Monday, March 28, 2016

SG Market (28 Mar 16)

SG Market: Cautious trading is expected in the week ahead amid overbought conditions, with sectors considered as safe havens such as telecom and consumer, as well as yield plays, likely to return into focus as investors await Chinese PMI data and US unemployment figures on Fri.

Regional bourses opened positive in Tokyo (+0.7%) and Seoul (+0.4%). Markets in Australia and Hong Kong will be closed today for Easter Monday holiday.

From a chart perspective, technical indicators are overextended. Immediate support for the STI is capped at 2,900, with underlying support at 2,830.

Stocks to watch:
*Budget 2016: Included a $4.5b package to transform firms and industries over the next five years and some targeted short term relief for SMEs, but offered little for listed companies apart from expanded infrastructure spending of $5b (+7.3%) in health care, education, security, urban development, and deferred foreign worker levy hikes for the marine and process industries.

*Economy: Feb manufacturing output fell 4.7% (est: -1.5%), dragged mainly by the transport engineering cluster from lower rig-building activity and weaker demand for oilfield and gasfield equipment amid the low oil price environment.

*O&G: Upstream oil majors including McDermott Int'l, Technip and Subsea 7 are among companies that have recently moved to Kuala Lumpur in Malaysia from Singapore to take advantage of the lower property prices and cheaper expenses.

*Halcyon Agri/GMG Global: Sinochem launched a mandatory conditional $0.75/share cash offer for Halcyon. Upon completion, Halcyon will make a voluntary offer for GMG via a new share issue on the basis of 0.9333-for-1, of which controlling shareholder Sinochem (51.1% stake) has given its irrevocable undertaking. Subsequently, Sinochem will inject its rubber processing assets worth an aggregate $210m into Halcyon, to be funded via new shares.

*ParkwayLife REIT: Acquiring nursing home facility Silver Heights Hitsujigaoka Ichiban-kan & Niban- kan located in Sapporo City, Hokkaido prefecture in Japan, for ¥1,100m ($13.6m), by 1Q16. The 123-room property with ~94% occupancy will come with a 20-year master lease agreement with the vendor Kabushiki Kaisha Silver Heights Sapporo, and is expected to generate an annual gross rental of ¥88.8m ($1.1m), or NPI yield of 6.7%.

*Biosensors: Special general meeting on 5 Apr to seek approval for its proposed merger with CB Medical Holdings, and the subsequent voluntary delisting of the company. Last trading day for counter to be on 4 Apr and shareholders may elect to receive either $0.84/share or new shares in the amalgamated private co CBCH II.

*Sembcorp Industries: Increased stake in Indian renewable energy business Sembcorp Green Infra by 1.06ppt to 65.12%, after a rights subscription in excess of those allocated for an aggregate $12m.

*Keppel Corp: Delivered the first two of five jackup rigs to Mexican company Grupo R, which will be chartered to national oil company PEMEX for operations in the Cantarell oil field in offshore Mexico.

*Ascott REIT: Insurance firm AIA emerged as a substantial shareholder after acquiring 8m units at $1.055 apiece via a placement on 23 Mar, which lifted its stake from 4.91% to 5.11%.

*Low Keng Huat: To divest subsidiary Vinametric, which owns Duxton Hotel Saigon in Ho Chi Minh, Vietnam, to New Life Real Estate Business for Vnd1.1t (US$49m).

*KrisEnergy: Extended an existing US$111m revolving credit facility by one year to Mar '17.

*Serial System: 91% owned subsidiary Serial Microelectronics Beijing will acquire two office units with total gfa of 1,216 sqm located at Changping, Beijing, for Rmb29.6m. The offices will serve as its headquarters for North China operations.

*Creative: Filed patent infringement complaint with the US International Trade Commission seeking exclusion orders against seven major smartphone manufacturers.

*Ocean Sky: Terminated the proposed acquisition of property developer Link (THM) Holdings after conditions have not been fulfilled.

*Adventus: Terminated the proposed acquisition of the commercial benefits for a residential property development project in Ho Chi Minh City, Vietnam, after preconditions have not been reached. Separately, group incorporated a 49/51 JV in Abu Dhabi, UAE, to design and manufacture measurement and control instruments.

*Abundance International: Following an exercise of convertible bonds which triggered a mandatory takeover, Executive Chairman Shi Jiangang issued a mandatory unconditional offer for the remaining 37.95% stake at $0.05/share.

*Global Yellow Pages: Initiated legal action against Leisure Empire to seek damages of $0.4m for a counter-guarantee.

*WE Holdings: Terminated a proposed JV in Myanmar with Dragon Cement.

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