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DBSVickers Reports June 2013
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Posts: 1350

PostPosted: Mon Jun 17, 2013 9:50 am    Post subject: Reply with quote

Today’s Focus
 Small Mid Caps - Offer stronger growth at lower
valuations. Bargain hunt SREITs/yield; go for high
conviction growth and value stocks
All ears are on Ben Bernanke’s press conference this
Wednesday. Investors eagerly await what the FED will say
with regards to the timing and pace of QE3 tapering. His
comments on May 22 that the FED may reduce stimulus led
to a jump in bond yields and pulled equity markets down into
a tailspin on worries that the ‘easy money’ that had
underpinned equity markets would go away. Emerging Asian
equities were among the worst hit.
DBS Economics Research sees reasons for the FED to sit tight
rather than taper the asset purchases. US GDP growth in the
next 2 quarters is expected to read 1.4%, not much better
than the previous two and less than half the long-term
average as the impact of the US85bil sequester cut is felt
from April-Sept. Recent manufacturing number has
weakened again with the May PMI falling to 49, the lowest
since June 2009. The employment rate sub-indices for both
the ISM manufacturing and services have also dipped. If these
weaknesses persist, the recent pace of decline in the
unemployment rate can moderate or even reverse up, which
will delay interest rate hikes.
Singapore equities were sold down in recent weeks in
anticipation of an early QE3 cut back, but the sell-down
appears to have reached a short-term support last week.
Consensus expectations are for the FED to reduce the
monthly bond purchases to USD65bil from the current
US85bil (USD45bil in Treasuries & USD40bil in MBS) by
September and start raising interest rates by Mar15. QE3 is
unlikely to come to a full stop till middle 2014 and interest
rates unlikely to rise from the current low level till mid-2015.
Any less talk from the FED this week can trigger a rebound in
equity prices.
Base view: As DBS Economics Research’s view is that the FED
will sit tight on QE, we take the view that the outcome of
Wednesday’s press conference will please markets and STI’s
correction ended last Thursday in the short-term at c c.3100.
At that level, valuation had fallen to 13.1x (-0.5 SD) 12-mth
forward PE. The immediate support is 3120-3130. STI should
rebound to 3235 (38.2% upward retracement) or even 3280
(50% upward retracement).
Alternate: What if Ben spooks financial markets on
Wednesday that results in another sell-off in both bond and
equity markets? While previous post-GFC market corrections
have stressed the index down to around 12.3x (-1SD) 12-mth
US Indices Last Close Pts Chg % Chg
Dow Jones  15,070.2 (105.9) (0.7)
S&P  1,626.7 (9.6) (0.6)
NASDAQ  3,423.6 (21.Cool (0.6)
Regional Indices
ST Index  3,161.4 30.7 1.0
ST Small Cap  568.1 6.9 1.2
Hang Seng  20,969.1 82.1 0.4
HSCEI  9,667.4 (20.9) (0.2)
HSCCI  4,049.9 34.0 0.8
KLCI  1,762.2 19.3 1.1
SET  1,465.3 62.0 4.4
JCI  4,760.7 153.1 3.3
PCOMP  6,242.3 128.2 2.1
KOSPI  1,889.2 6.5 0.3
TWSE  7,937.7 (13.9) (0.2)
Nikkei  12,686.5 241.1 1.9
STI Index Performance
Singapore
Total Market cap (US$bn) 594
Total Daily Vol (m shrs) 2,432
12m ST Index High 3,454
12m ST Index Low 2,774
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
14 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.960 1.22
Ascendas REIT Trading Buy 2.310 2.50 *
UOL Buy 6.25 8.21
Thai Beverage Public Buy 0.610 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
14 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.560 0.84
Pan-United Corp Buy 0.905 1.16
Tat Hong Holdings Buy 1.380 1.80
China Merchants Buy 0.880 1.07
Nam Cheong Buy 0.275 0.36
* Technical Target
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 3
forward PE (2915 based on current forecast) before
bottoming, we do not see the current correction pulling the
STI down to such extreme this time round. At worst, we
expect a bottom that is ‘moderately lower’ below 3100 but
comfortably above 2915.
This is because unlike previous corrections that were
ignited by the fear of the Eurozone debt crisis
deteriorating into another GFC, the current one started
after Ben Bernanke commented that the FED may lower
QE3 support if the US economy can sustain its recovery.
Investors were caught off guard by the FED’s comments
and stress tested equity markets on the assumption that
QE3 will be removed sooner and interest rate starts to rise
earlier.
Compared to the dangers of another GFC, the roots
behind the recent correction is much less menacing.
Between earlier stimulus cut-back, a rise in interest rates
rise from record low levels down the road as the economy
improves in a sustainable manner versus another GFC, no
prize for guessing which situation investors would rather
be in.
Small mid Caps (SMCs) can continue to outperform
supported by stronger growth and lower valuations. We
believe the selloff in SREITs is overdone. As values
emerge, we pick SREITs with identifiable and achievable
growth like Mapletree Greater China Commercial Trust
(TP: S$1.22), Mapletree Commercial Trust (TP:S$1.53),
Cache (TP: S$1.47) and Mapletree Industrial Trust (TP
S$1.63). Besides the S-REITs, we see bargain hunting
opportunity for Religare (TP: S$1.05) as yield improves to
9.7%.
As macro recovery remains modest, we pick stocks where
earnings growth is highly visible and sustainable: Ezion (TP
S$3.00) will continue to outperform on secured contracts
and its unique market positioning; Tat Hong (TP: S$1.80)
is positioned to benefit from the regional infrastructure
boom; Del Monte (TP: S$0.97) is a proxy to Philippines,
SEA’s 2nd largest consumer market. Kreuz (TP: S$0.7Cool is
our top pick in the O&G services sector for its proven
execution track record while Midas (TP: S$0.60) is poised
for earnings recovery backed by its growing order book.
For value, Vard (TP: S$1.46) is a bargain at 6.3x FY14PE vs
normalized 10x PE. We believe the Myanmar theme will
continue as reforms continue to attract FDIs. Results of
telecom license and Yangon Airport development
contracts are imminent events. Picks are Yoma (TP:
S$1.05) and Yongnam (TP: S$0.41).
Yoma announced that it has extended the long stop date
on the acquisition of land for its Landmark development
by another six months to 31 Dec 2013. The company
remains confident that the Master Lease will be issued
and that it is finalising its discussions with the relevant
government authorities regarding the terms of the Master
lease. Accordingly, the proposed rights issue (1 rights
share for every four existing shares) to fund the proposed
acquisition will be extended too. We are not surprised by
this extension given that bureaucratic delay is common in
emerging country. No change to forecast and TP.
CosmoSteel is currently exploring the possibility of
establishing a strategic business relationship with a
potential strategic partner in Myanmar. This is related to
the production, sourcing and/or distribution of piping
system components and other steel products in the
energy, marine and other industries in Myanmar.
AusGroup has secured an A$34.5m scaffolding contract
with CB&I and Kentz Joint Venture on the Gorgon
Project, one of the world's largest natural gas projects
and the largest single resource development in Australia's
history.
Mr. Peter Wong, Tsit Wing’s Chairman and CEO, seeks to
privatise Tsit Wing. Mr. Peter Wong’s wholly-owned
special purpose vehicle, Hero Valour and its concert
parties, which together control an aggregate 49.52%
stake in Tsit Wing, is making a mandatory conditional
cash offer for all the remaining shares at an offer price of
S$0.3075 per share. The offeror does not intend to
increase the offer price, which is at a 36.7% premium
over the last traded price of the shares.
Smartflex Holdings is proposing to place out 14m new
shares at an issue price of S$0.10 per share. The
Subscription Price represents a premium of approximately
7.5% to the last weighted average price. The company
intends to use the net proceeds solely and exclusively for
its working capital requirements.
Singapore's non-oil exports fell in May as rebounding
pharmaceuticals exports were not enough to offset a
continued slide in electronics shipments. NODX fell 4.6%
y-o-y in May, after a 1.0% fall in April, and below market
expectations of a 0.3% contraction. Compared with the
previous month, exports fell 1.1% in seasonally adjusted
terms, after expanding 1.1% m-o-m in April. Electronics
exports declined 13.2% y-o-y, after falling 9.0% in April,
while non-electronics shipments grew 0.2%, compared
with a 3.3% rise last month. In the non-electronics sector,
pharmaceutical exports rose 19.9%, after falling 11.8%
in the previous month. Shipments to the European Union,
Singapore's biggest export destination, fell 4.3% y-o-y in
May, compared with a 13.4% fall in April. Exports to the
U.S. fell 0.8% after expanding 4.6% in April. Exports to
China, however, grew 6.2% after the previous month's
6.2% increase.
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PostPosted: Tue Jun 18, 2013 9:19 am    Post subject: Reply with quote

