Monday, September 30, 2013

Maybank KE Report 1 Oct 13

Singapore Daily                                                         
                                                                           
  Q & M: A Gem In More Ways Than One; Initiate Buy, $0.305 - TP $0.41     
  QNM SP | Mkt Cap USD147m | ADTV USD0.2m                                 
                                                                           
  Ø  Q&M is the rarest gem in the global dental sector – the               
  best-performing by margins, ROE and growth in a sector where only four   
  listed peers can be found but the cheapest. At 34x FY14F forecast, we   
  believe it is still undervalued now ahead of organic profits from new   
  dental outlets in its 3 key markets and new revenue stream from medical 
  clinics in Singapore.                                                   
  Ø  Q&M has proposed to acquire two dental groups in China, its largest   
  acquisitions to-date. If completed, we expect it to boost FY14 earnings 
  and our target price by 39%. Dental businesses in China have shown far   
  more earnings growth and margin potential.                               
  Ø  Q&M has plans to unlock the value of its China operations via an IPO 
  in future, but already private equity firms have sniffed the investment 
  potential. Kunwu Jiuding’s proposed purchase of a 20% stake for RMB200m 
  places a value of RMB1b (SGD200m) on Q&M’s China operation, higher than 
  Q&M’s entire market cap in Singapore.                                   
  Click here for full report                                               
  johncheong@maybank-ke.com.sg   

OCBC Report 1 Oct 13

Noble Group Ltd: X2 JV will yield long-term benefits
Noble Group (Noble) has announced that it has agreed to invest in a newly established private mining venture – X2 Resources – where Noble, X2, TPG will each put in US$500m. Under the agreement, Noble will be X2 Resources’ preferred marketer and provider of supply chain management (SCM) and logistics services, which is in line with its strategy to focus on its core competence as a supply chain manager. While we do see benefits from the investment, we note that most will need some time to flow through i.e. more medium to long term in nature. But for now, we believe that headwinds could continue to come from the sluggish economy in China. We further expect its Agriculture segment to remain a drag on its overall profitability. Separately, the potential shutdown in Washington could also weigh on sentiment. As such, we maintain our SELLrating and S$0.76 fair value. We would be buyers below S$0.80 (recent low was S$0.785). (Carey Wong)

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Hankore: Potential proxy to China’s urbanization

HanKore Environment Tech Group is an international group investing and operating in the water environment sector. At the invitation of the company, we visited two of its projects in Jiangsu, China. The group has invested in 11 large-scale municipal water treatment projects located in Beijing and the provinces of Jiangsu, Shandong, Shaanxi and Henan, with a total contracted capacity of 1.57m tonnes per day. Hankore will spend RMB750m to expand the capacity of five other projects, which will be largely completed in 2014, and it has secured funding (both debt and equity). By focusing on the municipal waste-water treatment segment, Hankore could be also seen as a proxy to urbanization in China, based on the careful selection of its treatment plants. We currently do not have a ratingon Hankore. (Carey Wong)

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


NEWS HEADLINES


- US stocks dropped on Mon, taking a little shine off the third straight quarter of gains, as investors worried about a standoff on Capitol Hill and the likely duration of a possible government shutdown.

- The Ministry of Finance is raising the share buyback limit under the Companies Act for Singapore-incorporated companies from 10% to 20% with effect from today.

- Growth in bank lending here continued to slow, according to numbers just released by the MAS, pointing to a generally sluggish 3Q13 for loans compared to 2Q13.

- Ezion Holdings announced a restructuring and expansion plan as it tabled a bid to buy 45.15% of the enlarged share capital of Ocean Sky International.

- YHM Group has secured a contract worth more than US$37m over a 20-year period to lease a set of hydroelectric power-generation equipment for power supply to a national utility board in South Asia.

