SG Market (15 May 13)

SG Market: S’pore shares are set to grind higher amid growing confidence about the US economic recovery, which sent Wall Street to yet another record-breaking session. However, sentiment may remain cautious as the technicals for the STI appears overstretched following its almost uninterrupted rally since 3rd week of Apr. Overhead resistance for the benchmark index seen at 3,480, while support lies at the 3,400 level. Stocks to watch for: *SingTel: 4QFY12 net profit fell 33% y/y to $868m after taking a $225m loss on a 30% stake sale in Warid Pakistan and incurring higher taxes due to absence of tax credits. Revenue slipped 6.3% to $4.5b. Underlying net profit declined 2% to $1b due to adverse FX movements and investments in network, spectrum and digital initiatives. Higher earnings from affiliates in Indonesia and Thailand limited the impact of a falling contribution from Bharti Airtel in India, which posted a 49% drop in profit on higher interest and network costs. FY13 underlying profit of $3.61b is in line; higher final DPS of 10¢ proposed, bringing total DPS to 16.8¢ vs 15.8¢ last year. Group raised payout range to 60-75% of underlying profit from 55-70% previously. *Noble: 1Q13 net profit plunged 63% y/y and 55% q/q to US$41.3m as gross margin continue to be depressed (1.4% vs 2% in 1Q12) amid a challenging operating environment. Revenue slid 1% y/y, 7% q/q to US$22.6b, constrained by the drop in tonnage sold to 52.7m tons (-1% y/y, -9% q/q). Improved operating income from the energy segment was unable to cover for agricultural losses due to poor harvests and weakness in the metals, minerals and ores sector as customers remained cautious about restocking inventory. *Olam: 3QFY13 net profit rose 10% y/y to $108.5m, below consensus $119m but excluding exceptional items (mainly from expenses incurred on termination of sugar refinery projects in Nigeria and Brazil, net of gains on buyback of bonds), net profit would have gained 23% to $121.5m. Revenue grew 11.5% to $4.7b on the back of a 44% increase in sales volume to 3.88m tonnes with food category (+90%) and industrial raw materials (+5.4%) doing well. *Mewah: 1Q13 net profit (excluding exceptional gains) shrank to US$4m (-52% y/y, -6% q/q), while revenue of US$859.2m (-14% y/y, +12% q/q) reflected higher sales volume, which was offset by lower average selling prices for both its bulk and consumer pack segments. Operating margin of US$30.30/tonne contracted 11% y/y but expanded 7% sequentially. Improved refining margins in Malaysia helped the group achieve better profitability in its bulk segment but margins for its downstream consumer pack business remained under pressure. *NOL: Swung to 1Q13 net profit of US$76m vs US$254m loss a year earlier after booking a US$200m gain from disposal of NOL Building; otherwise results would have missed estimates. Revenue stalled at US$2.37b as liner turnover was weighed by lower volume and freight rates. But core operating losses narrowed to US$85m from US$233m previously through operational efficiencies (reducing bunker consumption by 14% and fleet capacity by 2%) and cost discipline. Net gearing remained elevated at 1.37x with NAV at $0.85. *Vard: 1Q13 results missed estimates as net profit sank 30% y/y to NOK188m, while revenue dipped 2% to NOK2.75b. Gross margin saw a further slippage to 11.1% from 14% in 1Q12 as it struggled to stabilize operations at it Brazilian yard and re-build the order-book at its Vietnam yard. Order intake of NOK2.8b was more than double the preceding quarter. Taking into account the five vessels delivered in 1Q13, the group’s order book now comprised 46 vessels as of Mar 13 with a total value of NOK15.5b. *SIA Engineering: FY13 results came in at low end of estimates, chalking up net profit of $270.1m (+0.4%) on revenue of $1.15b (-2%) due to lower fleet management and project sales. For 4QFY13, the group turned in flat net