Friday, December 16, 2016

SG Market (16 Dec 16)

The market might enjoy a minor bounce, backed by continued optimism on Wall Street optimism and stable oil prices.

Regional bourses opened mixed, with Tokyo (+0.7%) gaining while Seoul and Sydney were flat.Technically, STI may attempt to fill the gap at 2,953. Underlying support for the index remains at the 2,882 breakaway gap.

Stocks to watch:
*Banks: Moody’s upgraded the long-term rating of Singapore banks to “stable” as solvency pressures become manageable. However, baseline credit assessments, subordinated debt and capital instrument ratings were cut by one notch. For exposure, MKE prefers UOB (TP $18.36).

*Property: Private home sales (ex-ECs) rose 13.3% to to 860 units last month although it slid 31.4% from a 15-month high in Oct. Popular projects were Queens Peak at Dundee Road (271 units sold) and Parc Riviera at West Coast Vale (128 units).

*SIA: Group pax load factor fell 1.8ppts to 77.2% in Nov as capacity growth (+5%) outpaced traffic increase (+2.7%). Load factors deteriorated across Americas (-1.1ppts), Europe (-1ppt) and SW Pacific (-8.1ppts). Cargo load factor was flat at 66.4% as growth in carriage (+3.4%) largely matched capacity expansion (+3.3%). Subsidiary carriers Scoot (-4.5ppts to 79.1%) and SilkAir (-0.7ppts to 70.6%) also recorded lower load factors, while Tigerair improved (0.8ppt to 83.9%). MKE has Hold with TP of $9.70.

*CapitaLand: Its serviced residence unit Ascott bought the 136-unit Temple Bar Hotel in Dublin, Ireland for €55.1m to cater to rising accommodation demand from corporate and leisure travellers.

*SATS: Awarded IATA accreditation for ramp services training and will have exclusive rights to train ground handlers in 10 ASEAN countries when the programme begins in Mar ’17. Separately, it announced the use of smart watches in its technical ramp operations to streamline on-the-ground processes and enhancing communication, productivity and safety.

*Singtel: Australian unit Optus signed a five-year A$20m managed services contract with the Townsville City Council to boost its communication and IT capabilities.

*Cosco Corp: 51%-owned Cosco Shipyard deferred the delivery of a bulk carrier from 2Q17 to 2Q18 at the request of its European buyer.

*mm2 Asia: CEO Melvin Ang continues buying spree, scooping up 967,000 shares at 41.88¢ in the open market, boosting his total stake to 45.15% from 45.06%*Singapore Medical Group: Set up a 50% owned JV, SMG International Vietnam, with five individuals, to explore growth and acquisition opportunities in Singapore and ASEAN.

*Secura: Signed MOU with Custodio and Custodio Technologies (CT) to subscribe for new CT shares, representing 20% stake, for US$4.5m. CT engages in R&D of new cyber security solutions, with focus on cyber early warning technology.

*Elektromotive: The electric vehicle charging station provider is planning to acquire a 63.13% stake in South Korea-based Dream T Entertainment for $22.7m. The target is an artiste management company that has Girl's Day, MAP6, Hyun-Woo Ji and Soo-Ah Hong under its portfolio.

*Vibrant: Entered into sale and leaseback agreement with Sabana REIT for its property at 47 Changi South Ave 2 for $23m. The 10-year leaseback agreement allows Vibrant to occupy 74% of the 8,507 sqm gfa for $2.1m in the first year with rental escalation of 1% from year two onwards. It is expected to book a gain of $9.1m from the sale.

*Artivision: Divesting its digital advertisement and media solutions business arms to an undisclosed third party for $50m. It is expected to book a disposal gain of $38m, which will be used to redeem loans as well as for general working capital requirements.

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