DBSVickers Report 1 Oct 13

Dairy Farm - Beneficiary of rising middle class
population and food consumption in Asia. Initiate
coverage with BUY call, TP S$11.60.
􀂃 Ezion - Restructure for future growth; maintain BUY,
TP S$3.10.
We are initiating coverage on Dairy Farm with BUY
recommendation and target price of S$11.60. Dairy Farm
is a beneficiary of rising middle class population and food
consumption in Asia. The stock offers defensive earnings
and sound financials and is trading at undemanding
valuations. Recent selldown provides entry opportunity.
Dairy Farm has corrected by c.23% from May’13, more
than STI Index. Valuation is attractive at 25.5x FY14F PE,
below its last three years’ average valuations.
Ezion is proposing to inject its marine supply base asset
into Ocean Sky at cost via a share swap. Post exercise,
Ezion will hold 45.15% in Ocean Sky while the latter will
have a 2% stake in Ezion. This is a strategic move and is
positive for long term development of Ezion. It enables
Ezion to tap into the growth potential of the marine
supply base business in Australia without stretching its
balance sheet and resources further, while allowing the
company to stay focused on its core liftboat and service
rigs business. We have trimmed FY13/14/15F EPS by
2.2/3.3/3.8%. Post exercise, Ocean Sky is projected to
have cash of c.S$60m for business expansion. We have
not factored in any potential from this. The share price
weakness post announcement is unwarranted and we
advocate to BUY (TP S$3.10, Prev S$3.20) the shares on
weakness.
Yangzijiang’s share price was down 6% on heavy volume
yesterday, which we believe is due largely to the disposal
by a non-executive director, Mr. Yu Kebing. Mr Yu was
among the pre-IPO investors of Yangzijiang and has been
reducing its stake over the years. He has sold all his
remaining 55.176m shares in Yangzijiang (or 1.44%
stake) at S$1.12. Hence, there should not be any
overhang. In addition, he is a non-executive director and is
not involved in daily operations of Yangzijiang. The
fundamental of Yangzjiang remains intact. We continue
to favour Yangzijiang as the best proxy to shipbuilding
recovery. No change to our BUY recommendation and TP
of S$1.32.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 15,129.7 (128.6) (0.8)
S&P 􀀙 1,681.6 (10.2) (0.6)
NASDAQ 􀀙 3,771.5 (10.1) (0.3)
Regional Indices
ST Index 􀀙 3,167.9 (42.3) (1.3)
ST Small Cap 􀀙 571.6 (7.1) (1.2)
Hang Seng 􀀙 22,859.9 (347.2) (1.5)
HSCEI 􀀙 10,316.1 (178.2) (1.7)
HSCCI 􀀙 4,380.2 (43.0) (1.0)
KLCI 􀀙 1,768.6 (7.5) (0.4)
SET 􀀙 1,383.2 (34.3) (2.4)
JCI 􀀙 4,316.2 (107.5) (2.4)
PCOMP 􀀙 6,191.8 (188.0) (2.9)
KOSPI 􀀙 1,997.0 (14.8) (0.7)
TWSE 􀀙 8,173.9 (56.8) (0.7)
Nikkei 􀀙 14,455.8 (304.3) (2.1)
US Indices Last Close Pts Chg % Chg
STI Index Performance
Singapore
Total Market cap (US$bn) 592
Total Daily Vol (m shrs) 4,891
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
30 Sep
Target Price
($)
ST Engineering Buy 4.170 4.80
ComfortDelgro Buy 1.970 2.19
OCBC Bank Buy 10.300 12.40
Singapore Airlines Buy 10.440 11.40
Frasers Centrepoint Trust Buy 1.845 2.07
Stock Picks – Small /Mid Cap
Rec’n Price ($)
30 Sep
Target Price
($)
Ezion Holdings Buy 2.200 3.10
Goodpack Buy 1.730 2.00
CSE Global Buy 0.900 1.07
Mapletree Commercial Trust Buy 1.215 1.35
CDL Hospitality Trust Buy 1.630 1.80
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Vallianz Holdings, an integrated offshore marine solutions
services provider in the offshore oil and gas industry, has
boosted its order book to US$334.0m through its New
Subsidiary in the Kingdom of Saudi Arabia with an ongoing
contract-with-additional option to charter AHTS vessels to a
leading oil company in the Middle East. The New Subsidiary
is jointly owned by Rawabi, a leading Saudi Arabian oil and
gas service company.
Mermaid Maritime is proposing to place up to 58.1m shares,
at an issue price of S$0.280 to raise gross proceeds of up to
S$16.3m. The proceeds will be mainly used for investment in
drilling rigs and/or subsea vessels and acquisitions of
additional machineries.
Otto Marine had entered into two bareboat charter
agreements worth US$32m, to charter to its Malaysia
partners.
TA Corporation has secured two contracts worth an
aggregate of S$77.3m for a proposed condominium
development at Marine Parade Road and a proposed mixed
landed housing development at Whitley Road.
Growth in bank lending here continued to slow. Domestic
banking unit (DBU) loans to non-bank customers totalled
$540.8 bn in August. This represents a 15.4% y-o-y
increase, compared with the 17.6% rise recorded in July. On
a month-on-month basis, total lending inched up 0.3% in
August, compared to a 1.2% increase in July. Growth in
loans to both business and consumer segments slowed;
lending to businesses was up 17.4% y-o-y to $321.2 bn in
August, compared to 20.8% in July. Lending to consumers
was up 12.5% y-o-y to $219.6 bn in August, compared to
the 13.2% increase in July. Compared with the previous
month, business loans were flat, while consumer loans were
up 0.8% for August.
HSBC's final China purchasing managers' index came in
substantially lower than the forecast published a week ago.
September PMI was 50.2 points, a touch higher than the
August figure and lower by nearly one point compared to
the flash PMI released earlier. Despite a pick-up in exports
orders pointing to a recovery in China's main export
markets, the US and Europe, domestic demand remained
unchanged last month, the index showed. A breakdown of
the index shows that new export orders picked up, climbing
to 50.7 from 47.2 in August, but new orders remained flat
and manufacturers' restocking process continued, albeit
relatively slow. The official PMI published by the government
is due to be released today.
US stocks fell as a potential shutdown of the US government
by noon today (Singapore time) following the stalemate over
the federal budget looms. US lawmakers have to approve an
emergency legislation in time to keep the federal
government operating. Otherwise, as many as 800k federal
employees will be put on temporary unpaid leave. US 10-
year treasury yield stood almost unchanged at 2.61%.