earnings of $65.9m and revenue of $283.5m (-10%), benefiting from lower material and subcontract costs. With no debt, cash balance grew 5% to $522.9m, translating to $0.47/share. The board is proposing a final DPS of 15¢, bringing the full year DPS payout to 22¢. *SATS: 4QFY13 revenue rose 3.6% y/y to $449m, lifted by increased flights and higher meal volumes, which helped offset lower contribution from TFK arising from weaker JPY. Overall net profit dropped 7.8% to $46.2m but core earnings (adjusted for Daniels’ divestment and other one-offs) surged 32% to $63m. Final DPS of 6¢ + 4¢ special brings total DPS to 15¢ cts for FY13, representing a payout ratio of 90%. *Sino Grandness: Continues its outstanding performance as 1Q13 net profit climbed 25% y/y to Rmb70.3m, in tandem with the 32% increase in revenue to Rmb376.6m. Stellar top-line was attributable to a 50% jump in its beverage business to Rmb238.9m, and a 10-fold spike in domestic canned products to Rmb298m. *Midas: Inked a 1Q13 a net loss of Rmb4.9m, following its earlier profit warning, citing higher expenses and share of loss from NPRT for its poor performance. But management remains positive on the outlook for the PRC railway industry in 2013 and will continue to actively seek opportunities in export markets as well as other product segments. *Dyna-mac: Robust 1Q13 results with net profit doubling to $6.7m, while revenue surged 155% y/y to $60.1m. Strong top-line was led by contributions from projects that were in final stages of fabrication, resulting in a higher revenue recognition based on percentage of completion. *Jaya: 3QFY13 net profit came in 7% higher at US$4m on a 53% y/y jump in revenue to US$24.8m, largely attributable to increased time charter contracts and higher day rates achieved as the group expanded its presence beyond Asia to West Africa, India and Mid-East. This was however dampened by a low charter utilization rate and loss in the offshore engineering services division given the lack of vessel sale during the quarter. The group has a better showing for 9MFY13, with net earnings doubling to US$20.7m (+117%) against revenue of US$171.9m (+192%). *Sim Lian: 3QFY13 net profit rose 45% y/y to $32.9m, taking 9MFY13 earnings to $117.6m (-27%). Top-line revenue of $195.7m (+37%) was driven mainly by its property division (+77% to $158m) due to higher contributions from several development projects, while sales from its construction division (-33% to $30.7m) suffered from fewer projects undertaken during the period. As at end Mar, NAV climbed to $0.805. *Hankore: Stellar 3Q13 results as net profit net profit almost quadruples to Rmb31.8m. Revenue jumped 22.5% to Rmb80.4m on back of higher construction revenue and finance income from service concession arrangement, while gross profit soared 34.1% to Rmb40.2m as gross margins improved 4.3ppt to 50%. *Li Heng Chemical: 1Q13 results boosted largely by other income, as net profit at Rmb14.2m, +26% y/y . Baring which, revenue at Rmb694.8m, -30% y/y due to significant decrease in sales of self-produced PA chips anda drops in average selling prices of nylon yarn products due to the continued overall decrease in market demand. *Memstar: Accelerates growth momentum with 3Q13 profit up 59.5% y/y to Rmb9.4m, in tandem with robust revenue growth which surged 65.1% y/y to Rmb49.1m, propelled largely by higher demand for the Group’s membrane products. Gross profit margins improved by 10.1 ppt y/y to 55.5% as the Group continued to place higher emphasis on higher-margin membrane business segment. *SP Ausnet: FYMar13 revenue at $1,640m, +6.8%. Net profit at $279.1m, +9.5%. Declared final distribution of 4.1 cts, bringing full year distribution to 8.2 cts vs 8.0 cts in FY12. #IEV: 1Q13 revenue at RM 13.0m, -82% yoy, due to decrease in Offshore Engineering Sector contribution following completion of two major turnkey contracts. Net profit at RM 0.4m, -91% yoy.