SG Market (18 Oct 13)

Asian markets rallied yesterday, after the Democrats and Republicans agreed to raise the country’s debt ceiling, paving way for the government to resume operations and averting a sovereign default. While sentiment is lighter now, any exuberance may be short-lived, as market watchers cast their eyes on the next potential hurdle – a possible Fed taper in Dec. After that, the same debt issues will also likely have to be revisited early next year. The S’pore market may have a slight positive bias today, after the S&P 500 advanced another 0.7% last night to close at a new all-time high of 1,733, and aided by Keppel Corp’s 3Q13 results beat. As long as the STI stays above the 50-day moving average of 3,150, the technical trend favors the index to make a bid to test 200-day moving average of 3,238 in the near term. Stocks to watch for: *Keppel Corp: 3Q13 core net profit grew 20% y/y to $403m, coming in above consensus estimates, despite lower revenue of $2,947m (-8%). The surprise came from a continued improvement in O&M operating margin to 16.5% from 14.2% a year ago, boosted by greater efficiencies arising from repeated delivery of similar jackup rigs. *CapitaCommercial Trust (CCT): 3Q13 DPU of 2.04¢ was flat y/y, which translates to an annualized yield of 5.7%. Distributable income rose 1.6% y/y to 458.8m, due to lower interest expenses and the 1H13 distribution received from Quill Capita Trust. Net property income however, dipped 3.5% to $72.6m, dragged by higher operating expenses and lower income contribution from Capital Tower due to its lower occupancy and cessation of yield protection income for One George Street from Jul. CCT ended the quarter with low gearing at 29.5% and NAV per unit of $1.66. *SGX: 1Q14 revenue rose 15% y/y to $184.1m, driven by broad-based growth. In particular, the Securities and Derivatives segments, which accounted for 38% and 28% of group revenue, grew 15% and 38%, to $69m and $51.7m, respectively. Group operating profit jumped 21% to $106.7m, and net profit increased 24% to $92.3m. Management declared an interim dividend of 4¢ per share. *Mapletree Logistics Trust: 2QFY14 DPU at 1.82¢ (+6% y/y), while distribution income came in at $44.5m (+8%). Improvements were driven by an enlarged portfolio, higher contribution from existing assets on positive rental reversions, as well as lower financing costs. There was also a partial distribution of $0.6m from the net gain from the divestment of 30 Woodlands Loop. *Sembcorp Industries: Will be developing its most comprehensive total water management plant to-date, to support a 1m tpa coal-to-diesel project in Wangqiao Industrial Park, located in Changzhi city in China’s Shanxi province. Sembcorp will invest ~Rmb932m ($190m) to develop this new project, which will be funded by internal resources and external borrowings. The plant is expected to be completed in phases between late 2014 and 2015. *Noble: By way of an off-market take-over offer, Noble will effectively swap its 51.2% stake in Blackwood and subscribe for new placement shares in the offeror, Cockatoo, to end up with a 23.6% stake in the enlarged share capital of Cockatoo. The transaction values Noble’s current stake in Blackwood at A$11.2m, compared to its market value of ~A$7.1m. *Cordlife: Entered into an MOU with HK-listed Golden Meditech, an integrated-healthcare enterprise in China, to establish a JV in the Shanghai Free Trade Pilot Zone, to sell and distribute products and services catering to the mother-and-child segment in the PRC. The combined initial investment is expected to be US$6m, shared equally by both parties. *Cosco Announced a total of three contracts worth ~ US$400m, and an order cancellation worth ~US$500m. The contracts won include, i) US$170m conversion of a semi-completed hull into a floating accommodation, ii) US$180m jack-up rig for an Asian client, and iii) US$53m for a 30,000 dwt cargo ship. The cancelled contract is for a deepwater drill ship worth ~ US$500m, on grounds of a delay in vessel delivery. *Consciencefood: Receives approval-in-principle by SGX for the proposed voluntary delisting of the company, and the exit offer at $0.184 per share. *ISDN: Besides its proposed establishment of a business trust to house its hydropower projects, management says it may consider separate spin-offs for its coal-related ventures in Myanmar as an added measure to raise funds for its projects. These include the recently-announced 540 MW coal-fired power plant in Myanmar and the acquisition of concession rights to a coal mine. *Far East Group: Proposed a renounceable non-underwritten 1-for-2 rights issue at $0.15 per rights share. Net proceeds will be used for the final payment of its acquisition in Eden Refrigeration Manufacturing ($3.4m) and general working capital ($1.8m). *Sysma: Placed a total of 19.5m new shares at $0.312 each to 14 individuals.