Stocks to watch

Singapore
              * Cosco Singapore (COS SP): Ma Ze Hua resigns as chairman, Li
                Yun Peng replaces
              * CosmoSteel (CSMS SP): Hor Siew Fu resigns as CFO
              * Indofood Agri (IFAR SP): S$500m euro medium-term note
                program
              * Mermaid Maritime (MMT SP): Rights issue, placement to raise
                up to S$176.1m
              * Otto Marine (OTML SP): Charters workboats to Malaysia’s
                Expro Synergy
              * Singapore Press (SPH SP): Co., Yahoo settle copyright
                infringement suit
              * TA Corp. (TACL SP): Group gets 2, S$77.3m contracts
              * Xpress Holdings (XPH SP): FY net S$2.7m, reversing loss of
                S$4.6m
              * YHM (CHEN SP): Names Yak Thian Huat CFO

Daily Summary 30 Sep 13

Dow and Europe were weaker on Friday. Dow -71 at 15258. Trend of Dow is slipping down again. Dow's future is now -93. Europe opened down.

Asian bourses were mostly weaker. Nikkei -304, ShanghaiC +15, Hangseng -347. STI closed -33 at 3177. Volume was 4.9b shares. Gainers were 127 to 432 losers.

STI's trend is still flat but weakening.

Top volumes were YHM -1.1, Albedo -1.1, Ipco -0.1, Hankore -0.5, SingHaiyi -0.2, Oceanus unchanged, Yangzijiang -7, MetechInt -0.4, Federal +0.2, GoldenAgr unchanged.

Market was steady on opening and was slightly weaker till mid afternoon. it started to fall further in late afternoon and closed at day low at -42.

Blue chips were weaker. Penny and speculatives were mostly in the red. The sharp falls in Nikkei and Hangseng led to more selling.

The US Senate will vote on the Obamacare tonight and it could go either way. It can't go any worse I think. Europe and Dow's future are looking weak at the moment.

Sunday, September 29, 2013

Maybank KE 30 Sep 13

Courts Asia: NDR Feedback; Maintain BUY, $0.755 - TP $1.06
COURTS SP | Mkt Cap USD336.6m | ADTV USD0.6m

Ø Maintain BUY at SGD1.06 TP (reduced from SGD1.15 on the lower FY14F forecast) pegged to 14x earnings.
Ø We hosted a NDR with Courts to confirm our views on the retail scene in Singapore and Malaysia. We believe the share price has already priced in overall weakness in demand. Barring a longer-than-expected closing of the JEM store, the trough should be seen in 2QFY14 (3QCY13).
Ø Going forward, things should improve on (1) a loosening in credit policy to improve sales, particularly in Malaysia, (2) a short-term boost in sales from iPhone 5S and (3) the maiden store opening by FY3/15 in Bekasi, Indonesia, to boost sales.
Click here for full report alisonfok@maybank-ke.com.sg
Rickmers Maritime: NDR Feedback; Not Rated
RMT SP | Mkt Cap USD192.2m | ADTV USD0.1m

Ø We hosted Mr. Thomas Preben Hansen and Mr. Gerard Low from Rickmers Trust Management, Trustee-Manager of Rickmers Maritime (RMT) on a one day road show, where they introduced their Trust and shared valuable insights on latest industry trends.
Ø While RMT’s gearing ratio had improved significantly following a recently completed Rights Issue, a recovery in charter rates over 2014/5 remains critical as a significant number of vessel charters will expire over that period of time. If forecasts by Maersk Broker for a significant recovery in charter rates materialize, we expect RMT to be a beneficiary.
Ø RMT is a leveraged play to a cyclical recovery in the container shipping sector, in our view. The stock offers an attractive yield of c.10%, assuming its DPU of USD0.024 a year is maintained. We do not have a rating on RMT.
Click here for full report derrickheng@maybank-ke.com.sg

