Business

STI falls to 3,572 on O&G worries

1% drop also attributed to US Commerce Secretary' comments hinting of action against China in trade war

As the global elites focused their attention on the Swiss alpine town of Davos where the World Economic Forum is being held, investors in Singapore were more anxious about the colour of Keppel Corp's books.

The diversified marine conglomerate released its fourth-quarter results after the close of the market yesterday.

"There have been a lot of concerns in the oil and gas (O&G) industry. The latest being the hefty fine of US$422 million (S$551 million) slapped on Keppel Offshore & Marine (O&M) for bribes to officials in Brazil.

"The results should provide a clearer indication as to whether the worst is indeed over for the O&G sector," said one analyst.

Keppel Corp, which is expected to book its provisions for the fine, hit $8.65 a share before succumbing to some profit-taking. It ended at $8.58, down five Singapore cents, or 0.6 per cent, on about five million shares.

It eventually reported a net profit of $217 million for last year, down 72 per cent from the net profit of $784 million in 2016, due mainly to the one-off fine arising from Keppel O&M's global resolution with criminal authorities in the US, Brazil and Singapore as well as related legal, accounting and forensics costs amounting to $619 million. Excluding the one-off penalty and related costs, it would have turned in a net profit $836 million for FY2017, 7 per cent up from $784 million a year ago.

The benchmark Straits Times Index, which opened at 3,609.52, closed at 3,572.64, down 36.6 points, or about 1 per cent. Sentiment was dampened by US Commerce Secretary Wilbur Ross' comments that hinted at action against China in a trade war.

More than 2.4 billion shares, worth $1.5 billion, changed hands. There were 179 gainers to 296 losers.

TRADING HALT

Hong Kong-based Noble Group rallied as much as 21 per cent to 32 Singapore cents. It was trading around 30.5 cents, up four cents, or 15 per cent, when it sought a trading halt at 3.26pm.

Debtwire reported that the beleaguered commodities group has reached an agreement with its creditors to restructure about US$3.5 billion in debt, paving the way for an investor to take a controlling stake in the company.

If implemented, the plan would give Noble access to working capital at a cheaper cost and allow creditors to cash-in on shares obtained from a debt-to-equity swap via a sale to the strategic investor.

Investors initially reacted positively to CapitaLand Commercial Trust's (CCT) higher distributable income of $75 million in Q4 2017 versus $70.8 million a year ago. It traded to $1.93, before settling at $1.90, down one Singapore cent.

CCT's distribution per unit (DPU) for Q4 2017 of 2.08 cents and FY 2017 DPU of 8.66 cents was up 6.1 per cent and 5 per cent year-on-year respectively on an adjusted basis.

Based on CCT's closing price per unit of $1.91 on Wednesday and FY 2017 DPU, CCT's distribution yield is 4.5 per cent. CIMB upgraded it to an "add", with a target price of $2.25.

Genting Singapore slipped three Singapore cents to $1.36, with more than 50 million shares traded.

UOB-Kay Hian noted that the daily chart showed the breakout during the last trading session was accompanied by a high trading volume.

"The stock could continue to trade in the direction of its prevailing trend as there was a pennant formation breakout. Mild retracements... are opportunities to re-establish long positions. Ideally, the stock price should continue to trade well above its short-term moving average.

"For now, we expect the high of Nov 5, 2013, to be retested. Approximate time frame on average: two weeks," it said, adding that its institutional research has a fundamental "hold" call and a target price of $1.30 for the stock.

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