Wednesday, July 13, 2016

SG Market (13 Jul 16)

SG Market: Singapore shares are likely to be swept along with the rising risk tide amid the easing of Brexit fears and continuation of easy central bank policies, as well as the overnight surge in crude prices.

Basic materials, oil-related companies and CPO-related plays could pop. Counters include Ezion, Ezra, KrisEnergy, First Resources and Golden Agri.

In addition, traders can seek exposure in high-beta stocks to play the risk-on momentum. Top five beta STI names are:
1) Sembcorp Industries
2) Sembcorp Marine
3) Keppel Corp
4) Ezion
5) Golden Agri

Further, S-REITs should continue to edge higher as investors anticipate a pushback on interest rate hikes. MKE's top Buys in the sector are Ascendas REIT (TP: $2.57) and Mapletree Industrial Trust (TP $1.78).

Regional bourses opened firm this morning in Tokyo (+1.6%), Seoul (+1%) and Sydney (+0.6%).

From a chart's perspective, momentum indicators suggest strength in the STI as it heads towards its recent peak at 2,964, with support reset at 2,880.

Stocks to watch:
*Macro: IMF urged the US Fed to hold off on raising interest rates if Brexit materializes but foresees negligible economic fallout.

*Property: Market watchers cite that the earliest timing for policy relaxation is in 2017.

*GLP: To syndicate a final 5.45% stake in its US industrial asset portfolio for US$108m. GLP will subsequently retain a 9.85% stake in the portfolio, which is expected to generate returns within the first year of investment from share of operating results and fund management fees. Stock trades at 0.8x P/B.

*SCI: Wholly owned Nanjing International Water Hub established a strategic partnership with two respected Chinese state level research institutes, with an aim to raise expertise in wastewater treatment.

*ST Engineering: Secured $770m new aerospace contracts in 2Q16 (1Q16: $443m), including airframe maintenance and other repair and overhaul works. MKE's last rating was a Hold with TP of $3.17.

*Vard: Obtained a NOK100m contract from UK's shipbuilder Cammell Laird to supply engineering and provide electrical installation services.

*Declout: Filed the final IPO prospectus of 69% owned tech equipment provider Procurii on the SGX Main Board. The unit will issue 68.9m new shares at $0.56 apiece, with enlarged share base of 280m shares. Declout will retain a 46.5% stake in Procurri, and the spinoff is expected to unlock $40.6m, bringing the group into a net cash position of $5.9m.

*OKP: Secured a 15-month contract worth $19.3m to construct new roads and underground basement linkways at Punggol Road. This brings total contract value secured year-to-date to $101.8m, and net construction order book to $414.1m.

*AusGroup: Clinched contract from Technip Oceania Pty Ltd to supply scaffolding and rope access services on the Shell-operated Prelude FLNG project in Perth and Korea.

*Lifebranz: Terminated proposed acquisition of four medical aesthetics clinics after pre-conditions were not met. Separately, group entered a non-binding term sheet to acquire Tolukuma Gold Mines, which owns a non-operational gold mine in Papua New Guinea, for US$212m.

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