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OCBC Reports Sept 2013
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PostPosted: Fri Sep 20, 2013 9:42 am    Post subject: Reply with quote

CapitaLand Limited: New convertible bond issue
Yesterday, CAPL priced its proposed S$750m 2023 convertible bond issue at 1.95% yield to maturity with a conversion price of S$4.212. The group announced that they will use ~95%-100% of the proceeds to refinance its existing indebtedness and has set up an invitation to repurchase for cash existing CBs due in 2016 and 2018. We see this as a positive move that would reduce interest payments and lengthen the group’s average debt expiry. We also look forward to CAPL’s new condominium launch – the 694-unit Sky Vue in Bishan. While we estimate fairly slim profit margins in the low teens due to the pricing, we believe a strong launch would be taken positively by the market, particularly now that the group has a large unsold exposure of over a thousand units in the Bishan locality in Sky Habitat (340 units unsold) and Sky Vue (694 units unsold). Maintain BUY with an unchanged fair value estimate of S$3.77. (Eli Lee)

Telecom Sector: Price plans for new iPhones out
All three telcos have announced their price plans for the new Apple iPhone 5S/5C recently. For the 16GB model of the more powerful 5S, the telcos are offering the phone between S$515 and S$532 on a 2-year contract under their basic plans, versus the Apple Store’s retail price of S$988. This translates to an upfront subsidy of ~S$470 per subscriber. For the 5C, basic plan subscribers would need to fork out between S$318 and S$355 for the entry-level 16GB model on a 2-year contract. This amounts to a subsidy of ~S$515 against the retail price of S$848 found in the Apple Store. However, with Samsung launching its new Galaxy Note 3 around the same time, this may temper the demand for the new iPhone. We have a NEUTRAL rating on the sector. (Carey Wong)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks on Thu mostly fell, with benchmark indexes retreating from record highs that came with the Federal Reserve’s unexpected decision not to begin cutting stimulus.

- Singapore Airlines tied up with Tata Group, owner of the Jaguar and Land Rover brands, to start an airline in India.

- Asian Trust Investment has become a substantial shareholder in Logistics Holdings, following the acquisition of about 1.06m shares. This raises Asian Trust Investment's stake to 5.60% from 4.97%.

- Albedo has agreed to a S$774.1m reverse takeover with Tan Sri Dato’ Danny Tan’s company to buy land in Iskandar.
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PostPosted: Mon Sep 23, 2013 8:48 am    Post subject: Reply with quote

Singapore Airlines: Not taking off yet

Summary: We believe optimism over Singapore Airlines’s (SIA) Aug 2013 operating statistics is premature as the slight improvements are likely to be temporary in nature. Passenger demand growth should remain tepid in the coming quarters and the persistence of promotional activities will depress passenger yields. In addition, capacity additions from new routes have continued to outpace passenger growth and jet fuel price increases show little signs of abating, which will put further pressure on the carrier. As for its recent Indian JV announcement, we envision execution difficulties and the lack of adequate airport infrastructure. Maintain our SELL rating in SIA with an unchanged fair value estimate of S$9.50. Investors should take advantage of gains by the stock off recent lows and look to re-enter at price points nearer our valuation. (Lim Siyi)

MORE REPORTS

Hyflux: Time to look for other projects
Summary: Hyflux Ltd has officially launched Singapore’s second and largest reverse osmosis (SWRO) desalination plant on 18 Sep. According to management, the desalination plant is not only a showcase of its membrane technology but also strengthens Hyflux’s international track record in large-scale desalination plants, putting the company in a strong position to provide clean, affordable and sustainable water solutions to meet worldwide demand. During the Tuaspring launch, we also had a short chat with management and it appears that Hyflux is slowing but surely turning its focus back to the MENA region. But until we see the award of a sizable contract from any of the above mentioned markets to replenish its order book, we opt to maintain our HOLD rating and S$1.215 fair value (still based on 20x blended FY13/FY14F EPS). (Carey Wong)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stock markets finished the week higher despite a Friday pullback. How Congress and President Barack Obama deal with the debt ceiling is likely to determine market volatility for the rest of the year.

- YHM Group has secured a contract with a value of up to approximately US$183m over a 3-year period with an additional 2 year extendable option to provide a semi-submersible rig to be used by a Southeast Asian based national oil company to support its oil and gas activities in the Andaman Sea.

- Keppel entered into a sale and purchase agreement with KazStroyService Global Engineering B.V. for the sale of two shares, representing 100% of the issued and paid up capital of Berich Enterprises Limited, at a consideration of US$16.25m per share.

