Wednesday, May 29, 2013

SG Market (29 May 13)

SG Market: S’pore shares are expected to get a lift today from Wall Street’s 20th Tuesday winning streak as consumer confidence surged to its highest level since 2008 and housing prices jumped the most in seven years. Sentiment was also boosted after BOJ and ECB reaffirmed their accommodative policies but equities pulled back from session highs after the 10-year bond yield spiked to a one-year high of 2.16%, reviving concerns about the tapering of Fed’s stimulus plan. With the US economy now clearly on the mend and China hitting the economic brakes, the question now is whether funds will pull out of Asia to return to the fast improving US market. And do rising bond yields signal the economic pick-up or the start of a bubble burst? Indeed, GDP growth in S’pore is now slower than in the US as the local economy undergoes a restructuring to wean off foreign labour and inefficiency and the depreciating SGD/USD to $1.27 may be indicative of a funds outflow. Interest may switch towards listed companies with exposure to the US market and cyclicals like oil & gas and commodity stocks. Some of those with limited US exposure would include tech stocks (Venture, Stats ChipPAC) or in properties (OUE, SingHaiyi). For the STI, overhead resistance remains at 3,424 with supports at 3,380 and 3,320. Stocks to watch for: *Tat Hong: FY13 net profit of $70.4m (+67%) is in line but record revenue of $836.9m (+16%) slightly missed estimates. The top-line growth was generated by higher crawler and mobile crane rental (+37%), which in turn lifted the gross margin to 37.6% from 36.5% last year. Net earnings for 4QFY13 jumped 66% to $18.6m, while revenue was up 10% to $199.6m. Group is proposing s final DPS of 2.5¢, bringing total dividend for FY13 to 4¢, up from 2.5¢ in FY12. *Courts Asia: 4QFY13 and FY13 net profit of $12.6m (-19%) and $41.4m (+5%) respectively generally met expectations. Full year revenue grew 10% to $793.8m with S’pore turnover (68% of total sales) expanding by 11%, largely from better same-store sales (+8%) benefiting from broader product range and promotions; soaring online sales, as well as the full operations of its Bukit Timah and Clementi stores. Malaysia’s sales were more subdued (+6%), led by digital products such as tablets and smartphones. Group is proposing a post-IPO final DPS of 1.01¢ based on 30% payout of its 2H net earnings. *Bukit Sembawang: FY13 net profit sagged 37% to $114.6m as revenue dipped 9% to $354.7m due to lower sales recognition of its existing property development projects. Excluding write-backs and one-off gains from disposal of financials assets in FY12, core operating profit of $140.8m would have fallen in line with the 9% drop in revenue and gross profit. NAV climbed to $4.48 per share. Board has recommended a final and special DPS of 4¢ and 11¢ respectively, making a total of 15¢, down from 18¢ in FY12. *The Hour Glass: Delivered flat revenue of $601.9m (-1%) and marginally lower net profit of $52.8m (-3%) in FY13 amid challenging trading conditions marked by strong Asian currencies and weak consumer sentiment with key S’pore and HK markets adjusting to economic restructuring. Hit by rising rentals and increased A&P expenses, gross margin eased to 23.9% from 24.1% in the previous year. DPS has been shaved to 5.5¢ from 6¢ in FY12. *Informatics: Revenue declined 12% to $28.7m as student enrollment at its UK, HK, Sri Lanka and S’pore schools shrank due to tighter student visa entry requirements and depreciating GBP in the UK and downsizing of its HK and Sri Lankan operations. However, a drop in staff and operating expenses led to a smaller 5% dip in net profit to $2.9m. As with FY12, no dividends were declared. *Global Yellow Pages: Incurred a net loss of $124.7m for FY13 due to restructuring costs and goodwill impairment (already reflected in its 3QFY13 results). Excluding these exceptional items, the group would have remained in the black with a net profit of $3.2m vs $4.2m in FY12. Still, revenue slid 18% to $30.2m, mainly due to lower sales of print directories, which were partially offset by higher contributions from S’pore River Water Taxis and River Cruises, which commenced operations in Jan 13 as well as increased revenue from call centre and database marketing services. NAV shrank to $0.12 from $0.38 a year ago. No dividends were declared compared to 0.2¢ in FY12. *SingTel: Bloomberg reported that the group is conducting a review of its Optus Satellite business and may put the Australian unit up for sale at a price tag of A$2b. Bain Capital, Carlyle Group and Blackstone are among private equity firms evaluating and bidding for the potential deal. The divestment would help the group finance its $2b investment plan for its digital initiatives over the next three years. *Boustead: Subsidiary Boustead Int’l Heaters has, together with consortium partner GE Oil & Gas, secured a landmark contract from Brunei’s national power producer, Berakas Power Company to upgrade the Berakas Power Station. The equipment is scheduled to be delivered at end 2014 and commissioned in early 2015. This latest order would raise the group’s order book backlog to $390m. *Anwell Technologies: Granted exclusive rights by two parties to provide an entire range of engineering, procurement and construction services to develop a 10.5MW solar farm in Brazil and a 10MW solar project in Japan. Definite agreements will be executed subject to final negotiations with the customers. *Interra Resources: Jointly controlled entity Goldpetrol has commenced drilling on the infill development well Y3255 in the Yenangyaung oil field in Myanmar. Interra has a 60% interest in the profit sharing contract of the Yenangyaung oil field and also owns 60% of GoldPetrol, the operator of this field. Results of the drilling and completion will be available in approx. six weeks. *Asia Pay TV Trust: Based on the 600.5m units on offer, the IPO is 5.2x subscribed, split between the placement tranche of 530.5m units (5.2x) and the public offer of 70m units (5.8x). Among the placees, Thornburg Investment Management has been allotted 45m units, while Amundi S’pore is taking up 32.1m units. Trading is expected to commence at 2pm on 29 May.

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