ST Engineering: BUY S$3.88; Bloomberg: STE SP
Defensive play with leverage to cyclical recovery in the US;
Price Target : 12-month S$ 4.80

Suvro SARKAR +65 6398 7973 / Janice CHUA +65 6398 7954

• Recent sell-down is unjustified; stock offers upside from US recovery, backed by an attractive yield
• Visible growth drivers in place at Aerospace, Marine divisions; in Asia as well as in the US
• Strong balance sheet and net cash position drive M&A ambitions; beneficiary if interest rate rises
• Proxy to recovery in the US and appreciating US$. Maintain BUY,TP S$4.80

Enviable track record. We recently met up with 35 fund managers on a roadshow in the US with STE’s management team. Investors are generally impressed with the group’s track record over the past 10 years, chalking up revenue CAGR of 9.3%, net profit CAGR of 5.7% and EVA of 8.7%. Current shareholders have done well to enjoy the ride on ST Engineering’s sterling share price performance over the past 12 months, the stock generating total return of 32% (including dividend yield) notwithstanding the recent pullback.
Strategic growth drivers in place. Key discussion topics during the roadshow revolved around the group’s strategy for growth and possible changes in revenue mix in the next 5 years. Near term growth will come from acquisitions in Aerospace (PTF conversions in Europe), new hangar facilities in Guangzhou and engine workshop in Xiamen, and expansion into the shiprepair business in the US. Armed with a net cash chest of more than S$500m, the group is well positioned to source for M&A for longer term growth. Management’s key concern would be to negotiate an environment of rising cost pressure in Singapore due to the curbs on foreign labour, to ensure the group’s competitiveness in the global arena.
Maintain BUY, TP of $4.80. STE has no exposure to a potentially rising interest rate environment globally, and hence STE remains our preferred pick, offering strong earnings visibility from its record order book of S$13bn, steady earnings growth of 6% and dividend yield of 4.6%. The stock is a proxy to recovery in the US economy with 27% of sales from the US. Appreciation of the US$, if sustained, will provide earnings upside. Catalyst for stock performance will come from sustained order win momentum, going forward.
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PostPosted: Tue Jun 18, 2013 9:50 am    Post subject: Reply with quote

Today’s Focus
 ST Engineering - Defensive play with steady earnings
growth and dividend yield of 4.6%.
The recent sell-down in the shares of ST Engineering is
unjustified as the stock offers upside from US recovery,
backed by an attractive yield. Visible growth drivers are in
place at Aerospace and Marine divisions, and also in Asia
as well as in the US. With its strong balance sheet and net
cash position, the group is well positioned to source for
M&A for longer term growth. The stock is a proxy to
recovery in the US economy with 27% of sales from the
US. Appreciation of the US$, if sustained, will provide
earnings upside. Maintain BUY, TP S$4.80.
Singapore Airlines has posted a lower passenger load
factor (PLF) of 74.6% for May, which was down 1.2
percentage points compared to the previous year.
Systemwide passenger carriage grew 1.3% y-o-y against a
3.1% increase in capacity. The number of passengers
carried in May increased by one per cent to 1.47 million.
Meanwhile, load factors posted a decrease across all
regions, with Europe and South West Pacific registering
the highest declines as the growth in passenger carriage
was outstripped by the increase in capacity. For Europe
and South West Pacific regions, PLF fell 2.4 percentage
points and 1.9 percentage points respectively. Overall
cargo traffic was 5.1% lower y-o-y, while capacity
decreased by 3.8%. Consequently, cargo load factor
decreased by 0.8 percentage point.
Roxy-Pacific has acquired the freehold Yi Mei Garden in
Tampines Road through a collective sale for $136m. The
price works out to $856 psf ppr inclusive of a
development charge of $4m-plus. The site is zoned for
residential use with a 2.1 plot ratio. Located about 600
metres from Kovan MRT Station, Yi Mei Garden is
currently a 14-storey residential block comprising 44
apartments and four penthouses. It was completed in
1984.
Mencast Holdings was awarded a three year contract
from 1 January 2013 to 31 December 2015 (plus one year
option to renew) by Keppel FELS for the provision of
general underwater services. This long term contract
affirms its growing leadership in maintenance, repair and
overhaul (MRO) services to the offshore industry.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,179.9 109.7 0.7
S&P  1,639.0 12.3 0.8
NASDAQ  3,452.1 28.6 0.8
Regional Indices
ST Index  3,183.4 22.0 0.7
ST Small Cap  572.1 4.0 0.7
Hang Seng  21,225.9 256.8 1.2
HSCEI  9,744.5 77.1 0.8
HSCCI  4,114.4 64.5 1.6
KLCI  1,772.2 10.0 0.6
SET  1,471.0 5.8 0.4
JCI  4,774.5 13.8 0.3
PCOMP  6,339.4 97.1 1.6
KOSPI  1,883.1 (6.1) (0.3)
TWSE  7,992.9 55.2 0.7
Nikkei  13,033.1 346.6 2.7
STI Index Performance
Singapore
Total Market cap (US$bn) 594
Total Daily Vol (m shrs) 2,080
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
17 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.97 1.22
Ascendas REIT Buy 2.32 2.60
UOL Buy 6.29 8.21
Thai Beverage Public Buy 0.615 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
17 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.55 0.84
Pan-United Corp Buy 0.91 1.16
Tat Hong Holdings Buy 1.385 1.80
China Merchants Buy 0.88 1.07
Nam Cheong Buy 0.265 0.36
* Technical Target
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Texhong Textile Group announced that based on a review
of the Group’s unaudited management accounts for the
five months ended 31 May 2013, the earnings of the
Group has more than doubled that of the six months
ended 30 June 2012. This was mainly attributable to the
continuous strong demand of its yarn products in the PRC
and reduction in production costs due to low
international cotton price, although such competitive
advantage has been partly offset by the weak yarn selling
prices in the PRC.
Lian Beng Group has secured a contract for a project in
Singapore for the proposed construction of 12-storey
office block and 11-storey car park including additions
and alterations to existing office block. The contract is
worth approximately S$85m. The contract period shall be
26 months and is expected to commence in June 2013.
New private home sales climbed 5.4% in May to 1,455
units, reversing the previous month's 50% drop. Posting
the largest increase in take-up for the month was the Rest
of Central Region (RCR), which contributed 41.4% of
sales. The proportion of transactions within RCR has been
on the rise, from 14.3% in Q3 2012, to 22.7% in Q4. In
Q1 2013, 24.9% of homes sold were within RCR. On the
other end of the spectrum, the high-end market was fairly
muted, despite developers continuing their launch
momentum.
The government will release five 99-year-leasehold land
parcels that can yield 3,600 private and executive
condominium (EC) housing units, with two of the sites
allowing for commercial development as well. Four of the
five sites come under the confirmed list of the
Government Land Sales programme. They include two EC
sites at Punggol Drive and Yuan Ching Road; these were
launched for sale yesterday. The other two sites are a
residential plot at Mount Sophia and a mixed-use
commercial and residential plot at Yishun Central 1, and
will be both put up for sale next Friday. The fifth site, a
commercial and residential site at Meyappa Chettiar Road
in Potong Pasir, will be put on the reserve list next Friday.
US stocks ended off session highs but still managed to
recover Friday’s decline ahead of the FOMC meeting
tomorrow. Asian bourses are putting up a more mixed
performance this morning with the Nikkei and KOSPI
currently moderately higher while ASX All-Ords is lower.
Equity markets are likely to be in a holding pattern ahead
of Ben Bernanke’s press conference tomorrow night. A
recap our base view is that the FED will not signal QE
tapering anytime soon because the US economy is not
strong enough and last week’s low at STI 3100 signals the
short-term low to the recent correction. Also, if a timeline
is given for withdrawal and set conditions for it, it’s for
positive reason that the US economy can sustain its
recovery.
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PostPosted: Wed Jun 19, 2013 9:51 am    Post subject: Reply with quote

