SG Market (19 Apr 16)

SG Market: The dramatic comeback staged by crude prices and US stocks overnight could spur some risk-on trades although gains may be capped as investors anticipate 1Q results of index heavyweights this week including CapitaLand and SGX due tomorrow (20 Apr).

Regional bourses opened in the red in Tokyo (+3.1%), Seoul (+0.4%) and Sydney (+1.5%).

From a chart perspective, immediate resistance for STI seen at the 2,960 level, with support at 2,840.

Stocks to watch:
*Keppel Corp: 1Q net profit of $210.6m (-41.5% y/y) came in below expectations. Revenue of $1.74b (-38.1%) was dragged by rig deferments and suspension of Sete Brasil contracts, which offset improved property sales (+66%) in China and Singapore. O&M operating margin normalised to 13.6% (+1.6 ppt y/y), but orderbook shrank to $8.6b (4Q15: $9b), with management guiding for an extended slowdown. NAV/share at $6.22.

*HPH Trust: 1Q16 net profit (excluding one-offs) of HK$210.1m (-26.5% y/y) missed estimates as revenue slid to HK$2.75b (-6.7%), mainly on weaker intra-Asia and transshipment cargoes. Operating margin widened to 41.9% (+13.9ppt) on cheaper fuel, operational efficiencies, and RMB depreciation. NAV/unit at HK$4.76.

*China Everbright Water: Established a 70:30 JV with the Zhenjiang state government to undertake construction, renovation and operation of a 3,200-ha land and water project in Zhenjiang under a public-private partnership agreement, with concession of 23 years and total investment of Rmb2.59b, of which Rmb1.39b will come from the JV and the remainder from government grants.

*ST Engineering; Disclosed that its aerospace arm secured contracts worth $443m in 1Q16, for projects ranging from airframe maintenance and cabin interiors, to engine wash and component repair and overhaul.

*Sabana REIT: 1Q16 results missed as DPU tumbled 25.3% y/y to 1.33¢, in tandem with a 24.7% slump in distributable income to $9.8m. Revenue slipped 6.9% to $23.6m while NPI declined 18.4% to $15.2m, on higher property expenses from three properties which were converted to multi-tenanted lease arrangements. Portfolio occupancy gained 2.3 ppt to 90%, with WALE of 3 years. Aggregate leverage was lowered to 39.6% after the REIT repaid revolving debt after the divestment of 3 Kallang Way 2A with average cost of debt at 4.2%. NAV/unit at $0.88.

*First REIT: 1Q16 results in line. DPU climbed 2.4% to 2.11¢, while distributable income rose 6.2% to $16.2m. Gross revenue and NPI grew 7.1% and 8.1% to $26.5m and $26.2m, respectively, mainly due to new contribution from Kupang property acquired in Dec '15, divestment gains and lower expenses. Aggregate leverage stood at 34% (+0.3ppt q/q). NAV/unit at $1.03.

*Acromec: Secured two contracts worth $7.1m from a repeat customer, bringing total order book to $47m. Refurbishment and enhancement works at the hospital is scheduled to commence in May '16 and completion in Nov '16.

*Darco Water: 60% owned subsidiary Wuhan Kaidi Water Services was awarded a wastewater project contract by Tianjin SDIC Jinneng Electric Power worth Rmb40.9m. The project entails the construction of Phase II 2*1000MW desulfurization zero-liquid-discharge wastewater treatment system for Tianjin Power’s power generating plant in North China, and expected for completion by 31 Dec 2016.

*Sunpower: Secured high-end equipment contract worth US$3.95m from Hengyi Industries (Brunei) to supply high flux tube heat exchangers for two facilities in Brunei. The contract is expected to be positively accretive in FY17.

*Accordia Golf Trust: Operations in Kikuchi Country Club in Kumatomo, Kyushu, have been suspended due to the earthquakes last week. There is no material damage from assets or casualty reported.

*Otto Marine: Received writ of summons from Rakesh Shankarlal Tulshyan, alleging repudiatory breach of two loans and claiming a total US$17.6m. Group is seeking legal advice and intends to defend itself against the claim.

*Cityneon: Marks its first European premier with an Avengers exhibition in Paris, France. The exhibition is also slated to open this summer in Las Vegas, US.

*Profit warning: BRC Asia, Baker Tech