Friday, October 14, 2016

SG Market (14 Oct 16)

Singapore market is likely to pull back on mounting geopolitical tensions between Russia and the West, royal succession uncertainty in Thailand, impending US rate hike in Dec and upcoming 3Q results season, which is expected to be uninspiring.

Regional bourses opened firmer in Tokyo (+0.1%) and Seoul (+0.5%), while Sydney is flat.Technically, immediate support for STI is at 2,800 (200-dma), with topside resistance at 2,852 (50-dma).

Stocks to watch:
*Economy: 3Q GDP grew a tepid 0.6% y/y (2Q: +2%), falling short on expectation for a 1.7% expansion. The weaker-than-expected data came on the back of a contraction in the manufacturing sector (-1.1%), dragged by lower output in transport engineering, biomedical manufacturing and general manufacturing clusters.

*Keppel Corp: Commenced 10-year operations and maintenance work for the sludge treatment facilities in Doha following its completion. The design-build-operate project is the largest in Qatar and has the capacity to treat an average flow of 245,000m3/day. But group outlook is still hampered by O&M headwinds, asset write-down risks and lack of re-rating catalysts, MKE maintained Sell with TP of $4.54.

*CWT: Updated that controlling shareholder C&P is still in negotiation on the possible share sale and there is no certainty of a definitive agreement. Stock is trading at 12.2x forward P/E, above its historical average of 9.5x.

*Lian Beng: 1QFY17 net profit plunged 60.8% to $12.7m, as revenue slid 47.8% to $70.8m on weaker construction and ready-mixed concrete businesses. Bottom line was further eroded by steep drop in JV/associate contribution, FX losses, impairment on investment in Centurion and increased marketing expenses for industrial development T-Space. NAV/share at $1.1194.

*Vallianz: Judicial managers of parent, Swiber has expressed interest in participating in its rights cum warrants issue. Payment for the subscription will be set off against the outstanding amounts owed by Vallianz.

*Vard: Acquiring Storvik Aqua, an equipment supplier for the aquaculture industry, for NOK35m, representing 2.4x P/B, in a bid to broaden its product offering.

*Chip Eng Seng: Incorporated two subsidiaries in Vietnam to engage in provision of real estate management and consultancy services to local market.

*Vibrant Group: Formed a 51:49 JV with Harmony Gold Ventures for financial leasing business in China. Harmony will inject US$0.2m for its JV stake and will subsequently extend an interest-free shareholder loan of US$14.5m for working capital.

*Chiwayland: Intends to raise US$25.3m from high net worth individuals to finance its project in Toowong, Brisbane, Australia.

*IHC: Sought to vary an injunction order to prevent the disbursement of proceeds from the sale of its Australian properties to Crest Funds, which initiated the receivership tussle. Hearing over the provisional liquidation of the company has been adjourned to 20 Oct.

*Noble: Substantial shareholder Franklin Templeton disposed of 8m shares in the open market at $0.1978 on 11 Oct, reducing its stake to 5.98% from 6.04%.

*Olam: Secured a US$2b revolving credit facility to be applied for refinancing of existing bank loans.

*Phillip SGX APAC Dividend Leaders REIT ETF: Priced the ETF at US$0.9333 apiece, and trading is expected to commence on 20 Oct.

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