The market will likely continue to flounder on low liquidity with little to excite investors as we head into the 3Q results season. Property developers may return to unfavourable light after 3Q private home prices suffered its steepest fall in 7 years.
Regional markets opened mostly higher in Tokyo (+0.3%), Seoul (+0.4%) and Sydney (-0.4%). From a technical perspective, resistance for STI remains at 2,880, with support at 2,800.
Equity highlights:
*Economy: Factory activity expanded in Sep after 14 months of contraction. Manufacturing PMI came in at 50.1 (est: 49.9, prior: 49.8), boosted by increased new domestic and export orders, and expansion of inventory and finished goods. The reading for the electronics sector improved to 50.3 for the second straight month after 13 months of decline. Whether this uptick will materialise into a sustained trend will depend on the global economic outlook.
*Property: Flash URA data showed private home prices slumped 1.5% in 3Q, with declines in both landed homes (-2.2%) and non-landed properties (-1.4%). The index is in its 12th quarter of contraction and the longest correction since 1975. With a persistently weak macro outlook, we prefer stable REITs over developers.
*Ezra: 75.5% subsidiary EMAS Offshore is in discussions with sister company Perisai Petroleum, in which Ezra has a 25.5% stake, on an outstanding put option held by Perisai to sell its 51% stake in SJR Marine to EMAS for US$43m. The group has received an indicative financing package offer for the SJR deal, with US$20m earmarked towards an acceptable resolution with holders of its $125m notes due 2016.
*First Resources: Aug FFB harvest slumped 15.7% to 264,276 tonnes, on lower yield of 1.7 tonnes/ha (Aug '15: 2.1 tonnes/ha), while CPO production shrank 19% to 62,774 tonnes, and extraction rate dipped 0.6ppt to 22.4%.
*Halcyon Agri: Completed the acquisition of Sinochem’s rubber processing facilities and trading business for $210m, satisfied via the issuance of 280m new shares that will be listed wef 4 Oct.
*P99: Proposed acquisition of UES Holdings for $65m via cash of $16m and 612.5m new P99 shares at 8¢ apiece. Upon completion, the transaction will result in an RTO and P99 will be transformed into a environmental engineering services provider.*Azeus: Disclosed the completion of a £0.6m software development contract for the UK and Scottish parliaments, involving a browser-based legislation drafting tool.
*KLW: Received a reprimand from SGX after former MD Lee Boon Teck and CFO Jaslin Gaw Kuan Ching breached Catlist rules by failing to disclose material information, including the payment and non-refund of commitment fees owed by overseas development projects in Indonesia and China, failure to obtain approval and misstatement of interested party fees, non-disclosure of Key Bay Furniture acquisition, non-disclosure and inaccurate the use of proceeds from a 2014 share placement, rights cum warrants issue and 2013 rights issue.
*Jason Holdings: Directors Jason Sim and Sim Choon Joo received statutory demand from ANZ’s solicitors for the repayment of $1.74m outstanding debt.
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