OCBC Report 30 Sep 13

Frasers Commercial Trust: On accelerated growth mode

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

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SATS Ltd: Cruise control

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


CapitaLand Limited: A strong launch at Sky Vue

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

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

DBSVickers Report 30 Sep 13

M1 key beneficiary of telco price hike cycle TP raise
to $3.6 (prev $3)
�� US budget impasse keeps markets on tenterhooks as
the week begins
Stocks are likely to start the week on a negative note as
concerns mount that the US government is heading for a
partial shutdown by tomorrow as the Senate and House of
Representatives remains unable to come to an agreement on
the healthcare program when their fiscal year 2014 begins 1
Oct. With the FED stating that the timeline to start QE
tapering being contingent on upcoming data, eyes will also
be on this week’s US September employment numbers
scheduled for release this Friday. Meanwhile, Italy’s
government is on the verge of collapse after allies of former
leader Silvio Berlusconi said they’d quit the cabinet.
We believe that STI’s pullback off 3260 in mid-Sept signalled
the start of a consolidation band between c.3150-3250 in
the weeks ahead. Beyond the likely short-term range bound
behaviour, we continue peg a year-end objective at c.3330
or 13.9x (ave) FY14F PE. The year-end objective is on the
assumption that the upcoming deadline to raise the US debt
ceiling is met and there is little/no net forward earnings
downgrade for STI component stocks in the upcoming 3Q
results season.
DBSV Research is positive on Singapore banks. While
earnings are expected to be stable for the rest of the year,
we believe there is upside to NIM and earnings going into
2014. Our analyst raises Singapore banks to Overweight.
Besides improved prospects in 2014 coupled with possible
interest rate hikes, Singapore banks provide a flight-to-safety
theme in the near term, especially when compared with its
ASEAN counterparts. We have imputed NIM recovery and
stronger earnings growth for 2014. But 2013 earnings will
be subdued on flat NIM and normalised provisions.
Regionalization may see downside risk in markets such as
Indonesia and Thailand (UOB has exposure in these two
markets; OCBC only has exposure in Indonesia) in the shortterm.
Both UOB and OCBC derive close to 20% of profits
from their Malaysian operations that has till date remained
resilient. We would be cautious should there be further
significant tightening on consumer debt in Malaysia to rein in
household debt accumulation.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,258.2 (70.1) (0.5)
S&P �� 1,691.8 (6.9) (0.4)
NASDAQ �� 3,781.6 (5.Cool (0.2)
Regional Indices
ST Index �� 3,210.2 15.9 0.5
ST Small Cap �� 578.8 (0.0) (0.0)
Hang Seng �� 23,207.0 82.0 0.4
HSCEI �� 10,494.4 (46.7) (0.4)
HSCCI �� 4,423.2 7.8 0.2
KLCI �� 1,776.2 2.0 0.1
SET �� 1,417.5 (7.3) (0.5)
JCI �� 4,423.7 17.8 0.4
PCOMP �� 6,379.8 (27.6) (0.4)
KOSPI �� 1,999.8 (12.0) (0.6)
TWSE �� 8,230.7 46.0 0.6
Nikkei �� 14,760.1 (39.1) (0.3)
Dow Jones �� 15,258.2 (70.1) (0.5)
STI Index Performance
Singapore
Total Market cap (US$bn) 592
Total Daily Vol (m shrs) 4,712
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
27 Sep
Target Price
($)
ST Engineering Buy 4.210 4.80
ComfortDelgro Buy 1.955 2.19
OCBC Bank Buy 10.450 12.40
Singapore Airlines Buy 10.430 11.40
Suntec REIT Buy 1.685 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
27 Sep
Target Price
($)
Ezion Holdings Buy 2.370 3.20
Goodpack Buy 1.765 2.00
CSE Global Buy 0.905 1.07
Mapletree Commercial Trust Buy 1.230 1.35
CDL Hospitality Trust Buy 1.625 1.80
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
We believe that once these emerging ASEAN markets start
to recover from the current macro weakness, the Singapore
banks’ regionalisation journey should be back on track. We
prefer OCBC (Buy, TP: $12.4) over UOB (Hold, TP: $21.9).
SingTel doubled its excess usage charges to S$10.70 per GB
that is a positive for the sector. We expect M1 and StarHub
to follow soon. M1 is a key beneficiary of the price hike
cycle. We raise our FY14F/15F earnings 7%/14% assuming
that M1 charges S$10.70 per GB from Jan 2014 onwards.
Our TP is raised to S$3.60 based on DCF (WACC 6.5%,
terminal growth 0%). M1 is trading at 17x FY14F PER versus
19x for StarHub despite offering superior growth. M1’s
FY14F dividend yield of 5.3% is also superior to StarHub’s
4.7%. M1 is the only telco in Singapore, Malaysia &
Indonesia, which offers 5% plus yield with double-digit
earnings growth.
Nam Cheong has sold 4 Platform Supply Vessels for
approximately US$120 million to a new customer that is an
emerging offshore marine services company based in Latin
America. With that, the cumulative order book reaches
RM1.7 billion. The total sale of 20 vessels for 2013 is close
to the record high of 21 vessel sales achieved in 2012.
CM Pacific has entered into a conditional sale and purchase
agreement to sell its entire New Zealand property business
to China Merchants Properties Development for HK$356m.
The sale is targeted for completion in 4Q13, and the Group
will realise a gain of c. HK$111m on its P&L. The divestment
and consideration amount (which is about S 6.5cts per
share) is in line with our expectation and will help the Group
to focus on its core toll road business, while improving its
balance sheet slightly. Next up for the Group will be to look
for more toll road acquisitions to grow its business. Maintain
Buy and DCF-based TP of S$1.07, which assumes the
outstanding convertible bonds will be converted.
Sky Vue at Bishan Central by CapitaLand and Mitsubishi
Estate Asia received on the first day of its launch. 410 of the
505 units released for sale have been sold with one- and
two-bedroom units being the most popular among buyers.
The average price achieved for all the units sold is $1,500
psf. Prices ranged from an average $750,000 for a onebedroom
unit to an average price of $1.58 mil a threebedroom
unit.
US stocks fell as concerns grew that the budget impasse will
hurt economic growth. Over the weekend, congress
remained in deadlocked over Republicans’ insistence on
delaying the 2010 health-care law. The House has voted
231-192 to stop many of the Affordable Care Act’s central
provisions for one year and tie that to an extension of
government funding through Dec. 15.The Senate could
reject the House’s position when it comes into session today.
This development raises the prospect of the first government
shutdown since 1996, putting as many as 800,000 federal
employees out of work starting Tuesday, Oct. 1.

