Reports » Singapore

Singapore stock market and companies daily report (Dow Jones Industrial, Mapletree Logistics Trust , HupSteel ) (August 23, 2010)

Contributed by Shares Investment

By Shares Investment

US Stocks Fall On Recovery Concerns

The Dow Jones Industrial Average ended down 0.9% to 10,213.62 as a jump in jobless claims and an unexpected slump in Philadelphia-area manufacturing suggested a rebound in corporate profit growth won’t be sustained. The S&P 500 shed 0.37% to 1,071.69, while the Nasdaq reversed earlier losses, gaining 0.04% to 2,179.76. Most of the key S&P 500 sectors fell, led by energy, industrials, and telecom, but utilities, technology, and consumer staples turned higher. According to Schaeffer’s Investment Research, one concern is the spike in mergers and acquisitions activity to the highest levels seen since late 2009 —typically a bullish sign for the market — has failed to turn around sentiment. Meanwhile, oil tumbled to a 6 week low as it settled 1.3% lower to US$73.46 a barrel and gold ended around US$1,227 an ounce.

MapletreeLog Buys Second Korean Warehouse

Mapletree Logistics Trust (MapletreeLog) is investing $32m to acquire a second warehouse in South Korea. The company inked a conditional sale and purchase agreement, which is expected to be completed at the end of the current quarter, with the property’s vendor Multi-Q Logistics. MapletreeLog said that its gearing level will increase to 44.2% if the acquisition is fully funded by debt. Under the deal, Multi-Q Logistics will lease back the property for 5 years at rental prices that provide for annual escalation. To date, MapletreeLog has announced $460m worth of acquisitions and some $260m of these have been completed.

Significance: Besides the attractive net property yield, the growth potential of South Korea’s logistics sector is evident in the recognition given by the South Korean government which has an overall goal of raising logistics value-add to 11% of the country’s GDP by 2020.

HupSteel’s 4Q10 Net Profit Up 62%

HupSteel’s net profit for 4Q10 rose 62% to $4.14m while revenue slipped 15% to $57.18m on the back of lower sales of plates. Gross profit margins improved to 17.5% from 11.7% in 4Q09 as the group had been running down its higher cost stocks in the earlier quarters and replenishing them with lower cost stocks. For FY10, net profit was down 27% YoY to $10.32m while revenue dropped 45% to $177.7m. According to HupSteel, demand from sectors that the group mainly served namely, marine and oil & gas, had been relatively less buoyant than the manufacturing sector. Higher steel prices also affected the demand for steel, causing its customers to scale back purchasing activities. Looking ahead, HupSteel has set its sights on supplying to infrastructure projects like the Sports Hub and the Ferry Terminal.

Significance: With major economies such as US and China showing signs of slowing and Singapore’s growth forecasted to moderate in 2H10, market demand for steel products is not expected to improve in the near term. This may put HupSteel’s margin under pressure going forward.

This article is contributed by Shares Investment. Visit Sharesinv.com for the latest Singapore, Malaysia and China stock market news and reports.