NOL

NOL: 3Q14 missed. Net loss was US$23.1m (3Q14 profit: $20m), while revenue was flat at US$2.1b, as Liner revenue was pressured by lower freight rates and volume. Liner volume decreased by 2% y/y, weighed by Intra-Asia and Transatlantic trade lanes. Utilization rate maintained above 90%. Bottom line was weighed on the absence of one off disposal gain of NOL building recognized last year. Meanwhile, Bloomberg reported on Oct 17, that CJ Korea express is considering the acquisition of NOL’s logistics business, APL Logisticts. The newswire cites an unknown source putting a US$1.b price tag on APL. On that front, NOL has qualified that there haven’t been any material developments in its business review and there is no certainly of the deal being completed. NOL is trading at 0.9xP/B

SMRT

SMRT: 2QFY15 results beat consensus. Net profit rose 75.5% to $25.3m, while topline grew 6% to $314m, with increases from all segments except LRT and Engineering services. Fare-based business operating profit was $5.5m (2QFY14: $6.8m operating loss), on higher riderships and fares since Apr’14. Train operating profit jumped $6.6m to $7.6m (4.2% op margin), while bus operating loss narrowed from $74m to $1.4m. Non fare operating profit increased 4.1% to $4.8m, mainly driven taxi ops, rental, and advertising segments. Interim DPS of 1.5¢ (1HFY14: 1¢) Deutsche notes that SMRT remains focused on productivity gains such as headcount reduction in non-operational areas. In addition, management continues to look for investment opportunities, such as its recent JVs with Toshiba (Singapore Rail Engineering) and Hailo (mobile taxi booking app). Sustained lower oil prices could translate into lower electricity and diesel costs. That said, Maybank-KE thinks that stock price might remain range bound on the absence of clarity voer the rail transition, and as such keeps TP unchanged at $1.36 with the following assumptions: 1) Rail and bus operating assets will be sold to regulators for $1b 2) Contractual agreements under previous regime will be written off 3) 10% margins for bus and rail, includinfg rental margins after transition. SMRT is trading at 2.7x FY15e P/B and 24.7x FY15e core P/E. Latest broker ratings: Deutsche maintains Buy with TP of $1.90 Maybank-KE maintains Hold with TP of $1.36

Pacific Radiance

Pacific Radiance: Daiwa initiates coverage with Buy call and TP $1.30. View PACRA as a value stock offering good earningsgrowth visibility, and forecast an EPS CAGR of 26% over the next three years, driven by the company’s aggressive fleet expansion programme (with an aim to almost double its core offshore vessel fleet to 100 vessels by 2019). Share price fell about 29% from its peak of $1.51 reached in mid-August this year, on back of the sharp oil price retreat, and the house see a good entry point now. The recent purchase by Executive Chairman of 5.3m shares at prices of $1.04-1.15 signals management’s confidence and supports the house investment thesis. Other catalysts would include successful penetaryion into high growth markets across Asia, improving margins on an enhanced vessel mix and its entry into the new ship repair and maintenance by 2016.

Fragrance Group

Fragrance Group: 3Q14 net profit grew 6.7% y/y to $24.3m, buoyed mainly by lower non-controlling interests (-93%), while operating profit fell 9%, despite revenue spike of 17.5% to $133.3m, led by lower selling prices of property development units and higher sales expenses, partially mitigated by lower finance costs from the capitalization of finance costs. Meanwhile, top line was driven by progressive recognition of income from property development projects of $128.7m (+21.2%), partially offset by lower investment income of $4.6m (-36.5%) due to the commencement of AEI works at investment property at Alexandra Road. Gross profit margin narrowed 6.1 ppt to 28.1% on lower prices on new properties, which reflected the 0.7% shave of private residential property prices in 3Q, the fourth straight quarter of decline. Fragrance's proposed spin-off of its property business in Australia on the Catalist board remains the company's key move in the near term, aiming to unlock value of its four assets with a cost of A$166.6m. At $0.215, counter is valued at 1.6x P/B.

Soilbuild Construction Group

Soilbuild Construction Group: 3Q14 net profit fell 36% to $4.0m taking 9M14 net profit to $13.1m (-18%). Revenue was down 26% to $62.2m due to the completion of several projects, namely from Lavendar, Tamapines HDB, Xin Ming Hua, Ang MoKio and Rigel projects. Meanwhile gross margin inched down to 10.6% from 11.2%, due to timing differences in the revenue recognition for projects with varying profit margins. Soilbuild highlighted that the construction sector grew by 1.4% y/y in 3Q14, compared to the 4.1% growth in 2Q14, with the lower rate of growth attributable to a slowdown in private sector construction activities. The group has an order book of ~$666m, stretching revenue visibility over the next two years. At the current price, the group trades at 9.1x annualized 9M14 P/E.

