SG Market (29 Apr 16)

SG Market: Singapore market is likely to continue its downward drift on disappointing 1Q corporate earnings, although oil-related counters may see some support as crude prices hover near its 6-month high.

Regional bourses opened in negative territory today in Seoul (-0.7) and Sydney (+0.1%). Tokyo markets are closed for Showa Day.

From a chart perspective, underlying support for the STI at 2,840, with next level at 2,780.

Stocks to watch:
*OCBC: 1Q net profit of $856m (-14% y/y, -11% q/q) missed estimates. Net interest income rose to $1.31b (+5% y/y) on tepid loan growth of 1% and NIM of 1.75% (+13bps). Non interest income declined 12% to $753m on lower fees and commission from weak investment appetite. Notably, provisions surged 162% on higher specific allowances stemming from the oil & gas portfolio. Accordingly, NPL ratio ticked up to 1.0% (1Q15: 0.6%). Tier-1 CAR at 14.6% (1Q15: 13.5%). NAV/share at $8.20.

*SMRT: Headline 4QFY16 net profit of $26.6m (+27.6% y/y) was flattered by a $19m net property tax refund. Excluding that, operating performance was below expectations with losses in rail of $8.5m (4QFY15: $4.1m loss) and bus of $1.6m (4QFY15: $0.9m profit) due to cannibalisation impact from the opening of DTL Stage 2, while taxi operations were dented by 57% to $2.3m on a smaller fleet size. Proposed higher final DPS of 2.5¢, bringing full-year payout to 4¢ (FY15: 3.25¢). MKE maintains Hold with TP of $1.40.

*Yangzijiang: 1Q16 net profit of Rmb445m (-37% y/y) came in below estimates, plagued by 1) slump in revenue to Rmb2.71b (-11%) from delivery of smaller sized vessels, 2) absence of forfeited deposit (1Q15: Rmb88m) and 3) losses at associates/JVs due to fair value loss of venture capital investments. NAV/share at Rmb5.81.

*Venture: 1Q16 net profit of $35.8m (+10.1% y/y) matched forecasts, on revenue of $630.7m (+3.6%) due to new products. Pretax margin improved 0.3ppt to 6.7% on reduced R&D costs, partially offset by FX loss. NAV/share at $6.82.

*Ho Bee: 1Q16 net profit surged 59.8% y/y to $18.5m, boosted by higher associate income of $9.3m (1Q15: $1.3m loss) attributed to a Shanghai residential project. Revenue jumped 19.9% to $37.2m from three newly acquired investment properties in London in 2H15. NAV/share at $4.19.

*Jardine C&C: 1Q16 net profit tumbled 20.4% y/y to US$140.6m (-20.4% y/y), missing estimates as revenue fell to US$3.65b (-9.2%) on reduced contributions from Astra’s heavy equipment, mining, agri and auto segments. Operating margins narrowed to 7.8% (-1.1 ppt) on net FX losses of US$16m (1Q15: US$6.9m gain), while bottom line was further eroded by lower associate and JV contributions (-28.7%). NAV/share at US$5.91.

*Citic Envirotech: 1Q16 net profit of $12.1m (+60% y/y) fell short of estimates even though revenue jumped 62.5% to $99.5m, underpinned by increased contributions from engineering (+100%), treatment (+25.9%), and membrane sale (+85.7%). Gross margin slipped to 37.3% (-1.7 ppt) higher raw materials cost, while bottom line was pressured by FX losses of $4.5m (1Q15: nil). NAV/share at $1.00.,

*China Merchants Pacific: 1Q16 results met expectations as net profit climbed 15.3% y/y to HK$164.1m on revenue of HK$634.7m (+28.4%). Topline growth was largely attributed to consolidation of contributions from three Guangxi Expressways acquired in Sep and Oct ‘15, as well as revenue growth from the Yongtaiwen (+9%) and Beilun Port (+10.5%) expressways. Gross margin widened to 59.6% (+3.8 ppt). NAV/share at HK$5.44.

*Japfa: 1Q16 core net profit (in constant FX terms) spiked 107% y/y to US$19.8m, on higher revenue of US$717.7m (+6%) led by better selling prices for Indonesia's animal protein segment and improved overall sales volumes across all business segments. Operating margin expanded 3ppt to 7.7%. However, group remains cautious of economic slowdown and FX volatility in related emerging markets. NAV/share at US$0.40.

*GMG: Swung to 1Q16 net loss of $3.5m (1Q15: $2.7m profit), as revenue dropped 17.6% to $124.2m due to lower rubber selling prices of $1,650/ton (-19.1%), partially mitigated by higher volumes (+1.9%) and FX gain. NAV/share at $0.9236.

*City Dev: HK-listed subsidiary City e-Solutions requested for a trading halt, pending M&A related announcement.

*King Wan: Secured new mechanical and electrical projects worth $29.5m which are scheduled to be completed between 2016 and 2018. Order book currently stands at $164.5m, with contracts lasting till 2018.

*Acromec: Won two contracts totalling $5.4m. The first entails the fitting out of a chemical lab at Biopolis and is expected to be completed by FY16. The second contract is from a new customer in the healthcare sector and entails the reconfiguration of existing operating theatres. Order book currently stands at $52m.