Market Wrap by broker – 29 July 13

Baltic Dry: 1082 -0.92% Gold: 1330.65 +0.15% Palm Crude: 2183 +0.60%
VIX: 12.72 -1.93% WTI Crude: 104.61 -0.09% USD/SGD: 1.2632 +0.04%

*SingTel(ST)’s EPL cross-carriage appeal was rejected by the Govt & will now have to share EPL matches with StarHub(STH) over the next 3 yrs. Post-appeal, SingTel announced $59.90/mth EPL stand-alone subscription.

*Otto Marine(OTML) sold 2 vessels for US$170m & its subsidiary chartered back the vessels for 8 yrs; sees +ve impact on EPS.

*Swiber(SWIB) bags contracts worth ~ US$435m & additional US$105m under their JV co.

*First REIT(FIRT) 2Q13 #s: DPU of 1.85c -4.1%YoY while distributable income
(DI) rose 4%YoY to $12.7m. Excl. gain of Adam Rd divestment, DPU would have risen 16.4%YoY on back of a 26.6% jump in DI.

*Lian Beng(LBG) FY13 #s: NPAT S$39.4m -24.3%YoY on absence of 1-off gain that boosted the bottom line a yr ago; however, top line saw 13.6%YoY growth mainly due to cnstr & ready-mixed concrete biz, which is their core biz.

*Tsit Wing(TWI) took TWG Tea Co. to court, arguing a breach of its trademark; note OSIM owns 45% of TWG Tea.


Morning Wrap by Decoder – 29 July 13

• CN/HK – New audit of local government debt points to major risk. China’s new leadership considers the growing local government debt as a pressing problem. The State Council has asked the National Audit Office to look into the issue more thoroughly by conducting an audit of such loans for the third time in the past 3 years. This is to prevent the local government debt from causing severe damage to the financial system. Apparently, the 36 local government’s debt totaled to US$1.7trillion at the end of 2010. Although the amount has shrunk by 1/3 at the end of 2012, the amount is still an substantial enough to knock China off its path to achieve at a 7% min GDP growth this year. –

• KR – Government proposed to impose tax on derivatives including Kospi 200 futures and options to increase their tax revenue as soon as next year.

• Internet retail giant – Amazon reported an unexpected 2Q loss of US$7m and guided cautiously for the current quarter. The stock gapped down at open and slowly recovered throughout the day, closing at its intraday day high (+2.8%, Vs day low of -2.3%). Coincidentally, all the 3 major indices tracked this movement and mostly closed at the peak of the intraday range. T/O was light with only 597m shares traded on NYSE which reflected a day short of macro data except the Uni. of Mich’s confidence number that came in @ 85.1 Vs 84.1 cons. in Asian markets today, Nikkei opens at 3 weeks’ low as the Yen rises and the Kospi traded slightly lower with the lack of meaningful catalyst. ASEAN market are expected to trade sideways ahead of Wed’s FOMC (month end) and employment data on Friday.

Market Wrap by Decoder – 26 July 13

• CN/HK – Crackdown on outdated production capacity. The ministry of Industry and IT announced yesterday, the first batch of companies with outdated capacity that are required to be knocked out by the end of this year. This will affect a dozen of listed companies in 19 industries like steel/cement/paper/coking coal/copper/lead etc. While this move might be negative for the affected industries in the short run, it will be beneficial in the long run, leading to a healthier development in those industries. (overcapacity affects product prices and erodes profitability) –

• SG – Placement in KREIT, selling 95m new shares @ $1.26/piece to fund their acquisition in Australia. Parent KEP is also paying out special in specie div of 2 KREIT units per 25 KEP shares. Stock is likely to gap down after opening with strong support @ 1.15.

• Equities began the session mixed before the afternoon rally helped lift the S&P 500 into the green. Nasdaq showed strength throughout the session thanks to FB, which added 29.6% on renewed faith in the company’s abilities. Macros were mixed as well, with weekly claims coming in @ 343K Vs 340K cons and June durable goods order was up 4.2% Vs 1.4% cons. 10 yrs yield held steady @ 2.578%. After hours, Zynga -14.3% on weak outlook for their online gaming business. What’s new? As the US economy continue to show signs of recovery, investors are increasing in favor of rather than a perpetual Fed Bond purchase program. Stay tune for next week’s FOMC minutes for the Fed’s tone on QE3 as well as the market reaction that follows. In Asia, markets are expected to drift lower as China is trying to accept a lower but more sustainable growth target of 7% min.

GENS SP – Negative read-thru from LVS’ results overnight

Las Vegas Sands Corporation (LVS) reported its 2QFY13 results yesterday. The group’s results missed estimates due to lower contribution from Macau and Singapore.

LVS’ subsidiary, Marina Bay Sands (MBS), reported a 7.0% QoQ slide in turnover in 2QFY13 underpinned by a 7.8% fall in casino revenue.

Volume of VIP business at MBS shrank 21% QoQ to US$14.4bil in 2QFY13. This is the first sequential decline since 2QFY12.

GENS is due to report on 6th Aug, Tue.

Morning Prop News by broker – 25 July 13

* Mercer said that S’pore has moved up 2 spots to become the 5th most expensivecity in the world for expatriates, and the 2nd most pricey in Asia. The high cost of living is due to the strong SGD and expensive rental mkt. It said that renting a 3 bedroom unfurnished house that meets the standards of expats will cost U$7266/mth. Ranking as follows: Luanda, Moscow, Tokyo, Ndjamena, S’pore, HongKong, Geneva….

