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Stocks to watch: UOB, CapitaLand, Chip Eng Seng
STOCKS that could see some movements on Friday include banking stocks, which investors have a clearer handle on after the largest Singapore banks have all announced their results, as well as oil and gas (O&G) stocks.
All three banks reported lower earnings for the fourth quarter ended Dec 31, 2016, and higher provisions for loans to the O&G sector, signalling a continued challenging environment for the O&G industry.
UOB Group on Friday reported a net profit of S$739 million, 6.2 per cent below that a year ago, as stable loan growth was offset by a decline in net interest margin and lower gains from the sale of investment securities. It also raised its specific allowance on loans by S$313 million to S$428 million due to non-performing loans in the O&G and shipping industries.
Given banks' cautious outlook on the sector, O&G stocks may continue to see some selling pressures amid ensuing debt woes at Ezra Holdings.
Meanwhile, there was some positive news on the property front.
CapitaLand's shopping mall arm CapitaLand Mall Asia will buy four office and retail properties in Japan for S$636.3 million, inclusive of transaction costs.
The acquisition, which will strengthen CapitaLand's foothold in Greater Tokyo, is expected to increase the group's total asset size in Japan to about S$2.5 billion. It is also expected to be immediately accretive, contributing a net operating income of about S$25 million per year, providing CapitaLand with a stable source of income.
Chip Eng Seng reported on Thursday a net profit of S$14.9 million for its fourth quarter ended Dec 31, 2016, 52.5 per cent higher than S$9.8 million a year ago.
The construction and property development group's higher profits were driven by a net fair value gain on investment properties and lower administrative expenses due to a lower impairment loss on a development property and the absence of a fair value loss on investment properties.
Meanwhile, Singapore Medical Group has, through a S$15 million share placement, ushered the entry of South Korea's CHA Healthcare Co as a major strategic shareholder.
The group will issue 30 million new ordinary shares to CHC at 50 Singapore cents per share via a private placement. This investment will see CHC emerge as the group's fourth largest shareholder with a 8.8 per cent stake of the enlarged shareholding base and its largest strategic equity partner.