Friday, July 8, 2016

SG Market (08 Jul 16)

SG Market: Some profit-taking may set in after oil prices tanked almost 5% and took a toll on Wall Street ahead of a key jobs report.

Key indicator to watch is USDJPY, as it attempts to test the psychological 100 level again. A breach below the crucial support could spur risk-off sentiment before the weekend, boosting flows into safe haven sectors.

Regional bourses opened mixed this morning in Tokyo (-0.2%), Seoul (+1.1%), and Sydney (+0.6%).

Positive S-REITs - Investors continue to seek relative certainty in yield stocks, such as PLife, MGCCT, FCT. Longer term, MKE prefers industrial REITs, with A-REIT (Buy, TP $2.57) and MIT (Buy, TP $1.78) as its top picks.

On telcos, investors may consider switching into Starhub (+6.1%) as a laggard play following the strong price run-up in M1 (+14.6%) and Singtel (+10.3%) since mid-Jun.

From a chart perspective, support for the STI remains at 2,810, with small double top resistance at 2,880.

Stocks to watch:
*SPH REIT: 3QFY16 DPU of 1.36¢ (+0.7%) met expectations, on firmer revenue and NPI of $52.2m (+1.9%) and $40m (+1.8%), respectively, underpinned by higher rental income from Paragon Mall. The portfolio achieved 100% occupancy and has a WALE of 2.1 years. Aggregate leverage remained stable at 25.7%, with an average debt cost of 2.84% and debt tenor of 2.2 years. NAV/unit at $0.94.

*Triyards: 3QFY16 net profit of US$4.9m (-13% y/y) missed expectations, dragged by gross margin compression to 16.9% (-5.2ppt) due to less favourable project mix. Revenue rose 28% to US$82.1m, contributed by four self-elevating units, two multi-purpose support vessels, and three chemical tankers. NAV/share at US$0.684.

*SGX: Jun securities turnover stayed muted at $22.5b (-9% y/y, +4% m/m) even with an additional day of trading, while derivatives volume hit 14.1m contracts (-35% y/y, +4% m/m).

*GLP: Commenced development of a 71,000 sqm multi-tenanted logistic property in Osaka, Japan. The ¥10.5b facility is expected to be completed in 2H18.

*Keppel Corp: Clinched four marine projects worth $120m from repeat clients. Separately, the group will partner Shell in a 50:50 JV to establish a LNG bunkering business in Singapore.

*Swiber: Expects a delay to its US$710m offshore field development project in West Africa, due to weakness in the oil and gas sector since 2H14. Separately, the group redeemed its $75m 7% fixed rate notes that were due for maturity on 6 Jul.

*Ellipsiz: Mandatory conditional cash offer at $0.38/share by its largest shareholder, former Lum Chang managing director Lum Kok Seng.

*China Fishery: Executive Director, Chief Restructuring Officer Paul Jeremy Brough has resigned. Stock has been suspended since 26 Nov.

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