Friday, September 27, 2013

Daily Summary 27 Sep 13

Dow was +55 last night closing at 15328. Europe were mixed. Dow's trend is still down. Dow's future is now -21. Europe opened down.

Asian bourses were mostly up except Nikkei -39. ShanghaiC +4, Hangseng +82. STI closed +16 at 3208. Volume was 4.7b shares. Gainers were 242 to 257 losers.

Trend of STI is flat.

Top volumes were SingHaiyi +0.1, Albedo -0.5, Ipco -0.2, Digiland unchanged, MetechInt -0.3, Hankore -0.2, Sunmoon unchanged, MDR unchanged, Rowsley -2.5, EMS +0.2.

Market was firm for the whole day but closed at day low at +16. It was a small technical rebound after a week of selling. The down trend is halted for the time being.

Blue chips were firm. Penny and speculatives were weaker with profit taking.

Dow and Europe are showing a little weakness for the weekend.

DBSVickers Report 27 Sep 13

Indofood Agri - Upgrade to BUY on higher forecast
output and ASP, target price raised to S$0.93
Global palm oil stockpile is at one-year low on stronger-thanexpected
demand, despite global Slowdown. Near-term
weakness in CPO prices may not drag planters much, given
output and earnings recoveries. Our analyst has adjusted
CPO prices for CY13F/14F/15F by -4%/-10%/-11% in USD,
0%/+1%/-1% in MYR. Beware of upside risks from FY16F, as
supply growth decelerates. We expect multi-year CPO price
gain from here. For the SGX-listed CPO stocks, we upgraded
Indofood Agri to BUY on higher forecast output and ASP,
target price raised to S$0.93 (Prev S$0.81). We believe the
counter is oversold. Maintain BUY on Bumitama Resources
(TP: S$1.26) and First Resources (TP: S$2.19) and HOLD on
Wilmar (TP: S$3.53).
In SPH’s upcoming full year results (11 Oct 2013), we expect
final/special DPS of 16Scts with payout in Dec, equating to
4% yield for a c.10-week period. Going forward, we believe
earnings could improve, going by recent upward adjustments
to consensus’ 2013 GDP growth forecast for Singapore. We
also noted that AdEx growth for the period from May to
Aug’13 has been stronger y-o-y. With the listing of SPH REIT,
we project that SPH’s cash pile has risen to c.S$1.1bn. We
estimate SPH can well afford to pay out at least another 20-
30 Scts per share, on top of its usual DPS (FY14F: 22 Scts) to
shareholders. We reiterate our BUY recommendation, with
TP adjusted to S$4.53 (from S$4.75) to account for the
S$0.18 special DPS paid in Aug and 5-10% cut to our
earnings forecasts.
SATS is acquiring Singapore Cruise Centre for S$110m to
further develop its gateway services. The purchase price
implies historical PE of c.7.9x and 1.7x P/BV. This acquisition
is mildly positive given immediate but minor earnings
accretion.
SembCorp Industries (SCI) reported a successful close of
Sembcorp Salalah IPO last night. The IPO offering of 33.4m
shares (~35% of share capital) was comfortably
oversubscribed with strong demands from investors. Shares
are expected to commence trading on 10 Oct 2013. SCI is
expected to recognise a total gain of S$117m, higher than
our S$109m forecast. This divestment gain would boost
US Indices Last Close Pts Chg % Chg
Dow Jones  15,328.3 55.0 0.4
S&P  1,698.7 5.9 0.3
NASDAQ  3,787.4 26.3 0.7
Regional Indices
ST Index  3,194.3 (14.3) (0.4)
ST Small Cap  578.8 (3.2) (0.6)
Hang Seng  23,125.0 (84.6) (0.4)
HSCEI  10,541.0 (57.1) (0.5)
HSCCI  4,415.4 (20.Cool (0.5)
KLCI  1,774.2 (9.9) (0.6)
SET  1,424.8 (12.1) (0.Cool
JCI  4,405.9 (0.9) (0.0)
PCOMP  6,407.5 (13.0) (0.2)
KOSPI  2,007.3 9.3 0.5
TWSE  8,184.7 (99.2) (1.2)
Nikkei  14,799.1 178.6 1.2

