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DBS Vickers Reports July 2013
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PostPosted: Mon Jul 01, 2013 9:44 am    Post subject: DBS Vickers Reports July 2013 Reply with quote

Today’s Focus
• Vard - 2Q to miss expectations; downgrade to HOLD
with lower TP of S$1.16
We expect 2Q13 earnings for Vard to miss expectations
due to cost overruns of Brazil projects. This is a dampener
on confidence, and our analyst has cut FY13/14F earnings
by 11/7%. Downgrade to HOLD; TP lowered to S$1.16
(Prev S$ 1.46).
Plantation counters are still in the last leg of correction.
Our analyst recommends investors who are underweight
in this sector to start rebuilding positions in the latter part
of the year – when palm oil stockpiles peak. He expects
CPO prices to weaken between now and end of the year
on rising inventories and to rebound by next year, led by
global demand recovery. He has cut CY13/CY14/CY15
crude palm oil (CPO) price forecasts by 11%/2%/4%, and
expects spot CPO prices to average RM2,350 (US$791) in
3QCY13 and RM2,300 (US$777) in 4QCY13. The
upcoming 2Q13 results are expected to lag consensus, as
realised CPO ASP is lower than market expectations.
Switch to Singapore listed planters (close to -1SD forward
PE); accumulate others by year-end. Upgrade to BUY for
Bumitama Agri (TP: S$1.23, (Prev S$ 1.12)) and Wilmar
(TP: S$3.48, (Prev S$ 3.72)); maintain BUY for First
Resources (TP: S$2.18, (Prev S$ 2.14)).
SembCorp Marine has secured two turnkey contracts for
jack-up rigs from repeat customer Oro Negro worth
US$417m in total, scheduled for delivery by Jul 2015 and
3Q 2015. Including the two jack-up rigs ordered in Dec
2012 and two in Mar 2013, Oro Negro now have six
units of Pacific Class 400 jack-up rigs on order with SMM.
These new contracts will bring SMM's YTD wins to
S$3,212m, making up 64% of our new order assumption
of S$5bn. Maintain (HOLD, TP: S$4.70).
F&N’s Board announced that it will appoint advisors to
study and review alternative strategic options available to
the group to unlock shareholder value. This may involve a
segregation of the group’s property-related business from
its non-property related businesses. No decision has yet
been made on any strategic option or proposal. We are
not surprised by the message, though timing of this
announcement seems faster than expected. Separately,
the S$4.7bn cash distribution was approved by
shareholders and resolution was passed in its EGM held
on 28 June 2013. Shareholders will receive S$3.28/share
in cash, and based on the preliminary timeline indicated in
its shareholders’ circular dated 6 June 2013, F&N shares
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,909.6 (114.9) (0.Cool
S&P �� 1,606.3 (6.9) (0.4)
NASDAQ �� 3,403.2 1.4 0.0
Regional Indices
ST Index �� 3,150.4 32.4 1.0
ST Small Cap �� 562.1 2.3 0.4
Hang Seng �� 20,803.3 363.2 1.8
HSCEI �� 9,311.4 152.8 1.7
HSCCI �� 4,028.7 103.4 2.6
KLCI �� 1,773.5 22.0 1.3
SET �� 1,451.9 5.5 0.4
JCI �� 4,818.9 143.1 3.1
PCOMP �� 6,465.3 137.3 2.2
KOSPI �� 1,863.3 28.6 1.6
TWSE �� 8,062.2 178.3 2.3
Nikkei �� 13,677.3 463.8 3.5
STI Index Performance
Singapore
Total Market cap (US$bn) 586
Total Daily Vol (m shrs) 2,181
12m ST Index High 3,454
12m ST Index Low 2,847
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
28 Jun
Target Price
($)
ST Engineering Buy 4.19 4.80
CapitaMalls Asia Buy 1.825 2.38
UOL Buy 6.72 8.21
Thai Beverage Public Buy 0.59 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
28 Jun
Target Price
($)
Del Monte Buy 0.73 0.97
Pan-United Corp Buy 0.90 1.16
Tat Hong Holdings Buy 1.26 1.80
China Merchants Buy 0.88 1.07
Nam Cheong Buy 0.27 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 3
will trade ex-cash distribution on or about 19 July 2013 at
9am, and payment expected on or about 31 July 2013.
The SGX-ST has also granted F&N 3 months till 19 July to
restore the public float to above 10%, or about 0.32%
from the current level (9.7%).
Sembcorp Industries announced that it has commenced
construction of its US$200m expansion project for its
Fujairah 1 IWPP plant in the UAE. Completion of this
project is expected in 1H15. Positive development but no
impact to earnings forecast. Separately, SCI announced it
is investing S$6.4m for a 28.8% stake in Biowater, a
Norwegian-based water design and engineering firm. In
addition to equity investment, SCI has formed a Strategic
Partnership Agreement with Biowater. Positive to
operations long run but no quantifiable contributions
near term.
Sound Global announced that its chairman Mr Wen, also
largest shareholder with 56.2% stake, has issued a Letter
of Intent to the board to propose a delisting from SGX
while maintaining its primary listing of HKSE (00967 HK).
In connection with the possible delisting, Mr Wen has
offered cash of not less than S$0.70 per share. Exit offer
base price looks fair on current state of operations. The
offer base price of S$0.70 is 22.8% higher than last
transacted price of S$0.57. However, in PE terms, this
translates to 12.2x FY13F PE, still below historical mean of
13.5x PE. Share price could spike on reaction to this news
but fundamentally, there is no change to our view on
SGL’s operations and earnings forecast.
The Monetary Authority of Singapore (MAS) will
introduce a Total Debt Servicing Ratio (TDSR) framework
for all property loans granted by financial institutions (FIs)
to individuals. MAS expects any property loan extended
by the financial institutions to not exceed a TDSR
threshold of 60%. MAS will also refine rules related to
the application of the existing Loan-to-Value (LTV) limits
on housing loans. These refinements seek to ensure the
effectiveness of the LTV limits that were put in place to
cool investment demand in the housing market. In
particular, they aim to prevent circumvention of the
tighter LTV limits on second and subsequent housing
loans.
Based on the latest MAS stats for banks as at end May
2013, housing loan growth continued to soften to 15.2%
y-o-y vs 16.0% in Apr 2013 compared to a 12-month
peak of 16.1% recorded in Nov 2012. Monthly loan
momentum also soften to 0.5% m-o-m vs a peak of
2.0% m-o-m in Nov 2012. As at end 1Q13, UOB had the
highest exposure to mortgages at 29% of total loans,
OCBC at 27% and DBS at 20%. From our previous
conversations with the banks, we gather that housing
loan momentum would remain fairly robust due to prior
approvals granted but the momentum should taper off.
We understand that housing loan applications have
declined by 20-30% since the new stricter LTV rules were
introduced earlier this year.
Bank loans grew at a slower pace of 18.8% y-o-y in May
to $528.75 bn, after registering year-on-year growth of
20% in April to $522.28 bn at the close of the month.
But credit growth picked up month-on-month, following
two months of moderation. Over the month of May,
loans grew 1.2%, up from 0.9% in April. Business
lending grew 22% y-o-y in May, slowing slightly from
23.7% in April. But month-on-month growth picked up
to 1.6% in May, from 1% in April. Consumer loans grew
a slower 14.5% in May from a year ago, following 15%
y-o-y growth in April. Momentum has stabilised, too, as
consumer lending grew 0.6% over the month of May,
from 0.7% in April. Housing loans growth slowed for a
second straight month to rise 15.2% y-o-y in May, down
from 16% in April. In month-on-month terms, total
housing loans were just 0.5% higher.
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PostPosted: Tue Jul 02, 2013 9:54 am    Post subject: Reply with quote

Today’s Focus
 Private home price index rose 0.8 % q-o-q, supported by
suburban areas
A slightly better than expected June US manufacturing
PMI (actual 50.9, consensus 50.5) lifted stocks higher but
indices still ended off session highs. Yesterday marks the
start of a closely followed data heavy week that ends with
June’s employment data on Friday. This, coupled with a
holiday shortened week (Thursday being a national
holiday in US) is likely to result in choppy trading with
much data driven amid thinner than usual volume. With a
lack of catalyst to drive the Singapore market on the local
front, the choppy near-term trend is likely to be reflected
here in Singapore as well.
In the bond market, the MAS 10-yr bond yields saw a
slight rebound from 2.35% to 2.56% yesterday but still
below the high of 2.77% seen on 24 June.
The Urban Redevelopment Authority's second quarter
flash estimates showed that its benchmark private home
price index rose 0.8% from Q1, supported by a 3%
escalation in prices of non-landed homes in suburban
areas. This compares with respective increases of 0.6%
and 1.4% in Q1. URA's non-landed private home price
index in Core Central Region dipped 0.2% q-on-q in Q2 -
contrasting with a 0.6% increase in the previous quarter.
In Rest of Central Region, the Q2 flash estimate reflects a
0.2% q-on-q rise, identical to the Q1 performance. URA's
benchmark overall private home price index for Q2 was
3.9% higher y-o-y.
Prices of resale HDB flats grew at their slowest pace in
over four years in the second quarter, as both demand
and supply-side factors bit. Flash estimates of HDB's resale
price index (RPI) released yesterday showed a 0.5%
increase over the first quarter, the lowest quarterly growth
since Q1 2009. Two main factors cited for the
deceleration were cooling measures introduced in January
and an abundance of new flats.
US Indices Last Close Pts Chg % Chg
Dow Jones  14,975.0 65.4 0.4
S&P  1,615.0 8.7 0.5
NASDAQ  3,434.5 31.2 0.9
Regional Indices
ST Index  3,140.9 (9.5) (0.3)
ST Small Cap  562.1 0.0 0.0
Hang Seng  20,803.3 363.2 1.8
HSCEI  9,311.4 152.8 1.7
HSCCI  4,028.7 103.4 2.6
KLCI  1,775.1 1.6 0.1
SET  1,451.9 5.5 0.4
JCI  4,777.5 (41.4) (0.9)
PCOMP  6,526.6 61.3 0.9
KOSPI  1,855.7 (7.6) (0.4)
TWSE  8,036.0 (26.2) (0.3)
Nikkei  13,852.5 175.2 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$bn) 586
Total Daily Vol (m shrs) 2,088
12m ST Index High 3,454
12m ST Index Low 2,911
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
1 Jul
Target Price
($)
ST Engineering Buy 4.170 4.80
CapitaMalls Asia Buy 1.795 2.38
UOL Buy 6.54 8.21
Thai Beverage Public Buy 0.615 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
1 Jul
Target Price
($)
Del Monte Buy 0.740 0.97
Pan-United Corp Buy 0.900 1.16
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
CNA Group inked a memorandum of understanding with
its real estate partner in Thailand, West East International
(WEI), and Tokyo-listed Tama Home to design and build
homes targeted at the Japanese community in Thailand.
The entire real estate project, to be co-developed by CNA,
WEI and Tama will span a land area of 36,800 square
metres in Sriracha, a city south of Bangkok that consists
of premier service apartments and residential buildings.
The first phase, which will occupy some 6,400 sq m, will
have a saleable built-up area of 20,000 sq m. The
development is expected to be completed in four phases
over three to five years.
OKP Holdings has been awarded a $6.7m PUB contract
for the improvement works of Stamford Canal.
The contract raises OKP's order book to $415.2m.
Otto Marine has sold a multi-purpose field support and
remotely operated vehicle (ROV) support vessel for about
US$50m in a sale-and-leaseback deal. This deal is
expected to have a positive impact on the consolidated
net tangible assets per share or earnings per share of the
company for FY Dec 13.
In China, the official purchasing managers' index (PMI)
slipped from 50.8 in May to 50.1 in June, just a whisker
above the 50-point level that separates growth from
contraction. New orders index, a sub-index under the official
manufacturing purchasing managers' index (PMI), was at
50.4 in June, down sharply from 51.8 in the previous month.
A separate PMI survey conducted by Markit and sponsored by
HSBC, painted an even gloomier picture. It fell to a ninemonth
low of 48.2 in June, from May's 49.2. This suggests
that small and medium enterprises have seen their output
contract for two consecutive months, HSBC said.
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PostPosted: Wed Jul 03, 2013 9:51 am    Post subject: Reply with quote