Today’s Focus
• Capitaland – Room for further retracement to $3.37 or
$3.45.
US stocks finished higher as investors await the outcome
of the FOMC meeting and Ben Bernanke’s press
conference that follows. Investors seem to have gotten
more used to the idea of tapering and think the FED will
play it safe with regards to the intensity and timing of QE3
cut back.
Short covering and bargain hunting continues with the STI
looking to test the 3250 level today. Our view last Friday
that the STI has touched a short-term low at 3100 has
paid off even as consensus grew increasingly bearish. The
38.2% retracement level at 3235 was attained yesterday.
Going forward, with the Singapore market’s average 12-
mth forward PE at 3287 and the 50% retracement level
also around that level, we see short-term resistance there.
From yesterday’s close of 3229, simple maths tells us
about 70% or more of this initial rebound is completed.
Beyond that, we see the index’s current rebound shifting
to a sideway trend before gradually working higher again
in 2H. That is, the recent low at 3100 looks to have ended
the correction and any pullback going forward should be
a higher low.
Shares of Capitaland currently trade at a 45% discount to
$5.92 RNAV. At the current level, the stock trades at
among the steepest discount to RNAV in the post GFC era
that in the past ended major correction. Thus, we see
bargain hunting opportunity with the recent sell-down.
Scope for a 38.2% upward retracement to $3.37 while a
50% retracement can lift it to $3.45. Our current
fundamental recommendation is a Buy with TP $4.44.
May sales for Yanlord Land remained sluggish, due to
limited new launches. Our analyst does not expect any
positive surprise from June sales as meaningful new
saleable resources will not come until July. Concerns on
slow sales and its high end inventory remain and we
widen the target NAV discount to 55% (from 50%) to
factor in the dim presales outlook. Maintain FULLY
VALUED with a lower TP of S$1.12 (Prev S$1.24).
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,318.2 138.4 0.9
S&P �� 1,651.8 12.8 0.8
NASDAQ �� 3,482.2 30.1 0.9
Regional Indices
ST Index �� 3,229.6 46.1 1.4
ST Small Cap �� 578.3 6.2 1.1
Hang Seng �� 21,225.9 (0.0) (0.0)
HSCEI �� 9,733.5 (10.9) (0.1)
HSCCI �� 4,093.7 (20.7) (0.5)
KLCI �� 1,774.1 1.9 0.1
SET �� 1,427.4 (43.6) (3.0)
JCI �� 4,840.5 65.9 1.4
PCOMP �� 6,518.8 179.4 2.8
KOSPI �� 1,893.5 10.4 0.6
TWSE �� 8,011.0 18.1 0.2
Nikkei �� 13,007.3 (25.Cool (0.2)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 602
Total Daily Vol (m shrs) 1,983
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
18 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.98 1.22
Ascendas REIT Buy 2.35 2.60
UOL Buy 6.33 8.21
Thai Beverage Public Buy 0.61 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
18 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.565 0.84
Pan-United Corp Buy 0.92 1.16
Tat Hong Holdings Buy 1.40 1.80
China Merchants Buy 0.90 1.07
Nam Cheong Buy 0.27 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
ST Aerospace, a unit of ST Engineering, announced a
string of contract wins, including a US$28m maintenance
deal with Spring Airlines Japan and a 20-year repair
license agreement to provide maintenance, repair and
overhaul (MRO) services for US-based UTC Aerospace
Systems.
CapitaLand and Keppel Land have acquired land in
Shanghai, China, for development. CapitaLand's project
will be a mixed development comprising residential, office
and retail components on a site in Hangzhonglu in the
city's Zhabei district. The project will commence in 2015
and is expected to be completed by 2017. Keppel Land
will develop about 200 landed homes on a residential site
in the city's Sheshan area. The first phase of homes is
expected to be launched in the second half of next year.
ISDN has proposed to acquire equity stakes in two
Indonesian energy related companies - 40.8% and 80.0%
ownership in PT Prisma Karun Energy and PT Potensia
Tomini Energi respectively, allowing the Group a valuable
foothold in the country’s fast expanding energy sector.
Enviro-Hub is placing 41m new shares at the placement
price of S$0.11 each. The placement price is at a discount
of 6.62% to the last volume weighted average price. The
net proceeds of approximately S$ 4.5m will be mainly
used to fund further acquisitions and to strengthen its
working capital.
Intraco is extending its mandatory conditional cash offer
for its listed associated company Dynamic Colours (DCL)
by another 14 days to close at 5.30 p.m. on 2 July 2013.
No further extensions or any revisions to the Offer Price of
S$0.185 per Offer Share, unless a competitive situation
arises. As at 5.00 p.m. on 17 June 2013, Intraco owns
39.87% of the DCL shares in issue.
In property news, Eunosville is up for collective sale at a
reserve price of $688m, or $799 psf. Eunosville has a land
area of 376,712 square feet. Under Master Plan 2008, the
site is zoned for residential use with a 2.8 plot ratio. Built
in the late 1980s by the former HUDC, Eunosville was
privatised in 2011. Based on the reserve price, the
breakeven cost for a new project is about $1,200 psf,
with the new units expected to fetch between $1,450 psf
and $1,650 psf, JLL estimates.
A 99-year leasehold residential site at Faber Walk drew 18
bids at the close of its tender yesterday. Aspial Corp's
World Class Land put in the top bid of $156.7m, or
$687.42 psf ppr for the site, which measures about
162,808 sq ft. The gap between top three tender prices is
a narrow 1.1-1.8%, reflecting the confidence and
appetite of developers, say consultants.
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PostPosted: Thu Jun 20, 2013 9:37 am    Post subject: Reply with quote

Midas Holdings: BUY S$0.47; Bloomberg: MIDAS SP
Awaiting HSR contracts;
Price Target : 12-Month S$ 0.60
By: Paul YONG CFA +65 6398 7951

• 2-day NDR in HK was well received
• Firm optimism that high-speed railway orders will be handed out in 2H13
• Metro segment continues to boom as associate NPRT grows its order books to over RMB10bn
• Maintain BUY with S$0.60 TP (1.2x P/B)


All eyes on China Railway Corporation for new high speed train orders. We hosted Midas’ CEO and CFO for a two-day NDR in Hong Kong, and key concerns revolved around when the new high-speed train orders would be coming through. With China planning to double its HSR network to 18,000km by end-2015 and lack of orders for rolling stock in the last two years, there is firm optimism that the newly-formed China Railway Corporation could be placing orders for new HSR rolling stock in the second half of 2013, which should lead to substantial contract wins for Midas.

Meanwhile, the group has won a number of metro and overseas train contracts to boost its order book to Rmb650m, up from Rmb400m at the end of 2012.

NPRT racking up metro contract wins. 32.5%-owned associate Nanjing Puzhen has won five metro contracts worth nearly Rmb4bn in the last six months to bring their order book to over Rmb10bn, which should underpin its earnings over the next two to three years. In turn, NPRT should start to contribute positively to Midas’ bottom line from 2H13 onwards.

Maintain BUY with S$0.60 target price. Midas is currently trading below 1x P/B, which we see as attractive for a stock that is due for an earnings recovery from 2H13 onwards. Our TP is based on 1.2x P/B.
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PostPosted: Thu Jun 20, 2013 9:56 am    Post subject: Reply with quote

