Wednesday, December 17, 2014

SG Market (17 Dec 14)

With negative macro news flow (Russia, Brazil, oil, etc), and increased volatility in the global markets, investors are scaling down their risk exposures. Many fund managers and research houses are also winding down activities heading into the Christmas holiday season. Meanwhile, eyes will be on the upcoming FOMC announcement due 18 Dec, and if there are any changes in the Fed’s forward guidance. This morning, the Nikkei and Kospi are recovering from yesterday’s sell-off to trade 0.3% and 0.1% higher, respectively. From a chart perspective, the black marubozu candle yesterday, coupled with the clear break below the 200day moving average, bode negatively for STI price trend in the near-to-medium term. The new trading range for the index is between 3,150 and 3,266, which supports the current sell-into-strength strategy. Stocks to watch: *Straits Trading: Making its first acquisition of a retail development in Chongqing, China, known as Times Midtown, for Rmb668.4m, which will be paid progressively upon the completion of certain milestones. The property has a gfa of ~82,367 sqm, and is part of a large mixed-use development project that comprises 29 residential buildings, 4 office towers, a hotel and an open-air street mall. *Vard: Secured a contract for the design and construction of one offshore subsea construction vessel from Farstad Shipping. Delivery is scheduled from Vard Vung Tau (Vietnam) in 4Q16. *ISOTeam: Bagged nine contracts worth an aggregate $22.2m, consisting six R&R contracts of $15.4m, one A&A ($3.5m), an interior design project ($3.2m) and its first contract for renovation works ($0.1m). Works are expected over the next 16 months. *Sinopipe: Subsidiary Aton Plastics won a pipe and fittings procurement tender from Chongqing Airport for the construction of a rain drainage system at the third runway, and East Terminal, for Rmb30m. The contract is expected to contribute materially to FY15 performance. *Goodland Group: Updates that its T-City project in Ipoh, Malaysia, has an appraised land value of $147.5m, compared to its purchase price of $62.7m for a 70% stake in the 51.3 acre land plot. Construction will begin by 3Q15. Management believes the group’s NAV will increase significantly from 1H15 compared to the $0.46 per share as at end FY14. *YuuZoo: Delivered personal social e-commerce networks to 40 national beauty queens participating in the “Miss SuperTalent of The World” competition which is being held in Seoul, Korea, this week. Each network features an e-commerce shop from which consumers can buy goods relating to fashion, beauty, lifestyle and entertainment. The revenues from e-commerce and advertising within each network will be shared between the contestant, event organisers and YuuZoo. Management believes “the deal will be immediately accretive to YuuZoo’s earnings, and add several millions in USD, with potential for significantly more once the marketing of the networks commence.” *ecoWise: Profit warning for 4QFY14 and FY14 due to impairment loss from Wuhan ecoWise Energy.

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