SG Market (19 Jul 16)

SG Market: The Singapore market may consolidate its heady 7.3% gains since late Jun, as investors look for fresh direction from upcoming 2Q results.

Genting Singapore appears a little overextended following its recent surge on news of strong visitor arrivals in May. The upcoming earnings release by Marina Bay Sands on 27 Jul could provide a good read-through as to how Genting Singapore performed in 2Q.

Regional bourses opened mixed in Tokyo (+0.9%), Seoul (-0.2%) and Sydney (flat).

Technical indicators are in overdrive as STI approaches topside resistance at 2,964, with underlying support at 2,880.

Stocks to watch:
*Keppel Infra Trust: Flat 2Q16 DPU of 0.93¢ was in line with estimates despite a larger unit base. Revenue of $137.4m (-10.2%) was impacted by lower tariffs from City Gas (-10.1%) and outages at Basslink (-65.1%), partially mitigated by stronger contributions from its concessions (+7.7%), while distributable cash flows jumped 15.5% to $38m on lower operating expenses (-9.4%). Trading at 7.3% annualised yield and 1.6x P/B.

*Keppel DC REIT: 2Q16 DPU of 1.67¢ (+3.1%) met expectations. While gross revenue of $24.9m was hit by lower rental income at Keppel DC Dublin 1, as well as reduced contributions from overseas properties on weaker FX against SGD, this was mitigated by reduced property expenses (-32.7%). Portfolio occupancy inched up to 92.3% (+0.3ppt q/q), with WALE of 8.7 years, while aggregate leverage stood at 29.1% (-0.5 ppt q/q) with cost of debt of 2.4%. Offers 5.7% annualised yield at 1.3x P/B.

*SMRT: Remains halted pending an announcement. Media sources tout that controlling shareholder Temasek Holdings, which owns a 54% stake is mulling to take the transport operator private.

*Innovalues: Disclosed that discussions with parties in connection with a possible M&A transaction are still ongoing, allaying market fears that it might have been cancelled following the 14% selldown yesterday. MKE maintains Buy with TP of $1.15.

*Keppel T&T: Entered into a collaboration with managed security services provider Quann to provide cyber security solutions for its data centre customers.

*Halcyon Agri: Mandatory conditional cash offer by Shanghai-listed Sinochem for $0.75/share. Undertakings on the offer are expected to lift Sinochem's stake to at least 54%.

*GKE: Redeveloping 39 Benoi Road into a five-storey ramp up warehouse, which will more than double existing space from 0.2m sf to 0.53m sf. The development is targeted for completion in Jul '17.

*Fisher Tech: Acquiring a 41,195 sqm leasehold property with 39 years of remaining lease in Suzhou, China, for Rmb56m, with the intention to consolidate its manufacturing operations.

*Otto Marine: Submitted $2.8m claim against Robert Knutzen Shipholdings, which has defaulted on charter payments for two vessels. Separately, Otto received a US$0.2m claim by a vendor and disclosed that it is in the midst of making payment.