SG Market (03 Sept 13)

SG Market: S’pore shares are likely to take the positive cues from Europe and early Asian trades (US market was closed for Labour Day holiday) bolstered by upbeat manufacturing PMIs in eurozone and China and waning prospects of imminent military action against Syria. The Stoxx Europe index jumped 1.9%, marking the best one-day percentage gain since July, while Tokyo and Sydney opened 2% and 0.2% higher this morning, setting the stage for some upward momentum on the STI. However, gains may be capped by looming uncertainty over the Fed’s tapering of bond purchases and Syria. Investors will also be on the lookout for China’s non-manufacturing PMI due to be released today for confirmation if the economy is on the mend. A break of the 3,065 resistance would put the STI on the path to the next objective at 3,200, which marks a 61.8% fibonnaci level. Downside support sits at 2,990. Stocks to watch for: *China Environment: Secured three contracts with an aggregate value of Rmb86.6m to supply six electrostatic precipators to a nickel ore processing plant in Indonesia. This is the largest overseas project that the group has bagged from a new end customer and from a new segment and brings its total order book to Rmb241.2m. The contracts will commence by 3Q13 and are expected to be completed by 1Q14. *Raffles Educaton: Malaysia’s Khazanah Nasional has exercised its put option to sell a 10% stake in OUC back to Raffled Edu for Rmb400m (including a break fee of Rmb100m), after it failed to list OUC by 31 Aug 13. OUC owns the Oriental University City in China's Hebei province, which provides education and supporting services to eight colleges with total student population of 24,000. The group will fund the acquisition thorugh internal resources and bank borrowings. Proforma FY13 NTA will be reduced to 39¢ from 41.5¢. *CNA: Awarded $10.6m contract to renovate, upgrade and expand the domestic terminals in Ho Chi Minh's Tan Son Nhat Int’l Airport in Vietnam. Project slated for completion in Oct 14. Contract takes orderbook to $74.2m. *Jasper Investments: Disclosed that its The Jasper Explorer has completed drilling the first well (Elephant-1) for CNOOC Congo and has moved to the second well (Horse-1). Under the drilling contract, CNOOC still has one exercisable option well. *United Envirotech: Issues $50m 7.25% fixed rate notes due 2016 under the US$300m Medium Term Note Programme established in Jun 2013. Net proceeds will be used for refinancing of existing borrowings, investments, acquisitions and general working capital purposes. *Mapletree Industrial Trust: Fitch affirms MINT's BBB+ rating despite its relatively steep 35.8% leverage ratio compared to industrial REIT average of 31.1%. As of 30 Jun, 83% of MINT's debt consists of fixed rate debt, which protects the trust from the risk of rising interest costs in the next 12-18 months. Further, MINT's outlook remains stable despite rising supply. This is due to the lower than median market rents on MINT's portfolio despite its strong locational advantage.