Today’s Focus
 STI – Further gains capped at 3220 heading into the 2Q
results season
US markets gave up early session gains to find moderately
lower ahead of Thursday’s public holiday and Friday’s jobs
numbers. The June ADP employment number will be
released tonight (consensus 160k, previous 135k) as well
as the ISM non-manufacturing number (consensus 54). A
little ‘wait & see’ given the gains achieved in recent
sessions. Investors also await the start of the 2Q results
season after this week’s heavy economic numbers. US
aluminium producer Alcoa releases 2Q earnings early next
week.
For Singapore’s STI, the rebound that started from 3065
last month should be capped at 3220 (38.2% upward
retracement) in the short-term, which is moderately below
the 13.9x (average) 12-mth forward PE (currently at 3287)
given the macro uncertainty and a general lack of positive
anticipation heading into the 2Q results season.
Yesterday’s pullback off 3186 coincided with a ‘downside
gap’ from 3208-3186 formed on June 20th.
Global Logistics Properties will lease 23,000 square metres
of space in its facilities in Beijing and Chengdu to Chinese
e-commerce firm Lefeng. The online retailer will use
18,000 sq m of space in GLP Park Beijing ACL as its
national distribution centre for apparel, and another
5,000 sq m in GLP Park Chengdu Hi-tech for a regional
distribution centre for central and south-western China.
Petra Foods has completed the sale of its cocoa
ingredients division to Zurich-based chocolate
manufacturer Barry Callebaut. The sale proceeds, subject
to final post-completion adjustments, were estimated at
US$860m. With the completion of the acquisition, Petra
aims to focus on its branded consumer division, which in
the first-quarter achieved a gross profit margin of 32.5%.
Asiamedic will start Singapore's third private cord blood
bank in a joint venture backed by Indian conglomerate RJ
Corp chairman Ravi Jaipura and Modern Montessori
International Group chairman T Chandroo. Asiamedic will
US Indices Last Close Pts Chg % Chg
Dow Jones  14,932.4 (42.5) (0.3)
S&P  1,614.1 (0.9) (0.1)
NASDAQ  3,433.4 (1.1) (0.0)
Regional Indices
ST Index  3,173.3 32.4 1.0
ST Small Cap  568.6 6.5 1.2
Hang Seng  20,658.7 (144.6) (0.7)
HSCEI  9,203.9 (107.6) (1.2)
HSCCI  3,947.3 (81.4) (2.0)
KLCI  1,771.9 (3.3) (0.2)
SET  1,464.0 12.1 0.8
JCI  4,728.7 (48.7) (1.0)
PCOMP  6,448.2 (78.4) (1.2)
KOSPI  1,855.0 (0.7) (0.0)
TWSE  8,015.9 (20.1) (0.3)
Nikkei  14,098.7 246.2 1.8
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 587
Total Daily Vol (m shrs) 2,288
12m ST Index High 3,454
12m ST Index Low 2,911
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
2 Jul
Target Price
($)
ST Engineering Buy 4.120 4.80
CapitaMalls Asia Buy 1.830 2.38
UOL Buy 6.69 8.21
Thai Beverage Public Buy 0.620 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
2 Jul
Target Price
($)
Del Monte Buy 0.795 0.97
Pan-United Corp Buy 0.910 1.16
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
have an initial 25% stake in the joint venture company,
Cryoviva Singapore. AsiaMedic said that it has the option to
raise its stake to 49% within two years following the
incorporation of the JV company, based on fair-market price.
It will start operations in 2014. Singapore has two other cord
blood stem cell banks, StemCord and Cordlife Group.
Sinjia Land has entered into a non-binding Letter of Intent to
participate in the first phase of a mixed development project
in Medini Iskandar Malaysia. The first phase of the Proposed
Participation has an estimated gross development value of
approximately RM500m. In total, the estimated gross
development value of the entire mixed development project
in Medini, Iskandar Malaysia, is approximately RM2.5 bn.
ISDN Holdings has through its 80% ownership of PT Potensia
Tomini Energi (PTPTE), been invited by the Governor of
Central Sulawesi, Indonesia to develop a 126 megawatt (MW)
hydropower plant at the Laa River in Central Sulawesi,
Indonesia. This is the biggest hydropower project to be
undertaken by ISDN. Pre-feasibility studies show Laa river has
the potential to generate 936 GWh per year.
Triyards has secured its first ship repair contract for the newly
commissioned floating dock. The group is on track to grow
its ship repair into a significant business and diversify its
earnings streams.
Companies here are modestly optimistic about their
prospects in the third quarter of this year, going by the latest
Business Optimism Index (BOI) from Dun & Bradstreet (D&B)
Singapore. Overall, across all the six business indicators
measured, the service sector emerged the most optimistic.
Manufacturing and construction tied for second place, which
D&B Singapore attributed to increased pharmaceutical and
electronics production, healthy infrastructure investment and
upcoming public housing projects.
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PostPosted: Thu Jul 04, 2013 10:00 am    Post subject: Reply with quote

Today’s Focus
 Keppel Corp – Secured US$210m contract; maintain
BUY and TP S$13.00
The near-term choppy trend continues for the STI with the
current session likely an up day after US markets finished
higher ahead of a national holiday and June’s ADP
employment number (actual 188k, consensus 160k) came
in better than expected.
In Europe, bond yields for Portugal rose on news that the
country’s Foreign Affairs Minister resigned. Reaction was
limited to Portugal with bond yields of the other Eurozone
nations of Spain and Italy little changed. In Egypt, the
military has ousted the country’s President from power.
Political uncertain remains. Oil price is just marginally
higher on this news with Brent crude currently at
USD101.39pbl (+0.16) following gains in the past 3
sessions.
Keppel Corp has secured a contract to build a jack rig for
PV Drilling Overseas (PVDO), based on its proprietary
KFELS B class design. This will be the 19th KFELS B Class
rig on order at Keppel, with 45 already delivered since
2000. The contract value of US$210m represents a 2.4%
premium over the last contract for similar rig with Grupo
in March, due to the fast track delivery of 21 months by
1Q 2015. The new order brings Keppel's YTD win to
S$3.4bn, making up 57% of our full year assumption of
S$6bn. No change to our earnings; maintain BUY and TP
S$13.00.
Singapore's PMI reading rose to 51.7 in June from 51.1 in
May, expanded for the fourth straight month. The
improved showing last month stands in contrast to PMIs
elsewhere in Asia, including China. The increase comes on
the back of new orders and new export orders, which
continue to expand, but at a slower pace. New orders
were down 0.5 in June to 52.6, while new export orders
were down 1.4 to 51.5. The overall inventory index, which
continued to expand for the second consecutive month,
has recorded the highest reading since December 2011.
Singapore's electronics sector expanded for the fifth
consecutive month in June, but at a slower pace,
dropping 0.2 to 51.2.
US Indices Last Close Pts Chg % Chg
Dow Jones  14,988.6 56.1 0.4
S&P  1,615.4 1.3 0.1
NASDAQ  3,443.7 10.3 0.3
Regional Indices
ST Index  3,129.5 (43.Cool (1.4)
ST Small Cap  563.0 (5.6) (1.0)
Hang Seng  20,147.3 (511.3) (2.5)
HSCEI  8,900.3 (303.6) (3.3)
HSCCI  3,829.2 (118.1) (3.0)
KLCI  1,769.2 (2.7) (0.2)
SET  1,443.6 (20.4) (1.4)
JCI  4,577.2 (151.6) (3.2)
PCOMP  6,480.1 31.9 0.5
KOSPI  1,824.7 (30.4) (1.6)
TWSE  7,911.4 (104.4) (1.3)
Nikkei  14,055.6 (43.2) (0.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 589
Total Daily Vol (m shrs) 2,261
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
3 Jul
Target Price
($)
ST Engineering Buy 4.010 4.80
CapitaMalls Asia Buy 1.830 2.38
UOL Buy 6.65 8.21
Thai Beverage Public Buy 0.610 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
3 Jul
Target Price
($)
Del Monte Buy 0.765 0.97
Pan-United Corp Buy 0.900 1.16
China Merchants Buy 0.880 1.07
Nam Cheong Buy 0.270 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Midas has secured a RMB44.3m metro contract, awarded by
CNR Changchun Railway Vehicles for Changchun Metro Lines
1 and 2. Under the terms of the contract, Jilin Midas will
supply aluminium alloy extrusion profiles for 44 train sets, or
264 train cars. Delivery is expected to take place from this
year to 2015. The latest contract adds to the several rail
contracts won by the group in the current quarter in China
and Singapore. Maintain BUY, TP S$0.60 based on 1.2x P/B.
Parkway Life Reit is building up its Japanese portfolio with the
purchase of yet another two nursing homes for $23.1m.
Colliers International had valued the properties Palmary Inn
Shin-Kobe in Hyogo at $18m and Heart Life Toyonaka in
Osaka at $6m, as at April 15. The two homes have an
average occupancy rate of 85%, as at June 19. PLife Reit
expects to generate a net property yield of 7.1% with the
two buys.
ST Aerospace, the aerospace arm of ST Engineering, has
inked a long-term agreement with UTC Aerospace Systems to
provide maintenance, repair and overhaul (MRO) services for
the nacelle systems of the Rolls-Royce Trent 1000 and
General Electric GEnx engines used in Boeing's Dreamliner.
Intraco’s mandatory conditional cash offer for its listed
associated company Dynamic Colours has lapsed, as it did
not have enough acceptances to make its offer unconditional.
The cash offer of 18.5 cents per share for Dynamic Colours
was conditional on Intraco and its concert parties holding
more than 50% of the voting rights for DCL's shares by
5.30pm on Tuesday.
Despite the ongoing challenges facing the global economy,
demand for air travel continues to grow robustly,
underpinned by emerging markets. According to the
International Air Transport Association (Iata), global
passenger traffic for May grew by 5.6% y-o-y, outstripping
the 5.2% increase in capacity. This caused load factor to inch
up 0.3 percentage point to 78.1%. In April, passenger traffic
was up 3.2% y-o-y. For the first five months of the year,
passenger demand was 4.3% higher y-o-y, while capacity
was 3.4% higher and load factor stood at 78.4%.
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PostPosted: Fri Jul 05, 2013 9:51 am    Post subject: Reply with quote

