Tuesday, January 28, 2014
SG Market (28 Jan 14)
Market Roundup: US stocks extended last week’s retreat on ongoing turmoil in emerging markets and uncertainty over further reductions in Fed’s stimulus package. Trading was tentative as investors weighed whether last week’s selloff was the start of a bear trend or just a long overdue correction after the market has rallied 30% last year. The market was initially helped by an earnings beat from Caterpillar, which reaffirmed investors’ expectations of an improving economy in 2014 but succumbed to late selling as nervourness overtook sentiment. Another dampener was housing data which showed new home sales fell more than expected to 414,000 in Dec vs a 458,000 estmate. Investors are keenly awaiting three major events this week – The State of the Union address, the House GOP strategy retreat and the FOMC meeting on Tue with most analysts expecting the central bank will likely trim another US$10b from its monthly bond purchases. The concern is that the Fed is in a no-win situation. If it continues to taper, this could ve viewed as a lack of support but if it holds its axe, it could be interpreted as a lack of confidence in the economy. While regional bourses sold off hard yesterday, the STI may have found a temporary support base after rebounding off near the 3,02o level. But sentiment remained very fragile with next line of defence at 2,990. Sunvic and United Envirotech remain in focus for their M&A activities. Stocks to watch: *Osim: Maintained its fine run, registering 20 consecutive quarters of profit growth as 4Q13 net profit of $27.6m (+22% y/y) rose in tandem with 16% growth in revenue to $178.6m, taking FY13 earnings to a record $101.6m (+16%). The sales increase was driven by higher consumer demand for its products and TWG but higher operating costs shaved its pretax margin to 18.8%. All regions contributed to the better sales growth led by Rest of the World (+25%), South Asia (+17%) and North Asia (+13%). Final DPS of 2¢ proposed, bringing FY13 payout to 6¢. *Wing Tai: 2QFY14 net profit slumped 45% y/y to $48.4m on 23% revenue drop to $247.6m with lower contributions from development properties and absence of one-off gains from disposal of its apparel branded business and listed subsidiary in HK. Group booked sales from L’VIV, Foresque Residences, Helios Residences in S’pore and Jesselton Hills in Penang and the Lakeview in Suzhou. Net gearing was a comfortable 17%, while NAV declined 2.5% to $3.57. *Marco Polo: 1QFY14 net profit dived 28% to $3.3m despite revenue doubling to $30.1m following the consolidation of BBR, a former Indonesian associate turned subsidiary. But gross margin contracted to 30.4% from 38.6% in 1QFY13 due to lower vessel utlisation amid weakened demand in Indonesia for coal and commodity shipments. Bottomline was also weighed by absence of fair value gains, loss of associate contributions from BBR and higher taxes from its Indonesian chartering operations. *Hafary: 1HFY14 net profit crumbled 81% y/y to $4.5m on absence of one-time gains from sale of development property ($23.8m), other assets and FX gains. Excluding the exceptional items, core operating profit would have declined 25% to $5.1m. Revenue climbed 15% to $48.9m due to higher volume of surfacing materials delivered to HDB projects but gross margin contracted 3ppts to 38.6% from a change in sales mix towards project sales. *Nam Cheong: Secured its maiden contract for the year worth US$70m from repeat customer, Sentinel Marine to build four emergency response and rescue vessels and one anchor handling towing supply vessel with deliveries scheduled in FY15-16. The latest orders lift group’s order book to RM1.5b. *Global Logistic Properties: Signed three new leases totalling 43,000 sqm across four parks in China to 1) third party logistics provider Sankyu Logistics (16,000 sqm) at two parks in Tianjin, making it one of GLP's top 10 customers, 2) NYSE-listed inline retailer LightinTheBox.com (15,000 sqm) at GLP Park Suzhou and 3) global retail gaint Watsons (12,000 sqm) at GLP Park Jiangxia in Wuhan. *Ramba: Commenced well testing at Akatara-2 appraisal well in the Lemang block, which the group has a 51% working interest. This is the third well that is drilled and tested at the Lemang block and completion is expected to take 30 days. With the successful discovery of Selong-1 and Akatara-1 exploration wells, the Indonesian government has mandated Ramba to transition from exploration work program to plan of development in preparation for commercial production. *KrisEnergy: Acquired a 60% working interest in block G3/48 in the Gulf of Thailand from Mubadala Petroleum. Its other Thai partners are Tap Energy (30%) and Northern Gulf Oil (10%). The block covers 2,917 sq km in shallow waters of less than 20m up to 50m in the northern area of the Gulf of Thailand. *Keppel Reit: Seeking to sell its 93% owned Prudential Tower for $531m, or $2,400 psf vs $490m valuation. Management had highlighted that it is looking to sell older assets to help fund acquisitions, including Keppel Land’s stake in Marina Bay Financial Centre Tower 3. *GRP: Signed LOI with MGS Resort & Entertainment Co for the acquisition of 30-year leasehold rights to a 32,670 sf land plot in Tamwe Township in Myanmar, which includes the rights to develop, manage and operate service apartments on the site. MGSR is currently negotiating to acquire the land rights from the land owner. *Figtree Holdings: Awarded largest contract to-date of $178m to design and build the LF Logistics Distribution Centre in Jurong West. The 1m sf facility will be leased to Li & Fung, and is expected to be completed in 4Q2015. This significant new order brings group’s order book to $269.9m. *China Print Power: Expects depper losses for FY13 duw to impairment on plant and machinery.