Index
STI
Total Market cap (US$bn) 590
Total Daily Vol (m shrs) 5,771
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
26 Sep
Target Price
($)
ST Engineering Buy 4.200 4.80
ComfortDelgro Buy 1.950 2.19
OCBC Bank Buy 10.370 12.40
Singapore Airlines Buy 10.430 11.40
Suntec REIT Buy 1.680 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
26 Sep
Target Price
($)
Ezion Holdings Buy 2.370 3.20
Goodpack Buy 1.780 2.00
CSE Global Buy 0.900 1.07
Mapletree Commercial Trust Buy 1.210 1.35
CDL Hospitality Trust Buy 1.640 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
PATMI to S$864.8m. Stripping out exceptional items, core
profits would be S$772.8m from S$753.3m in FY12. No
change to our BUY recommendation and TP of S$5.60.
TriTech is proposing a share split of every one (1) existing
share into two (2) Shares and upon completion, up to
386.6m new Shares will be issued. Following completion of
the proposed share split and the issue of the additional
shares, TriTech is proposing to issue bonus warrants of up to
386.6m non-renounceable bonus warrants on the basis of
one (1) Warrant for every two (2) Shares held.
Singapore’s manufacturing output in August fell 1.4% from
July, marking a third consecutive month of decline despite
expanding 3.5% y-o-y. Last month's growth in factory output
was bolstered by a 5.3% increase in electronics production,
thanks to a 12.7% expansion in the semiconductor segment.
Electronics, which make up about a third of the entire
manufacturing sector, helped to offset a 1.9% contraction in
biomedical output as a result of a 3.4% decline in the
pharmaceuticals segment. Excluding biomedical
manufacturing, Singapore's output grew 4.8%. With this set
of weak data, the market is expecting GDP in the third
quarter to contract 3.5 to 4%, in line with our expectations.
In property news, demand in all segments of the property
market slumped in July following the introduction of the total
debt servicing ratio (TDSR) framework in late June.
Transactions of strata industrial and commercial units fell
20.9% and 31% respectively from June. But residential deals
dropped even more, by 56.6%. These were findings made by
property consultancy CBRE.
Singapore’s population expanded at its slowest pace in nine
years. Latest government figures released showed that the
total population stands at 5.4 million, a 1.6% increase from
the 5.31 million recorded last June. The resident total fertility
rate (TFR) had increased to 1.29 last year from 1.2 in 2011,
but is still far below the replacement level of 2.1 - a trend
that has remained for more than three decades.
US markets rebounded Thursday lifted by a better-thanexpected
initial jobless claims (actual 305k, consensus 325k).
But August pending home sales declined a worse than
expected -1.9% m-o-m compared to the -1% expected. The
US 10-yr treasury yield held stabilized off the 2.61% level in
recent sessions heading into next week’s data heavy week
that culminates with the September employment numbers.






 






Thursday, September 26, 2013

OCBC Report 27 Sep 13

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

MORE REPORTS

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

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

Singapore stocks to watch

* Asiasons Capital (ACAP SP): To pay for pay for Black Elk
                stake

              * Rowsley (ROWS SP): Lim Eng Hock boosts stake to 49.64% from
                29.9% via Jovina, Bellton, Garville holdings
              * SATS (SATS SP): SATS to buy Singapore Cruise for S$110m
            from
                Temasek
              * Sembcorp Industries (SCI SP): Raises 53m rials from share
                sale
              * Soilbild (SBREIT SP): Rated new buy at DBS Vickers
              * Sysma Holdings (SHLL SP): Gets S$7.5m contract to build
                bungalow
              * Tritech (TTGP SP): Proposes 2-for-1 shr split
              * Yoma (YOMA SP): Sets up unit for Myanmar tourism business

Singapore stocks to watch

* Asiasons Capital (ACAP SP): To pay for pay for Black Elk
                stake

              * Rowsley (ROWS SP): Lim Eng Hock boosts stake to 49.64% from
                29.9% via Jovina, Bellton, Garville holdings
              * SATS (SATS SP): SATS to buy Singapore Cruise for S$110m
            from
                Temasek
              * Sembcorp Industries (SCI SP): Raises 53m rials from share
                sale
              * Soilbild (SBREIT SP): Rated new buy at DBS Vickers
              * Sysma Holdings (SHLL SP): Gets S$7.5m contract to build
                bungalow
              * Tritech (TTGP SP): Proposes 2-for-1 shr split
              * Yoma (YOMA SP): Sets up unit for Myanmar tourism business

Daily Summary 26 Sep 13

Dow was -61 last night closing at 15273. Europe were slightly up. Dow's trend is down. Dow's future is now +22. Europe opened down.

Asian bourses were mostly down with the exception of Nikkei +179, ShanghaiC -43, Hangseng -85. STI closed -15 at 3194. Volume was 5.7b shares. Gainers were 192 to 313 losers.

Trend of STI is flat and threatening to break down.

Top volumes were Ipco -0.5, SingHaiyi +0.1, MetechInt +0.2, LifeBrandz -0.1, AdvSCT unchanged, Amplefield +0.2, MDR +0.1, Informatics +0.6, Equation unchanged, Albedo -0.1.

Market was weak on opening and stayed negative the whole day. Blue chips were slightly weaker. Penny and speculatives were mostly down. Though volume was still high but sentiment is down.

Europe opened down but Dow's future is slightly positive at the moment.