Today’s Focus
 Bumitama Agri - Earnings growth to accelerate;
reiterate BUY, TP: S$ 1.23
 Yangzijiang – Secured US$414m contracts in 2Q13
Our analyst expects earnings growth for Bumitama Agri to
accelerate. For 2Q13, earnings are expected to jump by
39-46% q-o-q on the back of c.7% increase in CPO sales
volume, c.3% recovery in CPO prices, 1% Rupiah
depreciation, and a slight decline in the group’s unit sales
expense. Overall, he forecasts earnings to expand at 31%
CAGR over the next three years, driven by CPO price
recovery and 9.8% CPO sales volume CAGR. YTD, the
counter has underperformed the STI by 3.7% but
outperformed Singapore peers. He believes the weak CPO
prices have been priced in and there is limited downside
from here. Reiterate BUY call; TP: S$ 1.23.
Golden Agri Resources is building its own destination
markets, and expanding downstream. It may finalise
acquisition of 16k ha of oil palm estates (planted) by end
3Q13. Watch out for more corporate action. Our
estimated fair value is S$0.53/share.
Yangzijiang has secured 15 bulk carrier contracts
amounted to US$414m in 2Q13, from customers in
Europe and Asia. This brings its YTD wins to US$1.01bn,
on track to meet our assumption of US$2bn for FY13. We
expect these projects to yield low to mid single digit
margins. In additions, Yangzijiang has a total of 51
options outstanding, worth US$2.64bn, including 22
options for containerships worth US$1.56bn and 29
options for bulk carriers worth US$1.08bn. We estimate
Yangzijiang’s orderbook to stand at US3bn as of end of
1H13, taking into account the latest wins.
Separately, Yangzijiang also announced the acquisition of
the remaining 49% stake in Changbo yard for Rmb110m
or 0.8x P/BV. Changbo yard is temporarily closed down
due to the diminishing orderbook. We understand
management is firming up strategies for reactivation of
Changbo yard.
On the industry outlook, the rebound of BDI to 1100
levels, dwindling of orderbook to fleet ratio below15%
and attractive newbuild prices have led to the uptick in
US Indices Last Close Pts Chg % Chg
Dow Jones  14,988.6 56.1 0.4
S&P  1,615.4 1.3 0.1
NASDAQ  3,443.7 10.3 0.3
Regional Indices
ST Index  3,147.1 17.6 0.6
ST Small Cap  566.9 3.9 0.7
Hang Seng  20,468.7 321.4 1.6
HSCEI  9,024.0 123.8 1.4
HSCCI  3,890.9 61.7 1.6
KLCI  1,771.3 2.1 0.1
SET  1,430.9 (12.7) (0.9)
JCI  4,581.9 4.8 0.1
PCOMP  6,464.3 (15.9) (0.2)
KOSPI  1,839.1 14.5 0.8
TWSE  7,893.7 (17.7) (0.2)
Nikkei  14,018.9 (36.6) (0.3)
STI Index Performance
Singapore
Total Market cap (US$bn) 581
Total Daily Vol (m shrs) 1,749
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
4 Jul
Target Price
($)
ST Engineering Buy 4.060 4.80
CapitaMalls Asia Buy 1.855 2.38
UOL Buy 6.61 8.21
Thai Beverage Public Buy 0.615 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
4 Jul
Target Price
($)
Del Monte Buy 0.780 0.97
Pan-United Corp Buy 0.895 1.16
China Merchants Buy 0.885 1.07
Nam Cheong Buy 0.265 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
YTD contract awards (+80% y-o-y). This will likely sustain
into 2H taking cue from the strong enquiry levels. The
surfacing of news on shipyard closures and / or capacity
cut in China is deemed positive as massive yard closures is
a precursor of industry recovery. These are positive signs
of early recovery phase. We are putting our Hold
recommendation and S$1.02 TP under review.
United Engineers plans to sell a mixed-use industrial
development to the proposed Viva Industrial Real-Estate
Investment Trust for S$518m. United Engineers has signed a
conditional agreement to sell UE BizHub East--comprising
two business-park buildings, a 251-room hotel and a
convention center--to Viva Industrial Trust Management, the
manager of the proposed REIT. United Engineers expects to
pocket S$86.7m in net post-tax gains from the sale.
Standard & Poor's Ratings Services withdrew all the ratings
for Frasers Commercial Trust, at the company's request. At
the time of the withdrawal, the outlook was stable.
AusGroup has been awarded a three year plus three month
extension on their calciner overhaul and maintenance
contract with Alcoa of Australia. The estimated value of this
extension is AU$36m. With this contract award, AusGroup’s
order book now stands at AU$252m.
Old Chang Kee announced that the controlling shareholder
of the company said that he and his associate have expressed
an interest to enter into a possible stake sale of the company
to a third party.
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PostPosted: Mon Jul 08, 2013 9:49 am    Post subject: Reply with quote

Today’s Focus
�� STI – Choppy range from 3065-3220 heading into results
season
�� Cambridge Industrial Trust – Proposed divestment of
Lam Soon Building not optimal, TP lowered to $0.78.
We see STI’s recent correction shifting into a choppy range
from c.3065-3220 in the weeks ahead as it enters the 2Q
results season. Technically, a marginal upside overshoot to
3247 based on Fibonacci projection is possible in the shortterm
but this level remains below the average 12-mth
forward PE.
Banks head into 2Q results season with a low single digit
FY13F earnings growth for the sector. We note that OCBC
shares are underperforming relative to UOB heading into the
2Q results season. This could be due to concerns about
possible mark-to-market losses on Great Eastern's non-par
insurance portfolio in the upcoming results given recent funds
outflow from the bond market.
While S-REITs offer better value at current levels after the selldown
in recent weeks and upcoming results plus dividend
announce has seen short-term stability returning to the
sector, we see S-REIT performing in-line with the market at
best, or even underperform. Elevated bond yields will
continue to weight over the sector.
The 33% FY13F EPS growth for the O&G sector rides on the
back of the anticipated earnings turnaround for Ezra and
growth for Kreuz. Nam Cheong, with a forecasted 9.7% EPS
growth for FY13F is the other small cap O&G stock that DBS
Research likes as it stands to benefit from the industry capex
momentum in Malaysia.
Finally, companies with China exposure are more likely than
not to underperform as investors adjust to the impact of
slower growth in China. Besides Noble Group that should be
affected by lower commodity demand, property stocks with
China exposure such as Capitaland and Yanlord could
continue to underperform as the Chinese government
continues to target the property market.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,135.8 147.3 1.0
S&P �� 1,631.9 16.5 1.0
NASDAQ �� 3,479.4 35.7 1.0
Regional Indices
ST Index �� 3,169.7 22.6 0.7
ST Small Cap �� 569.1 2.2 0.4
Hang Seng �� 20,854.7 386.0 1.9
HSCEI �� 9,209.3 185.3 2.1
HSCCI �� 3,954.1 63.2 1.6
KLCI �� 1,772.3 0.9 0.1
SET �� 1,441.3 10.4 0.7
JCI �� 4,602.8 20.9 0.5
PCOMP �� 6,500.5 36.2 0.6
KOSPI �� 1,833.3 (5.Cool (0.3)
TWSE �� 8,001.8 108.1 1.4
Nikkei �� 14,310.0 291.0 2.1
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) 584
Total Daily Vol (m shrs) 1,993
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
5 Jul
Target Price
($)
ST Engineering Buy 4.050 4.80
CapitaMalls Asia Buy 1.875 2.38
UOL Buy 6.72 8.21
Thai Beverage Public Buy 0.620 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
5 Jul
Target Price
($)
Del Monte Buy 0.790 0.97
Pan-United Corp Buy 0.905 1.16
China Merchants Buy 0.880 1.07
Nam Cheong Buy 0.275 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
On the other hand, water treatment companies such as
United Envirotech has benefited from one of China’s focus
shift to cut environmental pollution and urbanization drive.
Midas is a potential beneficiary of the urbanization drive with
our analyst optimistic of new HSR rolling stock orders in
2H13.
Cambridge Industrial Trust announced that it is proposing to
divest Lam Soon Industrial Building for S$140.8m. The
proposed selling price represents CREIT’s 69.4% stake in the
strata share value of the property and is a 28% premium over
the latest valued book value. The exit yield is estimated to be
c2.3%. We view that a strata-sale process is not optimal
given that it is likely to be a lengthy process coupled with
uncertainty regarding the eventual sale of its entire stake.
Our DPU/NAV estimates are revised slightly to account for
this sale. We have also switched our valuation methodology
back to DCF compared to SOTP previously where we had
factored in the full potential of an enbloc sale and
development of its portfolio. Our new DCF-based TP is
S$0.78 (previous TP: $0.93).
US markets rallied after stronger-than-expected June nonfarm
payrolls (actual 195k, consensus 165k) lifted optimism
that the economy was recovering while at the same time
raising the prospect that the FED will start tapering QE before
year end, even as soon as September. 10-yr treasury yields
rose 25bps to 2.74%, the highest YTD. This is a quieter week
for data release but marks the start of the 2Q earnings
season. Aluminum producer Alcoa reports results later
tonight. Meanwhile, oil price gained with Brent higher by
2.1% to USD107.7pbl on the strong US employment number
and concerns that the unrest in Egypt will escalate.
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PostPosted: Tue Jul 09, 2013 9:40 am    Post subject: Reply with quote

