Monday, November 15, 2010

SG Market

SG Market: may continue Friday's negative tone, tracking declines on Wall Street; also, with domestic earnings season all but wrapped up, investors may now take a breather, await more clues on health of global economy. Street concerned about China raising interest rates to curb growth, lending by its over-exuberant local banks. STI ends down 1.3% at 3252 Friday. 3244 support tipped, then 3220; 3300 likely medium-term cap.

* Commodities: plantation plays, supply chain operators may come under pressure today after commodities fell the most in 18 months on speculation that China will increase borrowing costs to damp inflation, eroding demand for crops, metals and energy.
* Olam: shares likely underpinned by significant Gabon invmts, comprising a JV to build a US$1.3b port-based ammonia-urea fertilizer complex and another JV for a US$236m palm plantation. Mkt watchers may view move positively, given the high project returns (>35% ROE, >24% IRR).
* Hyflux: won a contract, valued at US$100m to build a water desalination plant in Libya.
* Comfort DelGro: may be supported after posting strong 3Q results, that were within expectations. KE (Maintain Buy, TP $1.87 ), UBS (Maintain Buy, TP $1.69 ), Citi (Buy, TP $1.73 ), CS (Outperform, TP $1.90). DMG rates as Buy, raises target to $1.85 from $1.74, prefers Comfort over SMRT due to former’s cheaper valuation, greater overseas growth.
* Midas: JPM initiates at Overweight on Midas HK (TP HK$6.50 ), translates to Midas SP $1.10 target. CS also raises target to $1.20.
* FJ Benjamin: may be in focus as 1QFYJun11 net profit up 7-fold to $3.2m, boosted by record high tourist arrivals in Singapore, and positive contribution from the timepiece distribution business in China, Hong Kong and Taiwan.
* China Minzhong: 1Q11 NP +20% YoY to Rmb52.4m, in line. JPM maintains O/w, TP $1.60, on strong execution, attractive valuations.
* Sound Global: disappointing net profit at Rmb 60.6m, -51.5%YoY and -18.7%QoQ, due largely to the one-time expense of Rmb60.3m for listing on HKSE.
* HL Asia: 3Q net profit -54% yoy to $20.6m. 4Q challenging. Street maintains Buys but reduce target prices. CS (TP to $4.35 from $4.50), DMB (TP to $4.18 from $4.88 ).
* F&N: growth slowed into 4Q10 as net profit fell 23% to $144.5m. Full year net profit of $585 below consensus est of $639m.

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