SG Market (11 Oct 16)

Investors could switch to a risk-on mood on the back of the oil price surge above US$50/bbl after Russia expressed support on the OPEC production cut, as well as a Clinton win in the second US presidential debate, which is seen as more favourable to financial markets.

On the Singapore economy, MTI does not expect an outright recession but does not rule out some quarters of negative growth amid global headwinds. 2H16 GDP is forecast to come in lower than the 2.1% seen in 1H16, dragging 2016 growth to the lower end of the official 1-2% range compared to street estimate of 1.8%.

Regional bourses crept up in early trading in Tokyo (+0.5%), Seoul (+0.1%) and Sydney (+0.3%). Technically, STI could test its immediate resistance at 2,880 with downside support at 2,800.

Stocks to watch:
*SingPost: Appointed three new non-executive independent directors to the board and substantially implemented all recommendations in the Jul independent review in a bid to improve its corporate governance. MKE has a Buy with TP of $1.77.

*GLP: Leased 32,000 sqm build-to-suit facility in China to Walmart, which is the group's global customer leasing a total of 210,000 sqm across nine cities in China, Japan and US.

*Q&M: Updated that the proposed 33% stake acquisition in Shenzhen New Perfect Dental Research has lapsed.

*GuocoLand: Its Tanjong Pagar Centre has received TOP for the building's office component, Guoco Tower (890,000 sf), which is now 80% leased, as well as basement retail space. The integrated commercial, retail and lifestyle complex, which also includes 181 luxury apartments, 222-room Sofitel hotel and 150,000 sf Urban Park, will open in phases from next month.

*Saizen REIT: Proposed acquisition of 20 industrial properties in Australia via reverse takeover by Sime Darby Property Singapore. The A$355.8m deal will be done via issue of new Saizen REIT units at $0.03604 each, plus cash of A$73.2m. Pre-RTO proceeds of up to $0.0237/unit will be distributed to existing unitholders.

*Sim Lian: Privatisation offer at $1.08/share by controlling Kuik family has closed, with final acceptances of 99.2%. Offeror will proceed to compulsorily acquire the remaining shares.

*Sapphire: Responding to SGX query, management cited that share price movement and volume spike could be explained by a recent investment presentation jointly organised by SGX and WeR1 Consultants, as well as a feature on The Edge financial magazine published on 10 Oct.

*Ley Choon: Clinched a $9.5m contract from PUB for watermain repairs and network services for works between 2016 and 2019.

*Equation Summit: Showcasing its anti-theft protection technology DiSa Asset Protection System at the DiSa Point-of-Sale Activation summit organized by Loss Prevention Research Council in US on 18 Oct, which will be attended by eight of the top 12 retailers in the US.

*Jackspeed: 1HFY17 net profit slumped 72.5% to $1.6m on the absence of a $4.6m disposal gain and higher share of profits attributable to minority interests. Revenue surged 88.6% to $45.9m on increased contributions from accessories (+46.5%) and automotive (+272.6%) segments, pared by a decline in leather business (-24.7%). However, gross margin narrowed to 16.5% (-7ppt) on a shift in sales mix. NAV/share at $0.1688.

*Cheung Woh: 2QFY8/17 net profit tumbled 33.7% to $1.9m on softer revenue of $21.7m (-0.4%), weighed by weak demand for precision metal stamping and ringgit depreciation. Gross margin shrank to 18.2% (-5ppt) on higher cost of materials for the HDD segment and rising labor expenses. Bottom line was dragged by a $0.4m swing in tax expense (2QFY16 tax credit: $0.2m). Interim DPS cut to 0.3¢ (2QFY16: 0.5¢). NAV/share at $0.3649.