SG Market (10 Mar 17)

The market could adopt a cautious stance ahead of the US jobs report tonight, and sentiment could be further dampened after crude oil extended losses below the key US$50/bbl level.

Regional bourses are mixed today in Tokyo (+0.7%), Seoul (-0.2%) and Sydney (+0.3%).The STI is at the lower-bound of its uptrend channel between 3,120 and 3,175, and a break below that could see the index move lower towards the next support at 3,095.

Stocks to watch:
*O&M: Rigbuilders Keppel Corp and Sembcorp Marine could continue to see profit-taking as share prices may have run ahead of fundamentals, in the absence of new contract wins or an end of the impairment cycle. To recap, both counters strongly outperformed YTD following several street ratings upgrade on the back of improved sentiment in the oil market.

*Neo Group: Entered into an exclusive dealing agreement to acquire Asia Farm F&B, a manufacturer of fruit cordials and syrups, juices, sauces, puddings and jellies.

*Zico: Commenced business for its asset management business as a registered fund management company, targeting high net worth and family office clients focused on the Asean region.

*Axcelasia: Acquiring Malaysia-based business and corporate governance consultancy firm, Audex Governance, for RM2.9m. The acquisition will allow it to tap on Audex’s base of customers and facilitate cross-selling of services. Audex currently has RM2.1m worth of contracts.

*Sysma: 1HFY17 net profit surged 857.5% from a low base to $4.8m, mainly boosted by write-backs on provision of $3.6m. However, revenue slumped 40.4% to $40.5m on reduced contribution from property development (-84.6%), although partially offset by increased sales in construction (+23.4%). Gross margin expanded to 19.8% (1HFY16: 5.9%), in line with the shift in business mix. NAV/share at $0.182.

*Blackgold: Proposed placement of 39.5m new shares (5% share capital) at $0.0901 each to private investor and consultant to the company, Johanes Budisutrisno Kotjo. Net proceeds of $3.5m will be used for working capital.

*Natural Cool: Received letter of demand from former Chief Corporate Officer Ng Quek Peng, seeking $2.5m for alleged wrongful termination of his service.