SG Market (12 May 16)

SG Market: Cautious trading sentiment is likely to impact the Singapore market as investors weigh between global growth worries, poor 1Q earnings and the recent rebound in crude oil.

Regional bourses opened red in Tokyo (-1.2%), Seoul (-0.5%) and Sydney (-0.6%).

From a chart perspective, a breach of the immediate support at 2,710 could take the STI to the next level at 2,680. Topside resistance remains at 2,805.

Stocks to watch:
*Singtel: 4QFY16 results within expectations with headline net profit of $946m (+0.8% y/y). Revenue fell 5.6% to $4.1b due to a reduction of mobile termination rates in Australia and lower equipment sales in Singapore, but performance was pared by improved EBITDA margin of 30.8% (+1.4ppt), and higher contribution from regional mobile associates of $699m (+12.3%). Final DPS maintained at 10.7¢, bringing FY16 payout to 17.5¢ (flat). NAV/share at $1.57.

*City Dev: 1Q results missed after net profit slipped 14.4% y/y to $105.3m, as revenue of $723.3m (-11.2%) was weighed by fewer project milestones, absence of projects that were completed in 2015 and weaker hotel operations amid stiffer competition. Operating margin widened 1.9ppt to 19.7ppt helped by investment gains, but bottom line was hurt by a plunge in JV contributions (-83%). Guides challenging conditions to persist but overseas projects to contribute in 2H16. NAV/share at $9.85.

*Yanlord: 1Q results trailed estimates despite a 17-fold jump in net profit to Rmb260.1m, mainly boosted by higher interest income of Rmb47.7m (1Q15: Rmb25.2m) and FX gain of Rmb119.8m (1Q15: Rmb96.8m loss). Revenue leapt to Rmb2.85b (+182%), on a substantial growth in GFA delivered and increased ASP due to sales of higher-end projects. However, gross margin shrank to 28.6% (-14.1ppt) on lower resettlement service fee income. NAV/share at Rmb10.52.

*Super: 1Q16 net profit tumbled to $11.6m (-15% y/y), missing estimates, on a $2.1m FX swing to $0.7m loss and wider fair value loss of $0.7m (1Q15: $0.2m). Revenue dipped 2% to $119.4m on weaker sales in branded consumer (-2%) and food ingredient (-3%) segments, caused by lower A&P spending and market slowdown in Thailand, Myanmar and Malaysia.

*United Engineers: 1Q16 net profit slumped 72% y/y to $6.9m on a $2.4m FX swing to $1.2m loss and absence of $3m in disposal gains. Revenue fell 35% to $333.6m on reduced contributions from its property development (-75%) and manufacturing (-28%) arms, partially mitigated by growth in its engineering (+34%) business. Gross margin improved to 17.5% (+0.9 ppt), with bottom line supported by $2.3m (1Q15: -$0.6m) profit turnaround in associates and JVs. NAV/share at $2.94.

*Silverlake: 3QFY16 net profit fell 20% y/y to RM61.5m, while revenue dropped 10% to RM157m on lower maintenance and enhancement services (-6%) and sale of software and hardware products (-76%). Bottom line further eroded by gross margin contraction to 57% (-11ppt), consolidation of costs for recent acquisition Symmetri, as well as FX losses (Rm2.9m). Third interim DPS of 0.65¢ (3QFY15: 1.1¢). NAV/share at RM0.215.

*Haw Par: 1Q16 net profit jumped 26.8% y/y to $17.1m mainly due to disposal gains of $2.9m and FX gains of $1.8m (1Q15: $0.1m loss). Revenue climbed 14.9% to $52.3m on rise in healthcare (+17.8%) and property (+4.9%) segments but partially offset by leisure (-9.6%) segment. Bottom line was shored up investment (+103%) and interest (+92.2%) income as well as lower finance expenses (-26%). NAV/share at $11.17.

*Best World: Blowout 1Q16 despite being traditionally the weakest quarter. Net profit spiked from a low base of $0.2m to $6m boosted by operational leverage. Revenue accelerated 161% to $35.2m, led by continued growth momentum from key direct selling markets Taiwan (+353%) and Indonesia (+200%) due to increased product acceptance, as well as higher export and manufacturing/wholesale orders from China (+242%). Net cash/share slipped marginally to 21.2¢ (4Q15: 21.5¢), mainly on inventory build-up in anticipation of increased orders.

*Ezion: 1Q16 in line as net profit sank 62.2% y/y to US$15.5m, as revenue dipped to US$82.1m (-8.9%) on absence of contribution from projects in Queensland and a reduced fleet as some service rigs underwent servicing, while gross margin eroded to 25.2% (-20.9ppt). NAV/share at US$0.796.

*Pacific Radiance: 1Q16 results trailed estimates on a net loss of US$6.8m (1Q15: US$2.5m profit), with revenue plunging 42% y/y to US$18.4m, as the slump in oil prices hurt its subsea (-61%) and offshort support (-40%) businesses. Bottom line was further hit by a jump in finance costs due to higher borrowings. NAV/share at US$0.575.

*Vard: 1Q16 turned in net profit of NOK37m (1Q15: NOK92m loss), lifted by net FX gain NOK68m (1Q15: 207m loss). Revenue slumped 34% y/y to NOK2b on reduced shipbuilding activity, while EBITDA margin before restructuring cost increased to 2.8% (1Q15: 2.1%), although group recorded an operating loss after workforce reduction costs of NOK5m. Order book contracted to NOK8.58b (end-4Q15: NOK10.23b). NAV/share at $0.52.

*Vard: Secured contract to design and construct 15 module carrier vessels for Topaz Energy and Marine, worth ~US$300m. Delivery scheduled between 3Q17 and 2Q18.

*Nam Cheong: 1Q16 results missed; Slipped into net loss of RM40.1m (1Q15: RM39.3m profit), after revenue swung to negative RM93m (1Q15: RM326.3m positive), due to sales reversal stemming from the cancellation of an accommodation work barge, reduced deliveries and weak chartering business. NAV/share at 59.4 sen.

*Ezra: Subsidiaries EMAS Offshore and EMAS Energy secured new contracts worth an aggregate US$40m (including options) in 3QFY16.

*SBS Transit: 1Q16 net profit leapt 69.5% y/y to $8.1m on substantially lower fuel and electricity costs. Revenue increased 6.6% to $263.5m with stronger contributions from both rail (+27.4%) and bus (+1.2%). Operating margin fattened to 4.2% (+1.4 ppt). NAV/share at $1.13.

*Hock Lian Seng: 1Q16 net profit plummeted 86.5% y/y to $2.5m, as revenue of $25.6m (-33.2%) was eroded by absence of contributions from its property development segment, partially mitigated by growth in its civil engineering (+41.6%) segment. Gross margin shrank 17.8ppt to 6.1%, dragged by lower margins in civil engineering segment. Bottomline was supported by contributions from JV (+66.4%) project, Skywoods. NAV/share at $0.44.

*Cityneon: To issue 40m new shares at $0.55/share to PE fund China Media Capital, backed by investors including Tencent and Alibaba. Part of the new shares was also allotted to other institutional and financial investors, in line with efforts to increase its investor base, and liquidity.

*Cordlife: Swung to 3QFY16 net lossof $2.0m (3QFY15 net profit: $18.1m), largely due to both the absence of $11.3m of fair value gains and $4.6m FX gain booked last year. Gross margin contraction (65.3%, -3.3ppt) due to the consolidation of Stemlife negated a 4.7% increase in revenue to $14.9m from increased client deliveries. NAV/share at 49.75¢.