Friday, July 15, 2016

SG Market (15 Jul 16)

SG Market: The Singapore market is likely to play catch-up with the global rally after trading was halted mid-day due to a technical hitch at SGX yesterday.

Following the technical lapse at SGX which caused disruption yesterday, some market watchers opine if investors would now peg a valuation discount on the exchange due to operational risks.

Regional bourses opened higher in Tokyo (+0.3%), Seoul (+0.6%) and Sydney (+0.2%).

From a chart's perspective, near term STI appears a little overstretched with topside resistance at 2,964, and support at 2,880.

Stocks to watch:
*Noble: Trading deadline of nil-paid rights extended to the close of session today following the half day trading on SGX yesterday. Selling pressure may persist should Chairman Richard Elman continue to pare his remaining 263.6m rights (excluding the 625.9m he has undertaken to underwrite). At 4.8¢, the rights trade at a 5.4% discount to the mother share of $0.167.

*SingPost: Key takeaways from chairman Simon Israel at AGM - 1) departure of former CEO Wolfgang Baier was due to fractured board-management relationship, 2) diversification from its core postal business is necessary and this is expected to lower blended ROEs, and 3) dividend policy needs to be reviewed, amid its transition into an e-commerce logistics player.

*Ezra: Sank into a 3QFY16 net loss of US$247m (3QFY15: US$0.4m profit), bringing 9MFY16 loss to US$583.4m vs FY16 street forecast of US$154.1m loss and market cap of $197m. Quarter revenue fell 10% to US$125.7m, dragged by weakness in the offshore industry, while bottom line was impacted by a US$181.3m disposal loss. NAV/share at US$0.2715 ($0.365) implies the stock is valued at 0.18x P/B.

*First REIT: 2Q16 results in line with DPU of 2.11¢ (+1.9%), despite an enlarged unit base. Distributable income grew 5.5% to $16.2m, driven by maiden contribution from a newly acquired Kupang hospital cum retail mall. The Indonesian-based healthcare trust is trading at 6.5% annualised yield and 1.3x P/B.

*Ezion: Formed a 33:67 JV with Pacific International Offshore to provide additional assets to a national oil company, an existing client, for development and production related work.

*China Everbright Water: Secured a BOT wastewater treatment project in China's Shudong Ju County, which has a 30-year concession period and capacity of 20,000 tpd. Total investment required is Rmb50m and operations are expected to commence in 2017.

*Sapphire: Secured new rail infrastructure contracts in China worth Rmb873m, boosting its order book to ~Rmb2.75b. It is also in talks with governments in South Asia on business opportunities in the region.

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