SG Market (02 Nov 16)

Investors will likely turn defensive or head for the bunkers as the Fed meeting and US election looms.

Regional bourses slumped this morning in Tokyo (-1.1%), Seoul (-0.7%) and Sydney (-1.1%).Technically, STI is still trapped near the lower bound of its 2,800-2,880 trading band.

Stocks to watch:
*SIA Engineering: 2QFY17 missed as net profit of $35.5m (-20.2% y/y) was dragged by absence of disposal gain and dividend income following sale of 10% stake in Hong Kong Aero Engine Services to Rolls-Royce. Revenue dipped 0.5% to $264.8m on lower fleet management income amid tough industry outlook. Operating margin narrowed to 9.3% (-0.9ppt) on higher staff (+3.4%) and material (+9.3%) costs. Interim DPS slashed to 4¢ (2QFY15: 6¢) although net cash balance ballooned to $507.5m (+40.7%). NAV/share at $1.333. MKE maintains Hold with TP of $3.70.

*OUE Commercial REIT: 3Q16 results in line as DPU surged 29.4% to 1.32¢. Gross revenue and NPI more than doubled to $44.2m (+114%) and $35.3m (+127%), respectively, on contribution from One Raffles Place (acquired in Oct '15) and improved performances at OUE Bayfront and Lippo Plaza. Portfolio occupancy was stable at 94.4%, with WALE of 2.6 years. Aggregate leverage held steady at 40.8%, with average debt cost of 3.4% and tenor of 1.8 years. NAV/unit at $0.89.

*Frasers Logistics & Industrial Trust: 1QFY17 DPU of 1.84¢ came in 2.8% above IPO forecast on lower-than-expected financing costs. Gross revenue of $43.1m (0.8% above estimate) benefitted from earlier lease of a vacant property in New South Wales, Australia, and exercise of two call option properties. Occupancy improved to 99.2% (+0.9ppt) since IPO on 20 Jun, while aggregate leverage rose to 28.2% (+3.2ppt). NAV/unit at A$0.87.

*SIA Engineering: Divesting a 2.575% stake in its 49:51 JVCo, Component Aerospace Singapore (CAS), to its JV partner Pratt & Whitney for US$2.7m. The deal is intended to integrate JV operations and will result in a divestment gain of US$1.5m upon completion.*CapitaLand: Injected an additional Rmb550m ($113m) into Beijing Jiade Xinyuan Commercial Property for working capital requirements.

*Silverlake Axis: Sold a further 1.5m shares in Global Infotech on ChiNext of the Shenzhen Stock Exchange for Rmb35.9m (RM22.3m). Group expects to realise a disposal gain of ~Rm17.4m, which is intended for general working capital, special dividends, and reduction of borrowings as well as investments.

*Pacific Radiance: Awarded a US$73m charter contract, including options, for a newbuild maintenance work boat for operation in Mexico.

*Challenger Tech: 3Q16 net profit halved to $1.7m on impairment provisions of $1.2m. Otherwise, core net profit would have slid to $2.9m (-17%), on a similar decline in revenue to $74.4m (-15.6%) from lower contribution from IT products and services segment (-16%), partially offset by maiden contribution of $11.7m (3Q15: nil) from its new e-commerce portal. NAV/share at $0.22.

*Cosco Corp: 51% owned COSCO Qidong extended a rig delivery to Axis Vega Singapore for 17 months to 20 Aug ’17 (prior: 10 Mar ’16). Liquidated damages due to the delivery delay have been waived and Axis Vega may take delivery at any time earlier, suggesting construction works have almost completed.

*Neo Group: 55% owned Thong Siek is divesting its property at 14 Senoko Way to Jurong Town Corporation for $10m, which is expected to result in a $5.5m net loss.

*OKH Global: Sued by JV partner ZACD Woodlands, for an outstanding amount of $7.7m arising from a profit sharing agreement for the development of a land parcel in Woodlands.

*China Environment: Reviewing legal letters received seeking repayment of Rmb6.5m, from Chen Bing, brother-in-law of group's former chairman Huang Min and subcontractor Wuyi Jiufeng Anzhuang Engineering.