- Rex International’s 41% indirectly owned subsidiary HIREX Petroleum Sdn Bhd., has entered into a Collaboration Agreement with Bass Strait Oil Company Ltd to participate in exploration opportunities in the Gippsland Basin in Australia.
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PostPosted: Tue Sep 24, 2013 8:57 am    Post subject: Reply with quote

Ascott Residence Trust: Eurozone recovery and positive FX movements
Gradual recovery in the Eurozone should progressively translate into better leasing prospects for ART's European serviced residences. During the 2Q13 analyst briefing, management expressed that it believed that the whole portfolio's RevPAU for 2H13 will be flat or slightly higher than 1H13, assuming that exchange rates stay constant for the rest of the year. Assuming flat RevPAU/rental income in local currency terms on a HoH basis for 2H13, we note that the overall exchange rate movements for 2H13 so far could actually increase ART’s gross profit by ~1.0% HoH, chiefly due to improvements in EUR and GBP versus the SGD. Going forward, ART's geographically diversified portfolio in this volatile environment will provide some resilience to negative FX movements. We maintain our FV of S$1.37 and upgrade ART from Hold to BUY as FY14 yield is attractive at 7.6% based on yesterday’s closing price. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks fell on Mon after notching three weeks of gains, as investors worried about another standoff in Washington.

- New policy measures unveiled this month - with stricter rules for hiring skilled foreigners and tweaks to certificate of entitlement (COE) categories - will push consumer prices higher in coming months, economists say.

- The credit scores of consumers here have improved from a year ago even as they borrowed more, says Credit Bureau Singapore (CBS).

- DeClout's acquisition of a 50.1% stake in US company Procurri has allowed it to globalise its IT asset recovery and independent maintenance services business.

- Hotel Grand Central has received the go-ahead from local authorities to redevelop the site of a hotel and investment property in Christchurch, New Zealand, that was demolished after it was damaged in the 2011 earthquake.
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PostPosted: Wed Sep 25, 2013 9:06 am    Post subject: Reply with quote

Neptune Orient Lines: No peak season surprise
Despite industry wide efforts to push through general rate hikes, freight rates according to the Shanghai Containerised Freight Index show continued softening in Sep instead. With the traditional 3Q peak season weaker than expected and drawing to a close, we are likely to see freight rates subsequently head lower in 4Q13 as demand typically drops off, further affecting the ability of liners to force through rate hikes for the remainder of the year. That said, we are forecasting a much smaller core operating profit for NOL in 3Q13 and another loss-making 4Q13 to end a disappointing 2013. In light of the weaker outlook for 2H13 and beyond, we maintain our SELLon NOL with an unchanged fair value of S$0.95. The lack of any near-term catalyst compels us to keep our P/B peg at 0.9x. (Lim Siyi)

MORE REPORTS

CapitaCommercial Trust: Strengthening its debt profile
CCT reported that it has refinanced committed term loan facilities of an aggregate amount of S$450m and a revolving credit facility of S$100m with various expiry dates in 2014 and 2015. In addition, the trust also secured a new committed revolving credit facility of S$100m. These set of new facilities, with an aggregate amount of S$650m, will expire on maturity dates from 2018 to 2020. S$480m of the new facilities has already been drawn down, with S$450m to refinance the existing facilities and S$30m for capital expenditure and general working capital. We see this as a positive move for CCT which will significantly extend the average maturity of its debt portfolio from 2.8 years as at end 2Q13 by an additional 0.8-1.1 years, according to our estimates. Maintain BUY on CCT with a fair value estimate of S$1.61. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks ended mostly lower, with the Dow and the S&P 500 extending their losing streaks to four days, as a drop in consumer confidence and worries over a Washington debt-ceiling fight outweighed a rise in home prices and easing concerns over the Middle East.

- Property investment sales have crossed S$13b this quarter, roughly double the previous quarter and the strongest showing since Q3 2007.

- Larsen & Toubro Ltd, India's largest engineering company, is considering a Singapore listing for its toll-road projects that could raise about US$700m, said two people with knowledge of the process.

- Geo Energy Resources has struck two deals with Indonesia's coal-mining company PT Parisma Jaya Abadi.

- EMS Energy has received a contract to build a derrick equipment set for a tender-assisted drilling rig for US$36m and expects to secure two more similar-sized deals over the next few months.

