SG Market (25 May 16)

The Singapore market could open stronger today as investors warm up to the prospects of a Jun Fed rate hike amid stronger economic data.

Regional bourses in Tokyo (+1.3%), Seoul (1.1%) and Syndey (1.6%) opened stronger.

From a chart perspective, the STI looks to be gaining upside momentum with resistance at 2,780, and bottom side support at 2,710.

Stocks to watch:
*Keppel/SMM: US-based fund house EIG Management has added both rigbuilders into an USD221m lawsuit for damages against Petrobras. Both Keppel and SMM said they have not be served any claims.

*Valuetronics: FY16 net profit beat consensus, although it fell 19.3% to HKD120.4m. Revenue dropped 19.6% to HKD1.95b, as consumer electronics revenue (-44%), dragged by declines in LED sales, was offset by industrial and commercial electronics (+18%). Gross margin improved 1.6ppt to 15.2% on improved sales mix, but largely negated by FX losses. Final and special DPS of HK13¢ and HK7¢ brings full year DPS to HK20¢ (unchanged).

*mm2 Asia: FY16 net profit ahead of consensus forecasts, spiking 61% to SGD8.2m, on a 58% jump in revenue to SGD38.3m, mainly boosted by maiden contribution from newly acquired 3D animation and cinema businesses. Gross margin expanded to 48% (+9ppt) on a shift in sales mix. Group will continue to seek M&A to expand its business.

*GLP: Entered agreement with a new co-investor to further syndicate an additional 9.95% in the US portfolio of industrial assets for US$197m, or 0.4% below its NTA. If completed, this reduces its stake in the portfolio to 0.05%, below its initial intended 10% stake.

*Q&M: Dilution overhang removed after a two-year call option for 63m new shares with its substantial shareholder, healthcare PE fund Heritas Helios Investments, has expired. MKE upgraded its TP from $0.88 to $1.05.

*Boustead Singapore: 4QFY16 net profit dived 77% y/y to $4.1m, as gross margin compressed 14.9ppt to 27.7%. Revenue of $112.5m (-8%) was dragged by lower sales in energy-related engineering division (-44%) from heavily depressed state of O&G industries, partially offset by real estate solutions (+22%). Final DPS of 2¢ proposed, bringing full year DPS to 19.2¢ (incl. 16.2¢ dividend in specie, FY15 DPS: 4¢). NAV/share at $0.583.

*Tat Hong: To divest its training services arm for $0.4m as the arm has been facing headwinds, with no expected material financial impact.

*Hotel Grand Central: To sell its 408-room hotel in Australia for A$80m. It is expected to record a gain of $23.4m from the sale.

*CSC: 4QFY16 net loss narrowed to $6.6m (4QFY16: $8.7m loss) on a 34% y/y slide in revenue to $65.3m mainly due to several project delays. Gross margin improved slightly to 6.4% (-0.8ppt) as it disposed of old equipment and gradually reduced headcount. Bottom line was further pressured by higher interest costs (+23.2%) partially mitigated by contributions of $0.1m (4QFY15: $12k loss) from its Thai JV. NAV/share at $0.085.

*Renewable Energy Asia: Disposing the rights to develop a concession for a 100MW wind power project in Guazhou, China, for Rmb20m.

*Allied Technologies: Signed three-month non-binding MOU with Carapace Daybreak to sell subsidiaries Allied Machinery Shanghai, and Taicang Shanfeng Hardware.