Today’s Focus
 FED’s QE tapering statement not beyond consensus
expectations – STI’s recent low at 3100 to hold, reaction
support at 3145-60
 Midas - Optimism that high-speed railway orders will be
handed out in 2H13; maintain BUY with S$0.60 TP
Stocks across the region are currently lower by more than
1% after FED Chairman Ben Bernanke set the conditions
and timeline for QE tapering: 1) QE will start to taper in
the later part of the year in measured steps and end by
mid-2014 IF incoming economic data supports the view
that the US economy can grow by 3-3.5% and
unemployment rate decline to 6.5% by next year. 2) QE
tapering is NOT automatic. IF the economy does not
improve as expected, QE will continue 3) The FED might
aim for a lower 6.5% unemployment threshold before
rising short-term interest rates. Any interest rate hike is
still ‘far into the future’, this according to the FED
Chairman.
The first 2 points with regards to timing and QE cut was
already anticipated in the recent sell-down. Consensus
had expected the FED to start tapering QE from
September and complete the withdrawal by mid-2014.
The 3rd point reiterates that any interest rate hike is still
far away.
Thus, while we expect STI to decline more than 1% that is
in line with region, we see the recent low at 3100 holding
as there is nothing that the FED said that the market has
not expected. If anything, it’s worth to note that timing
for rate hike might be pushed by if the unemployment
rate recovers too soon. We see STI support at 3145-3160.
Focus should shift out from yield/defensive into
growth/recovery names. Yield/defensive and companies
with high gearing are expected to decline more compared
to growth and recovery names.
Other thing to keep investors this morning is the HSBC
June flash PMI at 9:45am this morning with consensus
expectations of 49.1.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,112.2 (206.0) (1.3)
S&P  1,628.9 (22.9) (1.4)
NASDAQ  3,443.2 (39.0) (1.1)
Regional Indices
ST Index  3,213.8 (15.Cool (0.5)
ST Small Cap  580.9 2.6 0.4
Hang Seng  20,986.9 (239.0) (1.1)
HSCEI  9,584.5 (149.0) (1.5)
HSCCI  4,027.2 (66.5) (1.6)
KLCI  1,772.9 (1.2) (0.1)
SET  1,437.7 10.3 0.7
JCI  4,806.7 (33.Cool (0.7)
PCOMP  6,513.2 (5.6) (0.1)
KOSPI  1,888.3 (12.3) (0.6)
TWSE  8,007.4 (3.6) (0.0)
Nikkei  13,245.2 237.9 1.8
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 602
Total Daily Vol (m shrs) 2,137
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
19 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.98 1.22
Ascendas REIT Buy 2.35 2.60
UOL Buy 6.26 8.21
Thai Beverage Public Buy 0.615 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
19 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.555 0.84
Pan-United Corp Buy 0.94 1.16
Tat Hong Holdings Buy 1.405 1.80
China Merchants Buy 0.90 1.07
Nam Cheong Buy 0.27 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Our analyst hosted Midas for a two-day roadshow in
Hong Kong, and key concerns revolved around when the
new high-speed train orders would be coming through.
With China planning to double its high speed railway
(HSR) network to 18,000km by end-2015 and lack of
orders for rolling stock in the last two years, there is firm
optimism that the newly-formed China Railway
Corporation could be placing orders for new HSR rolling
stock in the second half of 2013, which should lead to
substantial contract wins for Midas. Meanwhile, the
group has won a number of metro and overseas train
contracts to boost its order book to Rmb650m, up from
Rmb400m at the end of 2012. Maintain BUY with S$0.60
target price. Midas is currently trading below 1x P/B,
which we see as attractive for a stock that is due for an
earnings recovery from 2H13 onwards.
Mapletree Logistics Trust (MLT) has acquired its eighth
piece of property in South Korea for 28.75 bn Korean
won (S$32m). The property, a warehouse facility called
The Box Centre, is being purchased from Oakline, a
supply chain management company in South Korea that
stores and distributes spirits and wine. Oakline will lease
back the property for six years with built-in rental
escalation from the second year onwards. Based on the
purchase price, the property will provide an initial net
property income yield of 8.4% and is expected to be
distribution per unit-accretive. MLT's current gearing of
34.1% is likely to inch up slightly to 34.6% post
acquisition. This acquisition is in line with our expectations
as management has previously advocated taking a more
aggressive stance towards growth this year. Maintain BUY,
TP: S$1.37.
OUE’s executive chairman Stephen Riady said in an
interview with BT that it will make a payout to
shareholders following the listing of its hospitality and
retail real estate investment trust (Reit), which is expected
to be launched soon pending market conditions. OUE has
yet to announce the size of the listing, but reports have
placed it at between US$600m and US$800m.
Tat Hong Holdings has established a $500m multicurrency
medium term note (MTN) programme. Net proceeds will
be used for general corporate purposes, including
refinancing of existing borrowings, and financing capital
expenditure and general working capital of the group.
Fitch Ratings has affirmed Genting Singapore's long- term
foreign and local currency debt rating at A- and its
Singapore-dollar denominated perpetual capital securities
at BBB. Its parent Genting Berhad's long-term foreign
currency issuer default rating and senior unsecured rating
have also been accorded a credit rating of A-.
Jubilee Industries announced that it will raise
approximately S$15.0m via a proposed placement of new
shares to fund its strategic diversification into investing
activities in addition to its current precision plastics core
business. Jubilee will place out 97.5m new shares at
approximately 15.4 Singapore cents each, a discount of
10% to the last volume weighted average price.
ISDN Holdings is proposing to undertake a renounceable
non-underwritten rights issue of up to 179.97m warrants
at an issue price of S$0.02 for each Warrant, each
Warrant carrying the right to subscribe for one (1) new
share at an exercise price of S$0.60, on the basis of one
(1) Warrant for every two (2) existing shares held. The
Issue Price and Exercise Price together represent a
discount of 55.6% from the last closing price of S$1.35.
Matex International is placing 12.4m new shares at an
issue price of S$0.0961 per share. The Issue Price
represents a discount of 10% to the last weighted
average price. The gross proceeds of approximately
S$1.2m will be used for general working capital purposes.
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PostPosted: Fri Jun 21, 2013 9:42 am    Post subject: Reply with quote

Today’s Focus
 STI – Next support (technical rebound) level at 3030
The selling that affected the rest of the world, especially
emerging markets, finally appears to take its toll on US
equities. The Dow has lost 560pts since Ben Bernanke’s
comments on QE tapering on Wednesday night while
prior to that, it barely moved a whisper from May 22. The
bond market sold off as well with the US 10-year bond
yields rising to 2.428%. In Singapore, the MAS 10-year
bond yield is currently at 2.35%. The reaction downward
momentum means that the 3100 level can be broken to
the downside. The next support level below that is at
3030. We are watchful of a technical rebound off that
level as the Singapore market would be trading at below
13.1x (-0.5SD) 12-mth forward PE.
CapitaLand was the top bid for a 99-year leasehold site at
Coronation Road, with a bid of $366m, or $908.17 psf of
land, 17% higher than its closest rival. CapitaLand plans
to develop a prestigious landed development comprising
semi-detached houses and bungalows on this site. The
development will be ready for launch around Q2 of 2014.
The site is located near a Good Class Bungalow (GCB)
area. Recent transacted prices of landed houses in this
location ranged from $1,280 psf to $1,830 psf of land. It
is also within walking distance to Farrer Road MRT and
the future Tan Kah Kee MRT station.
The Australia’s Foreign Investment Review Board (FIRB)
said that it will not object to SIA’s proposed increase of its
stake in Virgin Australia to 19.9%. FIRB approval will
enable SIA to complete the purchase of an additional
255.5m shares in Virgin Australia at 48 Australian cents
per share, for a total consideration of A$122.6m. The
transaction is expected to be completed by the end of
next week.
Mencast Holdings announced that its Energy Division has
won two separate contracts from the Asian headquarters
of an oil Supermajor. The contracts are expected to
contribute positively to the Group.
US Indices Last Close Pts Chg % Chg
Dow Jones  14,758.3 (353.9) (2.3)
S&P  1,588.2 (40.7) (2.5)
NASDAQ  3,364.6 (78.6) (2.3)
Regional Indices
ST Index  3,133.3 (80.5) (2.5)
ST Small Cap  568.5 (12.4) (2.1)
Hang Seng  20,382.9 (604.0) (2.9)
HSCEI  9,265.3 (319.2) (3.3)
HSCCI  3,896.8 (130.4) (3.2)
KLCI  1,762.3 (10.5) (0.6)
SET  1,402.2 (35.5) (2.5)
JCI  4,630.0 (176.7) (3.7)
PCOMP  6,326.7 (186.5) (2.9)
KOSPI  1,850.5 (37.Cool (2.0)
TWSE  7,898.9 (108.5) (1.4)
Nikkei  13,014.6 (230.6) (1.7)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 599
Total Daily Vol (m shrs) 2,462
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
20 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.955 1.22
Ascendas REIT Buy 2.250 2.60
UOL Buy 6.10 8.21
Thai Beverage Public Buy 0.600 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
20 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.545 0.84
Pan-United Corp Buy 0.920 1.16
Tat Hong Holdings Buy 1.345 1.80
China Merchants Buy 0.880 1.07
Nam Cheong Buy 0.265 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Ryobi Kiso Holdings had secured additional new contracts
worth S$37.3m, bringing the total contracts secured to
S$55.4m since 1 January 2013.
Foreland Fabrictech is expected to report a significant
drop in revenue and a loss for 2Q 2013. The relocation of
the existing production facilities from the current factory
site to the new production facility, which commenced in
Dec 12, has been completed in Jun 13.
Singapore's tourism industry may not appear to be
hurting as yet but a prolonged period of haze could spell
trouble for the industry during the July-Aug peak holiday
season. The Singapore Flyer, which was placed into
receivership last month, said it was closing to protect its
employees, many of whom work outdoors.
China’s flash HSBC Purchasing Managers' Index (PMI) for
June dropped to a nine-month low, pointing to
continuing weakness in local and external demand. The
data came in at 48.3, under the 50-point mark
demarcating expansion from contraction, for the second
straight month and below consensus expectations. It
raised doubts whether the world's second largest
economy will miss its full-year growth target of 7.5%. All
sub-indexes declined last month, and now stands below
50. The new export orders index plunged 4.9 points to 44
as China's small and medium-sized enterprises struggle
with faltering growth in the eurozone and the United
States.
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PostPosted: Mon Jun 24, 2013 9:50 am    Post subject: Reply with quote

