SG Market (24 Jul 13)

SG Market: S’pore shares are not likely to see any big moves following the mixed close on Wall Street as investors weighed a clutch of corporate results against a weak regional manufacturing report. US stocks opened broadly higher amid some upbeat earnings led by United Technologies but the momentum faded after Fed Bank of Richmond’s factory index unexpectedly slid to -11 for July. After the close, Apple soared 5.8% after its 3Q earnings topped estimates. With corporate earnings dominating the news in US, the S’pore market will be looking to Asia for direction. Asian bourses rallied after Premier Li Keqiang said China needs to sustain its GDP growth above 7%, suggesting that there might be some measures to boost the flagging economy. The markets also cheered news that the Japanese government raised its outlook on the economy. Meantime, investors are awaiting the latest reading on China’s manufacturing activity this morning to gauge the health of the economy. Having pushed past the 50-day moving average, the STI will be meeting some resistance at the 3,260 level with the next hurdle pegged at 3,310. Underlying support remains at 3,200. Stocks to watch for: *CapitaMalls Asia: 2Q13 results came in above expectations with net profit +5.9% y/y to $245.6m and revenue +25.2% to $93.4m as maiden contributions from nine new malls (including Star Vista, Olinas Mall in Japan and 7 malls in China), re-opening of three malls after major AEIs and fair value gain from its China properties and ION Orchard, coupled with profit bookingsfrom Bedok Residences, more than offset lower portfolio gain. Excluding portfolio ($14m) and revaluation gains ($178m), operating net profit is up 41.1% to $53.6m. End 2Q NAV stood at $1.78. Interim DPS of 1.75¢ declared. *SGX: 4QFY13 net profit of $87.6m (+43% y/y, -10% q/q) missed estimates of $93m even as revenue surged to $202.3m (+28% y/y, +6% q/q), driven by rebounding stock volume and record derivative contracts. Securities daily average traded value climbed to $1.59b (+42% y/y, -7% q/q), while derivatives volume hit a record 516K contracts (+62% y/y, +8% q/q). Total equity funds raised was $3.1b vs $1.8b a year ago. FY13 earnings of $335.9m (+15.1%) on revenue of $715.1m (+10.4%) met expectations. Final DPS of 16¢ proposed, bringing full year DPS to 28¢ vs 27¢ in FY12. *Sheng Siong: Turned in 2Q13 net profit of $8.5m (+20.8% y/y) on revenue of $159.8m (+8.7%). The revenue growth came largely from five new stores (+$20.1m) but was partially offset by a contraction in same store sales ($-7.3m), which was attributable to declining sales in old estates and renovation works affecting three of its stores. Gross margins improved to 23.2% from 22.5% in 1Q13 due to stable selling prices, better sales mix and cost efficiencies. Balance sheet remained strong with net cash of $117.6m. An interim DPS of 1.2¢ has been declared vs 1¢ in 1H12. *FCT: 3QFY13 results in line with distributable income +9.8% y/y to $23.5m, DPU +9.6% to 2.85¢. Gross revenue rose 12.4% to $40m, while NPI jumped 15.4% to $28.5m, blostered by higher contributions from Causeway Point (post AEI) and Northpoint. Portfolio occupancy improved to 98.4% (+4.7 ppt) with 9.4% average rental reversions for renewals and weighted lease to expiry of 1.7 years. Gearing stood at 30.4% with average debt maturity of 3.1 years. NAV was little changed at $1.54. *Starhill Global: 2Q13 distributable income +22.1% y/y to $25.6m, DPU +10.2% to 1.19¢. Gross revenue rose 6% to $49.1m, pushing up NPI 5.2% to $39.1m as both Ngee Ann City and Wisma Atria benefited from high occupancy (99.7%) and positive rental reversions, while its Australian portfolio saw higher contributions from recently acquired Plaza Arcade in Perth. Weighted lease to expiry was maintained at 6.7 years. Gearing remained stable at 30.3% with average debt maturity of 1.2 years, which will be extended to 3.5 years post-refinancing in Sep 13. *Nam Cheong: Secures new orders for three vessels worth a total of US$70.5m comprising one platform supply vessel (PSV) sold to an existing customer, a leading oilfield services company in Asia, a second PSV sold to new customer, Cyprus-based EDT Offshore and an accommodation work barge sold to Perdana Petroleum, its third this year. The contract wins takes the group’s latest order book to RM1.5b with 16 vessel sales year-to-date sale vs 21 for whole of 2012. *Global Logistic Properties: Signed two agreements to lease a total of 44,000 sqm at GLP Park Qiandeng (38,000 sqm) in Suzhou and GLP Park Langfang (6,000 sqm) in Northern China to Goodbaby, a leading global manufacturer, distributor and retailer of infant and children products. With the new leases, Goodbaby would expand its leased area with GLP to 51,000 sqm. *Mencast: Energy services division won $6m worth of maintenance, waste management, cleaning and operations contracts from a S’pore-based refinery. These long term contracts will be effective from mid-2013 to Jun 2016. *Ley Choon: Commissioned its second asphalt premix plant at Sungei Kadut, next to its current production facility. With a production capacity of 400 tons per hour, the new plant (largest in S’pore) would more than triple its current capacity to 575 tons per hour and enable the group to meet the rising demand for hot mix asphalt in road and airfield pavement construction and maintenance projects in S’pore. *Soilbuild Construction: Landed a US$1.1m contract by a third party developer in Myanmar, to provide project management and professional consulting services for the erection of a 24-storey residential tower in Myanmar.

