SG Market

SG Market: Spore shares are likely to open higher after global markets rallied yday with the DJIA closing above the 12,000 level for the 1st time in 2 1/2 yrs. However, market is likely to be quiet with the local market closing at midday as participants are unlikely to take a lot of new positions ahead of the long holiday period as investors in many Asian bourses prepare to usher in the Year of the Rabbit.

In the absence of negative factors, the STI is expected to trend higher in thin vol with 3200 & 3230 providing resistance & support at 3180. SATS may be in focus after it posts 3Q results that were generally on track to meet FY11 estimates. SingTel is coming under some selling pressure as 21% owned Thai mobile telco associate is facing punitive claims from Thai regulator. Floods are forcing M’sian refiners to turn to Indon CPO.

Coking coal consumers bracing for another price spike as a Category 5 monster cyclone approaches Australia’s Queensland.

Stock highlights:
* SATS: 3Q11 results slightly below expectations. Net profit -4% yoy to $51.2m dragged by the UK food solutions business. Mgt cautious on 4Q outlook. KE downgrades to Hold, cuts TP to $2.93 from $3.48. But BNP, Deutsche keep at Buy with $3.23, $3.80 targets.
* Tuan Sing: strong set of FY10 results. Net profit at $68.2m, +53% yoy, boosted by revaluation of key property assets. Mgt sees growth staying strong.
* Cerebos: strong set of final quarter results. Net profit at $42.6m, +16% yoy, on improvements across most business units. Total FY10 div of 32cts translates to 6.6% yield.
* Palm oil: Apr futures +2.9% yday, crossing RM 3800/ton. Worst flood in Msia in 4 yrs forces refiners to turn to Indonesian palm oil. Meanwhile, Indonesian tankers are lining up to offload up to 20k tons of supply after escaping this month’s higher tax (25% vs 20% previously). Positive read through for Spore-listed palm oil stocks.
* SingTel: expect higher share price volatility in near term, as the Thai cabinet nears its decision regarding (21.3% owned) AIS’ penalty fees. Deutsche estimates the penalty could be slashed to Bt 5-7b from the current Bt76.4b that the Thai govt is seeking. But some mkt watchers continue to fear otherwise. Yday, shares of SingTel and AIS both fell by ~1.3%.