SG Market (31 May 16)

SG Market (31 May): The market may open weaker as investors assess the implications of a stronger USD, while the global environment remains fragile.

Regional bourses opened mixed, with Tokyo (flat), Seoul (+0.1%) stronger, and Sydney (-0.8%) weaker.

From a chart perspective, downside support for the STI is seen at 2,760, with resistance at 2,830.

Stocks to watch:
*Property: Private resale home prices, excluding small units, edged up 0.3% MoM in Apr, from the 1.1% slide in Mar, held up by higher prices of homes in the non-central region of 0.2% (Mar: 1.4% fall).

*Economy: The labour market is expected to see rising retrenchments and unemployment rates, amid the ongoing economic transformation.

*NOL: After meeting pre-conditions, French container shipper CMA CGM has formally announced its voluntary conditional general offer to acquire NOL at $1.30/share.

*SGX: Launching four new sustainability indices, including the flagship SGX Sustainability Leaders Index, which comprise leading companies that meet environmental, social and governance standards, as well as minimum liquidity requirement.

*Singapore Shipping: 4QFY16 net profit dived 46.8% y/y to US$1.3m bringing FY16 net profit to US$9.6m (+7.8%). Revenue grew 9.1% to US$9.4m mainly boosted by delivery of three additional vessels, but partly offset by contraction in its agency & logistics business. Operating margin expanded to 22.4% (+0.3 ppt) but bottom line was hurt by costs associated with the acquisition of three vessels and a US$1m swing FX losses of US$0.4m. First and final dividend maintained at 1¢. NAV/share at US$0.163.

*KSH: FY16 net profit surged to $61.5m (+47.6%), driven by its associate's property development project Liang Jing Ming Ju Phase 4 Sequoia Mansion in China. Revenue dipped to $245.5m (-0.3%) on weaker construction business, while operating margin narrowed to 7.5% (-0.5ppt), weighed by lower interest income, and higher provision for bonuses and impairment. Proposed higher final and special DPS of 1.5¢ and 0.5¢ respectively, bringing FY16 payout to 3.55¢ (FY15: 2.75¢). NAV/share at $0.6544.

*Ley Choon: 5QFY16 net loss deepened to $13.5m (1QFY16: $3.3m), as the company slipped into gross loss of $2.4m (1QFY16: $2.4m profit). Revenue rose 6.6% to $26.7m, on increased recognition of work done for ongoing projects, while bottom line was dragged by ABSD and additional impairment for the development at 241 Pasir Panjang Road, as well as a surge in interest costs from a debt restructuring exercise.

*Stratech: Dismal FY16; Swung into net loss of $9.6m (FY15: $0.7m profit), as revenue slumped 58.8% to $6.8m due to the late award of several projects which was expected to commence earlier.

*Fragrance Group: Appointed Brookfield Multiplex Constructions to carry out the design and construction of its new mixed-used development, Premier Tower in Melbourne. The development will house a 78-floor residential tower. Construction is expected to begin in 4Q16.

*Sarine Tech: Sarine has acquired DiaMining, a developer of point of sale applications for diamonds, gemstones and jewellery for US$1.2m. This will help open new avenues to market the Sarine Profile technology.

*Secura: Exercised option to acquire a freehold six-storey industrial property with gfa of 2,100sqm at 38 Alexandra Terrace for $16.5m, a 13.2% discount to a valuation done in Oct ’15.

*Chuan Hup: Lending US$7m to property developer PSD Holdings at interest rate of 8% p.a. for two years.

*HTL: Closed two sofa plants in China as part of efforts to restructure its business.

*MMP Resources: Agreed to a reduction in monthly management fees receivable from Magnum Modular Power Generation in relation to two South Korean power plants. The reduction includes fee forfeiture (May & Jun), reduced fee of $35,000 (Jul, Aug, Sep) with a subsequent return to the original fee of $0.1m from Oct.