52 wk highs / lows

52 wk highs: PS Group, Lee Kim Tah, Blumont, Osim, MTQ, Cogent, Star Pharma, 800 Super Recent IPOs -- KrisEnergy, ISOTeam ETF -- iShares Core S&P 500 52 wk lows: MYP, Healthway Medical, Chemical Ind (FE), SInostar PEC, Tiger Air, Qian Hu, Goodpack Recent IPOs -- Soilbuild Construction ETF -- DB X Trackers S&P 500 Inv DA

F&N

F&N: CIMB note that FNN shares have commenced “ex” trading and believe that more clarity from TCC/Thai Bev on its plans to 1) restructure FNN’s F&B and property businesses and 2) restore the stock’s public float will be the key milestones to watch for and could catalyse the stock. House slash our SOP estimates from $10.94 to $7.60, largely to account for the capital reduction. House FY14-15 core EPS numbers are cut by 3-6%. (still based on a 20% discount to its property RNAV) is now lower. We estimate that investors will be getting its property business at an implied discount to RNAV of 37% – among the widest in the sector. Maintain Outperform.

Rex International (IPO)

Rex International (upcoming Catalist IPO) - an EPC Swedish O&G player, hopes to raise up to $85.25m by placing out 168m shares (including over-allotment) at 50cts each. This IPO of 142.5m shares comprises 2.5m public shares and 140m placement shares, subject to an over-allotment option of 28m shares. The IPO closes at noon on July 29, with trading of the shares set to begin on July 31.

Osim

Osim: increased its shareholding in associate TWG Tea from 35% to 45%, for a minimal purchase consideration of $2, as the founding members had not met the agreed performance target for FYMar13. The transaction is positive and earnings accretive for Osim for the current financial yr.

euNetworks

euNetworks: GKG Investment (controlled by Mr Goh Geok Khim of GK Goh fame) inched up its deemed interest to 12.39%, after buying 108k shares in the open market at $0.662 a piece. Mr Goh himself bought a further 338k shares at $0.60 each, lifting his direct interest from 1.6% to 1.67%.

BH Global

BH Global: Subsidiary PT BH Marine & Offshore Engineering announced the retrieval of the two vessels which were forcefully removed on 14 Jul by the Indonesian Navy and handed over to the Batam Police. The Company understands that there are reportedly no damages caused and is unlikely to incur any losses as a result of the incident.