Thursday, July 14, 2016

SG Market (14 Jul 16)

SG Market: The recent rally is expected to take a breather ahead of the start of 2Q results season tomorrow, with eyes remain peeled on potential BoE rate cut today.

Defensive plays telecoms and consumer, as well as yield plays such as S-REITs look to outperform today, taking cue from fund flows in Wall Street overnight.

The recent coal price spike to a 10-month high due to higher demand from China could boost interest in SGX-listed Geo Energy.

Regional bourses opened mixed today in Tokyo (+0.5%), Seoul (-0.2%) and Sydney (+0.2%).

STI appears overextended with immediate support at 2,880 and resistance at 2,964.

Stocks to watch:
*Economy: Singapore's 2Q GDP grew 2.2% y/y (1Q16: +2.1%) in line with estimates. The manufacturing sector expanded 0.8%, reversing from the 0.5% decline in previous quarter, supported by higher output from the biomedical and electronics clusters.

*Noble: Chairman Richard Elman disposed another 89m nil-paid rights on the open market at 5.1¢ apiece, giving rise to speculation if Elman would pare an additional 263.6m rights (excluding the 625.9m he has underwritten) on the final trading day for the rights today. Rights at 4.8¢ trades at 5.4% discount to the mother share of 16.7¢, after taking into account the 11¢ subscription cost.

*Soilbuild REIT: 2QFY16 results in line with DPU of 1.56¢ (-3.1%) diluted by enlarged unit base. Distributable income rose 3% to $14.7m, thanks to a forfeit of deposit after one of its tenants filed for judicial management, as well as lower property taxes at West Park BizCentral. REIT offers 8.9% annualised yield and trades at 0.9x P/B.

*Q&M Dental: Conducted swift action against its Malaysian managaging partner, which under-reported earnings by only meeting the profit guarantee. Q&M will be taking legal action to recover its fair share of profit and assume full ownership of all four dental clinics in Johor. Limited impact to Q&M's earnings and operations as the clinics contribute less than 1% to group’s earnings. MKE maintains Buy with TP of $1.08.

*Best World: Invested $2.5m for a 52.1% stake in a dental stem cell bank to expand its product offering of health and wellness-related products. The JVCo intends to leverage on the direct seller's distributor network across 10 countries to market stem cell banking services.

*CITIC Envirotech: Opened doors to its new 5,100 sqm innovation centre and membrane production facility in Singapore, which is expected to double production capacity to 10m sqm of high-tech membrane per annum to meet demand. In conjunction, group signed an agreement with global membrane technology leader Hydranautics on the design, fabrication and sales of containerised membrane systems.

*Mermaid Maritime: Clinched US$5.8m contract to provide technical support service personnel to a national offshore oil and gas company for a year.

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