Global Premium Hotels

Global Premium Hotels’ (GPH) 3Q14 results were broadly in line with the prospects statement made in the group’s 2Q14 financial results announcement, with net profit inching up 3.3% to $5.1m, taking 9M14 net profit to $12.9m (-9.1%). Revenue for the quarter rose 9.3% to $17.2m, led by a 9.2% rise in hotel room revenue to $16.9m, as a result of full quarter contributions of $2.9m from Parc Sovereign Hotel – Trywhitt and $0.1m from Fragrance Hotel – Pearl. This was partially offset by lower revenue of $1.3m from the remaining hotels, and the closure of Fragrance Hotel – Elegance in 4Q13 due to cessation of tenancy agreement. Bottom-line was weighed by an 18% rise in admin expenses to $6.6m, attributable to higher staff costs, depreciation and property tax. While the group expects to remain profitable for the rest of 2014, it guides that tourist arrivals to Singapore continue to decline, with a 3.3% drop y/y from Jan to Aug ’14, on back of a slowing global economy. This, coupled with new supply rooms coming into the market, has led to a 0.8% y/y decline to 86% for average occupancy rates across the country. With no catalyst in sight in the immediate term to attract international travellers to Singapore, GPH do not foresee any significant change in the tourist arrivals number till end of the year. At the current price, GPH trades at 0.54x P/B

SG Market (03 Nov 14)

