Tuesday, December 1, 2015

SG Market (01 Dec 15)

Singapore shares could open higher, taking cue from Asian markets which are trading higher this morning, although volume could remain light with some investors expected to remain side-lined in anticipation of a slew of economic releases and central bank speeches this week.

Key data release today includes China’s official PMI, with economists expecting the number to stay at 49.8 in Nov.

Regional bourses are trading higher this morning in Tokyo (+0.7%), Seoul (+1.0%) and Sydney (+1.6%).

From a chart perspective, topside resistance for the STI is seen at 2,940, with support at 2,850.

Stocks to watch:
*O&M: Private owned Pacific Richfield Marine denies reports that its vessels are being offered for distressed sales, adding that its oustanding bank debt is ~US$100m, and not ~US$400m as reported, although the group confirmed that it was selling some of its vessels (as much as 1/2 its 40 offshore support fleet) to pare down debt and expenditure. Exposed banks include DNB, DBS, OCBC and UOB.

*Midas: Acquiring 100% stake in Huicheng Capital, an aluminium product specialist owned by its Chairman and six other individuals, for up to $264m ($166.3m initial consideration, $97.7m earn-out consideration). The acquisition will be financed via issuance of 733.3m new shares at $0.36 per share, representing 60.2% of current share capital. Assuming the acquisition was carried out at 31 Dec ’14, EPS will drop to 3.61 Fen from 4.63 Fen and NTA per share will decline to Rmb1.87 from Rmb2.46.

*Marco Polo Marine: Has taken its dispute with Sembcorp Marine (SMM) to the mediation stage, although should SMM refuse to mediate, Marco Polo (MPM) will proceed to commence arbitration against SMM.

*Yangzijiang: Acquired a 40% interest in China-based Zhuhai Lead Power Financial Leasing for Rmb40m. The transaction is not expected to have any significant impact on EPS and NTA per share for FY15.

*Ho Bee Land: Acquiring Apollo House and Lunar House in London for £99m, comprising 441,797 sf of office accommodation. Management expects the current rent to be highly reversionary.

*Sunvic Chemical: Reprimanded by SGX for failing to make immediate announcements of and seek shareholders’ approval for transactions involving its current and former chief executives.

*First Ship Lease Trust: Took delivery of a new tanker on 18 Nov ’15, which is operating in the spot market. The vessel is expected to yield 14.3% annually based on a time charter equivalent of US$16.5k/day.

*Rickmers Maritime: Satisfied conditions of a loan-restructuring agreement. The group is now no longer required to negotiate for an extension of the value-to-loan covenant waiver which was due to expire on 31 Dec ‘15.

*iX Biopharma: Granted a patent in Indonesia for its WaferiX drug delivery technology. The patent will expire on 26 Oct ‘30.

*Neo Group: Terminated its proposed acquisition of AMAX Foods as certain conditions could not be agreed on.

*MDR: Terminated its proposed acquisition of Shenzhen Quanli Leather because the company is not likely to achieve the agreed minimum net profit by 31 Dec ‘15.

*Roxy Pacific: Will not proceed with the acquisition of a land parcel in Malaysia due to changes in market conditions.

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