SG Market (08 Oct 13)

SG Market: S’pore shares will continue to struggle amid a sharp drop on Wall Street to its lowest level in a month as the US government shutdown enters its 7th day with no budget deal in sight and a debt ceiling deadline fast approaching. As in previous sessions, the selling was orderly in light volume with no sense of panic. Moody’s sees a “very low” chance that the US will default on its debt payments but market mood is still very nervous with the VIX spiking 26% to a three-month high of 19.41. The US results season kicks off on 8 Oct with 3Q profits for S&P 500 companies forecast to rise 1.7% before accelerating to 8.9% in the 4Q. Economic data on retail sales and trade will be postponed this week because of the government work stoppage. Market sentiment for the local market may be affected by the recent decimation of the penny stocks, which may trigger potential margin calls and inflict collateral damage on other counters. However, the blue chips are expected to hold their ground with the STI dipping only 1.5 pts to 3,136 yesterday. Bhut should the 3,136 support give way, expect the index to heads towards the next support at around the 3,100 level. Overhead resistance remains at 3,200. Stocks to watch for: *Global Logistic Properties: Signs new lease of 17,000 sqm at GLP Okegawa in Greater Tokyo with one of Japan’s largest manufacturers and sellers of sporting and athletic products. Occupancy at GLP Okegawa will reach 100% following the agreement with the undisclosed tenant, which will use the facility as its largest distribution centre in Japan. *Boustead: Secured $38m energy-related contracts globally to provide waste heat recovery units and process heater system installation services for oil and gas developments in Norway and Russia. Outlook for its energy division continue to be bright, with aggregate $140m order wins since the start of FYApr14, making up almost half of the group's new contracts of $300m and surpassing the value for whole of FY13. The group currently has an order backlog of $523m. *Mencast: Wholly-owned subsidiary Unidive Marine Services awarded a three-year contract (Sep 13 – Aug 16) by Shell Refining Company Bhd for provision of MRO-related diving services such as underwater inspection and maintenance for single buoy mooring and marine facilities, which includes diving vessel support. *W Corp: Acquiring e-commerce network solutions provider YuuZoo for $490.9m via issue of 981.8m consolidated shares (post 5-into1 consolidation) @ $0.50 each in a reverse takeover deal. Subject to YuuZoo achieving core pretax profit of not less than $20m for FY14, the group will issue an additional 50m consideration shares to the new management and YuuZoo shareholders. Post RTO, YuuZoo shareholders will end up with a 82.9% of the enlarged share base. *Superbowl: Hiap Hoe makes a pre-conditional cash offer at $0.75 per share, 15.4% above the last close. The offeror and consert parties now hold or control 71.53% of Superbowl. *Blumont: Alexander Molyneux appointed as Chairman designate after acquiring 135m shares (5.2% interest post rights issue) from current Executive Chairman Neo Kim Hock (95m) and an individual investor (40m) at an indicative price of $0.40 (subject to a floor of $0.20 and ceiling price of $0.60). Molymeux is a natural resources industry veteran and holds directorships in Ivanhoe Energy and Goldrock Mines and is Chairman of Celsius Coal and Azarga Resources, two of Blumont’s investee companies. *LionGold: Has until 1 Nov deadline to either announce a firm intention to make a takeover offer for LSE-listed Minera IRL or a withdrawal of a possible offer. Minera is a gold mining company with operations in Peru, Argentina and Chile. *GSH Corp: MOI for the proposed joint planning and development of the Longhai-S’pore Marine Eco-City Project in Fujian province, China has expired on 6 Oct, due to a change in the Longhai City government. Group will be reviewing the terms of negotiations with the new local government. *Genting Hong Kong: Entered into a €707.2m shipbuilding contract with Meyer Werft GmbH for a luxury passenger cruise vessel, to cater to the growing demand in Asia. Payment will be funded by internal cash and financing. The 1,682-passenger cabin vessel is expected to be delivered in Oct 2016. *ICP: Granted two-week option to sell its factory building and leasehold land located at Loyang Drive for $11.8m. The group will wind down its deteriorating electroplating business, which is currently operating at the property. Based on the $9.5m book value of the property, the group will reap a $2.3m gain from the proposed disposal. *Devotion Energy: Proposed a voluntary delisting at $0.19 per share (23.4% premium to last close) due to low liquidity and listing costs. The manufacturer and provider in various energy and thermal-related products will be required to obtain approval from shareholders with a majority of >75% of total share capital, while not be voted against by >10%. The offeror have obtained 43.4% acceptance on the delisting offer from substantial shareholders. *Mapletree Commercial Trust: Outlook of its credit rating upgraded by Moody’s from stable to positive, citing the REIT’s enhanced asset quality and improved operating performance.