Tuesday, September 6, 2016

SG Market (06 Sep 16)

SG Market: Singapore market could continue its upswing as oil bounced on a Saudi-Russian pledge to stabilise prices after meeting at the G20 summit and investors dialled back expectations of a Sep rate hike following a disappointing US jobs report.

Regional bourses saw a muted open in Tokyo (flat), Seoul (flat) and Sydney (-0.3%).

From a chart perspective, topside resistance for the STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*Economy: Nikkei Singapore PMI rose to 52.3 (Jul: 50.7) for a fourth consecutive month, aided by output and new orders from improved domestic demand, but exports fell for a sixth month.

*City Dev: Took a 20% stake in mamahome, a fast-growing Chinese online apartment rental platform with presence in >20 cities in China, for Rmb100m, alongside other investors Shanghai Chongfu (56%) and E-House Capital (24%). The platform reportedly has more than 100,000 listings, with >75% of listings in Tier 1 cities such as Shanghai, Beijing and Guangzhou. MKE has a Hold with TP of $9.17.

*Q&M: Maintains its acquisition momentum with completion of $1.3m acquisition of Jurong Point Dental Surgery, which comes with a profit guarantee of the sale amount over an eight-year period. MKE last had a Buy with TP of $1.08.

*BreadTalk: Acquiring the remaining 15% of Megabite (HK) for $1.7m. Megabite owns BreadTalk Concept Hong Kong, Food Republic Guangzhou F&B Management and Food Republic Shenzhen F&B Management.

*Sim Lian: Buyout offer of $1.08/share has been declared unconditional in all respects after the controlling shareholder garnered 90.1% of total share capital. The counter will cease trading at close of odder and the offeror intends to exercise its right of compulsory acquisition. Offer remains open for acceptance until 5.30 pm on 10 Oct.

*Silverlake: Established a Vietnamese subsidiary to provide workflows and networking systems to the insurance industry there.

*Ezion/ Charisma Energy: Both parties entered into a 50/50 JV to venture into the electricity trading business.

*Hyflux: Marking its foray into the consumer business with the upcoming launch of its City Square Mall outlet on 8 Sep, which retails bath equipment that leverages on Hyflux’s special oxygenated water.

*Chiwayland: Established financing partnership with Shanghai Caitong Asset Management (Caitong), in which Caitong will finance the group's property development projects up to a maximum of Rmb55m over an 18-month period, in return for a guaranteed 11% return on its principal.

*Rex Int'l: Management assures that the group's balance sheet remains financially sound, with liquid assets of US$68.5m exceeding total debt of US$60.5m, and supported by tax refunds from the Norwegian government. However, we note that the upstream O&G company bled further in 1H16 with operating cash outflow of US$18m (1H15: US$5.5m) depleting its cash balance to US$36.3m (FY15: US$53.5m).

*AVIC International Maritime: Awarded a €3m contract to provide design services for a ro-pax vessel to be built for Danish company Mols-Linien. Work will be carried out over 12 months.

*Mermaid Maritime: Clarified recent media reports that delivery of its vessel had been delayed to 30 Jun '17 and that it is currently evaluating options. Reports had previously surfaced that it had sold the vessel to Ultra Deep Subsea with delivery in 1Q17.

*Ipco: Profit warning for 1QFy17 amid a decrease in demand for burn-in boards in the semiconductor industry.

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