Wednesday, December 14, 2016

SG Market (14 Dec 16)

The market could trade sideways, as positive sentiment from Wall Street could be capped by cautiousness ahead of the FOMC interest rate decision, as well as early-profit taking from oil-related counters.

Regional bourses in Tokyo (+0.2%), Seoul (+0.3%) and Sydney (+0.7%) tracked higher. Technically, immediate resistance for the STI is at the 2,960 triple-top, with underlying support at the 2,882 breakaway gap.

Stocks to watch:
*Genting Singapore: The Promotion Bill to legalise casinos in Japan has cleared an upper house committee, and voting is to take place today (the final day of the current Diet session). MKE opines that GENS’ recent share price rally may be premature, as the subsequent Implementation bill has yet to be passed, while current valuations have overstretched fundamentals. Sell with TP of SGD0.73.

*Sheng Siong: MKE downgrades to Sell from Hold with lower TP of $0.88 on a deal-changing rise in competition for prime selling space, which puts its new outlet expansion plan at risk. This is critical as new stores drive sales growth much more than old stores. Worst, with two big store closures coming up in 2017, it could be left with a shortage of new stores to pick up the slack.

*IHH Healthcare: Received license to set up 70%-owned JV, ParkwayHealth Chengdu with initial capital of Rmb300m. The hospital will provide specialised care and services such as obstetrics and gynaecology, paediatrics and orthopaedics. MKE has a Buy with TP of MYR6.52.

*Oxley: Launched Phase 1 of its maiden Batam project – Oxley Convention City. The 20,000 sqm land area mixed-use development comprises one hotel, three residential towers and 130 retail units.

*PACC Offshore: Following legal action to recover sums owing by Makamin Offshore Saudi, the latter has applied for a Saudi court order to 1) forbid POSH from substituting Makamin's charter contracts with Saudi Aramco, 2) compensate Makamin for various damages amounting to US$58.7m, and 3) prevent POSH from tendering for Aramco charter contracts for the same period of time which Makamin is prevented from doing so.

*GL: Paid £7.75m to landlord K/S Habro-Gatwick and original tenant Scottish and Newcastle to settle a rental claim and legal guarantee on a UK hotel property after the current tenant became insolvent. The amount was provided for in 3Q16.

*CMC Infocomm: Clinched three contracts worth $7.8m, for works that include installation of WiFi infrastructure and procurement and provision of required infrastructure, as well as maintenance services for telecom operators in Singapore and Thailand respectively.

*Ipco: 2QFY17 net profit plunged 46.3% to $2.1m, as revenue slid 10.9% to $13.9m on lower demand for burn-in boards from semi-conductor manufacturers, and a decrease in installations of natural gas supply equipment for new households in China. Bottom line was further dragged by a $3.7m drop in FX gain. NAV/share at $0.02.

*OEL: Received a winding up application from Oceanfront Trading over failure to pay US$0.6m. Legal proceedings will begin on 6 Jan.

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