SG Market (31 Aug 16)

SG Market: Singapore market continue to be mired in low volumes amid weak sentiment and lack of major catalysts, with focus centred on a handful of small to mid-caps, mainly in healthcare and consumer space.

Regional markets opened lower in Tokyo (+0.8%), Seoul (flat) and Sydney (-0.7%).

STI has dipped below the support at 2,830, with next level at 2,800, while topside resistance remains at 2,880.

Stocks to watch:
*Banks: According to credit rating agency Fitch, S'pore banks will be able to withstand a property slump, due to a proactive regulator and measures to curb excessive debt. A drastic deterioration of 45% for home prices and housing NPL of 5% (2Q16:0.4%) would shave a modest 17-24% off FY15 earnings.

*Hospitality: UK, Australia, Taiwan and South Korea have all issued travel advisories for Singapore as Zika cases rise. This will have adverse impact on visitor arrivals and the hotel industry here, just when tourists are starting to flock back in. Affected counters include SIA, Genting S’pore, CDLHT, OUE HT and Far East HT.

*CapitaLand: Signed contract to manage the retail space (95,000 sqm) of Fortune Finance Center, a landmark integrated development under construction in Hunan. This marks its the start of its asset-light strategy to enlarge its mall network through third-party management contracts.

*ST Engineering: Its marine arm will partner American firm Raytheon and Saudi Arabia’s Zamil Group, to offer a full product suite in shipbuilding and systems integration. The JV, with each holding one-third stake, will bid for projects under the Saudi Arabian Naval Force’s modernisation programme. Separately, the group disclosed that former COO (Jun ’02 – Jun ’07) Han Yew Kwang has been found guilty of corruption.

*Top Glove: Acquiring a freehold industrial property, built on a 34,499 sqm land in Selangor, Malaysia, for RM51.5m, for future production expansion.

*Chip Eng Seng: Awarded a $75.9m contract by GS Engineering to supply precast concrete for the tunnels, rail and bus depot at Thomson-East Coast Line.

*Koon Holdings: 1HFY16 net profit tumbled 54.2% to $2.1m on losses from its precast operations in Indonesia. Revenue grew 4.6% to $108.9m from construction (+15.4%), pared by declines in precast (-40.9%) and electric power generation (-5.8%). Gross margin contracted to 11.6% (-3.5 ppts) on the shift in sales mix. NAV/share at $0.236.

*Serrano: Received letter of demand from Maybank for outstanding debt of $29.7m, as well as a writ of summons from supplier VGS Imports & Exports for $88.5m of unpaid goods and services.

*China Star Food: Denied all allegations made in relation to the $2.5m letter of demand from Cheong Chee Hwa.

*China Sky Chemical Fibre: Engaged counsel after it received winding-up proceedings against its subsidiary, Quanzhou Tianyu Chemical Fiber & Weaving Industry.

*Global Invacom: Obtained a patent for a new auto-assembly machine which doubles the efficiency of its satellite communications equipment line.

*Oxley: Repurchased 0.3m shares under its share buyback scheme on 30 Aug, at $0.41 apiece.