Market continues to languish
HK slide contributes to weakness; traders latch on to situational plays such as Ezion, which falls 4.6%
THE main difficulty dealers have faced in the past year is finding suitable adjectives to describe the local market - printable ones, that is.
Such was the case again on Monday, when the Straits Times Index drifted lower with little liquidity support. It eventually closed a nett 3.53 points weaker at 3,459.57 on volume of 1.7 billion units worth S$961.4 million.
A 0.8 per cent slide in Hong Kong probably contributed to the weakness, although the market there has enjoyed a massive rally lately and was due for a correction. A firm opening for Europe helped halve the STI's loss between 5pm and 5.05pm.
Whatever the case, dealers could find nothing flattering to say about local equities, many drawing envious comparisons with trading in China and Hong Kong, where daily volume is usually much higher than here.
Still, there were situational plays here for traders to latch on to. The shares of offshore and marine stock Ezion Holdings for example, fell S$0.055 or 4.6 per cent to S$1.13 on volume of S$34.5 million after news reports in Bloomberg and The Straits Times that it was being sued by Atlantic Marine Services (AMS).
RHB Research Institute called a "buy" on it, saying it sees parallels with an unfounded lawsuit against Yangzijiang Shipbuilding's chairman last year, during which the broker saw a mispricing amid the tumbling share price.
RHB said: "That stock has since jumped more than 40 per cent. The negativity surrounding Ezion arising from this lawsuit presents a similarly good entry opportunity. Maintain 'buy' with an unchanged S$2.10 target price."
In the afternoon, Ezion released a statement that it was "of the strong opinion that the claims by AMS as reported by Bloomberg and The Straits Times are frivolous and without merit".
In the food and beverage sector, shares of Thai Beverage ended unchanged at S$0.76 on volume of 4.3 million. OCBC Investment Research said the company's Q1 figures were decent, considering the weak Thai economy. "As Q2 and Q3 are usually weaker on a quarterly basis, Q115 performance is set to taper off to some extent but profitability should still improve year on year," said the broker.
"As we update our SOTP (sum of the parts) model with slightly higher PATMI (profit after tax and minority interests) projections, our fair value increases from S$0.80 to S$0.83. Maintain 'buy'."
Meanwhile, CIMB also called a "buy" with S$0.87 target price; DBS Vickers' "buy" came with a target of S$0.81.
In the second line, shares of furniture maker Nobel Design ended S$0.005 softer at S$0.425 on volume of 1.2 million. The company was due to release its first quarter figures on Friday, but had asked for a two-week extension as it wanted to re-examine its FY2014 figures.
Elsewhere, Maybank Kim Eng maintained an "overweight" on the property sector, saying it continued to believe that the odds of policy easing are greater in the high-end segment.
"Only 36 homes were sold in the Core Central Region in April - not far off the historical low of 13 in January 2013," said the broker. "Preliminary figures from CBRE showed that the capital value of luxury homes under construction has fallen to S$2,450 psf, 35.5 per cent lower than the peak of S$3,800 psf in Q312. As mass-market prices are still elevated, any easing may come later."
On the state of the US economy, Rabobank in its Monday Global Daily described US data released on Friday as "awful". "Industrial production fell month on month yet again, which was no surprise; but Michigan consumer confidence also collapsed, with a spike in inflation expectations (as well as fears over the job security) - totally in contrast to the picture we've been getting from other surveys," said the bank.
For full listings of SGX prices, go to http://btd.sg/BTmkts
