SG Market (11 May 16)

SG Market: Stocks are poised for a technical bounce from oversold levels and track higher oil prices but upside may be capped by underwhelming corporate results.

Regional bourses opened generally positive in Tokyo (+1.3%), Seoul (-0.1%) and Sydney (+1.3%).

From a chart perspective, topside for STI capped at 2,805 with support at 2,710.

Stocks to watch:
*SingPost: 4QFY16 results missed as underlying net profit tumbled 20% y/y to $31.8m, although revenue jumped 28% to $105.4m (+196% y/y), boosted mainly by e-commerce logistics volume and recently acquired subsidiaries, TradeGlobal and Jagged Peak. Operating margin contracted to 10% (-6ppt) as its e-commerce investments swung into losses. Bottom line was shored by one-off divestment gain of $78.5m. Notably, balance sheet weakened significantly into a net debt position from net cash of $345.8m as at Mar '15. Maintained DPS of 2.5¢, taking FY16 payout to 7¢.

*Wilmar: 1Q16 came below expectations on core net profit of US$222.4m (-12.5%), as revenue slipped 4.3% to $9b from lower CPO price and reduced soy crush margins, partially mitigated by stronger sales volumes across all segments. EBITDA margin improved to 6.2% (+1.2ppt). NAV/share at $2.332.

*SIA Engineering: In line 4QFY16; net profit remained flat at $41.4m, as a drag in associate contributions (-36.4%) were pared by higher revenue of $294.2m (+6.6%) from improved line maintenance and fleet management businesses, as well as wider operating margin of 9.3% (+0.9ppt) due to cost control efforts. Final DPS lowered to 8¢; FY16 DPS of 14¢ (FY15: 14.5¢).

*F&N: 2QFY16 core net profit grew 32.1% y/y to $11.6m, boosted by wider operating margin of 5.8% (+0.8ppt) arising from cheaper commodity prices and operational efficiencies. However, revenue slipped 4.9% to $474.3m on reduced contributions from dairies (-5.4%) due to the weaker RM and lower sales volume, and lacklustre print and publishing business from slow demand in China. Interim dividend shaved to 1.5¢ (2QFY15: 2¢).

*OUE Commercial REIT: 1Q16 met estimates; DPU of 1.32¢ (+33%) was partially dragged by a spike in financing costs (+194%) due to new acquisition and increased interest rates. Revenue and NPI soared to $42.9m (+110%) and $33.3m (+112%), respectively, thanks to newly acquired One Raffles Place and improved operating performance at OUE Bayfront. Portfolio occupancy inched up 0.5ppt q/q to 94.8%, with WALE of 2.8 years. Aggregate leverage crept up 0.4ppt q/q to 40.5%, with average debt cost of 3.56% (+0.11ppt), debt tenor of 2.04 years. NAV/unit at $0.91.

*UMS: 1Q16 net profit tumbled 55% y/y to $3.4m, dragged by FX loss of $1.9m (1Q15: $0.8m gain) stemming from a softer USD. Revenue tumbled to $20.4m (-26%), as the semiconductor business deteriorated against a weak global economic backdrop. Maintained interim DPS of 1¢. NAV/share at $0.4641.

*Straco: 1Q net profit slipped 4% y/y to $8.3m, although revenue edged up 5% to $26.4m in tandem with better visitation (+5.1%). Top line was held up by higher contribution from the Flyer, Shanghai Ocean Aquarium (SOA) and Lixing Cable Car, which outweighed a drag from Underwater World Xiamen. Operating margin shrank 3.3ppt to 47.8% on higher marketing costs, and staff expenses for workers at newly opened restaurant at the flyer. Bottom line was further weighed by a sales tax on SOA ticket revenue, effective Apr ’15, but is subjected to a potential waiver later this year. NAV/share at $0.2624.

*Emas Offshore: Awarded charter contracts worth US$32m, including options, since the start of 3QFY16 from National Oil companies, International Oil companies and other offshore contractors on drilling operations and cargo supply runs for offshore projects.

*Fragrance Group: Acquiring a freehold 3,009sqm property at 2-6 Collins Street, Hobart, Tasmania, Australia, for A$5.5m, to be funded via internal funds. The group is still considering its development options, which include office, retail, hotel and residential uses.

*Tiong Seng: 1Q15 net profit climbed 17% to $3.7m, while revenue surged 142% to $247.2m from a boost from construction contracts and development sales. Bottom line was dragged by gross margin contraction for construction segment (2.4%,-10.8ppt) due to project mix, and a $2.2m FX loss. NAV/share at $0.5549.

*Talkmed: 1Q16 net profit of $8.6m (-15.8%) was dragged by increased staff costs (+22.5%), and share of associates’ loss ($0.7m) while revenue was flat at $16m. NAV/share at 9.88¢

*Profit warning:
- Longcheer
- Dyna-Mac
- Ziwo
- Abterra