Hutchison Port Holdings Trust: BUY US$0.745; Bloomberg : HPHT
Tough times won't last long;
Price Target : 12-Month US$ 0.82 (Prev US$ 0.87)
By: Suvro SARKAR +65 6398 7973 / Paul YONG CFA +65 6398 7951

• HK volumes below par YTD, but the worst is over and look forward to better data
• Revised down FY13/14F DPU by 8%/6% given lower volume estimates
• 1H13 DPU could be around 2UScts, should improve in 2H13 in line with trade flows
• Weaker DPU priced in; Maintain BUY with lower TP of US$0.82

Can only get better from here. Volume growth at the Trust’s HIT terminals in HK has been below par so far in FY13, with the port workers’ strike in April adding to the woes. HIT volumes could be down more than 10% y-o-y in 2Q13, with the high base in 1H12 – arising from higher transhipment activities between newly formed liner alliance partners – further skewing the comparison. Yantian Port volumes though remain on course for mid-single digit growth as expected, but overall volumes in FY13 could be flattish, despite contribution from newly acquired ACT terminals in HK. But the worst should be over and even though Europe trade remains weak, US volumes show relatively positive signs and upcoming peak season should provide more visibility for investors. This was the key message that HPHT communicated during our Pulse of Asia investor conference in Singapore recently.
Some key indicators looking up. US payrolls data came in better than expected recently, and while unemployment rate didn’t fall, consumer sentiment is improving and US inventory to sales ratio has maintained its upward momentum, giving us some confidence that trade flows in 2H13 will improve.
Worst is over, good time to BUY. In line with lower volume estimates, we moderate our FY13/14 DPU expectations by about 7%/ 6% to 5.3UScts/ 5.9UScts. Our TP is adjusted down to US$0.82. HPHT share price has corrected significantly in line with market sentiment, and we believe it has more than priced in lower DPU expectations. Maintain BUY in light of healthy yield promise amid the uncertain macro environment. A trade recovery by 2H13 could provide an additional cyclical leverage boost to the stock price.
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PostPosted: Tue Jul 09, 2013 9:57 am    Post subject: Reply with quote

Today’s Focus
�� Hutchison Port Holdings Trust - Weaker DPU priced in;
maintain BUY with lower TP of US$0.82
A modest up session is seen for the STI today with US 10-yr
bond yield pulling back slightly to 2.64% from 2.74% and
the MSCI Singapore futures tracking a modest gain. It’s still
the same story, one of US recovery hopes offset by concerns
about China’s slowdown, liquidity crunch & overcapacity in
various sectors. After the bell in US trade, Alcoa reported 2Q
quarterly earnings that beat consensus estimates by a cent
while top line also exceeded expectations. Meanwhile, China
releases its June CPI (consensus +2.5% y-o-y) and PPI
(consensus -2.6% y-o-y) at 9:30am.
Volume growth at Hutchison Port Holdings Trust terminals in
HK has been below par so far in FY13, with the port workers’
strike in April adding to the woes. But the worst should be
over and even though Europe trade remains weak, US
volumes show relatively positive signs and upcoming peak
season should provide more visibility for investors. Our analyst
has revised down FY13/14F DPU by 8%/6% to 5.3UScts/
5.9UScts, given lower volume estimates. 1H13 DPU could be
around 2UScts, and should improve in 2H13 in line with trade
flows. Maintain BUY with lower TP of US$0.82 (Prev US$
0.87). HPHT share price has corrected significantly in line with
market sentiment, and we believe it has more than priced in
lower DPU expectations.
Global Logistic Properties announced a new development
costing an estimated S$199m in the Japanese city of
Nishinomiya in Hyogo Prefecture. Construction on the fivestorey
facility, GLP Naruohama, is expected to begin next May
on a 48,000 square metre plot of land, and is planned for
completion by June 2015. It will have a net lettable area of
92,000 square metres. GLP Naruohama is GLP's 21st facility
in the Greater Osaka region.
Moya Asia has entered into an agreement to undertake the
design, build, operation, maintenance and transfer (BOT) of a
drinking water treatment plant, dam and distribution pipes as
well as the sale of the treated water in Indonesia. The total
investment value of the BOT project is estimated to be
US$20m.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,224.7 88.9 0.6
S&P �� 1,640.5 8.6 0.5
NASDAQ �� 3,484.8 5.5 0.2
Regional Indices
ST Index �� 3,155.5 (14.3) (0.4)
ST Small Cap �� 564.6 (4.4) (0.Cool
Hang Seng �� 20,582.2 (272.5) (1.3)
HSCEI �� 9,063.3 (146.0) (1.6)
HSCCI �� 3,924.9 (29.2) (0.7)
KLCI �� 1,762.9 (9.4) (0.5)
SET �� 1,404.6 (36.7) (2.5)
JCI �� 4,433.6 (169.2) (3.7)
PCOMP �� 6,318.9 (181.6) (2.Cool
KOSPI �� 1,816.9 (16.5) (0.9)
TWSE �� 7,886.3 (115.5) (1.4)
Nikkei �� 14,109.3 (200.6) (1.4)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 585
Total Daily Vol (m shrs) 2,269
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
8 Jul
Target Price
($)
ST Engineering Buy 4.01 4.80
ComfortDelgro Buy 1.845 2.19
UOL Buy 6.61 8.21
Thai Beverage Public Buy 0.625 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
8 Jul
Target Price
($)
Del Monte Buy 0.795 0.97
Pan-United Corp Buy 0.90 1.16
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
Mandatory unconditional cash offer for Viz Branz at S$0.78
per offer share after the controlling stake holder and
concerted group own 58.09% of the total number of issued
shares. The offer price represents a premium of 11.4% over
the last traded price.
Sunpower Group has secured a RMB253.5m engineering
procurement and construction (EPC) contract. Expected to be
completed by 2015, this contract win is by far the largest that
the China-based heat transfer technology company has
secured for its energy saving and environmental protection
systems business segment, following a recent RNB130m EPC.
Blumont Group has entered into a conditional agreement
with Cokal to venture into the coal sector. It will take a
12.75% stake in Cokal for A$9.6m.
Mirach Energy has entered into a convertible loan agreement
for a total loan of up to $36m. The loan bears a flat interest
rate of 7% and matures two years from the date of the first
drawdown. Mirach intends to use proceed to repay the
$16.9m in principal amount of 3% senior convertible bonds
due 2014 and the balance to expand the company's
business.
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PostPosted: Wed Jul 10, 2013 9:54 am    Post subject: Reply with quote

Today’s Focus
�� Tat Hong - Australia presents earnings risks; maintain
BUY with lower TP of S$1.43
Our analyst sees potential earnings downside for Tat Hong in
1Q14F from weaker AUD and slower mining and
infrastructure spending in Australia. 2H13 revenues from
Australia fell 12% y-o-y, affected by a slowdown in mining
and infrastructure spending. These could result in slower
equipment sales/rental and translation losses for 1Q14F. The
outlook for mining in Australia will likely remain weak with
infrastructure spending expected to slow down over the next
two quarters. Australia will potentially drag earnings growth,
thus FY14F/FY15F earnings cut by 20%/21%. Maintain BUY
with lower TP of S$1.43 (Prev S$ 1.80). The stock has
corrected from S$1.54 since May. In the near term, the stock
looks technically oversold and the support is at S$1.12.
Cosco Corp announced that it has secured contracts worth
US$216m in total, comprising: i) Four 111k dwt tankers, ii)
One 22k dwt tanker and iii) One stinger barge. This brings
Cosco's YTD wins to US$744m, forming 37.2% of our order
win assumption of US$2bn. Maintain FULLY VALUED; TP:
S$0.75.
Yancoal Australia, of which Singapore-listed Noble Group
owns 13%, has received a privatisation proposal from its
holding company Yanzhou Coal Mining Company (YZ). In an
indicative and non-binding offer, Yanzhou would buy the
22% stake that it does not own through a share swap, and
eventually delist Yancoal. While we believe Noble will
consider the proposal in view of its asset light strategy, we
see two potential roadblocks:
1) Further negotiation of offer price / share exchange term.
The indicative offer price of AUD 0.91 from YZ is based on its
60 days volume weighted average price of HKD7.09.
However, YZ last closing price was HKD5.19, a 27% discount
from the average price. Based on YZ's last closing price and
same conversion term of 0.91, the implied offer price is only
AUD 0.67 which is an 8% discount to Yancoal last closing
price. 2) The approval from relevant regulatory on Yancoal's
privatisation. Recall that the listing of Yancoal was one of the
conditions for YZ's acquisition of Felix.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,300.3 75.6 0.5
S&P �� 1,652.3 11.9 0.7
NASDAQ �� 3,504.3 19.4 0.6
Regional Indices
ST Index �� 3,178.6 23.2 0.7
ST Small Cap �� 571.2 6.6 1.2
Hang Seng �� 20,683.0 100.8 0.5
HSCEI �� 9,051.2 (12.1) (0.1)
HSCCI �� 3,952.0 27.1 0.7
KLCI �� 1,766.5 3.6 0.2
SET �� 1,398.7 (6.0) (0.4)
JCI �� 4,403.8 (29.Cool (0.7)
PCOMP �� 6,327.0 8.1 0.1
KOSPI �� 1,830.4 13.5 0.7
TWSE �� 7,971.2 84.8 1.1
Nikkei �� 14,472.9 363.6 2.6
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 583
Total Daily Vol (m shrs) 2,184
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
9 Jul
Target Price
($)
ST Engineering Buy 4.04 4.80
ComfortDelgro Buy 1.905 2.19
UOL Buy 6.62 8.21
Thai Beverage Public Buy 0.64 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
9 Jul
Target Price
($)
Del Monte Buy 0.82 0.97
Pan-United Corp Buy 0.90 1.16
China Merchants Buy 0.87 1.07
Nam Cheong Buy 0.275 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Silverlake Axis has secured a contract from Bank Rakyat,
the biggest Islamic cooperative bank in Malaysia, to
implement a new internet banking system. The contract is
expected to contribute positively to the results of
Silverlake Axis for the current and next financial years.
Rotary Engineering has won approximately S$60m worth
of contracts in Singapore from April to June this year.
YTD, the group has won a steady stream of contract wins
with more than S$400m. It continues to win jobs from oil
majors and specialty chemical companies in Singapore
and is currently working on two major oil terminals –
US$250m Fujairah project and S$300m Pulau Busing
project.
Europtronic Group has entered into a non-binding
memorandum of understanding (MOU) to sell a
Singapore unit to Catalist-listed We Holdings. We
Holdings will make the payment via a new share issuance.
Europtronic plans to use proceeds for general working
capital and to reduce bank loans.
In China, the producer price index (PPI), a supply-side
inflation gauge, has contracted 2.7% y-o-y but improved
from a 2.9% fall in the previous month, This marks the
16th straight month fall. According to the market,
China's factory-gate prices will remain weak for the rest
of the year as the new leadership pursues its reform
programme that saw a serious credit crunch last month
and industries continue with their destocking cycle.
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PostPosted: Thu Jul 11, 2013 9:39 am    Post subject: Reply with quote