- Ley Choon Group Holdings has won four contracts amounting to about S$30.6m, raising its order book to S$233.4m.
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PostPosted: Thu Sep 26, 2013 9:22 am    Post subject: Reply with quote

Sheng Siong Group: No new stores not a concern
Although 3Q13 is coming to a close, we are unconcerned by the lack of new store additions by Sheng Siong Group (SSG). While this development means that SSG will be unable to achieve its 10% gross floor area target for the year, the group should still experience decent top-line growth for 3Q13 from full-quarter contributions of new stores added last year. Furthermore, expected margin stability and a conducive macro environment – more dining-in of consumers and relatively subdued supermarket competition – provide price support for SSG’s share price at current levels. Favouring the counter for its defensive qualities and healthy balance sheet, we maintain BUY with a slightly lower fair value estimate of S$0.78 (S$0.80 previously). A potential catalyst for the counter exists in the form of its pilot e-commerce initiative, which is likely to commence in 4Q13. (Lim Siyi)

MORE REPORTS

CapitaRetail China Trust: Outcome of Distribution Reinvestment Plan
CRCT has announced that ~6.0m new CRCT units have been allotted and issued at an issue price of S$1.447 per unit to eligible unitholders of CRCT who have elected to participate in the Distribution Reinvestment Plan in respect of the distribution of 4.69 cents per unit for 1H13. The new units will commence trading on the SGX-ST today. With the issue of the new units, the number of issued units has increased by ~0.8% to 756,140,024. Since 3Q13 results will be announced soon, we will hold off on adjusting our model for this development. We maintain our fair value of S$1.58 FV and BUY rating on CRCT. (Sarah Ong)

Lippo Malls Indonesia Retail Trust: S$150m of notes issued under MTN programme
Lippo Malls Indonesia Retail Trust (LMIRT) has priced S$150m 4.25% notes due 2016. The notes will be issued under its S$750m Guaranteed Euro Medium Term Note Programme. The fundraising does not come as a surprise since management had indicated during the 2Q13 analyst conference call that LMIRT may refinance the S$147.5m term loan due June 2014 as early as late 2013. We maintain our DDM-based FV of S$0.44 on LMIRT and HOLD rating for now. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks dropped on Wed, with the S&P 500 index recording its longest decline since Dec, as a possible government shutdown overrode better-than-forecast economic reports.

- The wealthy in the Asia Pacific trust their wealth managers more than high net worth individuals in the rest of the world, a wealth report has found.

- OUE Limited is mulling over establishing yet another REIT to be listed on the Main Board of SGX.

- Asiaphos Limited, a Singapore-based explorer and miner of phosphate in China, hopes to raise about S$24.4m in an IPO on the Catalist board.

- Asia Fashion Holdings assured the market that a RMB461.5m (S$94.6m) compensation it is making to customers will not render the company "insolvent immediately".

- OKH Global has entered into a placement agreement in which it will issue up to 60m new ordinary shares at 68 S cents apiece.
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PostPosted: Fri Sep 27, 2013 8:55 am    Post subject: Reply with quote

Raffles Medical Group: Looking for overseas opportunities
Raffles Medical Group (RMG) recently announced that it has entered into a framework agreement to collaborate on the proposed development of an integrated international hospital with more than 300 beds in Shanghai, China. Negotiations on the finalisation of terms will likely take place over a timeframe of six months to a year, while relevant regulatory approval is also required. Recall that RMG is also in the process of exploring an integrated international hospital collaboration in Shenzhen, China. Should these negotiations be successful, it would allow RMG to expand its operations overseas. We are positive on RMG’s decision to explore business expansion opportunities in China given the immense growth prospects, although regulatory uncertainties would likely be the largest risk, in our view. We roll forward our valuations on RMG to 29x FY14F EPS, which consequently bumps up our fair value estimate from S$3.42 to S$3.61. Reiterate BUY. (Wong Teck Ching Andy)

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Hutchison Port Holdings Trust: Refinancing an important boost
According to Dow Jones, Hutchison Port Holdings Trust (HPHT) has secured a US$3.6b refinancing loan which comprises three tranches – a US$1b one-year loan, a US$1.6b three-year loan and a US$1b five-year loan. The one-year tranche is at an interest rate of 0.6% above Libor, while the three-year and five-year tranches are 1.1% and 1.4% above Libor respectively. On a blended basis, we estimate that the interest rate cost for this loan is ~1.5%, dramatically lower than the 2.5% rate which management had previously guided. Updating our model to reflect the lower future interest expense, we raise our DDM-based FV to US$0.84 from US$0.76 and maintain a BUYrating on HPHT. We estimate that HPHT is currently trading at an attractive FY14F dividend yield of 7.9%. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks rose on Thu, with the S&P 500 rebounding from its longest losing streak this year, as a larger-than-expected drop in jobless claims mostly overrode worries about a budget standoff on Capitol Hill.

- Singapore's 3Q GDP may fall by as much as 5%, warn economists as they take stock of the latest industrial production numbers, which revealed a continuing weakness in the key electronics sector.

- Demand in all segments of the property market slumped in Jul following the introduction of the total debt servicing ratio (TDSR) framework in late Jun.

- SATS Ltd and its subsidiaries are extending their hold over the local cruise industry by buying Singapore Cruise Centre from Temasek Holdings for S$110m.

- Structural steel specialist TTJ Holdings reported an 11% fall in net profit to S$14.87m for the full year ended Jul 31.

