SG Market (04 Aug 16)

SG Market: The Singapore market may see a slight bounce from technical support level and firmer oil prices.

Oil-related counters are likely to see a near term respite, but upside gains may be capped in the longer term as investors seek to pare down their holdings given the potential for further downside risks in the sector.

Regional bourses opened higher in Tokyo (+0.4%), Seoul (+0.5%) and Sydney (+0.8%).

From a chart perspective, topside resistance remains at 2,900 with downside support at 2,810.

Stocks to watch:
*CapitaLand: Headline 2Q16 net profit came in at $294m (-36.6%), while core net profit of $171.6m (-33%) was dragged by lower fair value gain from change in use. This brought 1H16 earnings to 42% of consensus full year estimates. Revenue improved 9.7% to $1.13b despite the absence of a fair value gain (2Q15: $148.4m), underpinned by higher contribution from development projects in Singapore and China, as well as increased rental income from both the serviced residence business and office tower CapitaGreen. NAV/share at $3.95.

*StarHub: 2Q16 net profit of $108.6m (+9.6%) came in at the top end of estimates, buttressed by lower handset subsidies and fair value gain on its mm2 Asia investment ($9.5m). Revenue slipped 0.6% to $585.7m on weaker mobile (-1.8%), Pay TV (-2.4%), and equipment sales (-9%), but was partially offset by broadband (+11%) and enterprise fixed services (+1.9%). Service EBITDA margin rose to a 3-quarter high of 34.7% (2Q15: 35.1%; 1Q16: 33.8%). 5¢ interim DPS maintained. MKE reiterates Buy with TP of $4.15.

*OUE: 2Q net profit turned around to $25.7m from $16.3m loss previously, only because of a $28.1m impairment writeback. Revenue jumped 40.4% to $134.3m from increased contributions due to the acquisition of One Raffles Place and higher sales at OUE Twin Peaks. Gross margin expanded to 43% (+4.4ppt), while bottom line was weighed by higher borrowing costs (+32.4%). Cut interim and special DPS to 3¢ (1H15: 4¢). NAV/share at $4.31.

*BreadTalk: 1H16 net profit tumbled to $3.8m (-23.3%) on a softer revenue of $304.3m (-1%), as higher contribution from restaurants (+6.3%) was doused by the core bakery (-2%) and food atrium (-5%) businesses. While gross margin expanded 1.6ppt to 53.7%, bottom line was hurt by increased expenses for distribution (+4%), admin (+19%), interest (+25%) and associate losses. Maintained interim DPS of 0.5¢.

*Mapletree Commercial Trust: Raised $529m via a private placement of 364.9m new units at $1.45 apiece, to partially fund the acquisition of office and business park components of Mapletree Business City (Phase 1).

*ACROMEC: Awarded a $10.3m contract for the fitting out of an existing client’s research cleanroom at Fusionopolis for delivery by Oct ’17. The contract lifts order book to ~$40m.

*BHG Retail REIT: Declined offer from its sponsor Beijing Hualian Department Store for the 51% stake acquisition in each of Tongchengjie Mall and Libao Mall for Rmb593.7m, as the properties are deemed to not be at suitable performance levels for injection.

*Global Premium Hotels: 2Q15 net profit fell 13.5% to $2.7m, as revenue inched lower to $14.6m (-2.7%) due to a drop in RevPAR (-2.1%) and AEI works at three hotels. Bottom line further dragged by increased admin expenses (+7.2%). NAV/share at $0.6992.

*Singapore Medical Group: 1H16 results turned around to net profit of $0.6m (1H15: $0.2m loss) on a stronger revenue of $19.5m (+33.5%), driven by higher takings in key healthcare businesses. Gross margin widened 2.8ppt to 33.4%. NAV/share at $0.04.

*Soilbuild REIT: Outlook for its Baa3 credit rating from Moody's has been downgraded to negative.