SG Market (27 Jun 16)

SG Market: Volatility is expected to rule the day following the Brexit shockwave, which will likely precipitate weaker growth in Europe and years of uncertainty. Short term, possible central bank action may shore up sentiment.

Regional bourses opened mixed today in Tokyo (+1.7%), Seoul (-0.5%) and Sydney (-0.1%).

From a chart perspective, immediate support for the STI is seen at 2,710, with topside resistance at 2,810.

Stocks to watch:
*Strategy: Singapore's direct exposure to UK is limited but the indirect impact from EU and its repercussions on the global economy present far greater risks. Prefer defensive yields, telecoms and companies with USD revenues to growth-oriented plays.

*City Dev: Assured that its UK development projects cater to local demand, which will help to insulate its projects from the potential impact of UK's impending exit from EU. Subsidiary M&C Hotels sees medium-term uncertainty. Group exposure to UK is 12%/11%/12% in terms of revenue/asset/debt.

*PACC Offshore: Clinched a contract by Technip Oceania to support Shell's Prelude FLNG facility, with its 750-pax semi-submersible accommodation vessel, POSH Arcadia. MKE last had a Buy with TP of $0.42.

*Anchor Resources: Proposed acquisition of loss-making granite quarry in Terengganu, Malaysia, for $100m, which will result in a RTO transaction. Funding will be via a placement of 30.8m new shares at $0.104 apiece. Pro forma FY15 NTA/share is expected to fall from 1.24¢ to 1.05¢.

*China Environmental Resources: Entered MOU for a possible JV in a specialist sports car manufacturer. The group also intends to be the manufacturer's sole distributor in Asia.

*Federal Int'l: Disclosed that it will go on its first roadshow in China and expects to meet over 100 fund managers.

*Ace Achieve: FY15 net profit jumped 16% to Rmb15.2m, buttressed up by write-backs of Rmb3.8m. Revenue inched up 1% to Rmb237.6m on stronger business support solutions (+27%), and maintenance and servicing (+53%), offset by a decline in ICT system integration (-16%). Gross margin narrowed to 21% (-5ppt) on a change in sales mix, while bottom line was supported by lower operating (-23%) and financing (-28%) expenses. NAV at Rmb0.23.