SG Market (14 Oct 13)

With the Hong Kong market closed today for holiday today, and Singapore to go on break for Hari Raya Haji tomorrow, most investors here are likely to stay light on their positions. Technically, the STI may trade within a tight 3,150 to 3,200 range in the immediate term, with a slight negative bias. US futures shed little positives on the near term macro outlook. The Dow Jones index futures are down 0.6% at 8.02am, as the US remains in a debt stalemate and partial government shutdown. The 17 Oct deadline continues to loom, with the US on the brink of a technical default, if a debt ceiling resolution cannot be reached. Adding to investors’ worries, China’s exports unexpectedly fell in Sep, dipping 0.3% y/y, compared to a median projection for a 5.5% gain. Singapore’s latest 3Q GDP data out this morning is unlikely to help. The economy fell an annualized 1% on a q/q basis, compared to a revised 16.9% expansion in the previous quarter, though consensus view was for a 4% contraction. The government said full year GDP growth is forecast to be in the range of 2.5% to 3.5%, and will maintain its existing pace of currency appreciation to focus on mitigating inflation risks. Stocks to watch for: *SPH: FYAug13 net profit fell 25% to $431m, broadly in line with the street’s estimates. The decline was mainly due to higher fair value gain on investment properties recorded in FY12. Recurring earnings dipped 14% to $369.3m, mainly due to lower contribution from the Newspaper and Magazine business including an impairment charge for an overseas subsidiary, reflecting continued weakness in the core media business. The group proposed a final dividend of 15¢. Together with the interim dividend of 7¢ and special dividend of 18¢ in relation to the listing of SPH REIT, the total payout for FY13 will be 40¢. *Medi-Flex: 4Q13 net profit jumped 60% y/y to RM10.5m, taking FY13 net profit to RM24.7m (+134%). Full year revenue rose 19% to RM200.8m, largely driven by new capacity added from new production lines to meet the increasing customer demand, and a shift in product mix toward the higher margin nitrile and cleanroom gloves. Separately, major shareholder, Top Glove (~80% stake) has proposed a voluntary delisting of Medi-Flex, in conjunction with an exit offer of $0.15 per share. *Chip Eng Seng: Has sold ~60% of the initial 100 units launched at its 99-year leasehold Nine Residences mixed-development project in Yishun at an average price of ~$1,070psf. The developer also sold 124 of the total 146 strata retail units at prices ranging from $4,500-5,500psf for the first floor, and $3,000 – 4,500psf for the second floor. Market watchers estimate the group’s breakeven cost for the residential and retail components at $850psf and $2,500psf, respectively. *Ausgroup: Profit warning. The group anticipates a net loss for 1QFY14, due to the cost overruns from two contracts that are approaching completion, delays in the commencement of new contracts; and restructuring costs. *Teho International: Refers to the recent increase in its share price; says management is considering and has entered into several discussions to acquire a potential target that could entail its diversification into the property sector. No firm decision on the deal has been finalized yet. *Nam Cheong: Has been granted an option to purchase the office lots at #41 of Suntec Tower Three with total floor space of ~10,097sf and a leasehold term expiring in 2088. The purchase price of $30.3m translates to a valuation of $3,000psf for the Suntec office property. The property will be used as Nam Cheong’s corporate office after the expiry of the existing tenancies over 2014-16. *CH Offshore: Has commenced legal proceedings in London against PDV Marine and Astilleros De Venezuela, for a claim relating to outstanding charterhire amounting to ~US$56m (including interest) in respect of the charter of two vessels.