• Cosco Corp - Secures contracts for accommodation units
While STI fell below 3100 briefly last Friday, we believe
further volatility should only result in a decline that is
moderately below 3100 (13.1x or -0.5SD12-mth forward
PE) and comfortably above 2915 (12.3x or -1SD 12-mth
forward PE).
The root cause behind the current correction comes from
the rise in bond yields due to QE3 withdrawal if the US
economic sustains recovery. S-REITs and high gearing
sectors (e.g. property) are likely to underperform the
market given the upward pressure on the risk-free rate.
During this transitional period when focus shifts away
from yield to growth but broad based growth is still
lacking, we are selective in our growth/recovery picks.
One group is the O&M stocks within the SMC space given
their low single digit forward PE valuation and double
digit growth rate in the low to mid teens. Our picks are
Nam Cheong, Ezion, Kreuz and Vard. The large cap O&M
pick is Keppel Corp.
Cosco has secured contracts from a Singapore customer
for the conversion of two semi-completed
accommodation units valued at over US$170m each. The
contract for the first unit is effective while the second one
shall turn effective within 6 months. The units are
scheduled for delivery 24 months upon effectiveness of
contracts. Taking into account the first unit that has been
effective, Cosco's YTD wins is lifted to US$528m.
Management has guided US$2bn order win this year with
90% coming from offshore projects. YTD wins seem
lagging, forming only 26% of company's target new
order (as well as our assumption). Maintain Fully Valued,
TP: S$0.75.
Property developer Oxley Holdings has expanded its
overseas presence again, this time embarking on a joint
venture to develop a 12-hectare freehold plot of land in
Penang for residential use. It will be entitled to all income
generated from the project, including 70% of the total
sales of the built-up saleable area of the land.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,799.4 41.1 0.3
S&P �� 1,592.4 4.2 0.3
NASDAQ �� 3,357.2 (7.4) (0.2)
Regional Indices
ST Index �� 3,124.5 (8.Cool (0.3)
ST Small Cap �� 566.5 (2.0) (0.4)
Hang Seng �� 20,263.3 (119.6) (0.6)
HSCEI �� 9,237.5 (27.Cool (0.3)
HSCCI �� 3,862.7 (34.1) (0.9)
KLCI �� 1,755.9 (6.5) (0.4)
SET �� 1,400.5 (1.7) (0.1)
JCI �� 4,515.4 (114.6) (2.5)
PCOMP �� 6,182.2 (144.5) (2.3)
KOSPI �� 1,822.8 (27.7) (1.5)
TWSE �� 7,793.3 (105.6) (1.3)
Nikkei �� 13,230.1 215.5 1.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 579
Total Daily Vol (m shrs) 2,741
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
21 Jun
Target Price
($)
Mapletree Greater China
Commercial Trust
Buy 0.955 1.22
Ascendas REIT Buy 2.190 2.60
UOL Buy 6.10 8.21
Thai Beverage Public Buy 0.605 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
21 Jun
Target Price
($)
Perennial China Retail Trust Buy 0.545 0.84
Pan-United Corp Buy 0.975 1.16
Tat Hong Holdings Buy 1.330 1.80
China Merchants Buy 0.880 1.07
Nam Cheong Buy 0.265 0.36
* Technical Target
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 3
United SM Holdings intends to make a voluntary
unconditional cash offer of 88 cents per share for Guthrie
GTS in a move to take the company private. United SM
Holdings has a deemed interest representing about
69.15% of the total number of issued shares in Guthrie.
The offer price is at a 21.4% premium over the last
closing price. According to the offerer, delisting Guthrie
would provide United SM Holdings and the company with
greater control and management flexibility in utilising and
deploying its available resources.
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PostPosted: Tue Jun 25, 2013 9:46 am    Post subject: Reply with quote

Courts Asia: BUY (Initiating Coverage); S$0.93; COURTS SP
Courting Asean's credit
Price Target : 12-Month S$ 1.13

by: Alfie YEO +65 6398 7957
and Andy SIM CFA +65 6398 7969

• Beneficiary of increased population and housing in Singapore and growing regional wealth in Malaysia & Indonesia
• Enjoys competitive advantage in in-house credit, Indonesia a longer term stock catalyst
• Ramping up presence in Malaysia, earnings CAGR of 15% for the next two years
• Initiate with BUY and TP of S$1.13


Offers exposure to higher Asean consumption. Courts offers investors a unique exposure to Asean’s retail markets, growing middle class, rising disposable income, and increasing consumer appetite for credit on the back of rising incomes. Courts is a beneficiary of Singapore’s rising population and housing demand. With presence in Malaysia, and Indonesia from 2014, Courts will also benefit from the growing middle class and rising income of Asean consumer markets.
Competitive advantage in offering in-house credit, Indonesia a longer term price catalyst. Courts’ unique business model of offering in-house credit to customers helps it to expand its customer base and have an active balance sheet that yields c.25% on its credit sales vs cost of funding of 8%-9%. Entry into Indonesia presents a longer term catalyst for the stock.
Earnings growth of 15% CAGR for the next two years. We forecast earnings growth of 15% CAGR between FY13 to FY15F, largely driven by store growth in Singapore and Malaysia. Management has planned for 1 new big box and 6 new stores in Malaysia this year. We factor in modest contribution from the Indonesia store which is expected to open in 2014. We view an upward earnings revision is possible in the event that the Indonesian operation exceeds expectations.
Initiate with Buy, TP S$1.13. Courts currently trades at 10.7x FY14F PE, compared to peers’ 12-15x. We expect Courts to post healthy earnings CAGR of 15% from FY13 to FY15F, which implies a PEG of 0.7x. We initiate Courts with a BUY on account of its healthy growth prospects and undemanding valuation. Our TP of S$1.13 is based on 13x PE valuation, comparable to its peers.
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PostPosted: Tue Jun 25, 2013 10:03 am    Post subject: Reply with quote