Wednesday, September 25, 2013

OCBC Report 26 Sep 13

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

MORE REPORTS

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

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

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


NEWS HEADLINES

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

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

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

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

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

- OKH Global has entered into a placement agreement in which it will issue up to 60m new ordinary shares at 68 S cents apiece.

DBSVickers Report 26 Sep 13

Soilbuild Business Space REIT – Initiate coverage with
BUY call and target price of S$0.87. Forward yield of
7.7%-8.6% one of the highest amongst the S-REIT
space.
For the STI, an initial dip that probed the 3200 immediate
support earlier this week resulted in a minor 30pt rebound
but that has since been given back. With US hitting its debt
ceiling by 17 Oct, the postponement of QE tapering to a later
date and a likely lack lustre 3Q results season, it is possible
for STI’s current consolidation off the 3200 level to dip lower
to 3175 but not exceeding 3140 where better support
emerges.
We are initiating coverage on Soilbuild Business Space REIT
(SB REIT) with a BUY call and target price of S$0.87. SB REIT
offers exposure into a modern portfolio of business
park/industrial properties in Singapore with a valuation of
S$935m. Compared to existing industrial S-REITs, its portfolio
is the youngest, with an average age of 3.1 years (by GFA),
backed by long land lease tenure of c.51 years. SB REIT will
derive 42-43% of its net property income from master
leases, with tenures ranging from 5-15 years, and this will
offer strong income visibility to the REIT. At a FYP13F-15F
yield of 7.7%-8.6%, SB REIT offers one of the highest yields
amongst the S-REIT space, which is attractive.
Yangzijiang Shipbuilding has launched its first ever 10,000
TEU containership from its Jiangsu New Yangzi Shipbuilding.
This is also the first ever Chinese yard to have secured orders
for the 10,000 TEU containerships. As at current date, the
Group has 11 of such vessels on the order book and also
there are options for 14 more. This reiterates the Group’s
ability to scale up the value chain with securing orders and
building higher capacity eco-friendly vessels.
OUE is considering yet another real estate investment trust
(Reit). The company is "exploring the establishment" of a
commercial Reit to be listed on the main board. OUE said
that the proposed Reit's initial portfolio is expected to include
OUE Bayfront - its 18-storey flagship office building at Collyer
Quay - along with the building's ancillary properties
comprising a tower building used for a food and beverage
outlet and a link bridge with retail shops. Other commercial
properties owned by Lippo China Resources Limited (LCR) are
also being considered for acquisition by the proposed Reit.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,273.3 (61.3) (0.4)
S&P  1,692.8 (4.7) (0.3)
NASDAQ  3,761.1 (7.2) (0.2)
Regional Indices
ST Index  3,208.6 (3.2) (0.1)
ST Small Cap  582.0 1.9 0.3
Hang Seng  23,209.6 30.6 0.1
HSCEI  10,598.2 (1.0) (0.0)
HSCCI  4,436.3 1.4 0.0
KLCI  1,784.1 (8.4) (0.5)
SET  1,436.9 19.1 1.3
JCI  4,406.8 (53.6) (1.2)
PCOMP  6,420.4 (41.0) (0.6)
KOSPI  1,998.1 (9.0) (0.5)
TWSE  8,283.9 (15.2) (0.2)
Nikkei  14,620.5 (112.1) (0.Cool
 


STI
Total Market cap (US$bn) 591
Total Daily Vol (m shrs) 9,496
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
25 Sep
Target Price
($)
ST Engineering Buy 4.250 4.80
ComfortDelgro Buy 1.945 2.19
OCBC Bank Buy 10.440 12.40
Singapore Airlines Buy 10.440 11.40
Suntec REIT Buy 1.690 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
25 Sep
Target Price
($)
Ezion Holdings Buy 2.370 3.20
Goodpack Buy 1.720 2.00
CSE Global Buy 0.900 1.07
Mapletree Commercial Trust Buy 1.200 1.35
CDL Hospitality Trust Buy 1.640 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Rowsley announced that the proposed acquisition of RSP
Architects Planners & Engineers and the proposed land
acquisition were completed. A total of 3.26bn consideration
shares issued at an issue price of S$0.150 per share will be
listed on 27 September but will be placed under a separate
temporary stock counter (Counter Name: Rowsley A, Stock
Code: T4A) until the Books Closure Date (3 October 2013) as
they are not entitled to the warrants under the proposed
bonus issue.
Internet Technology Group is proposing a voluntary delisting
from SGX. The exit offer price for each share is S$0.127 in
cash, representing approximately a 24.5% premium over last
traded price. The rationale for the delisting include: 1) Access
to Capital Markets No Longer Required; 2) Eliminate costs; 3)
Management Flexibility and 4) Low Trading Liquidity.
OKH Global is placing up to 60m new shares at a placement
price of S$0.68 per share. The placement price represents a
discount of approximately 8.36% to the last weighted
average price. The estimated net proceeds of about S$39.5m
will be used mainly to fund potential acquisitions,
investments and business expansion plans in connection with
the Group’s business.
The global investor confidence index (ICI) fell to 101.4 points
this month, down 3.5 points from last month's revised
reading of 104.9, the latest findings by State Street Global
Exchange have revealed. The decline was mostly driven by
sentiment in North America, where the figure fell 7.6 points
to 104.5 from August's revised reading of 112.1. European
confidence rose 4.7 points to 101.7, while Asian confidence
rose 2.1 points to 95.3 for the month.
Casino entry levy purchases and the amount of levies
collected have been dropping annually, due to the casino
novelty factor wearing off and the impact of social
safeguards including exclusion orders, and more recently,
casino visit limits to curb problem gambling. The Casino
Regulatory Authority disclosed that Singaporeans and
permanent residents forked out $174m in casino entry levies
in 2012. That's down from $195m in 2011 and $216m in
2010.
In property news, Serangoon Plaza in Little India has been put
up for collective sale at an indicative price range of between
$360m and $368m. The indicative price range translates to
between $1,751 psf ppr and $1,790 psf ppr. Over in
Clementi, Cityvibe mall has been put on the market with an
asking price above $130m.
US markets fell as investors once again weighed on whether
a looming government shutdown will hamper economic
growth. The Senate will likely vote on a stopgap spending bill
only this weekend that leaves the house just 1 full working
day to act before the Federal government’s spending
authority ends on Oct 1st. The 10-yr treasury yield dipped to
2.61%.