US Market: US stocks powered to fresh highs and gained back all its recent losses as the surprise stimulus by the Bank of Japan sparked a global rally. The blue-chip DJIA leapt 195 pts to a new record of 17,390 (+1.1%), for its best weekly gain since Jan 2013, while the broad-based S&P 500 surged 23 pts to an all-time high of 2,018 (+1.2%), up 8.4% from its Oct low and the tech-rich Nasdaq Composite jumped 65 pts to 4,631 (+1.4%), its highest since Mar 2000. US equities joined a global rally after the BoJ announced that it would expand its monetary base by up to ¥20t to ¥80t (US$724b) annually and triple its purchases of ETFs and REITs. The move dovetails plans by Japan’s Government Pension Investment Fund to double its holdings in local and foreign stocks. This comes just as the US Fed winds down the final US$15b of its US$85b monthly asset-buying scheme. Investors looked past softer-than-expected consumer spending in Sep, which fell for the first time in eight months, and higher employment costs, which rose for the second consecutive quarter to mark its biggest back-to-back gain since 2008. For more positive headlines, consumer sentiment rose in Oct to the highest level since Jul 2007, while Chicago PMI climbed to a one-year high. Market watchers noted that additional stimulus globally would aid the outlook for stocks, especially in a period where the US economy is showing signs of continued improvement. So far, better-than-forecast corporate earnings have helped the S&P 500 rebound from near correction territory with 76% of companies reporting results that exceeded expectations. All 10 major industry groups advanced, led by energy (+2%), materials (+1.9%) and technology (+1.8%) shares. Oil majors ExxonMobil and Chevron rose 2.4% and 2.3% respectively, after both companies reported quarterly profits which beat estimates, even as crude oil continued a selloff. Among other stocks in focus, Groupon soared 22% after the discount coupon firm reported sales and earnings wnich were ahead of estimates, while Linkedin vaulted 12.8% as mew business lines boosted 3Q revenue and profits. GoPro jumped 13% after posting better-than-expected 3Q results and gave an upbeat 4Q guidance. But Starbucks dropped 2.3% after its 4Q revenue missed forecasts. About 8.3b shares were traded on US exchanges, 27% above the three-month average. Advancing issues outnumbered declining ones by 3.3 to 1 on the NYSE and 2.4 to 1 on Nasdaq. S’pore shares are likely to take its cue from the record close on Walll Street to move higher. Having cleared the 3,260 resistance, the STI is set to test the next objective at 3,310 with downside support now placed at 3,230. Stocks to watch: *SMRT: 2QFY15 results beat street estimates. Net profit soared 76% y/y to $25.3m, driven by broad-based improvement across businesses, further aided by productivity gains. Top line grew 6% to $314m, with increases from all segments except LRT and Engineering services. Operating profit surged 67% to $33.3m, reversing sharply from the $6.8m operating loss from a year ago, boosted by better performance in the train and bus operations. Interim dividend boosted to 1.5¢ (1HFY14: 1¢). *NOL: Dismal 3Q14, posting a net loss of $23.1m (3Q14 profit: $20m), for a fourth consecutive quarter in the red. Revenue was flat at US$2.1b, as liner revenue (-2% to US$1.7b) was pressured by lower freight rates and volume, offsetting the growth in APL Logistics (+8% to US$399m). Efficiency gains helped NOL reduce its core EBIT loss by 31% to US$59m, but bottom line was weighed without the one-off disposal gain of NOL building recognized last year. BVPS at US$0.73. *UIC: 3Q14 net profit jumped 37% y/y to $59.7m, as revenue rose 17% to $178.4m, driven by higher trading property sales at V on Shenton, Alex Residences and Mon Jervois, and better performance from Pan Pacific Singapore hotel. Bottom line was boosted JV developments, Archipelago and Thomson Three. BVPS at $3.99. *OUE C-REIT: 3Q14 DPU of 1.4¢ came in 2.9% above IPO forecast, while distributable income of $12.2m beat by 3.2%. Gross revenue of $19.5m, and NPI of $14.5m outperformed forecast by 1.8% and 6.3%, respectively, on better occupancy and rental reversions, coupled with lower than expected utilities and maintenance costs. Occupancy stood at 97.2% with WALE of 3.7 years. Aggregate leverage was 39.5%, with average cost of debt of 2.59%. BVPS at $1.05. #Fragrance Group: 3Q14 net profit grew 6.7% y/y to $24.3m, aided by lower non-controlling interests. Pretax profit fell 9%, despite a revenue spike of 17.5% to $133.3m, dragged by lower selling prices of property development units and higher sales expenses, partially mitigated by lower finance costs from the capitalization of finance costs. Top line was driven by progressive recognition of income from property development projects of $128.7m (+21.2%), partially offset by lower investment income of $4.6m (-36.5%) due to the commencement of AEI works at investment property at Alexandra Road. BVPS at 13.4¢. *Global Premium Hotels: 3Q14 net profit edged up 3.3% y/y to $5.1m, taking 9M14 net profit to $12.9m (-9.1%). Revenue grew 9.3% to $17.2m, driven by full quarter contributions from Parc Sovereign Tyrwhitt (+$2.9m) and Fragrance Pearl (+$0.1m), though offset by lower same hotel revenue and closure of Fragrance Elegance. Bottom-line was dragged by an 18% jump in admin expenses to $6.6m, due to higher staff costs, depreciation and property tax. BVPS at $0.65. *Soilbuild Construction: 3Q14 net profit slumped 36% y/y to $4.0m, taking 9M14 net profit to $13.1m (-18%). Revenue sank 26% to $62.2m following completion of several major projects in 2014, and gross margin contracted to 10.6% (-0.6ppt), due to timing differences in the revenue recognition for projects with varying profit margins. The group has a current order book of $666m, with revenue visibility stretching over the next two years. BVPS at $0.115. *Mercator: 2QFY15 losses widened 16% y/y to $6.3m, as revenue slumped 33% to $14.3m, mainly due to a fall in spot rates, unscheduled repairs and lower rates for new contracts. *Sembcorp Marine: Secured a US$240m contract to build a new deepwater jack-up rig (Pacific Class 400 design) from BOT Lease, a leasing company of the Mitsubishi UFJ Financial Group. The contract value may be higher on additional specification requirements to be negotiated among the parties involved. Delivery is scheduled at end Oct ’16. This is SMM’s third jack up order year-to-date. *Keppel Corp: Secured a US$240m from BOT Lease, a leasing company of the Mitsubishi UFJ Financial Group, for a KFELS Super B Class jackup rig worth US$240m. Delivery is scheduled at end 2016. This is KEP’s 7th jack up order year-to-date. *DBS: May be interested in buying Coutts International, the non-UK private banking business of RBS, when it comes into the market around year end. Goldman Sachs has been appointed to handle the sale. *F&N / Thai Bev: A Singapore tribunal has ruled in favour of military-linked Myanma Economic Holdings, giving it the right to buy F&N’s 55% stake in Myanmar Brewery. *Cheung Woh Technologies: Acquiring a site in Senai, Johor, for RM8.3m ($3.2m), to expand its operations for secondary processes and electroless nickel plating of computer parts and components. *Oxley: Extended the MOU on its proposed acquisition of a freehold land in the city centre of Kuala Lumpur, Malaysia, from 4 Nov ‘14 to 5 Jan ‘15. * Hiap Seng Engineering: Profit warning. Expects net loss for 1HFY15 due to cost overruns for certain projects. *Grand Banks Yachts: Profit warning. Expects net loss for 1QFY15 due to longer-than-expected sale of inventory, one-off professional fees and amortization cost arising from the acquisition of Palm Beach Motor Yacht and restructuring expenses from streamlining of operation. Results to be released during the week of 10 Nov. *Dukang Distillers: Profit warning. Expects overall revenue 1QFY15 to be significant lower y/y, and a net loss for the quarter, due to the decrease in ASP and sales volumes of Luoyang Dukang and Siwu products as the Chinese government’s continued austerity measures affect wine and spirit sales across the nation. Results due on or before 14 Nov.