Today’s Focus
 Plantation Companies - In a weak CPO price
environment, prefer Bumitama, First Resources and
Wilmar.
US stocks ended mixed but futures are higher after FED
Chairman Ben Bernanke reassured that interest rates will stay
low for a long time even as the FED minutes showed
members debating whether to halt bond this year. 10-year
treasury yields fell 2.576% while the USD weakened. Against
the SGD, the USD weakened to 1.265 from 1.28 last week.
STI is expected to rebound, testing the 3220 (38.2% upward
retracement) level and while an overshoot to 3246 is even
possible. These levels remain below the 13.9x (average) 12-
mth forward PE of 3266.
Malaysia’s Jun13 palm oil stockpile dropped 9% m-o-m to
1.647m MT –c.11% below forecast – as same month output
came in 10% below expectations. Flat Jun13 palm oil exports
were partly compensated by higher domestic consumption.
Given YTD numbers and Ramadan slowdown, we cut Jul13
output forecasts by 3% to 1.656m MT. Jul13 stockpile may
further drop to 1.593m MT. Productivity may deteriorate if
low prices persist. In a weak CPO price environment, we
recommend stocks with young age profile, decent volume
growth, trading at a discount to peers, have relatively low
unit cost of production, and strong balance sheet. For SGX
listed stocks, we believe Bumitama Agri, First Resources and
Wilmar fit these criteria.
Asian Telecom Sector update: Among mature markets, Hong
Kong is likely to benefit more than Singapore from 4G
networks. For the emerging markets, China and Thailand are
monetizing 3G better than Indonesia. Our top picks in
Singapore are StarHub and M1. As roaming revenue bottom
out in 2013, average revenue per user (ARPU) is set to rise in
2014F due to the impact of data re-pricing. M1 and StarHub
are expected to benefit more from potentially higher excess
data charges. StarHub to benefit from rising popularity of
Android phones while M1. StarHub & M1 had net debt to
EBITDA of 0.5x & 0.6x respectively at the end of 1Q13 versus
1.0x for SingTel. StarHub is likely to raise annual DPS (from 20
Scts currently) after spectrum auction in Aug 2013. For
SingTel, weaker regional currencies (AUD, INR, IDR) and huge
investments into Myanmar and Digital Life business are the
key risks.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,291.7 (8.7) (0.1)
S&P  1,652.6 0.3 0.0
NASDAQ  3,520.8 16.5 0.5
Regional Indices
ST Index  3,188.0 9.4 0.3
ST Small Cap  568.1 (3.1) (0.5)
Hang Seng  20,904.6 221.6 1.1
HSCEI  9,215.1 163.9 1.8
HSCCI  3,971.1 19.0 0.5
KLCI  1,768.7 2.2 0.1
SET  1,388.4 (10.3) (0.7)
JCI  4,478.6 74.8 1.7
PCOMP  6,308.2 (18.Cool (0.3)
KOSPI  1,824.2 (6.2) (0.3)
TWSE  8,011.7 40.5 0.5
Nikkei  14,416.6 (56.3) (0.4)
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$bn) 588
Total Daily Vol (m shrs) 2,217
12m ST Index High 3,454
12m ST Index Low 2,929
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
10 Jul
Target Price
($)
ST Engineering Buy 4.080 4.80
ComfortDelgro Buy 1.910 2.19
UOL Buy 6.56 8.21
Thai Beverage Public Buy 0.620 0.80
Stock Picks – Small /Mid Cap
Rec’n Price ($)
10 Jul
Target Price
($)
Del Monte Buy 0.850 0.97
Pan-United Corp Buy 0.900 1.16
China Merchants Buy 0.870 1.07
Nam Cheong Buy 0.270 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
OUE Hospitality Trust (OUE H-Trust) - the real estate
investment trust of OUE that is heading for a listing - is
looking to raise as much as $613.6m from its initial public
offering of stapled securities at between 88 and 90 cents
each. The amount comprises $391.1m from an offering of
434.6m stapled securities and $222.5m from a separate
subscription for 247.2m stapled units from cornerstone
investors. Based on the 88-90 cent price range, the
distribution yield for the full year 2013 could range from
6.99% to 7.15%. The preliminary prospectus shows that
OUE H-Trust is a hospitality stapled group consisting of
OUE Hospitality Real Estate Investment Trust (OUE H-Reit)
and OUE Hospitality Business Trust (OUE H-BT). OUE, as
vendor of the initial portfolio of properties, will receive
about 626.8m units as part consideration. These units
represent 47.9% of the total number of stapled securities
in issue when OUE Hospitality Trust is listed, assuming an
over-allotment option is not exercised.
Tiger Airways Singapore posted a 22% y-o-y rise in
passenger traffic in June, while capacity was boosted by
21.7%, giving rise to a 0.3 percentage point increase in
load factor to 86.5% for the month. Passenger traffic
came in at 787 million revenue passenger-kilometres
(RPK), while capacity for the month was 910 million
available seat-kilometres (ASK). For the 12-month period
ended June, Tigerair Singapore saw a 22.6% increase in
traffic to 8.4 billion RPK, outpacing the 18% increase in
capacity. Passenger load factor was 3.1 percentage points
higher at 84%. Meanwhile, Tigerair Australia registered a
60% growth in passenger traffic to 299 million RPK while
capacity increased 48% to 339 million ASK. As a result,
passenger load factor rose 6.5 percentage points to
88.2%.
Global Logistic Properties has signed an agreement to
develop BMW's largest distribution centre in China.
Construction starts this year. The agreement, signed with
BMW's joint venture with Brilliance Auto, will see a
75,000 square metre built-to-suit facility developed at
GLP's Lingang logistics park in Shanghai.
China's exports shrank 3.1% in June to US$174.32 billion
from a year earlier, the first decline in more than three
and a half years and the biggest since October 2009.
Imports were down 0.7% at US$147.19 billion. The
country's overall trade for the month fell 2% to
US$321.51 billion, taking the trade surplus to US$27.13
billion. In the six months to June, overall trade came to
US$1.998 trillion, up 8.6% y-o-y, with the trade surplus
hitting US$107.95 billion. Exports rose 10.4% to US$1.05
trillion while imports grew 6.7% at US$944.87 billion.
China has set a 10% trade growth target for this year. In
2012, overall trade expanded 6.2% to US$3.87 trillion,
missing the official 10% growth target. Weak global
demand is clouding China's trade growth prospects.
Global shipments of personal computers slumped 10.9%
in the second quarter, the fifth straight quarterly decline
in a market that has been devastated by the popularity of
tablets, according to research firm Gartner. Marking the
longest decline in the PC industry's history, Hewlett-
Packard in the June quarter lost ground to Lenovo, now
the world's leading personal computer maker with a
market share of 16.7%.
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PostPosted: Fri Jul 12, 2013 9:49 am    Post subject: Reply with quote

