Monday, March 30, 2015

SG Market (30 Mar 15)

Key US economic data due out this week is expected to keep Singapore stocks on a tight leash this Good Friday shortened week, despite the slightly positive close on Wall Street, which rebounded from a four-session losing streak.

Asian stocks are trading lower this morning, in Tokyo (-0.5%), Seoul (-0.1%) and Sydney (-1.4%), following softer-than-estimated factory output data just released from Japan, dampening trading sentiment, while investor’s mood in Australia was spooked by news that Chevron has sold its entire stake in Caltex Australia.

From a chart perspective, topside resistance for the STI resistance is tipped at the recent 3,460 peak, with support at 3,400.

Stocks to watch:
*Low Keng Huat: 4QFY15 net profit soared 816% to $61.4m, while revenue skyrocketed to $779.9m from a small base (4QFY15: $22m) due to revenue recognition from Paya Lebar Square which obtained TOP on 3 Nov ’14. The construction business also aided top line from increased activity at Genting Hotel at Jurong Town Hall Road. Bottom line growth was partially weighed by increased expenses and a $3.8m share of JVs’ losses (4QFY15: $7.9m). First and final DPS of 3¢ and special 2¢ declared, bringing full year DPS to 5¢ (FY14: 3¢). NAV/share at $0.82.

*Jardine Cycle & Carriage: To spend US$615m for a 24.9% stake in Siam City Cement Public Company (SCC), the second largest cement manufacturer in Thailand. SCC owns three cement plants with a total production capacity of 14.5m tonnes per annum. Proforma FY14 NTA is expected to drop from US$12.00 to US$10.70, while EPS is expected to improve 4.1% to US$2.40.

*Sembcorp Marine: In relation to corruption issues in Brazil, Sembcorp Marine disclosed that one of its agents, Guilherme Esteves de Jesus, has been arrested by the Brazilian authorities. Guilherme was involved in the award of drill rig construction contracts by Petrobras to SembCorp Marine.

*IEV: Proposed renounceable rights issue of 94.6 new shares at $0.07 apiece, on the basis of one rights share for every two ordinary shares held. The rights issue is expected to raise net proceeds of $6.5m and is expected to be used for the development of the Paburan KSO E&P Program (68.1%), construction of the biomass plant in Vietnam (23.2%), expansion of the CNG supply chain in Malaysia (7.7%) and general working capital (0.9%).

*Koh Brothers Eco Engineering: Proposing a capital reduction exercise, reducing its fully paid up share capital from $30m to $16.5m. The $13.5m cancellation of shares will aid to write off the accumulated losses of the company as at 31 Dec ’14.

*MTQ: Expecting to incur goodwill impairment for the Engine Systems and Binder Engineering operations in Australia, which will result in a loss making quarter for 4QFY15. Nonetheless, the group still expects to remain profitable for FY15.

*SHC Capital: Entered non-binding MOU to acquire Tong Da Medical Device for $120m, via the issuance of shares, which will result in a reverse takeover transaction. The offer prices Tong Da at 10x FY14 P/E. The allotment of consideration shares and issue price will be finalized at a later date.

*Chip Eng Seng: Sold a vacant development site at 170 Victoria Street, Melbourne for $64.8m. The settle date is on 26th Mar ’16. The contract is not expected to have any material impact on the net tangible assets and earnings per share for Chip Eng Seng for DecFY15.

*Loyz Energy: Inks two MOUs with India’s Sun Petrochemicals, one of which is a significant JV between the two, to jointly bid for upstream E&P projects. In the second MOU, Loyz Energy will transfer and assign two production sharing contracts held by its 51.8%-owned subsidiary in India to Sun, which will work towards production.

*Changjiang Fertilizer: Entered into placement agreement for 18.0m new ordinary shares at $0.02 per share, and an interest free convertible loan agreement for principal amount of $0.36m convertible into 18m shares at a conversion price of $0.02.

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