Wednesday, May 4, 2016

SG Market (04 May 16)

SG Market: The market is expected to maintain its downward drift in the near term as global growth worries return to the fore and corporate earnings fail to inspire confidence.

Regional bourses opened in positive territory today in Seoul (-0.6%) and Sydney (-0.7%). Tokyo markets remain closed for Greenery Day.

From a chart perspective, STI has broken below the 50-dma with next support at 2,780, and immediate resistance at 2,890.

Stocks to watch:
*Economy: Apr PMI remained in contraction territory but rose to 49.8 (Mar: 49.4), the highest level since Jun ‘15 as new orders increased.

*SingPost: Long anticipated special audit report cited that group's disclosure slip-ups made no difference to interested party transactions and blamed the whole saga on staff carelessness and lapses in corporate procedures.

*Innovalues: 1Q16 net profit decline of 31% to $3.8m was in line, although hurt by softer revenue of $27.3m (-6.3%) on reduced orders in both automotive (-2.4%) and office automation (-19%) segments. Bottom line was further dragged by a $1.4m FX reversal to $1m loss. MKE raised its TP from $1.00 to $1.15 based on higher global peer valuations.

*Lippo Malls: 1Q16 DPU of 0.83¢ (+5.1% y/y) in line. Gross revenue and NPI rose to $45.5m (+8.5%) and $40.8m (+4.6%), with maiden contributions from newly acquired Lippo Plaza Batu and Palembang Icon in Jul '15, as well as positive rental reversion at existing malls, partially offset by higher property expenses. Occupancy inched up to 94.7% (+0.7 ppt q/q), with WALE of 4.92 years, while aggregate leverage crept up to 35.7% (+0.7ppt q/q) with average debt tenor of 2.18 years. NAV/unit at $0.38.

*ARA Asset Management: 1Q16 net profit edged higher to $19.4m (+2% y/y) on revenue of $41.4m (+10%), bolstered by higher management fees (+14%) and finance income (+142%). Operating margin widened 1.1ppt to 54.4% on operating leverage, but improvement in bottom line was pared by the absence of an acquisition fee. NAV/share at $0.5442.

*SGX: Launched futures and option contracts that track the MSCI China Free Index, which comprises large and mid-cap companies from a broad representation of sectors.

*Sembcorp Industries: Increased stake to 86.9% from 67.4% in Thermal Powertech Corp India, which owns a 1,320MW coal-fired power plant in Andhra Pradesh, for Rs358 crores ($73m).

*Keppel Corp: Acquired the offshore product division of Cameron International, which comprises the Letourneau range of jackup rig designs, rig kit business, as well as aftersales and aftermarket services.

*Cityneon: Entered into an exhibition tour agreement with Beijing Starclouds Entertainment Development for the Transformers experience in China.

*BreadTalk: Partnering Shwe Taung Group as the master franchise for its lifestyle bakery chain in Myanmar. The group anticipates opening its first outlet in Yangon by early-2017.

*Oxley: Broke ground for its second Cambodian mixed-use development The Peak, in Phnom Penh. The 208,750 sqm gfa mixed development will comprise 1,014 residential units, offices, 300-room hotel and retail, and is scheduled for completion by 2020.

*Darco Water Tech: Secured four contracts worth $13.1m, of which two comprising 89% of total contract value are from HDB. The contracts are to supply and maintain its pneumatic waste conveyance system, an automated waste collection system using high-speed vacuum technology, and are expected to provide recurring income over the next 10 years.

*IEV: Secure five new contracts worth US$2.9m to supply its marine growth preventer products.

*Acesian Partners: Initiated legal action against Tuck Hwa Industries for default and breach of terms relating to a sub-contract issued for Changi Airport Terminal 4.

*Sakae: Swung to 1Q16 net loss of $2.1m (1Q15: $1m profit), while revenue fell 12.2% to $22.3m on F&B weakness in Singapore and a depressed MYR. Bottom line was further weighed by legal fees of $1.4m.

Profit warning:
- United Food
- Pharmesis Int’l
- Uni-Asia
- Luzhou Bio-Chem

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