Market Wrap by Broker – 31 Oct 13

Month end futures expiry today, expect price volatility & huge vols to go thru at the open. CAPL just reported 3Q NP -8.7% YoY to S$135.5m. Last evening NOL 3Q earnings were below expectations. PALM OIL extends rally, +1.8% to RM2543 metric ton on supply concerns in Msia due to the monsoon season starting next mth. Separately Msia is set to impose a requirement for biodiesel to use 7% palm oil up fr 5% now. This coupled with Indo’s biodiesel program shd lend support to CPO px. +ve for upstream players GGR, FR. Both reporting 3Q on Nov12

**RESULTs today: OSIM 3Q consensus est NP S$23m; MRT 2Q consensus est NP S$22m**

*CAPITALAND 3Q NP S$135.5m -8.7% YoY vs Macq est NP S$182m. 9M net S$706.9m +5.9% YoY. Spore residential sales YTD S$2.2b; +ve on China property mkt. Expect to launch 650m units in China in 4Q, est value RMB1.7bn.

*NOL: Not pretty. Reported 3QNP:US$20m vs est $50m, blamed on lower freight rates & volume. BUT expect a better 2014, underlying op performance has cont to improve due to lower bunker consumption and other cost saving programs.

*SPOST 2Q NP S$35.6m vs consensus S$40.5m. 2Q revenue S$203.8m

*EZION gets approval in principle for listing of bonus shares.

*China Environment (CENV SP): Secured 5 contracts with value of RM119.1m +ve *Yongnam (YNH SP): Profit warning. Sees FY 2013 profit lower y/y

*SHORTs: Highest short as a % of t/over yday: FRT (75%), OSIM (45%), GGR (33%)

Morning Wrap by Decoder – 31 Oct 13

• HK/CN – Xi shows impatience over rising home prices. President Xi’s pledge to boost the nation’s housing supply, especially affordable housing could spelt troubles for developers including China Vanke/Country Garden Holdings. Although affordable housing and private residential projects are basically 2 different markets, Xi’s remarks are a clear reflection of the government’s limited tolerance for rising home prices as seen in China’s major cities in the past year. Xi’s administration would probably make its first move to curb home prices after the Communist Party plenum in Nov. According to the country’s 12th 5-yrs plan, China will increase the quantity of affordable housing to cover 20% of all residential areas by 2015 and this would likely involve the construction of 36m affordable housing units, including renovation of run-down neighborhoods. –

• Overnight markets ended lower on profit taking after Bernanke said that the Fed will keep the 85bn stimulus going, citing a weak housing sector, an elevated unemployment rate and economic policies that are still holding back growth. As anticipated, rates were unchanged @ 0.25% and the Fed will postpone the tapering. Market observers are expecting the Fed to take actions in 2Q 14, giving Yellen some time to adjust for the transition. VIX stayed around “13” level for 10 consecutive days, after hitting an intraday high of 15.27. NYSE value traded took a plunge, -10% against the recent 10 days average. On macro side, Sept inflation number was inline while the ADP employment came in @ +133K which missed esti of +150K and last month of +166K.

Morning Wrap by Decoder – 30 Oct 13

• HK/CN – Hukou reform aims to push economic restructuring. China, which is upgrading its economic structure, plans to step up the long-awaited reform of its “hukou” or household registration system after the issue is sorted out during the third plenary session of the 18th Communist Party of China Central Committee on Nov 9th to 12th. The reform can help to improve the labor force and address the income inequality between rural and urban residents. China is pushing for its transformation into service-oriented economy from the low end manufacturing model which has contributed its explosive growth for the last decade. This new reform will help foster labor mobility and unleash more human resources to help develop the less affluent inland regions. –

• US equities finished the day with gains after a day packed with corporate earnings that largely beats estimates. Drug maker Pfizer +1.7% on higher sales, Xylem +12.4% after an EPS that well exceeded estimates. Baidu +3.4% prior to earning report that was released a/h. Stock added another 5.5% a/h on an EPS of 1.48 Vs 1.46 f/c. Markets initially took a dip when Oct Consumer confidence numbers hit the streets (71.2 Vs 75 est) and Sept retail sales fell 0.1% MoM Vs consensus of unchanged. NYSE value traded # was lighter, -8.7% against recent average ahead of Fed’s statement tonight.

