Friday, December 12, 2014

SG Market (12 Dec 14)

This morning, the Nikkei is up 0.3% and the Kospi is flat, mirroring the slight gains in the US market overnight. While this points to a mildly positive open for the Singapore market, expect continued volatility in the China and Hong Kong markets to affect the STI later in the day. Trading of late has been volatile, exacerbated by the daily swings particularly in the O&M plays. Momentum however, remains on the downside. From a chart perspective, the STI has continued to trade within the 3,300 – 3,360 band, But if the psychological 3,300 level fails to hold, expect the index to test the next support at 3,273 (50 day moving average). Stocks to watch: *GLP: Signed new leases of 65,000 sqm with four existing customers - a leading ecommerce retailer, two leading third-party logistics (3PL) providers and one of the world’s largest health and beauty retail chains. *UE E&C: Second largest shareholder, Singapore Tong Teik, has again increased its stake from 6.98% to 7.06% on 9 Dec, snapping up 239k shares at an average $1.28 each from the open market. There is an on-going offer for UE E&C shares at $1.25 each. *Falcon Energy / CH Offshore (CHO): Falcon made a voluntary conditional cash offer to acquire the remaining 70.9% stake in CHO that it does not own for $247.5m, or $0.495 per share (~6.45% premium over the last close). The acquisition is part of Falcon’s plan to acquire more vessels to broaden the number of vessel types and to cater to a broader group of customers. Falcon intends to maintain the listing status of CHO. *Hwa Hong: 70% owned subsidiary to acquire a freehold retail and commercial property in Holborn, London for £24.6m. The property has gfa of 30,533 sf and is within walking distance of landmarks like Covent Garden, The British Museum and Royal Courts of Justice. The property produces annual gross rental income of ~£1.4m *Low Keng Huat: 9M14 net profit doubled to $83.5m, while revenue soared $459m, contributed by development revenue (9M13: nil), and an increase in construction activity at Genting Hotel, though offset by lower hotel and F&B revenue. Share of associates’ profit halved to $14.7m. BVPS at $0.74. *Lee Kim Tah: Offer by controlling Lee family closed yesterday, resulting in the offeror owning 98.4% of shares. The offeror intends to exercise its right of compulsory acquisition on or after 12 Jan 2015. The counter will be suspended wef today. *TEE International: Awarded $26m worth of contracts, comprising addition & alteration works for Changi Airport Terminal 1 and 2, Singapore University of Technology and Design and Temasek Polytechnic. This raises total outstanding order book of $467m. *Logistics Holdings: Awarded a $13.5m contract by the Ministry of Education, for the addition and alteration of existing Concord Primary School. This brings the group’s order book to ~$370.3m. *Datapulse: Turned profitable in 1QFY15 with earnings of $0.72m as an 11.3% y/y drop in gross profit was offset by cost cutting across functions. *Weiye: Acquisition of the 51% equity interest in Hanfang Yaoye is underway, with Hanfang transferring its land use rights to Weiye’s 51% owned subsidiary. *Vibrant: 2QFY15 net profit tumbled 47% y/y to $6.0m despite a 5.6% increase in revenue to $50.3m, due to lower gross profit margin, absence of re-measurement gains and increased administrative expenses arising from several property development and upgrading projects. BVPS at $0.14. *KLW: Dropping the proposed acquisition of equity interest in Wah Loon Group. *New IPO: Keppel DC REIT will commence trading on SGX Mainboard at 2pm today. The IPO of 261.2m units priced at $0.93 each, received overwhelming demand, with the institutional tranche 24.4x subscribed, and the public offer 9.6x subscribed. Investors can expect a distribution yield of 6.8% in FY15e and 7.1% in FY16e.

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