Jaya Holdings (77 cents) - Possible top formation

Volume has been expanding on black candle days, suggesting that some selling pressure has appeared. In addition, prices appear poised to fall below the 50-day moving average support line at 76 cents. As yet, no clear negative divergence has appeared between price and quarterly momentum.

However, 21-day RSI has been declining and is now marginally below its equilibrium line, suggesting some short-term selling pressure. Support/breakdown is at 76 cents with the next support appearing at 72 cents. Resistance has been established at 80 cents.

Feb 25: Pan United, Jaya, Sembcorp

Singapore share prices ended slightly higher on Monday. The blue-chip Straits Times Index rose 0.19% or 5.91 points to end at 3,105.84. Here are some stocks and factors that could affect the market this Tuesday morning:

Pan United Corp has posted a 4% rise in full-year earnings to $52.1 million from a year ago as revenue rose 2% to $727.4 million. For the 4Q ended Dec, earnings came in at $11.9 million, up 37% a year ago even as revenue stayed flat at $186.3 million.

Jaya Holdings, the offshore energy services company, said it would be selling its subsidiaries to Australia-listed Mermaid Marine Australia for $625 million. The sale, representing all of Jaya's businesses, comes after a strategic review conducted by Jaya in September last year.

Sembcorp Industries is planning to expand two of its utilities facilities. Its wind power plant in Huanghua, Hebei province, will see its wind power capacity increase by almost 50%, and its industrial water plant in Nanjing, Jiangsu province, will have its industrial water capacity doubled.

Viva Industrial Trust (VIT), the business park and industrial trust, has posted a distribution per stapled security (DPS) of 1.080 cents for the financial period starting from its date of listing on 4 November 2013 to 31 December 2013, on net property income of $6 million and gross revenue of $9 million, which have exceeded forecast.

DBSV reinstates Jaya Holdings at Buy, $0.85 target

DBS Vickers reinstates Jaya Holdings (J10.SG) at Buy with a $0.85 target.

“With a clearer focus and less volatile earnings, we believe Jaya now offers a more attractive investment opportunity. We see a potential re-rating of the stock towards its book value on a strong 86% recovery in FY13 earnings.”

It notes Jaya repositioned as a service-provider for the offshore energy sector, with a focus on chartering ensuring higher recurring income and a move away from speculative shipbuilding reducing earnings volatility.

It views Jaya’s strategic alliance with IHC Merwede as a potential game-changer as the two could collaborate to build IHC’s high-specification offshore vessels at Jaya’s yards, which would propel Jaya up the value chain, leapfrogging regional competitors.

The house expects FY12-14 EPS CAGR of 54%, primarily on the offshore-support division on a larger fleet, improved day rates and better margins. “We see positive catalysts from potential high-value newbuild orders and possible resumption of dividend payments.” It views current valuations as undemanding at 0.7x FY12 P/BV vs its 1.1x five-year historical average. The stock is up 3.4% at $0.605.