Morning Wrap by Broker – 29 Oct 13

Baltic Dry: 1619 -3.11% Gold: 1352.22 +0.08% Palm Crude: 2463 +0.78%
VIX: 13.31 +1.68% WTI Crude: 98.48 -0.20% USD/SGD: 1.2382 -0.15%
Macro: Construction firms in Singapoee MUST be certified “green & gracious” by Govt if they want to bid for public housing, schs, hospital projects from 2017.This will affect > 300 medium-sized & large building firms which have bet Jan 2015 & Dec 2016 to obtain certification.

*Great Eastern(GE): 3Q13 #s: NP S$282.8m -54.4%YoY due to absence of 1-off post tax-gain of S$421.6m from stake sale in APB & FNN; If excl. this, NP rose 42.8%YoY; Co. says capital adequacy ratios remained well above min. regulatory ratios.

*Far East(FEOR) to buy Clocktower Sq in Sydney for A$72m, Harbour Town in Perth for A$205m.

*Frasers Centrepoint(FCT) aims to generate profits of at least S$200m from Singapore residential projects; also aims to sell 1,000 homes a yr in overseas after split from FNN.

*(SGX) starts Asian FX futures for deliverable & non-deliverable Asian currencies from Nov 11.

*ARA Asset(ARA), Straits Trading(STRTR) resumes trading today; ARA & STRTR agreed to jointly invest in ppty: STRTR to buy 20.1% stake in ARA for S$294.4m from Cheung Kong Investment Co. & ARA’s CEO John Lim in cash & shs. STRTR & John Lim are to also inject S$850m & S$100m respectively in JV investment vehicle that will seed new pte funds to invest in Asia & elsewhere.

*ST Engr(STE) unit gets 3-yr line maintenance contract from Jetstar Asia.

*Boustead(BOCS) unit gets design-build-and-lease contract, their 2nd such project secured in FY14; Contract will not be added to their order book back log, since its not on a design-and-build arrangement.

*King Wan(KWAN) bags S$26m worth of new M&E contracts; order book S$168.9m worth of M&E contracts *Tee Int’l(TEE) signing of conditional LOI for S$142m package.

Market Wrap by Decoder – 29 Oct 13

• HK/CN – Tiananmen crash fuels rumors before party plenum. Security in Beijing is said to have raised to high alert after a sport utility vehicle crashed and burst into flames in the heavily guarded Tiananmen Square yesterday morning (killing 5 and injuring 38 others). Coverage of the crash was small and little details can be found. There have been rumors going around that it could be a terrorist attack from ethnic minorities in Xinijang province. If true, this could be seen as a direct challenge to Beijing and the stability that the new Chinese government vowed to maintain. The timing of the incident is also sensitive as it comes at a time when Beijing is preparing to hold the 3rd plenary session next month. –
• PBoC to conduct 13B Yuan of 7-Day Reverse Repos, first time in 2 weeks. (BFW)

• US stocks finished little change on Monday as investors awaits the outcome of the 2 days FOMC meeting starting tonight. Fed policy makers will meet again tonight to assess the economic conditions to determine if the economy is ready to have the stimulus removed. IP’s reading beats expectations (0.6% Vs 0.3%) while the pending home sales saw its biggest slump in 3 yrs in Sept (falling 5.6% Vs an unchanged forecast). Cyclical sector ended mixed – energy +0.1%, tech +0.3% while consumer discretionary/financials/industrials down 0.1 – 0.2%, material – 0.6%. NYSE value traded saw a modest 5% increase against the recent average. Apple initial read was +ve with a higher EPS of 8.26 Vs 7.92 estimated but stock came under pressure after coy gave a weaker than expected gross margin guidance.

