SG Market (16 Oct 13)

The S’pore market may open on a softer note, taking cue from the overnight weakness in the US market after the S&P 500 index shed 0.7% to 1,698,06. Investors remain jittery on US-related macro concerns. Fitch Ratings has placed the US’ AAA credit grade on negative watch, citing the government’s failure to raise its borrowing limit as the 17 Oct deadline nears, raising the risk of a US default. Myanmar-related stocks, or the M-Chips may be harder hit today, after a series of explosion rocked Myanmar’s capital, Yangon, and two regions north and northeast of the city. A blast went off at the Traders Hotel, one of the more prestigious and well-guarded hotels in Yangon, fueling further fears. No one has yet claimed responsibility for the attack. This will likely come as a somber setback for the country, which has been trying to shed its past pariah-status, embark on a road of political and economic progress and improve its international standing. Technically, the STI has reversed back down after nearly touching the 3,200 resistance last Friday. A break below the immediate 3,150 support could signal further decline toward a firmer level at 3,113. Stocks to watch for: *Keppel Reit: 3Q13 results inline. Net property income at $34.3m (+7% y/y) mainly due to improved performance from Ocean Financial Centre and the additional contribution from 8 Exhibition Street in Melbourne. Associates’ contribution registered an improvement of 26% to $16.0m, due to improved performance from Marina Bay Financial Centre Phase 1 and One Raffles Quay. DPU of 1.97¢ translates to an annualized yield of 6.4%. *M1: 3Q13 within expectations. Net profit rose 19% y/y to $39.5m, and would have been stronger if not for the provision of an IDA fine of $1.5m from a network failure occurred back in Jan ’13. EBITDA margin rose y/y and q/q to 37.7%, as lower subscriber acquisition and handset costs fell. Meanwhile, the trend of rising data monetization remains intact, with data contribution continuing to rise to 42.3% of service revenue, and an increase in subscribers who have switched over to tiered data plans and who continue to exceed their caps. Maybank-KE maintains Buy with higher TP of $3.98 (from $3.69). *Tee International: 1QFY14 net profit slumped 62% to $1.1m, despite revenue coming in at $68.8m (+124%). The strong top-line was due to revenue from on-going and completed engineering and property development projects. Bottom-line was however impacted by a rise in admin cost to $5.7m (+104%) mainly due to a one-off incentive payment of $1.1m to employees, and from the newly acquired integrated turnkey material-handling subsidiary. *GKE Corp: Registered an FY13 net loss of $0.8m versus a net profit of $9.9m in the previous year. Revenue increased by 22% to $7.3m, mainly contributed by the increase in volume handled from local transportation services as well as the increase storage revenue generated from existing and the new warehouses during the financial period. The significant decrease in other income from $11.1m to $0.1m was mainly due to the one time gain on revaluation of investment in associate to fair value and gain on disposal subsidiaries in the last financial period. *ST Engineering: Its aerospace arm, ST Aerospace has secured new orders worth ~$600m in 3Q13. The new orders involve projects ranging from airframe, component and engine maintenance, to commercial airline cabin retrofit and freighter conversions. Also included is an order of 17 passenger-to-freighter (PTF) conversions received from an international air freight carrier, bringing to 119 the total number of aircraft contracted for the Boeing PTF conversion programme. *Chasen: Has secured $7.1m worth of new contracts for relocation, and technical and engineering services, and includes its first relocation project from the Middle East to Singapore. Management believes the commencement of major relocation projects in the PRC, Malaysia and Vietnam, which was reflected in the recent quarterly results, is expected to continue making an impact for the rest of the financial year. *PEC: Added ~$50m of contracts to its order book, to provide mechanical works for refineries in Singapore and to supply fabricated steel structures for onshore projects. *Loyz Energy: Proposes to raise $17.5m by way of a private placement of 50m new shares (12.5% of enlarged share base) to private investors. The issue price of $0.35 apiece comes at a 10.3% discount to the counter’s last closing price of $0.39. The fund raising will allow Loyz to augment its working capital and give it the flexibility to finance its existing projects now and take advantage of any business opportunities that may arise in the future. *SIIC Environment: To raise $260m via a placement of 3.1b of new shares at $0.085 apiece to 5 investors, including its 50.3% controlling shareholder, Triumph Power. Each of investors has 9-month lock-up period. *Singapore Medical Group (SMG): Has requested for trading halt. Pure Beauty Investments intends to make a voluntary conditional cash offer for all shares in SMG at an offer price of $0.1144 per share. The Offeror has no intention to raise the offer price, and intends to preserve SMG’s listing status on the Catalist board. *Pacific Century Regional Developments: HK Television Entertainment Co, an affiliate of its HK-listed associated company, PCCW, has been granted an approval-in-principle in relation to its application for a domestic free TV programme service license.