SG Market (28 Apr 16)

SG Market: Singapore shares may get a slight lift from the positive Fed cues, which downplayed global issues but upside will be capped by muted corporate earnings.

Regional bourses opened generally positive in Tokyo (+1%), Seoul (flat) and Sydney (+0.4%).

From a chart perspective, topside resistance for STI still seen at 2,960 with underlying support at 2,840.

Stocks to watch:
*UOB: 1Q16 net profit of $766m (-4.4% y/y, -2.8% q/q) came in at low end of estimates. Net interest income rose to $1.28b (+6.1% y/y, -0.2% q/q) on loan growth of 3.0% (+1% q/q) and NIM of 1.78% (+2bps y/y, -1bps q/q). Non-interest income tumbled to $695m (-7.8% y/y, -13.4% q/q) on lower wealth management fees and trading and investment income amid volatile market conditions. CIR inched up to 45.4% (1Q15: 43.6%) on higher staff costs and IT-related expenses. Provisions were lowered to $117m (-30.7% y/y, -38.4% q/q), while NPL ratio ticked up to 1.4% (1Q15: 1.2%). Tier-1 CAR at 12.8% (1Q15: 14.3%). NAV/share at $18.22 (+1.9%).

*Sembcorp Marine: 1Q16 net profit of $54.8m (-48.2%) met lowered expectations, although shored by net FX gains of $6.9m (1Q15: $13m loss) and one-time disposal gain ($9.3m). Revenue dived 29.6% on lesser rig building projects due to order deferments, while bottom line was weighed by higher finance costs (+87.4%). Order book diminished to $9.7b (-6.7% q/q) and the group foresees a prolonged downcycle for the offshore industry.

*Mapletree Greater China Commercial Trust: 4QFY16 DPU of 1.923¢ (+10.4%) came in line, as revenue and NPI surged 15.2% and 17.3% to $87.8m and $73m, respectively, boosted by newly acquired Sandhill Plaza, strong reversions from Festival Walk and Gateway Plaza, as well as stronger CNY and HKD. Portfolio occupancy stable at 98.6% (-0.1ppt q/q) with WALE of 2.6 years. Aggregate leverage stood at 39.5% with average cost of debt of 2.83%. NAV/share at $1.239.

*Sheng Siong: In line 1Q16; net profit jumped 16.8% y/y to $16.4m on revenue of $208.5m (+5.1%), led by five new stores although same store sales slipped 0.5%. Gross margin held steady at 24.5% (+0.1ppt), while bottom line was boosted by government grants (+175.6% to $2.3m).

*SIIC: 1Q16 net profit jumped 30.8% y/y to Rmb89.5m, boosted by a 50.6% surge in revenue to Rmb563m from increased construction projects. This led to lowered overall gross margin of 31.4% (-9.1ppt). NAV/share at Rmb2.5132.

*Cambridge Industrial Trust: In line 1Q16; DPU of 1.112¢ (-9.2%) was mainly dragged by cash payment of management fees. Otherwise, adjusted DPU would have rose 3.8%, thanks to higher gross revenue and NPI of $28.4m (+3.2%) and $21.5m (+1.2%) from acquisitions and completion of AEI projects. Portfolio occupancy stable at 94.1% (-0.2ppt q/q) with WALE of 3.6 years. Aggregate leverage remained at 37.1% (+0.2 ppt q/q) with average cost of debt of 3.64%. NAV/share at $0.671.

*CapitaLand: Serviced residence arm Ascott will invest £52m ($100.4m) in a 108-unit property in Islington, London, through its 50:50 US$600m JV fund with Qatar Investment Authority. The acquisition adds to group's London portfolio of close to 1,000 units across seven properties.

*Aspial: 50% owned Urban Vista development obtained TOP and expects to receive about $100m in cash proceeds which will then be used for the repayment of its bonds. Meanwhile, it locked in $275m worth of sales from its Waterfront @ Faber project which is expected to TOP in 1H17.

*Viva Industrial Trust: 1Q16 DPU fell 12.4% to 1.638¢ due to an enlarged unit base. Distributable income improved 21.6% to $14.1m, led by higher gross revenue and NPI of $21.9m (+21.2%) and $15.8m (+27.3%) respectively, on incremental contribution from newly acquired properties and higher income from Viva Business Park. Portfolio occupancy remained stable at 86.9%, with WALE of 3.5 years. Aggregate leverage was at 37.6% (-1ppt q/q), with average debt cost of 4.13% (+0.14ppt) and tenor of 4 years. NAV/unit at $0.811.

*Best World: Substantial shareholder Shi Jinyu sold 5.5m shares between 7 Mar and 31 Mar at an average $0.406 apiece, reducing his stake from 7.04% to 4.54%.

*Jason Holdings: Group charged by the Ministry of Manpower for safety lapses. Court date on 7 Jun and it could face a fine between $80,000 and $120,000 if convicted.

Profit warning:
- Serial System
- King Wan
- Global Palm Resources