SG Market (23 Oct 13)

SG Market: US stocks extended gains with the broad-based S&P 500 climbing to record high above 1,750 on solid corporate earnings and a tepid jobs report, which suggested that the Fed would not rush to withdraw stimulus until next year. Investors reacted positively to the Sep jobs data which showed US employers adding 148,000 workers, missing the 180,000 jobs forecast. But the employment rate did fall a tick to 7.2%, its lowest level since Nov 2008. Construction spending rose 0.6% in Aug, hitting a 4½ year high. The advances also followed a trove of corporate earnings from Dupont, Freeport and Kimberly-Clark that beat expectations. We expect the STI to continue trading within its 3,150-3,238 band with an upward bias. Stocks to watch for: *Mapletree Industrial Trust: 2QFY14 results were largely in line with distributable income of $41.1m (+10% y/y) and DPU of 2.47¢ (+8%). The increase was attributable to higher rental rates secured across all property segments and higher occupancies in its flatted factories and stack-up/ramp-up buildings. Refinancing for FY14 was completed, extending its weighted average tenor of debt to 3.2 years from 2.5 years. *CRCT: 3Q13 distributable income up 2.1% y/y to $17.1m, mainly due to higher revenue growth contributed by better tenants sales and higher rental reversions at CapitaMall Xizhimen, CapitaMall Wangjing and CapitaMall Saihan, which offset the absence of contributions from CapitaMall Minzhongleyuan (MZLY), which is currently undergoing asset enhancement works. Exluding MZLY, CRCT noted its tenants’ sales at its multi-tenanted malls grew by a healthy 10.1%. DPU however, dipped 6.6% to 2.26¢ due to the issue of 57m new units via a private placement in Oct. Annualized 9M13 DPU of 9.29 cts translates to a yield of 6.7%. *Rickmers Maritime: 3Q13 net profit surged 59% y/y to US13.1m on stable charter revenue of US$36.6m (+1%) and significant reduction in finance expenses (-47%) due to debt repayments and expiry of interest rate swaps, which also resulted in negative cash flow of US$3.6m. But distributable income doubled to US$5.1m, funded by retained cash reserves, enabling the shipping trust to maintain its DPU of US0.6¢. Its fleet of 16 containerships is fully employed on fixed rate time charters with an average remaining charter life of 2.5 years and secured revenue of US$372.1m till 2019. Continued deleveraging has reduced its net gearing to 37% from 58% in 3Q12. *Global Logistic Properties: Signs expansion leases with Deppon Logistics for 25,000 sqm of space at GLP Park Wangting (18,000 sqm) in Suzhou and GLP Park Hunnan (7,000 sqm) in Sheyang, China. Deppon is GLP’s second largest customer in China, taking up 308,000 sqm across 13 cities and is expanding its space to meet increasing demand from its consumer goods and e-commerce clients for third-party logistics services throughout the country. *Keppel Land: Breaks ground for a new 28-storey wing for its 366-room Sedona Hotel Yangon to capture rising demand in quality hotel rooms in light of short supply in Yangon. Costing US$80m, Phase 2 will add 420 rooms, bringing total capacity to 786 rooms when completed in late 2015. Phase 1 of upgrading and refurbishment works is expected to be completed by end 2013 at a cost of US$25m. The group will begin renovation works to Sedona Hotel Mandalay, its second hotel property in Myanmar early next year, which will cost US$7m. With more than 1m foreign visitors to Yangon in the first 8 months of 2013, tourist arrivals are forecasted to reach between 1.8-2m by end 2013, almost double that for the whole of 2012. *Sino Grandness: Investing Rmb600m to build a plant producing canned products and beverage in Anhui, China. Construction starts next year and completion expected by 2016. Group will pay Rmb63.6m to Guzhen municipal government for the land-use rights. *Wilmar: Greenpeace released a report alleging that Wilmar is sourcing its palm oil from illegally cleared land in Indonesia and contributing to deforestation and the haze that blanketed S’pore and parts of Malaysia in Jun/Jul. One of the hotspots was on land owned by PT Jatim Jaya Perkasa, a plam oil company that supplies Wilmar. Wilmar supplies more than one-third of the world's palm oil and Greenpeace accuses the group of supplying "dirty palm oil" to produce an array of grocery goods in over 50 countries. *OKH: Divesting its legacy IT business to a new holding company (Holdco) following its $123m RTO of Sinobest and distributing in specie all shares of Holdco to shareholders on the basis of 1 Holdco for every OKH share held. Holdco shares will not be listed on SGX. The Holdco will have a share buyback programme for shareholders at no more than Rmb0.24 ($0.05) apiece. *Yoma: 70% held subsidiary, German Car Industries Company (GCI) has entered into a non-exclusive service partner agreement with Volkswagen, to begin operating the brand’s first service centre in Myanmar this month. GCI will provide maintenance and repair services for Volkswagen branded vehicles, including the sale of genuine vehicle parts. *Ho Bee: Changed its name to “Ho Bee Land” from “Ho Bee Investment”, and unveiled a new corporate logo, as well as the group’s relocation of headquarters to The Metropolis. The counter name change takes effect from today. *C&G Environmental: Entered a LOI with a PRC-listed company, to sell its waste-to-energy business and assets. The group has granted to the purchaser a three-month exclusive period to conduct due diligence and finalize the terms of the sale.