Today’s Focus
�� Vard - Lack of visibility clouds outlook; maintain HOLD
with lower TP of S$0.88
�� Ezra – 3Q13 results significantly below expectations
US markets rallied in reaction to Ben Bernanke’s comments
that monetary policy will stay highly accommodative for the
foreseeable future. Essentially, there is not much new that
was said compared to the press conference post June FOMC
meeting. Back in June, Ben Bernanke said that QE tapering is
not automatic but dependent on GDP and unemployment
numbers. He had added that any rate hike is still ‘far into the
future’ and the FED might even aim to lower the 6.5%
unemployment threshold before raising short-term rates.
Back in June, equity markets reacted negatively. This time
round though, it’s a positive reaction.
For the STI, we do not expect much, if any, follow through
gains in the current session in reaction to the overnight rally
on Wall Street as it had already rallied in anticipation
yesterday.
Vard Holdings reported weak results in 2Q, in line with profit
warning, mainly due to cost overruns at both Brazil yards.
Margins may not recover as early as we had expected earlier.
FY13/14 earnings cut by another 39%/ 19%. Order wins in
2H13 should be within expectations but unlikely to
outperform. Maintain HOLD with lower TP of S$0.88 (Prev S$
1.16).
Ezra reported another disappointing set of results for
3QFY13. Reported net profit of US$7.2m includes about
US$64.9m in exceptional gains (inclusive of divestment gains
related to Ezion shares). Stripping that out, Ezra would have
reported a core net loss of US$57.7m, significantly worse
than our projections of US$15m profits. Our earnings
estimates, target price and recommendation are put under
review, with negative bias. A full report will be released,
following discussions with management.
Separately, Ezra reported contract wins worth US$505m.
These projects are for work in the North Sea, Africa, the Gulf
of Mexico and the Asia-Pacific region, said the group, which
provides services to the oil and gas industry.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,460.9 169.3 1.1
S&P �� 1,675.0 22.4 1.4
NASDAQ �� 3,578.3 57.5 1.6
Regional Indices
ST Index �� 3,248.9 60.9 1.9
ST Small Cap �� 574.9 6.8 1.2
Hang Seng �� 21,437.5 532.9 2.5
HSCEI �� 9,551.6 336.5 3.7
HSCCI �� 4,107.2 136.2 3.4
KLCI �� 1,781.2 12.4 0.7
SET �� 1,447.0 58.6 4.2
JCI �� 4,604.2 125.6 2.8
PCOMP �� 6,407.4 99.2 1.6
KOSPI �� 1,877.6 53.4 2.9
TWSE �� 8,179.5 167.9 2.1
Nikkei �� 14,472.6 56.0 0.4
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 590
Total Daily Vol (m shrs) 2,289
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
11 Jul
Target Price
($)
ST Engineering Buy 4.200 4.80
ComfortDelgro Buy 1.925 2.19
UOL Buy 6.89 8.21
Stock Picks – Small /Mid Cap
Rec’n Price ($)
11 Jul
Target Price
($)
Del Monte Buy 0.845 0.97
Pan-United Corp Buy 0.900 1.16
China Merchants Buy 0.865 1.07
Nam Cheong Buy 0.270 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Triyards’ 3Q net profit tumbled 55% y-o-y to US$7.55m, on
the back of reduced revenue recognised on a subsea
construction vessel Lewek Constellation. For the nine months
ended May 31, net profit was 33% lower y-o-y at US$21.1m.
Revenue during the nine months was down 30% to
US$198.4m.
We hosted SREITs from the industrial, hospitality and
retail sectors. REITs remained generally upbeat about
occupancies and rents, citing still-strong tenant
performance and positive rental reversions as indicators of
organic growth going forward. S-REITs generally expect
Net property income (NPI) growth to drive or support
valuations. In terms of picks, we like Cache Logistics Trust
(BUY, TP S$1.47) for its locked-in earnings growth and
acquisition opportunities, Fraser Commercial Trust (BUY,
TP S$1.69) for its strong capital management and organic
growth from Alexandra Technopark, and Mapletree
Commercial Trust (BUY, TP S$1.53) for its strong
reversionary growth profile, particularly from VivoCity.
OKP has won a S$13.6m drainage contract from PUB. The
project is expected to commence on 15 July 2013 and
scheduled for completion in 2015. Gross order book is
now S$428.8m lasting till 2015. This project win is small
in our view with no significant impact to earnings. It is
within our project win expectation for FY13F of S$117m.
Maintain Fully Valued call on the stock.
Courts has announced soft opening of its first Malaysia
big-box in 8trium, Klang Valley. 8trium is located in a
business-retail cum leisure concept development that
serves a population of over 750,000. The Megastore is
the largest store in Malaysia with 108,000 sq ft offering
the largest range of electrical, IT and furniture products in
Malaysia. This development has been factored into our
forecasts and is within our store opening projection for
FY14F. Maintain BUY and TP of S$1.13.
Ausgroup has signed a sale-and-leaseback deal with
Boustead to sell the latter its Singapore fabrication
facilities at 36 Tuas Road for $39.4m. The property, built
in a secure area of over 30,000 square metres, consists of
a large enclosed fabrication facility, machine shop and
staging areas with waterfront access. Ausgroup estimates
that it will have a net gain of $17.3m. It plans to use the
net sale proceeds to reduce its bank borrowings, facilitate
other corporate funding requirements and for general
working capital.
Mencast Holdings has secured two separate contracts for
offshore services from Keppel Singmarine and Keppel
Shipyard. Both contracts will extend to Dec 31, 2015, and
include a one-year option to renew. The value of both
contracts was not disclosed, due to the contracts' longterm
nature and that prices would depend on Keppel's
requirements during the contract period.
ST Aerospace, the aerospace arm of ST Engineering, has
landed contracts totalling some $430m in the second
quarter for services ranging from component and engine
maintenance to interior modifications.
Dyna-Mac Holdings has secured a new fabrication order
for a provisional sum of S$135m. The order is from a
regular client for the fabrication of topside module of
various sizes, manifolds and flare towers for two FPSOs to
be carried out in Singapore and Guangzhou, China yards.
Production will commence in late 3Q2013.
Singapore's 2Q advance GDP estimate surges 15.2% q-oq,
on the back of a rebound in the biomedical and
electronics clusters. That beats a 9.7% rise predicted by
consensus. On a y-o-y basis, GDP expanded 3.7% in 2Q
vs 0.2% in 1Q and a prediction of 2.1% by the market.
Manufacturing powered this improvement, expanding
37.6% q-o-q and 1.1% y-o-y. Services and construction
pulled their weight too, growing 5% and 5.6% y-o-y
respectively.
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PostPosted: Mon Jul 15, 2013 8:58 am    Post subject: Reply with quote

Today’s Focus
�� Ezra - Low visibility on margin recovery, downgrade to
Fully Valued with lower TP of S$0.90
We stick to our view that while STI has touched a low at
3065 (13.1x blended FY13/14F PE) in June, near-term upside
should be capped at 3246, which is slightly below the 13.9x
(average) blended FY13/14F PE level at 3266. Concerns about
the impact of a China slowdown on Asia, STI’s low single
digit FY13F EPS growth and uncertainty surrounding QE
tapering are likely to limit the current rebound upside in the
near-term. Time, or a return in confidence that growth is
returning, is needed for STI to sustain a rise above this level.
Project the 13.9x (average) 12-mth forward PE though,
positions the STI at 3430 by year-end.
China economic data releases at 10am this morning is likely
to set the tone for the day – 2Q GDP (consensus 7.5%) June
industrial production (consensus 9.1%), June FAI ex-rural
(consensus 20.2%) and June retail sales (consensus 12.9%).
Ezra Holdings reported disappointing core net loss of
US$58m in 3Q13. Write-offs on legacy projects and project
delays lead to negative contribution from subsea. Order win
momentum sustained but execution risks will likely
overshadow. Our target price is revised down to S$0.90,
based on 0.8x P/BV for Ezra’s core operations, down from
1.15x P/BV earlier, to account for lower margins and ROEs as
well as risks associated with a highly geared balance sheet
amidst a potentially rising interest rate environment in future.
Downgrade to Fully Valued.
In a BT article, MAS is said to prohibit preferential rates for
property loans to clients buying properties. This rule is said to
have come into effect from 29 June, at the same time of the
introduction of the Total Debt Servicing Ratio ruling. Under
the non-preferential rate ruling, financial institutions should
not offer any property-related services to customers except
for the granting of property loans including not sending
property advertisements to their customers or enter tie-ups
with property agents/developers. The intent of the above
measures is to ensure loan evaluations remains objective.
These measures would continue to introduce more caution
into the residential market. We believe volumes would be
more impacted then ASPs as developers would have holding
power with strong balance sheets.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,464.3 3.4 0.0
S&P �� 1,680.2 5.2 0.3
NASDAQ �� 3,600.1 21.8 0.6
Regional Indices
ST Index �� 3,236.1 (12.9) (0.4)
ST Small Cap �� 574.9 0.0 0.0
Hang Seng �� 21,277.3 (160.2) (0.7)
HSCEI �� 9,433.7 (118.0) (1.2)
HSCCI �� 4,102.7 (4.6) (0.1)
KLCI �� 1,785.7 4.5 0.3
SET �� 1,453.7 6.7 0.5
JCI �� 4,633.1 28.9 0.6
PCOMP �� 6,574.2 166.9 2.6
KOSPI �� 1,870.0 (7.6) (0.4)
TWSE �� 8,220.5 40.9 0.5
Nikkei �� 14,506.3 33.7 0.2
STI Index Performance
Singapore
Total Market cap (US$bn) 601
Total Daily Vol (m shrs) 2,912
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
12 Jul
Target Price
($)
ST Engineering Buy 4.250 4.80
ComfortDelgro Buy 1.920 2.19
UOL Buy 6.86 8.21
Stock Picks – Small /Mid Cap
Rec’n Price ($)
12 Jul
Target Price
($)
Del Monte Buy 0.840 0.97
Pan-United Corp Buy 0.900 1.16
China Merchants Buy 0.865 1.07
Nam Cheong Buy 0.270 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
UOB is proposing to offer Singapore Dollar-denominated
non-cumulative non-convertible perpetual capital
securities. Subject to market conditions, the proposed
transaction is expected to be launched today. The net
proceeds from the offering are intended to allow the
issuer to redeem its outstanding Preference Shares which
are callable on 16 September 2013.
Keppel Logistics (KLF), a subsidiary of Keppel T&T, has
acquired a 60%-stake in Foshan Sanshui Port
Development in Foshan City, Guangdong Province, China
for approximately RMB166mil. The other 40% is held by
the Sanshui local government. This project will be KLF’s
second integrated port logistics facility in Foshan City. The
22.7-ha port has a 160m long multi-purpose berth and
over 5,000 sm of warehousing space. This will increase
KLF’s total warehousing capacity to 81,000 sm. In
operation since 2000, Sanshui Port has an annual
handling capacity of approximately 300,000TEU. The
foregoing transaction is not expected to have any material
impact on the NTA and consolidated earnings per share
of Keppel T&T for the current FY.
Tiong Seng Holdings has signed a joint-venture
agreement to set up a precast plant in Yangon, Myanmar.
The total annual capacity of the precast plant is 55,000
cubic metres when fully completed. Tiong Seng will take a
30% equity stake in the JV that is investing $10m in the
plant. It will first supply precast components to a potential
government affordable housing project.
CapitaRetail China Trust (CRCT) has entered into an
agreement to acquire Grand Canyon Mall in Beijing. The
mall was awarded to CapitaMalls Asia through a tender
at a price of RMB1.74 bn. This follows CRCT exercising its
right of first refusal under an existing agreement, to
acquire completed shopping malls located in China which
are identified and targeted for acquisition by CMA or its
subsidiaries. Based on the purchase price, the mall
currently has an annualised net property income (NPI)
yield of about 3.5%.
China’s finance minister has signalled that Beijing may be
willing to tolerate economic growth in the second half of
the year significantly below 7%. For the full year, growth
could be 7% this year. That would mean growth coming
in below the government's official target of 7.5%.
In property news, just 50-plus units have been sold at Vue
8 Residence, a 99-year leasehold project in Pasir Ris.
Market watchers attributed it to the general air of caution
as well as the longer bank loan approval process under
the new total debt servicing ratio (TDSR) framework that
took effect on June 29. The average prices of transacted
units are in the $980-1,050 psf range.
Better-than-expected earnings by Wells Fargo offset a
reduced profit forecast by UPS as US markets finished
modestly firmer. Equities fluctuated following mixed
comments by FED officials regarding tapering time table.
The Fed Bank of Philadelphia President, who opposed the
central bank’s current round of asset purchases, said the
Fed should begin tapering in September. However, the
Fed Bank of St. Louis President said the central bank
shouldn’t cut back until inflation accelerates toward the
Fed’s 2 percent goal.
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PostPosted: Tue Jul 16, 2013 9:14 am    Post subject: Reply with quote

