Source: UOBKayhian
MARKET NEWS:
The FSSTI lost 0.1% to close at 2,882.73. Activity in China’s manufacturing sector contracted for a fifth straight month in December, an official survey showed on Friday. Increased vacancy rates amid an oversupply of executive condominium (EC) units in Singapore is reviving debate in property circles about the relevance of the publicprivate housing type today. The broader market in Singapore saw 151 gainers and 156 losers, with total trading value at S$373.3m. US stocks ended the final trading day of 2015 with a whimper rather than a bang on Thursday, as the S&P 500 Index and the Dow Jones Industrial Average both snapped multi-year winning streaks. The S&P 500 index dropped 0.9%, to close the year at 2,043.94, while the DJIA retreated 1%, to finish the year at 17,425.03. The Chicago Purchasing Manager’s Index plunged to its lowest level since Jul 09 at 42.9 in December from 48.7 in November. Shares of Chimerix Inc. rose 7% after hedge fund billionaire Steven A. Cohen’s investment firm on Wednesday reported a 5.3% stake in the biotech group. That move comes days after shares plunged 80% in one day on news of an unsuccessful late-stage drug trial.
CORPORATE NEWS:
Keppel Corp: Takes full control of Keppel Bay Tower. Keppel has acquired the remaining 30% interest in Harbourfront One Pte Ltd – which holds Keppel Bay Tower – from Mapletree for S$180.9m. In turn, Keppel, through its unit Keppel Point, sold to Mapletree its 39% interest in Harbourfront Two Pte Ltd – which holds Harbourfront Towers 1 and 2 – for S$225.7m. (Source: The Business Times)
Noble Group: Noble caps turbulent year with “junk” status. Moody has cut Noble’s credit rating to “junk” status with a negative outlook. The credit-rating agency said that the downgrade was due to its concerns over Noble’s liquidity, low profitability and consistent negative free cash flow from core operating activities. (Source: The Business Times)
Triyards: Bags NT$716m oil barge order from CPC Corp. Triyards Holdings unveiled an order worth NT$716m (S$30.75m) from CPC Corporation, its second contract win from Taiwan, in yet another sign of the yard group’s diversification into new markets. The contract for the construction of two oil barges from CPC, is also Triyards’ first with the Taiwanese state-owned oil and gas company. (Source: The Business Times)
Singapore strategy:
Picking Up After Hitting Bottom Back to stock picking after recent bounce. With the FSSTI rebounding close to 5% from its Sep 15 low, the market could be range bound in 1H16. The FSSTI looks inexpensive but the 18% and 30% discounts to long-term mean PE and P/B valuations respectively look appropriate, given the mixed outlook and structurally weaker domestic growth prospects. We have an end-16 target of 3,240 for the FSSTI. Hoping for earnings recovery in 2016 but downside risks remain. After a disappointing 2015, investors will be hoping for a recovery but we think any signs are only likely in 2H16 as near-term headwinds persist. We forecast 2016 market EPS growth of 8.2% yoy, but see potential downside. Consensus forecasts continue to trend down with a 5.4% EPS growth (-1.8ppt) after a lacklustre 3Q15 reporting season. Our picks for a profitable 1H16. Large-cap BUYs include Ascott REIT, City Developments, DBS, First Resources, Raffles Medical, SATS, Singapore Post and SingTel. Mid-cap picks include Jumbo, Singapore O&G, Triyards and Wing Tai. SELL Nam Cheong, Sembcorp Marine and SIA Engineering.
Valumetrics.co 
Leave a comment