SG Market (13 Nov 13)

Market Roundup: Wall Street retreated on Tue after rising bond yields and growing debate by Fed officials over how soon the central bank would start tapering its stimulus spooked markets. In the absence of major news, many fund managers are closing their books after the S&P 500 rallied 24% so far in 2013, poised for its best year in a decade. Fed officials added to the uncertainty with Atlanta Fed chief Dennis Lockhart telling a radio interview that some discussion of tapering could take place next month, while Dallas Fed President Richard Fischer said that monetary accommodation becomes riskier by the day. But most market watchers are forecasting the central bank to delay tapering of asset purchases until the Mar 18-19 meeting. Investors were also disappointed that China’s pledge to boost the role of the market in economic growth and other reforms during the Third Plenum was too broad and lack details. Sentiment on the S’pore market could be affected by a host of weak corporate results with many reporting lower earnings or missing expectations. The STI is likely to see its consolidation pattern continue within the broad 3,150-3,238 trading range. Stocks to watch: *SIA: 2QFY14 net profit of $160.6m (+78.2% y/y) beat estimates as revenue climbed 2.8% to $3.9b on the back of higher passenger carriage (+5%), partially offset be declining yields, while group expenditure of $3.8b (+2.4%) was well contained from a flat fuel bill. SilkAir booked lower operating profit of $8m (-58%) as passenger traffic did not keep pace with capacity growth. Cargo continued to bleed amid uncertain global economic conditions and excess capacity but managed to narrow its operating loss to $31m from $50m in 2QFY13. Overall, bottomline was propelled by higher operating profit ($87m), share of profits from associats ($36.6m) and gains from aircraft sales ($9.1m). An interim DPS of 10¢ was declared vs 6¢ in the previous year. *Noble: 3Q13 net profit of US$22.9m (-70%) missed estimates after booking a US$90.1m accounting hit from its share of Yancoal Australia’s losses. Adjusting for this, core profit of US$113m was the highest since 3Q10. Revenue reached a record US$25.6b (+13% y/y, +1% q/q) driven by higher selling prices (+24%) but on lower sales volume (-9%). Agriculture performance starting to recover as operational efficiency improves. Energy was underpinned by significant offtake and marketing agreements, while metals, minerals and ores expanded its product portfolio. Continued trend decline in selling & admin expenses and finance costs sent margins slightly higher. Adjusted net gearing remains stable at 50.7% with NAV at US$0.77. *City Dev: 3Q13 results met expectations with net profit of $120.6m (-10.4% y/y) and revenue of $822.7m (-1.2%). Property development accounted for 50.2% of pretax earnings coming from pre-sold projects (368 Thomson, Buckley Classique, H2O Residences, Cube and JVs (Tree House, Bartley Residences, Haus@Serangoon Garden, Hedges Park, The Palette, The Glyndebourne). Its office portfolio continued to enjoy healthy occupancy of 96.4%. The hotel segment under 59% owned M&C booked net profit of £32.4m (+5.5%), helped by higher RevPar (+3.4%) and occupancy of 76.5% vs 73.4% in 3Q12. Balance sheet remains strong, backed by cash of $2.6b, comfortable net gearing of 22% and NAV of $8.36. *Golden Agri: 3Q13 net profit tumbled 64.8% y/y to US$30.2m, bringing its 9M13 earnings to US$188.3m, making up only 54% of consensus estimates. Revenue fell 6.1% to US$1.57b, impacted by a weaker selling prices (-19%) and lower palm output (-13%). EBITDA margin shrank to 7.1% from 11.4% in 3Q12. Financial position remained healthy with low gearing of 0.2x. Proposed interim DPS of 0.585¢ is marginally lower than the 0.6¢ declared in 3Q12. *Yangzijiang: 3Q13 net profit slid 6% y/y to Rmb820.7m, bringing 9M13 earnings to Rmb2.4b (-15%), on track to surpass FY13 estimates. Revenue came in at Rmb3.7b (+2%), with