Today’s Focus
�� Sheng Siong Group - Stable earnings base, consistent
dividend payout and yield of 4.0%. Maintain BUY, TP
S$0.78
�� First Resources - 2Q13 CPO output weaker than
expected; lower 2Q13 earnings expectations
We hosted Sheng Siong Group’s CEO and CFO for a
conference in Singapore and a two-day roadshow in Hong
Kong. We like SSG for its stable earnings base, consistent
dividend payout and yield of 4.0%. Population growth, store
expansion, margin improvement and e-commerce will be
SSG’s key growth drivers going forward. Maintain BUY with
slightly higher TP of S$0.78 (Prev S$ 0.76).
2Q13 CPO output for First Resources was 126,797 MT
(+10% y-o-y; +10% q-o-q) or 21% of our full year target of
592,151 MT, weaker than the 24% we were expecting.
2Q13 earnings expectations now reduced to US$45-50m
from US$50-57m previously. Subject to changes to
management guidance for 2Q13 results, we are maintaining
our forecasts, TP of S$ 2.18 and Buy rating for the stock. At
current price, the counter is trading at undemanding 9.4x
FY14F earnings. Any near term weakness would be an
opportunity to accumulate the stock.
Keppel Corp has secured fifth contract to build a jack up
rig worth US$206m for Mexican drilling company, Grupo
R, scheduled for delivery by 4Q15. The first four orders for
similar vessels for Grupo were placed in March 2013 at
similar pricing. The latest contract take Keppel's YTD order
win to S$3,678m, making up 61% of our full year
assumption of S$6bn. No change to our earnings,
maintain Buy, TP S$13.00.
Keppel REIT reported a 6.1% rise in distributable income
to S$52.8m (DUP of 1.97Scts, +1.5% y-o-y) on the back
of a 3.1% increase in net property income to S$32.2m, in
line with expectations. The better performance was
attributable to increased rental income from OFC (through
an increase in its effective stake to 99.9%, improved tax
transparency status) coupled with higher occupancy at 77
King Street. Keppel REIT has also successfully refinanced
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,484.3 20.0 0.1
S&P �� 1,682.5 2.3 0.1
NASDAQ �� 3,607.5 7.4 0.2
Regional Indices
ST Index �� 3,236.8 0.8 0.0
ST Small Cap �� 574.9 (0.0) (0.0)
Hang Seng �� 21,303.3 26.0 0.1
HSCEI �� 9,445.6 11.9 0.1
HSCCI �� 4,112.4 9.8 0.2
KLCI �� 1,786.7 1.0 0.1
SET �� 1,455.4 1.7 0.1
JCI �� 4,635.7 2.6 0.1
PCOMP �� 6,620.0 45.7 0.7
KOSPI �� 1,875.2 5.2 0.3
TWSE �� 8,254.7 34.2 0.4
Nikkei �� 14,506.3 33.7 0.2
STI Index Performance
Singapore
Total Market cap (US$bn)
Total Daily Vol (m shrs)
12m ST Index High
12m ST Index Low
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
15 Jul
Target Price
($)
ST Engineering Buy 4.25 4.80
ComfortDelgro Buy 1.925 2.19
Hutchison Port Holdings Trust
(US$)
Buy 0.77 0.82
UOL Buy 7.00 8.21
Stock Picks – Small /Mid Cap
Rec’n Price ($)
15 Jul
Target Price
($)
Del Monte Buy 0.845 0.97
Pan-United Corp Buy 0.895 1.16
China Merchants Buy 0.865 1.07
Nam Cheong Buy 0.27 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
borrowings due in 2014 amounting to S$425m (or 60%
of debt expiring) and improved debt maturity profile.
HOLD maintained, TP S$1.36 (Prev S$1.43).
SIA reported June operating statistics that were fairly
weak, with passenger carriage up by 2.5% y-o-y to
8,230.2m p-km, on 4.4% y-o-y increase in capacity,
leading to a 1.5ppt decline in load factor to 81.5%.
Silkair's carriage rose by 8.9% y-o-y to 489.2m p-km but
lagged behind capacity growth of 17.1% y-o-y, resulting
in a 5.5ppt drop in load factor to 75.5%. SIA cargo
meanwhile, reported a 6.3% y-o-y decline in carriage to
550m tonne-km on 5.6% y-o-y decline in capacity, and
load factor dipping to 62.6%. This set of numbers
highlight SIA's difficulty in operating as a premium carrier
in a weak macro-economic environment, with their yields
also likely to be under pressure. The only relief is that jet
fuel prices are slightly lower y-o-y. Maintain HOLD.
Mencast Holdings has entered into a non-binding
Memorandum of Understanding (MOU) with Takamul
Investment Company, to co-operate in analysing
downstream ventures within the Sultanate of Oman. The
first potential project being examined under the MOU is
the engineering, procurement, installation and
commissioning (EPIC) of a downstream treatment plant.
Moody's Investors Service changed Singapore's banking
system’s outlook to negative from stable. This is due to rapid
loan growth and rising real estate prices in both Singapore
and regional markets where Singapore banks are active.
These have increased the probability of credit quality
deterioration under potential adverse conditions in future.
While Singapore banks have improved their NPLs over the
past few years, asset quality has potentially peaked both at
home and in many of the regional markets in which these
banks operate. A turning point in the credit cycle is likely to
lead to a worsening of NPL ratios and higher credit costs.
Although it is difficult to exactly predict turning points in
banking credit cycles, Moody's believes the increased
likelihood of monetary policy tightening in US - with a higher
probability of QE tapering during the outlook period - is a
potential trigger.
June primary home sales (excl ECs) rose 24% m-o-m to
1806 units and is a reflection of home take up prior to
the introduction of the tighter debt servicing ratio by
MAS. Total sales (excl ECs) in 1H13 amounted to 10159
units, 17% lower than the same period a year ago. The
sales were dominated by mass market transactions with
newly launched projects showing more popular take up.
In all, transactions in the Rest of Central Region made up
93% of all sales.
Home sales continue to show a bias toward mass market
projects, also a function of the location of availability of
new projects. With the recent clampdown of financing
with the introduction of the Total Debt Servicing Ratio
capped at 60% since June 29 and the application of a
30% haircut on variable income in assessing mortgage
affordability, we believe volume sales in the coming
months could see a moderation as this move would likely
dampen investment demand as well as marginal
homebuyers. ASPs are expected to remain relatively flat as
developers continue to enjoy strong holding power and
balance sheets. Our estimates for a 20% drop in volume
and a -5% in home prices is maintained.
China's annual economic growth slowed to 7.5% in the
second quarter of 2013, from 7.7% in 1Q, the second
straight quarter of slower growth, in line with market
expectations. In the first six months of 2013, the economy
grew 7.6% from a year earlier. Other data released
showed industrial output grew 8.9% y-o-y in June, versus
expectations of 9.1%. Retail sales in June rose 13.3% y-oy
versus an expected 12.9%. Fixed-asset investment grew
20.1% in the first half from a year earlier, versus an
expected 20.2%.
China's economic growth faces relatively big downward
pressure and the country will increase financial incentives
to support small firms as part of efforts to stabilise
growth, this according to the Chinese central bank
governor. China’s stance to keep monetary policy prudent
was also reiterated.
US markets carved out modest gains with better-thanexpected
earnings from Citigroup offsetting a
disappointing June retail sales figure (actual +0.4%,
consensus +0.8%). 10-yr treasury yields dipped 5bps to
2.54% in reaction to the weak retail sales number. Ben
Bernanke’ semi-annual Humphrey-Hawkins congressional
testimony will take place on the 17 and 18 July. The event
is not likely to spring new surprises as he had made his
stand clear – QE tapering is data dependent mode and
labour market improvement will be the primary focus
with regards to timing. He will also likely stress that
tapering is not tightening.”
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PostPosted: Wed Jul 17, 2013 8:54 am    Post subject: Reply with quote