- Sysma Holdings has won a S$7.5m contract to build a two-storey Good Class Bungalow at Jervois Hill. Work starts next month and will take 18 months to complete.
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PostPosted: Mon Sep 30, 2013 10:18 am    Post subject: Reply with quote

Please note this will be the last post here. All reports will be posted at www.redbeanforumsg.blogspot.sg with effect from tomorrow.

Frasers Commercial Trust: On accelerated growth mode

Summary: Frasers Commercial Trust (FCOT) has essentially locked in robust growth for FY14 with lower interest costs and the redemption of its 321.9m Series A Convertible Perpetual Preferred Units (CPPUs) this year. In addition, we expect FCOT to gain from its growth initiatives embarked over the past year. For one, FCOT has completed the Precinct Master Plan and asset enhancement works for the office tower at China Square Central, and is likely to benefit from improved occupancy and higher secured rentals going forward. Moreover, FCOT has successfully completed the renewal of 511,000 sqft of the underlying leases at Alexandra Technopark and has achieved positive rental reversion of 17.4% at the property. According to the latest report by DTZ, we also note that sequential rental increments were seen within the CBD in 3Q13 on the back of better occupancy rates. This is consistent with our view that office leasing activity is likely to remain healthy. We maintain our BUY rating on FCOT with a revised fair value of S$1.45 (S$1.58 previously). (Kevin Tan)

MORE REPORTS

SATS Ltd: Cruise control

Summary: SATS will acquire Singapore Cruise Centre (SCC) from Temasek for S$110m. This acquisition will complement SATS's existing cruise services at the Marina Bay Cruise Centre, and give it control of the ferry terminals at Tanah Merah, Pasir Panjang, and HabourFront Centre, which has an anchor client in the form of the popular Star Cruises. We view the deal favourably as it is cash generative (SCC had revenue of S$45m and PBT of S$16.7m in FY13), should enhance SAT’s FY14F EPS by at least 5%, and will provide growth opportunities for its gateway and food solution businesses. We raise our fair value estimate to S$3.35 (S$3.10 previously) but maintain our HOLD rating on the counter as we foresee limited upside at this point. (Lim Siyi)


CapitaLand Limited: A strong launch at Sky Vue

Summary: Over the weekend, CapitaLand (CAPL) launched the 694-unit Sky Vue condominium project near the Bishan MRT station, and saw a strong sales performances with 430 units sold out of 505 units released for sale. The average selling price of the units sold was ~S$1,500 psf – which was 5% to 10% lower than those at the adjacent 509-unit Sky Habitat project. We like that the group has taken a rational approach, in terms of pricing, to move units during the Sky Vue launch. The strong sales performance will significantly reduce the group’s unsold exposure in the locality from over a thousand units at Sky Habitat and Sky Vue to ~600 units currently. We continue to favor large-cap developers with strong balance sheets and diversified exposure across regional real estate markets. Maintain BUY on CAPL with an unchanged fair value estimate of S$3.77. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.
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PostPosted: Thu Nov 21, 2013 11:40 am    Post subject: Reply with quote

Transportation sector: Hindered movement in 2014
Despite general economic improvements, the counters within the transportation sector failed to perform well in 2013 due to industry-specific challenges and issues (e.g. sustained competitive pressures in the aviation sector, demand-supply imbalance for the shipping sector, lack of fare increases for the land transportation sector). With some of these issues unlikely to be resolved in 2014, we are downgrading the overall sector to UNDERWEIGHT and expect investor interest to remain tepid. Out of the counters in our coverage, our top pick is ComfortDelgro, rated BUY with a fair values estimate of S$2.20, as we favour its diversified and stable earnings stream, attractive overseas operations, and strong domestic leadership in the taxi and bus segments.
More reports:
- Bumi Armada Berhad: 3Q13 PATMI grows 27.6% YoY
News Headlines
 US stocks fell on Wed after Federal Reserve meeting minutes signaled the central bank was on track to slow down its bond-buying programme.
 Singapore’s domestic wholesale trade rose 5.1% in 3Q13 compared with a year ago, according to data released by the Department of Statistics Singapore.
 The Draft Master Plan 2013 has taken a more holistic approach to developing new activity clusters and encouraging green spaces.
 Keppel Corporation has secured a contract to build a repeat KFELS Super A Class harsh environment jackup rig from Ensco plc for around US$265m.
 CapitaLand has unveiled plans for a quick sale of about a third of its stake in Australand Property Group that could fetch around A$434m (S$507m).
 Rex International Holding has received the green light to acquire 10% stakes in two offshore licences in Norway from North Energy ASA.
 SIIC Environment Holdings is buying a 50% stake in Shanghai Pucheng Thermal Power Energy for 530m yuan (S$108.2m).
 Hafary Holdings is placing a big bet on Singapore's housing outlook with the opening of its new S$21.5m showroom building.
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