SG Market (10 May 13)

SG Market: S’pore shares may take a breather after Wall Street snapped five sessions of record highs despite fresh labour data showing weekly jobless claims falling to a 5-year low. Apart from results, focus in S’pore will be drawn to the possible restructuring of UOL/Pan Pacific Hotels (both halted), which may revive interest in OUE and SPH over their potential Reit spinoffs. The STI is on a tear since 23 Apr and may be ripe for a small pullback to its immediate support at 3,400 with overhead resistance pegged at 3,480. Stocks to watch out for: *StarHub: 1Q13 results were on par with estimates with net profit of $91.2m (+3.2% y/y) on slightly reduced revenue of $580.1m (-1.8%) due to lower equipment sales (-23%) and mobile revenue (-1.5%) from post-paid subscribers, offset by higher fixed network services (+3.9%). EBITDA margin improved to 33.3% from 31.2% in 4Q12 and 32.2% in 1Q12. Interim quarterly DPS of 5¢ is maintained. *Hyflux: 1Q13 net profit rose 5% to $8m, while revenue was 8% lower at $124.5m with 87% derived from municipal projects in Asia ex China, 8% from China and the rest coming from Mid-East and Africa. The improved bottom-line was achieved through better cost efficiencies, which led to a higher gross margin of 40% vs 37% in 1Q12. Net gearing stood at 0.7x backed by a cash position of $402m. *Marco Polo: 2QFY13 net profit surged 121% y/y to $9.3m, boosted by a $5.7m exceptional gain from the disposal of its equity interest in BBR, without which the recurrent profit of $4.2m would have been about flat. Revenue saw a steeper 31% drop to $21.3m due to sharply lower shipbuilding and repair sales (-82%), which more than outstripped higher turnover from ship chartering operations (+237%). *Civmec: 3QFY13 net profit came in flat at $8.5m after adjusting for a one-off $1.4m net interest write-back in prior period, while revenue declined 10% to $87.1m as some projects approached completion, delivering lower income streams. For 9MFY13, earnings rose 22% to $26.8m, driven by a 52% jump in revenue to $326.5m on higher activity levels in both the oil & gas and other segments. Order book stood at $151m with tendering activities at its highest since inception. *Parkson Retail Asia: Net profit in 3QFY13 inched up 1.3% y/y to $9.8m, in line with the 2.3% revenue growth to $109m. The shift in Chinese New Year and Tet calendars pushed the festive retail buying into the 3Q and drove up same store sales in Malaysia (+8.6%), Vietnam (+9.9%) and Indonesia (+1.2%). For 9MFY13, net earnings fell 5.4% to $34.6m due to a $10m hike in rental expenses. *Fortune Reit: Distributable income rose 16% to HK$153.3m, lifting DPU by same margin to HK$0.09. Revenue and NPI grew 16% and 18% respectively, partly due to contributions from Belvedere Square and Provident Square that were acquired in Feb last year as well as increases in rents (+20% for renewed leases) and occupancy rates (98.6%) among its portfolio of 16 retail properties in HK. NAV stood at HK$8.82. *WBL: UEL has sweetened its offer price for WBL for a second time to a final $4.50, 8.5% above its earlier takeover bid of $4.15. The higher offer falls within the $4.27-5.16 valuation range touted by its independent financial advisor KPMG. UE currently owns 39.5% of WBL, while rival Straits Trading has a 44.6% stake. Closing date of the offer has been extended to 29 May. *ISDN: 1Q13 net profit slumped 63% y/y to $0.75m, while revenue slid 6% to $30.9m as the engineering solution provider faced a seasonal slowdown in the semiconductor sector leading to a slight dip in gross margin to 29.2% vs 30.6% in the previous period. To diversify its earnings base, the group is pursuing new energy opportunities in Indonesia (hydropower) and Myanmar (coal-fired power plants). *Sunningdale: 1Q13 net profit declined 24% to $2.3m despite a marginal drop in revenue to $110.1m. Bottom-line was affected by narrowing gross margin of 10.7% vs 12% in 1Q12, owing to lower capacity utilization, product mix and increase in staff costs. External environment remains challenging in Europe while US and China is seeing slower growth. This coupled with rising wage cost and pricing pressures will continue to put a squeeze on margins. *Etika: Muted set of 2Q13 results with net profit down 6.6% y/y to RM4.9m, which was in tandem with a 5% slide in revenue to RM234.4m. Weak performance was mainly attributable to the lower export sales in the dairies division due to intense market competition, and also the delay in commencement of commercial production of its sweetened condensed milk plant in Surabaya. *Hock Lian Seng: 1Q13 net profit fell 28% y/y to $3.2m, impacted by lower contributions from other income and higher fair value gains from the corresponding quarter. Revenue rose 28% to $28.4m, propelled by higher progress billing recognized for the Marina Coastal Expressway project for FY13. *Courage Marine: Posted lower net loss of US$0.6m for 1Q13 despite 12% drop in revenue to US$5m. Top-line was impacted by poor dry bulk rates, which was below the 1,000 throughout 1Q13 and is currently at the 800 level. Despite the decrease in turnover, the group recorded a gross profit of US$0.2m vs US$0.6m loss y/y, mainly due to lower fixed costs, including insurance, crew fees and depreciation arising from the disposal of aged vessels in FY12. *Ley Choon: 1Q13 net profit rose 15% y/y to $4.1m, while revenue rose 29% to $36.4m largely attributable to an increase in the recognition of revenue from new contracts. The group has a healthy project pipeline for next two years, with order book at $152m. Interim DPS of 0.25c proposed. *Ryobi Kiso: Weak 3Q13 results as the group sank into a net loss of $0.3m vs profit of $0.7m last year, while revenue slid 29% to $29.1m as sales from bored piling operations dropped 41% to $21.4m, due to lower value of work undertaken in Singapore. *CNA: Signed LOI with Thai real estate agency Est East Int’l to act as the EPC contractor for two real estate projects valued at $63.6m. The Palm Island project in Pattaya is expected to commence in Jun 13 and be completed inJul 14, while the Tub Tai project in Hua Hin will commence in Jul 13 with completion due by Aug 14. *Q&M Dental: Announced it will not proceed with proposed acquisition of Spore Medical Group for $22.65m or $0.1323/share after the vendors breached representations and warranties with material change in Jun 12 to Dec 12 balance sheet.