Today’s Focus
�� Ascendas REIT - Commendable 1Q14 results; new
acquisitions and development projects to drive earnings
growth
�� M1- 2Q13 results below consensus; downside risk to our
FY13F earnings
Ascendas REIT reported a set of commendable 1Q14 results,
in line with expectations. New acquisitions and development
projects are expected to drive earnings growth in FY14-15F.
Acquisitions if any, will be a positive surprise. Maintain BUY,
TP adjusted to S$2.50 (Prev S$ 2.60).
M1’s 2Q13 net profit of S$39.2m (+11% y-o-y, -4% q-o-q)
was inline with ours but 7%-8% below consensus estimates.
Half yearly DPS of 6.8 Scts (+3% y-o-y) at 77% payout ratio
was 3% below ours and 10% below market expectations.
We see downside risk to our FY13F earnings due to potential
rise in depreciation expenses with higher capex in 2H13.
Consensus underestimates the impact of fair value
accounting policy of iPhones. M1 follows fair value
accounting policy for iPhones (not for Android phones),
which boosted its net profit hugely in 2010 & 2011 during
iPhone frenzy. Higher sale of Android phones is hurting its
profit due to past burden of accrued handset revenue, which
may last for another two years. M1 is not cheap at 18x FY13F
& 17x FY14F PE while offering <5% yield. We maintain HOLD
on M1.
United Overseas Bank announced the successful pricing of
S$850m in aggregate principal amount of 4.9% noncumulative
non-convertible perpetual capital securities. The
Capital Securities are perpetual securities but may be
redeemed at the option of UOB on 23 July 2018 or any
distribution payment date thereafter.
United Fiber System has gone forward with its plan to acquire
coal miner PT Golden Energy Mines (Gems) for $1.88 bn in a
reverse takeover deal with PT Dian Swastatika Sentosa (DSS).
Prior to or on completion of the transaction, UniFiber will be
required to consolidate every 30 UniFiber shares into one,
such that DSS receives 3.30 billion UniFiber consolidated
shares at an issue price of 57 cents apiece.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,451.9 (32.4) (0.2)
S&P �� 1,676.3 (6.2) (0.4)
NASDAQ �� 3,598.5 (9.0) (0.2)
Regional Indices
ST Index �� 3,225.0 (11.9) (0.4)
ST Small Cap �� 576.4 1.5 0.3
Hang Seng �� 21,312.4 9.1 0.0
HSCEI �� 9,419.5 (26.0) (0.3)
HSCCI �� 4,100.9 (11.6) (0.3)
KLCI �� 1,786.4 (0.3) (0.0)
SET �� 1,451.5 (4.0) (0.3)
JCI �� 4,644.0 8.3 0.2
PCOMP �� 6,583.6 (36.4) (0.5)
KOSPI �� 1,866.4 (8.Cool (0.5)
TWSE �� 8,260.1 5.4 0.1
Nikkei �� 14,599.1 92.9 0.6
STI Index Performance
Singapore
Total Market cap (US$bn) 599
Total Daily Vol (m shrs) 3,591
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
16 Jul
Target Price
($)
ST Engineering Buy 4.27 4.80
ComfortDelgro Buy 1.935 2.19
Hutchison Port Holdings Trust
(US$)
Buy 0.775 0.82
UOL Buy 6.91 8.21
Stock Picks – Small /Mid Cap
Rec’n Price ($)
16 Jul
Target Price
($)
Del Monte Buy 0.84 0.97
Pan-United Corp Buy 0.895 1.16
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
Separately, United Fiber System is proposing to issue
74.6m shares to BDL at an issue price of S$0.02322 per
share to settle amounts due and owing to BDL. BDL is a
private investment company and currently does not hold
any shares in the company.
Singapore’s June NODX fell 8.8% y-o-y, below market
expectation of a drop of 5.8%, affected by weaker
electronics and pharmaceuticals. On a m-o-m basis,
NODX increased 3.2%, vs expectation of 2.4%.
Electronics shipments slipped 12.4% y-o-y in June while
non-electronics shipments eased 7.1% y-o-y.
Following a decision by Moody's Investor Services to
revise the outlook for Singapore banks to negative from
stable, MAS has issued a statement saying that local
banks are not at risk and regular stress tests have shown
that adequate buffers are in place to cope with the
inevitable upturn in the interest rate cycle. MAS added
that it other government agencies have taken pre-emptive
measures with regards to property market risks. These
include tightening loan-to-value ratios for housing loans,
introducing stamp duties on property transactions and
shortening loan tenures. For the longer term, MAS
recently introduced the TDSR framework.
The Asian Development Bank (ADB) has lowered its
growth forecasts for developing Asia this year and the
next, citing a softer outlook for the world's secondbiggest
economy China that meant subdued economic
activity elsewhere in the region. ADB lowered its growth
forecast for developing Asia to 6.3% (previous 6.6%) in
2013 and 6.4% (previous 6.7%) in 2014. Growth
estimates for China is also reduced to 7.7% (previous
8.2%) for 2013 and 7.5% (previous 8%) for 2014. ADB
forecasts inflationary pressures to be benign due to
decelerating growth in the region as well as commodity
prices weakness as global demand softens.
Chinese Premier Li Keqiang said the government should
not rush into changing policy as long as economic growth
stays within the official comfort zone, even as it remains
vigilant about a sharper slowdown. State television
quoted Mr Li as saying that the government is able to
achieve key economic tasks for this year, which reinforces
the official view that the 7.5% GDP growth target
remains achievable. Many analysts believe the Chinese
government will step in to support the economy if yearon-
year growth slips in a quarter to 7%, this according to
Reuters.
In property news, the first private residential site tender to
close since a new debt servicing framework for property
loans was introduced has drawn strong demand,
surprising market which expected greater caution. Ten
bidders contested for the 99-year leasehold site (parcel B)
at Tampines Avenue 10. The highest offer came from
MCC Land (Singapore), at $562.01 psf ppr, or $289.7m
in absolute terms. This was 7.6% higher than the next
highest bid.
US markets fell moderately after Coca Cola said volume
missed estimates amid slowing economic growth in China
& Europe. Goldman Sachs shares dipped even as earnings
beat consensus expectations. FED Chairman Ben
Bernanke’s semi-annual monetary policy report to US
lawmakers tonight also led to the modest decline in
equity prices following gains in recent sessions.
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PostPosted: Thu Jul 18, 2013 9:02 am    Post subject: Reply with quote

Today’s Focus
�� Keppel Land – 2Q13 dragged by lower associate income;
maintain BUY with lower TP of S$4.66
As expected, 2Q13 net profit for Keppel Land was flat y-o-y,
dragged by lower associate income. Looking ahead, there will
be more new offerings in Singapore and China in 2H13, with
balance sheet having room for more investments. Maintain
BUY, TP S$4.66 (Prev S$ 4.6Cool.
2Q13 results for CapitaCommercial Trust in line. The expiry of
yield protection income for One George Street is expected to
negatively impact 2H13 earnings. However, management has
indicated a willingness to utilise a portion of their retained
distributable income from Quill Capita Trust in order to
stabilise the DPU going forward. CCT has also announced
new AEI works at Capital Tower. Maintain HOLD, TP revised
lower to S$1.62 (Prev S$ 1.72).
Cosco has secured a contract worth over US$200m from
repeat Mexican customer – COTEMAR, to build one Harsh
Environment Semi Submersible Accommodation Vessel. This
is an exercise of one of the two options granted to COTEMAR
together with the contract for similar vessel in May 2012. The
vessel is scheduled for delivery in 24 months. The latest
contract takes Cosco YTD wins to US$944m, forming 47% of
our order win assumption of US$2bn. Upstream reported in
early June that Cosco is signing contracts for two drillships
worth US$650-700m each with X-Drill. If this materialise,
Cosco will beat consensus' order win assumption this year.
While the recent slew of order flow is encouraging, we
remain concerned over Cosco's project execution particularly
for the new vessel types. Positive order win momentum will
likely be overshadowed by poor earnings visibility, in our
view. Hence, we maintain our FULLY VALUED call and TP:
S$0.75. Cosco's 1H13 results will be due on 1st Aug.
mDR's unit MDR Myanmar has been appointed the aftermarket
service (AMS) provider for Nokia in Myanmar, shortly
after its partner Golden Myanmar Sea Company (GMS)
became Nokia's distributor. mDR set up MDR Myanmar in
January to grow its presence in the new market and is
working with GMS and Nokia to expand its distribution
channels and provide retail planning and support in the
Myanmar market.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,470.5 18.7 0.1
S&P �� 1,680.9 4.7 0.3
NASDAQ �� 3,610.0 11.5 0.3
Regional Indices
ST Index �� 3,208.3 (16.6) (0.5)
ST Small Cap �� 577.1 0.8 0.1
Hang Seng �� 21,371.9 59.5 0.3
HSCEI �� 9,480.9 61.3 0.7
HSCCI �� 4,068.4 (32.5) (0.Cool
KLCI �� 1,788.7 2.3 0.1
SET �� 1,458.1 6.6 0.5
JCI �� 4,679.0 35.0 0.8
PCOMP �� 6,574.7 (8.Cool (0.1)
KOSPI �� 1,887.5 21.1 1.1
TWSE �� 8,259.0 (1.2) (0.0)
Nikkei �� 14,615.0 15.9 0.1
STI Index Performance
Singapore
Total Market cap (US$bn) 599
Total Daily Vol (m shrs) 3,446
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
17 Jul
Target Price
($)
ST Engineering Buy 4.230 4.80
ComfortDelgro Buy 1.920 2.19
Hutchison Port Holdings Trust
(US$)
Buy 0.765 0.82
UOL Buy 6.85 8.21
Stock Picks – Small /Mid Cap
Rec’n Price ($)
17 Jul
Target Price
($)
Del Monte Buy 0.840 0.97
Pan-United Corp Buy 0.890 1.16
China Merchants Buy 0.870 1.07
Nam Cheong Buy 0.275 0.36
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Air travel markets appeared to slow down in May, with
the number of passengers travelling in premium cabins on
international routes growing by 2% y-o-y, compared to a
growth of 3.8% in April, according to International Air
Transport Association (Iata). Meanwhile, the number of
passengers travelling in Economy Class was up 3.9% in
May, although this was slightly slower than the 4-5%
growth - seasonally adjusted for the Easter holidays -
chalked up in April. Total international passenger
numbers rose 3.7% y-o-y in May, while international RPKs
(revenue passenger kilometres) increased 5.7%. Mediumand
long-haul routes, which are growing at a quicker clip
this year, are fuelling the total growth in international air
travel.
China announced a nationwide crackdown on the sale of
illegal and said it would tighten industry regulation. The
crackdown comes 2 days after Chinese police accused
GlaxoSmithKline of bribing officials and doctors to boost
sales and raise the price of its medicines in the country.
The State Food and Drug Administration said the 6-month
campaign would target illegal online drug sales and the
sale of fake traditional Chinese medicine.
China's economic slowdown is likely to weigh on
Southeast Asian economies but is unlikely to result in a
steep downturn in the region's growth, this according to
the president of the Asian Development Bank. China's
challenges are more about achieving sustainable,
balanced growth driven by personal consumption. The
country's current economic growth was too reliant on
capital expenditure, so the key is whether overall growth
would be supported more by strength in personal
consumption, said the ADB president. The challenge is
whether China can make a smooth transition in the
medium- to long-term.
FED chairman Ben Bernanke reiterated the FED’s stance
that the pace of QE tapering depends on economic
conditions. The FED still expects to start QE tapering later
this year but left open the option of changing that plan in
either direction if the economic outlook shifted. While
sticking closely to the time line that was outlined last
month in which the Fed is anticipated to halt bond buying
by mid-2014 when the unemployment rate is seen
dipping to around 7%, Ben Bernanke went out of his way
to stress that nothing is cast in stone. The pace of asset
purchases will be reduced "somewhat more quickly" if
economic conditions are to improve faster than expected.
On the other hand, the current US$85bil monthly pace
"could be maintained for longer" if the labour market
outlook weakened or if inflation did not look like it is
rising back towards the 2% goal.
US markets rose following Ben Bernanke’s reiteration
regarding QE tapering. On the data front, housing starts
unexpectedly fell in June to the lowest level in almost a
year (actual 836k, consensus 960k). In after hours trade,
IBM reported better than expected earnings and raised FY
forecast while eBay and Intel fell as revenue fell short of
expectations.
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