Morning Wrap by Broker – 24 Oct 13

Baltic Dry: 1786 -3.30% Gold: 1332.76 +0.19% Palm Crude: 2482 +1.10%
VIX: 13.42 +0.68% WTI Crude: 97.10 +0.25% USD/SGD: 1.2389 +0.06%

*Fraser & Neave(FNN): billionaire Charoen may pare his majority stake in FNN to keep the stock listed & allow it to spin off property assets. -WSJ *Keppel Land(KPLD) to buy China site for RMB241m, building 350 homes on land.

*SingTel(ST) scraps mobile app “LoopMe” for reasons that are unclear; seems that 2 firms that worked on the app were involved in licensing dispute.

*Courts Asia(COURTS) to start construction of Indonesia megastore; operational by 2014.

*China Minzhong(MINZ) gets approval to extend halt by another 2 wks till Nov 6 so as to enable INDF.IJ to restore the public float of the Co.’s shs. If float not restored, co. will need to convert TRADING HALT to a SUSPENSION.

*Tuan Sing Hldgs(TSH) unit “Dillenia Land” drawn into Gilstead Court row over a collective sale; 3 members of sale committee claim breach of contract over an offer.

Earnings results:
*CapitaMalls Trust(CT): 3Q DPU +5.8% to 2.56cts on back of higher contributions from revamped malls & higher rental from new/renewed leases. Distributable income +9.7% to S$88.8m. Overall occupancy rate improved QoQ to 99.5% from 99.1%. Mgt remains cautiously optimistic on outlook.

*(AAREIT): 2Q DPU +10% to 2.75cts. Distributable income +29% to S$14.5m due to a new source of rental income and higher rental rates. Mgt believes that AAREIT will be able to cope if interest rates increase as its debt refinancing is due only in Oct 2015.
*CacheLog(CACHE): 3Q DPU -0.8% to 2.126cts. Distributable income +9.6% to S$16.5m. Lower DPU was due to the issuance of 70m private placement units in Mar 2013.

*FrasersComm(FCOT): 4Q DPU +18.9% to 2.08cts. Distributable income +20% to S$13.7m due to lower finance costs, & lower payout to holders of its Series A Convertible Perpetual Preferred Units.

*Sheng Siong(SSG) 3Q13 #s: NP S$10.6m +7.8%YoY mainly on higher REV (+4.8%YoY on higher new store sales offset by lower comparable SSS) & better gross profit margin.

Market Wrap by Decoder – 24 Oct 13

• HK/CN – Property tax comes closer to more homes. Increasing the supply of public housing and the expansion of the property tax to more cities will probably top Chinese leaders’ list of measures to contain the rebound in home prices. BJ’s housing administration said on Wed that the capital city will allocate land by the end of this year to build 20k low-cost homes, with plans to earmark more sites next year for 50k similar residences. The prices of these units will be 30% lower than those surrounding units. Similar programs are expected to be launch in other cities such as SH/Shenzhen/Guangzhou/Tianjin where some double digit gains in home prices were seen in Sept. Property tax – which now applies to only luxury units in SH/Chongqing, is likely to be extended to other cities as well. –
• China Flash PMI due 9.45am HKT (cons 50.4 Vs last 50.2).

• Overnight markets closed lower, falling from high due to weaker corporate earnings from Caterpillar as well as bad business loans data from China. Caterpillar was down 6.1% due to earning misses/outlook revision while SHCOMP plunged earlier in the day after China reported write offs in bad bank loans and a spike in the short term money rate send investors fleeing from equities. The energy sector was down 1.4% as crude grinded lower, below $97 mark. Treasuries locked in modest gains as the 10 yrs yield dipped 2.5 bps to 2.49%. Macro data like the mortgage applications added on to the selloff as the # declined as home refinancing fell for the first time since early Sept.