* DTZ said that the number of PRs and foreigners buying pte ppty has fallen in 2Q13, a 30% QoQ drop in the secondary mkt, while a +4% was seen in the primary mkt. There is an overall 13% decline for this group vs a 14% increase in purchases from S’poreans. In terms of country split, Chinese accounts for 28%, M’sians 27%, Indonesians 18%, Indians 7%.

* OUEHT – to list today at 2pm. Priced at 88cts, low end of range. Retail tranche is oversubscribed by 19x. Placement/Institutional tranche is ‘fully subscribed’.

* KPLD – to sell its 51% holding in the east Jakarta township to PT Modernland Realty, for S$290.5m. It expects to book a gain of S$186m.

* CAPL – 2Q NP -0.7% to S$383m. AHEAD of Daiwa’s ests. Mgt warns of headwinds for S’pore mkt, but remains +VE on its China business. No interim dvd annced. More from analyst later.

* CACHE – 2Q DPU +8.4% to 2.147cts. Distributable income +19% to 16.6m, while net ppty income +17% to S$19.6m. Mgt acknowledged that growth in Asia will remain sluggish for this and next year, but it will continue to pursue growth via acquisitions & organically.

* FCOT – 3Q DPU +29% to 2.19cts as distributable income +31% to S$14.4m. Net ppty income -13% to S$23.1m. Overall portfolio occupancy at 98.1%.

* MCT – 1Q DPU +14% to 1.753cts. Distributable income +26% to S$36.2m. Net ppty income +31% to S$47m.

Market Wrap by Decoder – 25 July 13

• CN/HK – Sans monetary stimulus, new measures could help. Premier Li Keqiang is serious about his vow not to offer additional stimulus to prop up the slowing economy. Apparently the slowdown has yet to reach the bottom as reflected in the latest manufacturing activities gauge and the weaker economic expansion in Apr-June period. Instead of loosening the grip on interest rate and hence liquidity, the State Council on Wed unveiled a package of fiscal and administrative initiatives to boost trade and fixed asset investments and to support small and micro companies. This is to make sure that China is able to keep up and hit Li’s 7% target this year. Those measures include pouring billions to speed up railway construction/exemption of small firms from valued added and biz taxes starting 1st Aug/reduction of administrative fees for export inspections/rebates for small firms etc. 4Q GDP might just be a shocker for everyone. –

• Stocks retreated last night amid mixed earnings and rising borrowing cost. 9/10 of the sectors ended in the red with Tech being the only one that’s able to keep Nasdaq afloat. Apple added 5% overnight as the tech giant reported 3Q earnings that top street’s est the day before. Financials -0.8% with major banks registering losses as the 10 yr yield climbed 11bps to 2.583%. New home sales came in @ 497K vs 484K, best in 5 years as investors take advantage of the low interest rates before it starts to rise again.

Market Wrap by Broker – 24 July 13

Baltic Dry: 1127 -0.70% Gold: 1343.60 +1.19% Palm Crude: 2258 -0.62%
VIX: 12.66 +3.01% WTI Crude: 107.39 +0.15% USD/SGD: 1.2639 +0.19%

*Starhill Global Reit(SGREIT) 2Q13 #s: DPU of 1.19c was exactly the same with our fcst but REV & NPI came 3% below fcst, where REV was dragged by Wisma Atria retail & the overseas properties in Japan, China, & Australia.

*Frasers Centrepoint(FCT) 2Q13 #s: DPU of 2.85c was 1.5% above our fcst while NPI & REV came slightly higher vs our fcst on Causeway Point’s other income & Northpoint’s rental income. However REV from Anchorpoint & YewTee Point (2 fast-food tenants vacated their spaces) were below fcst.

*Cambridge Industrial(CREIT) 2Q13 #s: DPU of 1.24c was 0.7% below our fcst while NPI & REV came 1% & 2.8% above fcst respectively; Occupancy rate was stable at 98.4% & achieved positive rental reversions of 5-10% for 1H13.

*CapitaMalls Asia(CMA) 2Q13 #s: PATMI of $245.6m +5.9%YoY on REV of $93.4m +25.2%YoY largely due to new contributions from Olinas Mall & The Star Vista.
Interim div of 1.75cps, amounting to >20% of 1H13 PATMI & 7.7% higher than
2012 interim div; ex-date Aug 28.

*(SGX) 4Q13 #s: NP of $87.6m +43%YoY was below berg’s consensus of $92m.
Operating profit rose 28%YoY as trading of derivative contracts climbed to a record & stock volumes rebounded. FY NP of $335.9m was inline with consensus.
Recommended 16c final div, bringing the total payout for the yr to 28c.

*Sheng Siong(SSG) 2Q13 #s: NP of $8.5m +20.8%YoY while improvements in gross EBITDA (+1.3pp) & OP margins (+0.7pp) were mainly due respectively to the price war started in 4Q11 & efficiencies obtained from the new Mandai Link warehouse. Interim div of S$0.12 declared.

*SingPress REIT(SPHREIT) in trading debut today at 2PM & will be closely watched as IPO was 37x subscribed, assuming an over-allotment option of 56m units not exercised. Placement tranche of ~224.9m units was 42x subscribed, with IOIs received for ~9.4b units while public offer was ~ 25x subscribed.

*(GLP) extends cooperation with Goodbaby, leases out 44k sqm in China to them.
*Nam Cheong(NCL) bags sales contracts for 3 vessels valued at $70m.