Nov 13, 2013

    STI dips slightly as markets await data

    The Straits Times

    SINGAPORE shares slipped yesterday, with traders in wait-and-see mode as they mulled over uncertainty abroad.

    The benchmark Straits Times Index (STI) dipped 6.47 points - or 0.2 per cent - to 3,180.25.

    Some traders were awaiting news of China's Communist Party meeting, which may shed light on Beijing's economic framework for the years ahead.

    Others were weighing the odds of the United States Federal Reserve slowing its massive money-printing policy, following recent upbeat job data from the US.

    Among the STI stocks, Sembcorp Industries fell two cents - or 0.4 per cent - to $5.30, even though the conglomerate said on Monday that third-quarter net profit rose 40.4 per cent to $254.4 million. There was a 30.8 per cent rise in revenue to $2.97 billion.

    The stellar performance was helped by gains from the initial public offering (IPO) for Semb- corp Salalah Power and Water Company, one of Sembcorp's jointly owned units.

    "Sembcorp Industries' third-quarter core earnings were $186 million, up 3 per cent year on year," said DMG & Partners Research.

    "Utilities earnings were in line, while its headline net profit of $254 million was boosted by one-off gains from the Salalah IPO, but offset by asset impairments in Teesside, in Britain."

    DMG said it remains positive on Sembcorp, given its strong capacity expansion over the next three years and possible earnings growth from potential new projects. It has a "buy" call and target price of $5.90 on the stock.

    Outside the STI, engineering and construction company Yongnam Holdings gained half a cent, or 2 per cent, to 25 cents. On Monday, it announced a net loss of $3.41 million for the three months to Sept 30, against earnings of $10.31 million for the same period last year.

    Cost overruns on three steelwork projects and a non-recurring loss from the disposal of some fixed assets were blamed for the third quarter's red ink.

    Maybank Kim Eng Research said that Yongnam's results for the nine months to Sept 30 met its toned-down expectations, following a profit warning announced two weeks ago.

    "We remain cautious on Yongnam's earnings (next year amid) a lack of contract wins year to date, and trim our financial-year 2013 estimate marginally."

    Maybank Kim Eng has a "hold" call and 24-cent target price on Yongnam.

    Market turnover continued to be soft, with $795 million worth of shares changing hands - just slightly ahead of Monday's $768 million.