US equity indices edged above the narrow sideways band that stretched over the past 2 weeks on M&A news and after Germany's February investor confidence rose more than expected, fuelling optimism that the country's economy is on the rebound. Asia equities are currently on the rise this morning and the same should go for the Singapore market. Valuation though, should limit the pace in which STI can rise as the index currently trades at 14.13x (Ave) 12-mth forward PE. Tracking along this forward PE line, STI should head to c.3360 by end-March, which is more than a month away, based on current earnings forecast.

CapitaLand has entered into an agreement with Iskandar Waterfront Sdn Bhd and Temasek to acquire and develop land at the A2 Island in Danga Bay, located in one of the 5 flagship zones in Johor's Iskandar Malaysia. Capitaland will take a 51% stake in the project, Iskandar Waterfront 40% and Temasek the remaining 9%. This is Capitaland's first direct large scale township investment and development in Malaysia. This signals its confidence in Iskandar Malaysia as a compelling investment opportunity into a new upcoming development region, and would generate benefits in the medium term. Maintain BUY with TP of S$4.09.

More collaboration works between Singapore and Malaysia are in the making. A new high-speed rail link between Kuala Lumpur and Singapore is in the works, with passengers needing just 90 minutes to get from one city to the other once the system is up and running by 2020.

Suntec REIT is issuing S$280m in aggregate principal amount of Convertible Bonds (CBs). The convertible bonds will pay a coupon of 1.4% (semi-annually) and conversion price at S$2.154. The maturity date is on or about 18 March 2018. Bondholders can choose to convert to new Suntec REIT units from 28th Apr'13 onwards. In aggregate, the CBs represent a potential additional of c130m new units of Suntec REIT shares, representing a 5.8% of the current share base. Bondholders may also require the issuer (Suntec REIT) to redeem all/some of the units together with any accrued interest on 18th March 2016 or may be redeemed at the option of Suntec REIT from that date onwards. Use of the proceeds from this issue is expected to refinancing debt and will extend its debt maturity profile as a result. We reckon most likely the proceeds will be utilized towards refinancing existing CBs due in Dec'13, which has a coupon of 3.25% and a conversion price of S$1.678, which is already in the money. The refinancing of this expiring CB is likely to result in annual savings of c S$5m (or 2.3% of distributable income). Maintain HOLD call and TP of S$1.70.

Koh Brothers, a construction, property development and specialist engineering solutions provider, reported FY12 net profit of S$19.7m (-4% y-o-y), on the back of S$299.5m in revenue. The lower net profit was mainly due to higher distribution and marketing expenses. Gross profit margin for FY12 rose 3.7 percentage points to 16.7%, from 13.0% for FY11. Gross profit for FY12 rose 13% to S$50.1m, as the Group's continual efforts to drive productivity contributed to higher margins at its Construction and Building Materials division.

Yamada Green Resources is placing out 82.2m new shares, representing approximately 16.49% of the enlarged share capital, at an issue price of S$0.119 per share, a discount of about 10% to the last volume weighted average price. The Subscriber is a special purpose vehicle wholly owned by Mr Sam Goi Seng Hui, the Executive Chairman of Tee Yih Jia Group. The net proceeds of about S$9.4m will be used to fund the future acquisition and expansion of the company, as well as general working capital.

More companies are issuing profit warning as the close of the reporting season draws nearer. China Environmental Resources Group expects to record significant losses for the six months ended 31 Dec 12 as compared to the profit recorded for the corresponding period in 2011, mainly attributed to the loss from changes in fair value of biological assets of which slight decrease in volume mainly affected by the shortage of underground water in the Xinjiang Region, the PRC.

RH Energy expects to report a net loss for FY12 due mainly to lower revenue from the absence of large equipment integration projects completed and delivered, higher staff  related expenses and increased business development expenses in exploring new markets and sourcing new products.

Changtian Plastic & Chemical is expected to report a loss for 4Q12 mainly due to an impairment charge.

Zhongmin Baihui Retail Group expects to report a lower net profit in FY12 as compared to FY11. This was mainly attributable to losses incurred at its Nanzhan Store as it had only opened for operations in Sep 12.

Changjiang Fertilizer Holdings expects to report significantly lower revenue and a loss in 4Q12 results due to lower demand for its products.

Source: DBSV