Tuesday, April 29, 2014

SG Market (29 Apr 14)

US Market: US stocks ended higher in a choppy session, with the S&P 500 gaining 0.3% after erasing an earlier slide as Internet and small caps pulled back from a selloff amid a flurry of merger activity. But investors remained cautious after US and Europe slapped new sanctions on Russia. Investors welcomed deal news among telecoms and pharmaceutical companies and stronger-than-expected housing data in early trades but heavy selling of Internet stocks dragged the market down in late morning, only to recover by late afternoon. Pfizer (+4.2%) surged after proposing another offer to buy over British drug giant AstraZeneca (+12.2%) for US$100b. But Newmont Mining (-6.7%) dropped after takeover talks with Barrick Gold broke down. Funds continue to switch from the high growth tech plays towards safer and dividend names such as Apple (+3.9%), Microsoft (+2.4%) and IBM (+1.9%). Biggest losers include Amazon (-2.4%), Facebook (-2.7%) and Netflix (-2.4%). BofA (-6.3%) slumped after suspending its planned share buyback and dividend increase because of an error in its capital planning. A busy calendar this week will give investors more clues about the strength of the economy and the pace of the Fed’s stimulus program with the FOMC expected to trim its bond purchases by another US$10b, 1Q GDP likely to expand 1% and nonfarm payrolls forecast to show 200,00 jobs added in Apr. S’pore shares are likely to open mixed but STI maydip towards its near term support at 3,230 with several index components going ex dividend. Upside remains capped at the 3,320 resistance level. Stocks to watch: *Vard: Uninspiring 1Q14 results. Revenue dipped to NOK2.7b (-3% y/y, -14% q/q), and net profit fell to NOK92m (-51% y/y, -19% q/q). Nevertheless, EBITDA margin ticked up for the third consecutive quarter to 6.4% (4Q13: 5.1%). The group recorded an exceptionally high order intake of NOK5.5b with eight vessels secured during the quarter, lifting order book to a five-year high of NOK21.8b (+41% y/y, +13% q/q). Its second Brazil yard Vard Promar is in the final stages of construction. NAV per share of $0.67. *HPH Trust: 1Q14 net profit jumped 47% y/y to HK$558.9m, coming in above street estimates, boosted by a HK$243.8m gain from the disposal of a 60% stake in Asia Container Terminals. Revenue edged up 2.7% to HK$2.9b, as the average revenue per TEU for both HK and China improved. Container throughput at the HK terminals fell 5.5%, due to weaker intra-Asia cargoes, but offset by higher transshipment volume. Throughput at Yantian increased 1.8%, due to growth in transshipment and US/EU cargoes but partially offset by lower empty volume. *Ho Bee: 1Q14 net profit plunged 92% y/y to $4.1m, as revenue collapsed 72% to $17.1m, in the absence of new project sales and revenue recognition for development projects. Rental income from its industrial and commercial investment properties (namely The Metropolis in Singapore and Rose Court in London) rose six-fold to $15.9m. Net gearing doubled to 31%. NAV/share of $3.47. *Top Global: 1Q14 net loss of $0.7m (-65% y/y) despite revenue surging 260% to $4.7m. Top line was boosted by recognition of revenue from sale of development properties from its Braddell and Bartley projects. However higher cost of sales of the two projects led gross margin to halve to 25.5% from 56.2%. *Aspial: Agreed to acquire 54-64 A’Beckett Street, Melbourne for A$26.8m. The freehold property is an existing low-rise building with total land area of ~1,295 sqm, that comes with an active planning permit for a new 49-storey tower comprising residential apartments, serviced residence and retail shops. *Lian Beng: Clarifies that the tender to purchase the property at Leng Kee Road for $46.2m remains subject to HDB’s approval. Through its 80/20 JV with Vincar Leasing, Lian Beng intends to use the property to provide car maintenance, in part for its fleet of cars and commercial vehicles. *OKP: Won a $19.2m PUB contract to improve roadside drains at various locations in S’pore. The contract will commence end Apr, and carried out over 30 months. Group order book stands at $388m. *Midas: Secured Rmb146m worth of contracts to supply high-speed train car body components to a unit of CN, bringing the group’s year-to-date order wins to Rmb536.9m. *F&N: To acquire a 70% stake in Yoke Food Industries for RM54.6m. Yoke manufactures and distributes canned beverages in M’sia, and exports its products to S’pore, Indonesia and Indochina under brands such as Day Day, SoSoy and Juice Secret. *Keppel Corp: Partners Seafox to conduct an engineering study of a purpose-built accommodation jackup rig with well intervention and plug & abandonment features. Seafox may place an order for the rig upon completion of the study in 2H14. *Wilmar: Says it will continue discussions to acquire Australian food firm Goodman Fielder, after it’s A$1.3b joint bid with HK-listed First Pacific Company was rejected.

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