Today’s Focus
• Courts Asia – Initiating coverage with BUY call and
target price of S$1.13
DBSV Research is initiating coverage on Courts Asia with a
BUY call and target price of S$1.13. Courts is a beneficiary
of increased population and housing in Singapore and
growing regional wealth in Malaysia and Indonesia.
Courts’ unique business model of offering in-house credit
to customers helps it to enjoy a higher customer base.
Entry into Indonesia presents a longer term catalyst for the
stock. We forecast earnings growth of 15% CAGR
between FY13 to FY15F, largely driven by store growth in
Singapore and Malaysia.
In contrary to our earlier technical view for shares of
Capitaland to extend its rebound to $3.37 or even $3.45
(Wired Daily dated 19 June), the stock has been on the
slide down over the past week. Volatility from the FED’s
QE3 tapering and worries about a liquidity crunch in
China weighed on the stock. While a minor bounce is
possible from yesterday’s close, technically the stock’s
immediate resistance is now seen at $3.04 (stronger at
$3.09). There is likely eventual downside bias to $2.82
before reaching firmer support.
Gallant Venture is offering 5,426 rupiah for each PT
Indomobil Sukses Internasional Tbk (IMAS) share that it
does not already own, following its 7.8 trillion rupiah (S$1
bn) acquisition of a 52.35% stake in the Indonesia- listed
automotive group. Gallant's offer price is slightly higher
than the acquisition price of Rp5,420 per share. Gallant
said it was acquiring IMAS to expand its business,
enhance its portfolio and position itself to tap into the
growing Indonesian economy, in particular the Indonesian
middle- class sector and industrial segments.
China Fishery Group intends to launch a new voluntary
cash offer for Oslo Børs-listed Copeinca, Peru’s second
largest fishing company, at the price of NOK68.17 per
share, a premium of 17.5% over Copeinca’s last closing
price. The Group has gained an effective control of 74.2%
of the total outstanding shares of Copeinca at the time of
the announcement.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,659.6 (139.Cool (0.9)
S&P �� 1,573.1 (19.3) (1.2)
NASDAQ �� 3,320.8 (36.5) (1.1)
Regional Indices
ST Index �� 3,074.3 (50.1) (1.6)
ST Small Cap �� 557.9 (8.6) (1.5)
Hang Seng �� 19,814.0 (449.3) (2.2)
HSCEI �� 8,938.6 (298.Cool (3.2)
HSCCI �� 3,777.4 (85.3) (2.2)
KLCI �� 1,738.2 (17.7) (1.0)
SET �� 1,364.1 (36.4) (2.6)
JCI �� 4,429.5 (85.9) (1.9)
PCOMP �� 5,971.1 (211.1) (3.4)
KOSPI �� 1,799.0 (23.Cool (1.3)
TWSE �� 7,758.0 (35.3) (0.5)
Nikkei �� 13,062.8 (167.3) (1.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 580
Total Daily Vol (m shrs) 2,396
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
24 Jun
Target Price
($)
ST Engineering Buy 3.90 4.80
CapitaMalls Asia Buy 1.78 2.38
UOL Buy 5.94 8.21
Thai Beverage Public Buy 0.60 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
24 Jun
Target Price
($)
Del Monte Buy 0.725 0.97
Pan-United Corp Buy 0.91 1.16
Tat Hong Holdings Buy 1.265 1.80
China Merchants Buy 0.88 1.07
Nam Cheong Buy 0.265 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Auric Pacific Group intends to make a voluntary
unconditional cash offer for its 61%-owned subsidiary
Food Junction. The offer of S$0.255 per share, which is at
a premium of 40% to last transacted price of Food
Junction shares, values it at S$31m. Food Junction has
faced challenging conditions in recent years due to the
competitive nature of its business, which saw it slipping
into a loss in 2012. By raising equity interest in Food
Junction, Auric Pacific will have greater control and
flexibility to align Food Junction’s business direction with
the Group’s growth strategy.
OKP has won a S$15m drainage contract from PUB. This
brings gross order book to S$408.5m lasting till 2015.
This project win is small and within our expectation of
S$117m wins for FY13F. Maintain Fully Valued call as OKP
has registered weak earnings on the back of rising costs
from direct labour and subcontracting services.
Keong Hong Holdings had secured a $161.9m contract as
the main contractor for the private residential
development, J Gateway in Boon Lay Way. J Gateway will
sit on an 11,588 sq m site in Jurong East. It will comprise
two towers of 20 and 38 storeys housing one- to fourbedroom
units and penthouses, including small
office/home office or SOHO-inspired units with high
ceilings and loft platforms.
Lian Beng Group has been awarded a contract worth
$115m to build a condominium along Flora Drive in Pasir
Ris. The contract period is from this month to October
2015. This is Lian Beng's ninth construction contract of
the year, a new record. Its order book now stands at $1.4
bn.
Oxley Holdings has acquired a leasehold site in Malaysia's
Johor Bahru for RM 92.8m (S$40.0m). The site, which has
an area of about 17,280 square metres, is zoned for
commercial and hotel development. The group intends to
develop the land, subject to approvals from the relevant
authorities.
Courage Marine Group is proposing to divest into
property investment business. The Group will focus on
residential, commercial, warehousing or mixed-use
projects.
TEE International has signed an MOU with Pioneer
Environmental Technology, subsidiary of SGX mainboard
listed AnnAik, to evaluate the possibility of investing in a
waste water treatment plant located in Huzhou, a
prefecture-level city in China. Earlier on, TEE has formed a
consortium to enter into an approximately S$8.6m 3-year
contract to manage and control the water level at
Makkasan Water Catchment area near the Chao Phaya
River, Thailand. These two projects will add to TEE’s
growing infrastructure portfolio, an essential part of TEE’s
third pillar of growth.
Singapore's consumer price index (CPI) rose to 1.6% y-o-y
in May, below consensus forecast of 1.7% and after the
inflation rate plunged to a three-year low of 1.5% in April.
Inflation rate was kept low by a fall in car prices which
sent private road transport costs tumbling 3.7% y-o-y - its
first decline since 2009. But core inflation, which strips
out private road transport costs along with
accommodation costs, rebounded to 1.7% from 1.4% in
April, surpasses headline inflation. Services inflation
picked up to 2.5% in May, from 2.2% in April, due to
higher healthcare-related costs. Food inflation rose to 2%
in May from 1.8% in April, reflecting the quicker pace at
which prices of both non-cooked food and prepared
meals rose. The government also kept its headline
inflation forecast of 3-4%.
A deal is said to have been inked for the sale of Park Regis
Singapore at about $250m. There is talk that a sale and
purchase agreement was signed recently with a China
buyer for the property, which is located along New
Market Street/Mer-chant Road. The asset comprises the
203-room hotel and a seven-storey office block with
about 42,000 sq ft net lettable area on a site with a
balance lease term of about 93 years. Assuming the office
space is valued at $1,800-$2,000 psf or $75.6m to $84m,
the hotel component would be priced at between
$859,000 and $818,000 per room.
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PostPosted: Wed Jun 26, 2013 10:17 am    Post subject: Reply with quote

Today’s Focus
• Yongnam – Secured S$27m contract in HK; slight
negative impact from exposure to insolvent contractor
Alpine
US stocks rose after data showed May’s durable goods
orders (actual 3.6%, consensus 3%), new home sales
(actual 476k, consensus 460k) and June’s consumer
confidence (actual 81.4, consensus 75.1) was strongerthan-
expected. Comments by a PBOC official that China
will keep money-market rates at a reasonable level and
seasonal forces that drove it higher will fade also calmed
nerves as the overnight repurchase rate fell.
Yongnam has won two new civil engineering subcontracts
worth HK$166m (S$27m) in Hong Kong. The two projects
are namely the Hong Kong Express Link Central-Wan Chai
Bypass Tunnel to be completed by April 2014 and the
Shatin to Central Link MTR project due for completion by
December 2013. The project value is small in our view and
within our project win expectations for the year. No
change to our earnings forecast on this event for now.
With regards to Yongnam’s exposure to insolvent
Downtown Line 2 (DTL2) contractor Alpine Bau GmbH,
we estimate this could lower our current TP of S$0.41 by
5% if Yongnam provides for losses. Yongnam has
reported that its exposure will be about S$5m (10% of
FY13 earnings). Main contractor Alpine Bau GmbH has
filed for insolvency and Yongnam is exposed to package
C918 of DTL2. The project value is S$25m, started in
March 2011 and due to end in 2Q13 to 3Q13. As this
project is very near completion, we estimate that writeoffs
could amount to about c.S$5m if management
chooses to do so. Otherwise, we remain positive as
Yongnam is a strong contender for Yangon Airport
project. Results of Yangon Airport's expansion project bid
are expected to be announced around July. We believe
Yongnam's consortium is a strong contender and is one
of the front runners. If it wins the contract, the Yangon
Airport project could add another S$0.12 to the stock
price based on our assessment. Maintain BUY.
Other stocks in our coverage list with exposure to Alpine
include Pan United. We assess Pan United’s exposure to
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,760.3 100.8 0.7
S&P �� 1,588.0 14.9 0.9
NASDAQ �� 3,347.9 27.1 0.8
Regional Indices
ST Index �� 3,089.9 15.6 0.5
ST Small Cap �� 557.1 (0.Cool (0.1)
Hang Seng �� 19,855.7 41.7 0.2
HSCEI �� 8,871.3 (67.3) (0.Cool
HSCCI �� 3,756.4 (21.0) (0.6)
KLCI �� 1,728.6 (9.5) (0.5)
SET �� 1,384.6 20.5 1.5
JCI �� 4,418.9 (10.6) (0.2)
PCOMP �� 5,789.1 (182.0) (3.0)
KOSPI �� 1,780.6 (18.4) (1.0)
TWSE �� 7,663.2 (94.Cool (1.2)
Nikkei �� 12,969.3 (93.4) (0.7)
STI Index Performance
Singapore
Total Market cap (US$bn) 571
Total Daily Vol (m shrs) 2,576
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
25 Jun
Target Price
($)
ST Engineering Buy 4.00 4.80
CapitaMalls Asia Buy 1.74 2.38
UOL Buy 6.02 8.21
Thai Beverage Public Buy 0.585 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
25 Jun
Target Price
($)
Del Monte Buy 0.72 0.97
Pan-United Corp Buy 0.90 1.16
Tat Hong Holdings Buy 1.24 1.80
China Merchants Buy 0.87 1.07
Nam Cheong Buy 0.26 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
be <S$3m (<5% of PBT). If we factor in potential losses,
impact on target price will be -3.5% from S$1.16 to
S$1.12. Tat Hong has no exposure to Alpine while OKP
has no exposure to MRT projects.
Baker Technology has divested its entire 20.29% stake in
Discovery Offshore SA. It has sold its 13.288m shares to
Hercules Offshore Inc for S$41.7m. The divestment
follows Hercules's purchase of an additional 27.4% stake
in Discovery, bringing its total shareholding in Discovery
to 59.5%. The acquisition of additional shares by Hercules
triggers an obligation to make a mandatory offer for all
the outstanding shares. The net sale proceeds of $40.9m
will be used for general working capital, future
investments and other purposes.
WE Holdings, together with prominent Myanmar
businessman, H.E. Nay Win Tun, has established a joint
venture company to assess petroleum, oil and gas, and
related resources business opportunities in Myanmar. The
Non-binding Memorandum of Understanding signed is to
carry out petroleum exploration activities in five target
oilfields in Myanmar.
AusGroup has issued a Writ of Summons against Karara
Mining (KML). AusGroup’s Writ is in respect of KML’s
failure to process, certify and make progress payments
amounting in aggregate to approximately AU$43.5m and
for a failure by KML to recognise additional corporate
overhead and profit of AU$11.2m which was a
performance incentive to achieve certain milestone dates
for structural, mechanical and piping installation works
carried out by AusGroup, at KML’s Karara Iron Ore Project
in Western Australia.
Water treatment company Moya Asia has inked a 25-year
agreement to build and operate a water treatment plant
in the Indonesian city of Tangerang, in Java. The
International Financing Corporation (IFC) has arranged
$85m of financing for this project.
Leader Environmental Technologies is placing 31.7m new
shares at an issue price of SGD0.063 for each placement
share. The issue price represents approximately 3.1%
discount to the last volume weighted average price. The
proceeds will be used for investment opportunity and
general working capital purposes.
Swissco Holdings has secured contracts for its crew boats
worth an aggregate of S$8.24m. The Group took delivery
of a new crew boat on 16 April 2013, the ‘Swissco
Cheetah’. With the addition of Cheetah, the Group owns
/ manages a total of 7 crew boats.
Sunpower Group has secured a RMB130m Engineering,
Procurement and Construction (EPC) contract with
China’s top 500 enterprise Lu’an Group for the first
time. The contract is to supply flare systems for oilchemical‐
power‐heat integrated project of highsulphur
coal clean utilisation. This is the largest contract
secured for the Group’s Energy Saving and Environmental
Protection Systems segment.
In property news, the Ministry of National Development
(MND) has released a list of state land sites for the second
half. It has trimmed supply in the confirmed list but made
up for this in the reserve list, thus maintaining the overall
supply of land for private homes and executive
condominiums (ECs) for the second-half Government
Land Sales (GLS) Programme at 14,155 units - close to the
14,035-unit supply for the first half. For H2 2013, MND
will release land for 5,960 private homes and ECs under
the confirmed list - a 14% reduction from the 6,935 units
for H1 2013. This is the lowest confirmed-list supply since
the H1 2010 figure of 2,925 units. Excluding ECs, the
supply of private homes in the H2 2013 slate is 3,175
units, down 17% from the 3,825 units in H1 this year.
Tenders for a pair of adjacent private housing sites in
Upper Serangoon View on the confirmed list will close at
the same time in September. Likewise in December,
tenders for a pair of side-by-side executive condominium
(EC) housing sites in Choa Chu Kang Grove will close at
the same time. The Ministry of National Development
(MND), which revealed this in its second-half Government
Land Sales (GLS) Programme, said that this would
"encourage more prudent bidding by developers". One
of the Choa Chu Kang Grove EC sites can generate about
575 units and the neighbouring plot, 580 units. As for the
Upper Serangoon View pair, one site, beside the existing
Rio Vista condo, is estimated to yield 510 private homes.
The next-door plot can produce some 410 units. Market
watchers predict that the top bid for each site could be
around $800 psf ppr.
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PostPosted: Thu Jun 27, 2013 9:55 am    Post subject: Reply with quote

