SG Market (29 Jul 16)

SG Market: The market remains in a corrective phase with no clear direction as investors await BoJ's policy statement today.

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

From a chart perspective, immediate support for the STI is seen at 2,917, followed by 2,900, with topside resistance at 2,964.

Stocks to watch:
*DBS: Disclosed that it has $700m exposure (comprising loans, bonds, off-balance sheet items) to Swiber or ~0.3% of its gross loan book. As this is partially secured, DBS expects to recover half of it and will provide fully for the anticipated shortfall from its surplus general allowances. Net provision charge is estimated at $150m, and there will be minimal impact on its capital adequacy ratio. MKE maintains Sell with TP of $13.40.

*Sembcorp Marine: 2Q16 net profit sank 90% to $11.5m, torpedoed by a quadruple whammy of rig delivery deferments, FX translation losses, higher finance costs and impairment of AFS assets. Revenue shrank 25% to $908.5m (-25%) as weaker rigbuilding overshadowed improvement in offshore platform projects. Operating margin narrowed to 5.9% (1Q16: 7.8%, 2Q15: 12.2%) due to FX loss on revaluation of UK and US assets. Order book of $9.2b inflated by troubled Sete Brazil contracts. Interim DPS slashed to 1.5¢ (1H15: 4¢). MKE maintains Sell with TP of $1.00.

*SIA: 1QFY17 net profit nearly tripled to $256.6m (+182%), boosted by cheaper fuel and divestment gains. Revenue dipped -2.1% on weaker passenger carriage (-1.7%) and yield (-3.7%) and weaker cargo yield (-17.4%) at the parent airline, but partially compensated by improved performances from SilkAir and Scoot. Outlook remains challenging as yields continued to be pressured by global economic uncertainty, intense competition and aggressive capacity expansion. NAV/share at $11.44.

*CDL Hospitality: 2Q16 results came in at the lower end of forecasts with DPU of 2.23¢ (-0.9%). Revenue of $42.5m (+8.9%) was lifted by contribution from recently acquired Hilton Cambridge City Centre and completion from refurbished mall Claymore Connect, which more than offset the weaker performance from Singapore hotels and Maldives resorts. NAV/unit at $1.5726.

*SMRT: Temasek and SMRT will hold shareholder meetings to discuss the proposed acquisition, after concerns were raised by investor activist group SIAS over the buyout offer.

*Dairy Farm: 1H16 results missed; net profit climbed 3% y/y to US$199m, buttressed by full contribution from China associate Yonghui, while revenue slipped to US$5.56b (-1%) on lower sales from supermarkets in Singapore and Indonesia. Maintained interim DPS of US$0.065.

*China Aviation Oil: 2Q16 net profit grew 32.8% y/y to US$23.6m on revenue of US$3.02b (+19.8%), boosted by increased contribution from other oil products (+138%). Gross margin contracted to 0.3% (-0.1 ppt) on a shift in sales mix, while bottom line was buttressed by stronger associate contribution of US$19.6m (+43.7%).

*Singapore Shipping: 1QFY17 net profit tumbled to US$1.6m (-20.1%) despite higher revenue of US$10.8m (+1.2%), as improvement in agency & logistic business was outweighed by the slump in ship owning segment. Operating margin shrank 4.6ppt to 21.9% on higher depreciation, logistics, and staff costs, while bottom line was dragged by higher finance costs (+25.8%). NAV/share at US$0.164.

*GuocoLand: Disclosed that pre-commitment levels for its integrated office development Guoco Tower has reached >60% (Apr: 14%). While this may improve sentiment on office space demand, MKE opines that rents could continue to fall on the oversupply.

*Ascendas India Trust: Acquiring the fourth aVance Business Hub in Hyderabad India for an estimated $36.4m. The IT building with floor area of 0.39m sf has leasing commitment of 46.3%, and construction is expected to complete by 31 Mar '17.

*Vard: Secured a US$70m contract for the design and construction of three vessels for an undisclosed client.

*GKE: Entered MOU to purchase maritime logistics provider TNS Ocean Lines for $9m. Funding will be partly satisfied in cash ($2.7m) and 52.5m new shares at 12¢ apiece.

*Chiwayland: Investing Rmb4.9m into a 49:51 JV with HK-listed Modern Land China to develop its first science residential project on a 13,270 sqm land in Wuhan, China.

*Ntegrator: Secured a $11.3m contract from a regional service provider to supply outside plants services, involving pipeline and manhole works. The contract will commence in Aug '16 and target to complete in three years.