shipbuilding remaining as the core revenue driver, (8 vessels delivered vs 9 in 3Q12) and contributing ~90.5% to total revenue. The investment segment reported a 14% increase in revenue to Rmb349.1m, largely due to a steady increase in revenue derived from held to maturity investments, while revenue from its micro finance business increased 28% due to higher loan amount extended. Shipbuilding gross margin remain steady at 22%. *Biosensors: 2QFY14 results disappointed with net profit of US$11.3m (-60% y/y, -7% q/q) on revenue of US$83m (+4% y/y, +8% q/q). The EMEA and Asia-Pacific markets continued to lead DES sales with double-digit volume growth partially offset by lower average selling prices. Product gross margin slid to 73% from 80% in 2QFY13 due to distribution activities in Japan for its Nobori stents and consolidation of its newly acquired cardiac diagnostics business. Higher operating expenses (+35%) also ate into its profitability. *Courts Asia: 2QFY14 net profit slumped y/y 55.4% to $7.2m despite a 3.3% rise in revenue to $222.9m. The soft bottomline was impacted by lower gross margin of 28.5% (-5.5ppts) owing to a shift in sales mix from furniture to lower margin IT products, as well as a 66.8% spike in finance costs. Sales from S’pore (70% of total revenue) rose 11% on the back of bulk sales for digital products and air systems. Malaysia sales fell 11% on poorer consumer sentiment due to the government’s curbs on household debt as well as a reduction in fuel subsidies. Group also tightened its credit in line with a stricter borrowing environment, leading to a drop in credit sales. 1HFY14 DPS of 0.76¢ proposed. *Civmec: 1QFY14 net profit slipped 8% y/y to $8m as revenue shrank 49% to $70.9m due to lower level of activity as well as timing of contract recognition. Bottomline was however aided by improved gross margin of 23.3% vs 13.2% in 1QFY13 as it reaped several efficiency and productivity gains in its projects, and positive variation orders. Order book stood at $330m with the bulk to be realized in FY14. *Yanlord: 3Q13 net profit declined 15% y/y to Rmb306.7m despite revenue climbing 39.7% to Rmb3.5b (+39.7%). The higher topline was largely due to higher achieved ASPs arising from the inclusion of Yanlord Sunland Gardens (Phase 1) and higher GFA delivered. But earnings were dampened by a Rmb161m swing in other operating income to Rmb12.9m due to net FX gains, interest waivers, government subsidies and disposal gains. Finance cost jumped 22% due to an increase in interest expense incurred on investment properties, as well as the issuance of the Rmb2b 5.375% senior notes in May '13. Net gearing was 40.2% with NAV at Rmb8.58. *Straco: 3Q13 net profit leapt 72% y/y to $15.2m (+72%) on revenue of $30.5m (+43%), taking 9M13 earnings to $28.5m (+72%). Its strong performance was driven by its two main attractions, Shanghai Ocean Aquarium and Underwater World Xiamen, which saw visitor numbers soar to 1.26m (+33.4%). As at Sep, the group has cash of Rmb101.1m and no debt with NAV at 18.23¢. *LionGold: 2QFY14 results tanked to net loss of $47.8m (2QFY13: -$1.2m) stemming from marked-to-market losses of $49m on its marketable securities as at 8 Nov, partly offset by gains of $2.6m on disposal an industrial property and financial assets. Revenue soared 52% to $45.6m due to the results inclusion of Castlemaine Goldfields, which was acquired in late 2QFY13. NAV fell to 22.35¢ as at Sep. *Ascendas Hospitality Trust: 2QFY14 distributable income of $14.6m and DPU of 1.41¢ were 2.1% and 23.8% below IPO forecasts, while gross revenue of $53.1m and NPI of $21.3m were 10.1% below and 2.9% above estimates. This was mainly due to unfavourable FX movements in AUD (-9.4%) and JPY (-21.3%), which was partially mitigated by new contributions from Ibis Beijing Sanyuan (China) and Park Hotel Clarke Quay (S’pore). Gearing was 35.8% with debt to maturity of 2.2 years and effective borrowing rate of 2.9%. NAV per unit was $0.76.