Today’s Focus
• Myanmar delays award of telco licenses - sentiment
could weigh on Yoma but no earnings impact
Myanmar has delayed the award of the two telco licenses
scheduled to announce an outcome today. Yesterday, the
country’s parliament voted to delay awarding the license
until a new telecommunications law governing the
industry is passed. Members of the parliament agreed that
the "industry risked being monopolized" if the winners of
the telecommunications license were announced before a
new telecommunications law is passed in the country. In
addition, it was also proposed in parliament that only
foreign companies with a local joint-venture partner
should be granted a telecommunications license, although
it is unclear whether this new rule will be adopted. Some
of the foreign bidders, including a consortium of Orange
and Japan's Marubeni Corp. and Bharti Airtel, are
competing for a license without a local partner.
Although bureaucratic delays are common in frontier
market, we hope that the delay will not be too long as
these developments - telecom network and airports - are
the new government's first attempts to revamp the
country. The development of the telco network is widely
regarded as a litmus test for the new government's
liberalization and development plans for the country. For
Yoma, sentiment could weigh on the stock but as we
have mentioned previously, we do not expect and have
not imputed into our forecast any earnings impact from
this telco bid. Hence, no change to earnings and target
price.
SembCorp Industries’ JV coal-fired power plant Thermal
Powertech Corporation India (TPCIL) has signed an
agreement with Mahanadi Coal Fields, a subsidiary of
Coal India, for the supply of approximately 2.1m tonnes
per year of domestic coal over 20 years for its 1,320-
megawatt power plant. The agreement will commence
once the plant becomes operational in the second half of
2014. This fuel supply agreement is a significant milestone
for Sembcorp’s project, as it ensures the availability of a
fixed supply of coal for 20 years, critical for the smooth
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,910.1 149.8 1.0
S&P �� 1,603.3 15.2 1.0
NASDAQ �� 3,376.2 28.3 0.8
Regional Indices
ST Index �� 3,104.4 14.5 0.5
ST Small Cap �� 558.1 1.0 0.2
Hang Seng �� 20,338.6 482.8 2.4
HSCEI �� 9,164.6 293.4 3.3
HSCCI �� 3,871.7 115.2 3.1
KLCI �� 1,740.8 12.1 0.7
SET �� 1,424.4 39.8 2.9
JCI �� 4,587.7 168.9 3.8
PCOMP �� 6,118.9 329.9 5.7
KOSPI �� 1,783.5 2.8 0.2
TWSE �� 7,784.8 121.6 1.6
Nikkei �� 12,834.0 (135.3) (1.0)
STI Index Performance
Singapore
Total Market cap (US$bn) 574
Total Daily Vol (m shrs) 2,194
12m ST Index High 3,454
12m ST Index Low 2,806
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
26 Jun
Target Price
($)
ST Engineering Buy 4.08 4.80
CapitaMalls Asia Buy 1.775 2.38
UOL Buy 6.16 8.21
Thai Beverage Public Buy 0.585 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
26 Jun
Target Price
($)
Del Monte Buy 0.69 0.97
Pan-United Corp Buy 0.895 1.16
Tat Hong Holdings Buy 1.23 1.80
China Merchants Buy 0.87 1.07
Nam Cheong Buy 0.27 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
operation of the plant as domestic coal supply is scarce in
India. This is also a milestone for its India plant but no
impact to forecast and target price. This contract follows
the inking of another coal supply agreement with PT
Bayan Resources in February 2012 for a supply of a
million tonnes a year over 10 years.
Sin Heng Heavy Machinery plans to raise about $18.4m
through a one-for-four rights issue at 16 cents apiece.
The issue price is a 33.3% discount to the closing price on
Tuesday. About $9m of the net proceeds will be used for
expansion. A further $5m will be used to reduce gearing,
while the remaining $3.9m will be used for working
capital.
Heeton Holdings is proposing a bonus issue of up to
44.77m new shares with up to 44.77 warrants.
Shareholders will get one share with one warrant for
every five shares held. Each bonus warrant will entitle the
holder to subscribe for one new share at the exercise
price of 70 cents each. This exercise price is at a premium
of four cents to the last transacted price on June 25.
Mirach Energy is proposing to raise some $18.1m in net
proceeds from a rights issue of 152m new shares and
another $36m via a convertible loan. The new shares will
be issued at 12.42 cents, representing a 10% discount to
the volume weighted price on June 21. The company said
it intends to use the net proceeds from the placement to
redeem the $16.9m of 3% senior convertible bonds due
2014.Mirach will also grant a convertible loan of up to
$36m, which can be drawn down in tranches of $6m.
Keppel Reit has acquired a 50% stake in a freehold office
building, 8 Exhibition Street in Australia, for A$160.2m.
Located in the prime part of the Melbourne central
business district, the 35-storey freehold commercial
building has a total net lettable area of about 480,309 sq
ft with 3,304 sq ft of ancillary retail space on the ground
floor. This acquisition, which is immediately DPU
(distribution per unit) accretive, is in line with the group’s
aim to generate steady and sustainable returns for
unitholders.
In what is shaping up to be the most expensive office deal
this year, Tuan Sing Holdings has entered into a sale and
purchase agreement with Robinson Point (Cayman) to
acquire Robinson Point for $348.9m. Based on the
acquisition price, this works out to $2,579.5 psf on
existing net lettable area (NLA). As at June 26, Robinson
Point was valued at $350m by Colliers International
Consultancy and Valuation. According to Tuan Sing, the
share acquisition is in line with the company's strategy of
expanding its core property business and securing
recurring income business. The share acquisition will be
funded mainly by bank borrowings.
PoMo, a retail and office development along Selegie Road,
has changed hands for $336m. Formerly known as
Paradiz Centre, PoMo is on a site with a remaining lease
term of 69 years. The price reflects a price of $1,894 psf
based on a net lettable area 177,381 sq ft. The buyer is a
joint venture between BS Capital and Enviro-Hub
Holdings. And the seller is a vehicle controlled by CLSA
Capital Partners.
Led by Marina Bay, the office market is starting to see
rents and vacancy rates improve, supported by more
broad-based leasing demand. According to Cushman &
Wakefield (C&W), Marina Bay saw Grade A vacancies
decline 2.0 percentage points to 3.6% from the first
quarter, even as rents rose 10.9% on a quarterly basis.
This led to an increase in average Grade A rents by 4.2%
to $9.03 psf per month quarter-on-quarter. The Shenton
Way submarket saw rents rise by 9.5% to $7.64 psf per
month, while rents in Raffles Place inched up 0.6%, to
$8.82 psf per month. Elsewhere, Orchard Road rents
moved up 4.6% to $8.49 while suburban rents rose 1.3%
to $5.64 psf per month.
Industrial production grew 2.1% y-o-y in May, trouncing
the market's expectations for just 0.1% growth but
slowing from April's revised growth of 5%, driven by a
jump in pharmaceutical output. If the biomedical sector's
22.8% growth is excluded, industrial output would have
shrunk 2.4% instead. After seasonal adjustments,
manufacturing output grew 1.2% m-o-m. Excluding
biomedical production, output would have risen 1% from
April. Although it was a key driver of growth in May, the
biomedical sector's expansion is slowing. Pharmaceuticals'
growth slowed to 25.2% y-o-y from 46.4% in April,
while medical technology output grew a slower 10.7%
too. Electronics continued to chart recovery with growth
of 4.3% y-o-y, stronger than April's 1.6% expansion. This
was thanks to a 11.8% rebound in semiconductor output,
in part due to a lower base in May last year, as well as
higher computer peripherals output. Transport and
precision engineering sectors contracted.
US markets rose as the USD firmed and bond yields
dipped as the second quarter draws to a close tomorrow.
At the same time, the commodity CRB index dipped with
the USD strength and as the shadow of a China
slowdown weighed down on commodity prices. With the
US 1Q q-o-q GDP number coming in weaker-thanexpected
(actual 1.8%, consensus 2.4%) yesterday, the
equities rebound last night also shows that investors are
realizing the FED’s tapering is dependent on the economy
recovering and not automatic.
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PostPosted: Fri Jun 28, 2013 9:51 am    Post subject: Reply with quote

• SingTel, Yoma - Lose out on Myanmar bids; could see
near term weakness in share price
Myanmar proceeded with the award of telco license. The
winners of the tender are Qatar-based Ooreedo and
Norway-based Telenor with France Orange-Telecom as
back up should any of the winners be disqualified. SingTel
and Yoma have been shut out of these two highly sought
mobile licences. The winners are not within our
expectations. However, both have notable experience and
ownership of telcos in Asia.
On Yoma, we are neutral of their consortium's failure to
win the bid because no earnings related to this bid is
imputed into our forecast. What's next for Yoma? We
look forward to progress of Landmark project and
expansion of non-property businesses which are small at
the moment but mostly strategic and profitable.
Management have also mentioned in their announcement
that plans and negotiations are ongoing for their
agriculture division. Overall, we remain positive on Yoma's
prospect as long as Myanmar's momentum sustains. We
believe they are still very well positioned to tap on
Myanmar's explosive growth. No change to Yoma's
forecast and TP. Expect some degree of share price
weakness on account of this news. We see weakness as
good opportunity to collect stock for investor with long
term horizon. Stock though could still decline in the near
term on disappointment given the built up in expectations
recently. The same for the other contender SingTel, whose
share price rebound from $3.50 to $3.72 in recent
sessions could be in expectation of the license award that
didn’t come true. The failure to win any telco licenses
could also taper optimism for Yongnam, who is in the
running for Myanmar’s airport projects pending award in
July. Investors are likely adopt a ‘wait and see’ rather than
‘buy in anticipation’ given that the stock has already risen
43% YTD.
Overall, for the country, we are encouraged by the
authority's will to push ahead with the award of the
license, reflecting their eagerness and ability to execute on
plan on time. The authority's ability to deliver on promises
is an important factor for Myanmar's development going
forward.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,024.5 114.4 0.8
S&P �� 1,613.2 9.9 0.6
NASDAQ �� 3,401.9 25.6 0.8
Regional Indices
ST Index �� 3,118.0 13.6 0.4
ST Small Cap �� 559.8 1.7 0.3
Hang Seng �� 20,440.1 101.5 0.5
HSCEI �� 9,158.6 (6.0) (0.1)
HSCCI �� 3,925.4 53.7 1.4
KLCI �� 1,751.6 10.8 0.6
SET �� 1,446.5 22.1 1.5
JCI �� 4,675.7 88.0 1.9
PCOMP �� 6,328.0 209.1 3.4
KOSPI �� 1,834.7 51.3 2.9
TWSE �� 7,883.9 99.1 1.3
Nikkei �� 13,213.6 379.5 3.0
STI Index Performance
Singapore
Total Market cap (US$bn) 574
Total Daily Vol (m shrs) 2,193
12m ST Index High 3,454
12m ST Index Low 2,842
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
27 Jun
Target Price
($)
ST Engineering Buy 4.03 4.80
CapitaMalls Asia Buy 1.795 2.38
UOL Buy 6.50 8.21
Thai Beverage Public Buy 0.59 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
27 Jun
Target Price
($)
Del Monte Buy 0.715 0.97
Pan-United Corp Buy 0.91 1.16
Tat Hong Holdings Buy 1.215 1.80
China Merchants Buy 0.88 1.07
Nam Cheong Buy 0.265 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Keppel is sprucing up its hotels in Myanmar as it looks to
ride the wave of newly awakened interest in the country.
The group, which owns Sedona Hotel Yangon and
Sedona Hotel Mandalay, is pumping in US$80m to add a
new 29-storey hotel wing offering 418 rooms to Sedona
Hotel Yangon. With the country opening up, the number
of travellers has increased and the occupancy has gone up.
CosmoSteel Holdings has entered into a memorandum of
understanding with a Myanmar-based group of
companies to explore potential strategic business
relationship in Myanmar. The counterparty has its
headquarter in Yangon and operates in diversified
business areas, including construction, hotel and tourism
and trading.
Advance SCT is proposing a renounceable nonunderwritten
rights issue of up to 1,168.8m Rights Shares
at an Issue Price of S$0.008 per Rights Share, on the basis
of two (2) Rights Shares for every five (5) existing shares
to raise gross proceeds of approximately S$9.35m. The
Issue Price represents a discount of approximately 20%
from last traded price. The proceeds will be used for the
expansion of the Group’s business and repayment of
borrowings.
ISDN Holdings has inked a non-legally binding
Memorandum of Understanding to acquire 80%
shareholding interest in three Indonesian energy-related
companies, paving the way for ISDN to gain a firm
foothold in the hydropower industry in Sumatra. ISDN has
also completed its 80% share acquisition of PT Potensia
Tomini Energi, cementing its planned development of two
mini hydropower plants in Central Sulawesi.
Passenger numbers grew year-on-year at Changi Airport
in May even as cargo continued to slump.Some 4.28m
passengers passed through Changi's doors for the month,
up 4.7% from May 2012, while commercial flight
movements rose 5.4% to 28,500. In contrast, passenger
numbers were nearly flat in April, edging up just 0.8% yo-
y to 4.24m. Aircargo volume slipped 3.5% to 147,600
tonnes at Changi in May, after the airport saw a 1.8% yo-
y decline in April to some 145,600 tonnes. Japan,
Malaysia and Thailand - all of which fall within Changi's
top 10 markets - posted double digit growth. The top five
markets for the month were Australia, China, Indonesia,
Malaysia and Thailand. Year-to-date, Changi handled
21.6m passenger movements, up 4.8% from the
corresponding five-month span in 2012, while aircraft
movements were also higher at 138,600, up 4.3%, for
January to May. Meanwhile, cargo shipments fell 2.4% to
727,100 tonnes.
US markets rose on the back of benign economic data
and as FED official continued to stress that QE tapering is
not automatic and much depends on economic
performance. May’s pending home sales (actual +6.7%
m-o-m, consensus +1%) was better-than-expected. The
pullback in US 10-year bond yields to 2.48% (MAS 10-
year bond yield dipped to 2.45%) should also calm
markets. As this week is the half year and 2Q quarter end,
the strength in US equities in recent sessions could also be
the result of funds flow out from emerging markets into
US equities given the USD strength and recovery hopes
there.
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