Maybank KE Report 26 Sep 13

Singapore Daily

Super Group: Chinese Caffeine Fix; Maintain Buy TP $6.00
SUPER SP | Mkt Cap USD1.9b | ADTV USD1.5m

� Reiterate BUY and Street-high TP of SGD6. Super recently launched its coffee products in China, where it used to just sell instant cereals. China is a big potential market, with instant coffee expected to grow at 12% CAGR over the next five years, driven mainly by a younger audience influenced by the Starbucks Culture.
� A major marketing thrust is the introduction of a new instant cup format that will be sold mainly through convenience stores. As an early-mover, Super has the chance to generate significant brand equity from this.
� We believe this market has the potential to become a significant contributor in the next 2-3 years. We keep our DCF-based TP of SGD6.00 unchanged, implying 28.3x FY14F PER.

Click here for full report jameskoh@maybank-ke.com.sg

Daily Summary 25 Sep 13

Europe were up but Dow -67 closing at 15335 last night. Trend of Dow is down with MACDs cutting downwards. Dow's future is now +10. Europe opened marginally down.

Asian bourses were mixed. Nikkei -122, ShanghaiC -9, Hangseng +31. STI closed -6. Volume was 9.5b shares. Gainers were 319 to 209 losers.

Trend of STI is flattening and weakening.

Top volumes were Ipco +1, SingHaiyi +0.1, EMSEner+2.2, Xpress +0.3, Magnus +0.7, Hankore +0.3, TopGlobal unchanged, MetechInt +0.5, Albedo unchanged, ChinaGaoxian +0.1.

Market was positive for the first part of the day. It started to drift down after lunch to close near day low at -3. Blue chips were slightly firmer. Penny stocks were in play with many turning green. They closed on the lower side with profit takings in the afternoon.

Volume was exceptionally high due to penny stocks with Ipco alone registering 2b shares.

Europe and Dow are quite steady and trading in small ranges.

Tuesday, September 24, 2013

Stocks to watch

Singapore
  * CapitaCommercial (CCT SP): Gets S$450m term-loan extension
  * Centurion (CENT SP): Got SGX-ST AIP for warrants, shr
    listing, quotation
  * EMS Energy (EMSE SP): Gets $36m contract from Koastal
    Industries, expects 2 more contracts of same value over next
    few mos; lifts trading halt after announcement
  * GEO Energy (GERL SP): Gets mining services contract, signs
    coal mining cooperation pact
  * G.K. Goh (GKG SP): Will ’vigorously’ defend itself vs claims
  * Global Logistics (GLP SP): Not signed any China platform
    pact
  * HTL (HWA SP): Executive management met fund managers,
    investors to seek better understanding of business
  * ISDN (ISDN SP): Buys 2 more Indonesian energy-related cos.
  * Ley Choon (LEY SP): Gets S$30.6m of contracts
  * Luzhou Bio-Chem (LUBC SP): Singapore court rejects appeal
    regarding Cheah Peng Hock
  * Tee Intl (TEE SP): Names Lai Tak Loi group finance director

OCBC Report 25 Sep 13

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

MORE REPORTS

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

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


NEWS HEADLINES

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

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

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

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

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

- Ley Choon Group Holdings has won four contracts amounting to about S$30.6m, raising its order book to S$233.4m.

DBSVickers Report 25 Sep 13

REITS dominated equity raising in 3Q
Equity capital raising in Singapore slowed year-on-year in
a volatile third quarter, but real estate investment trusts
helped maintain year-to-date volumes at a five-year
high.3Q ECM (equity capital market) activities were muted
primarily due to the uncertainties in the equity market.
Proceeds raised from priced stock sales, including
convertible deals, in Singapore fell 20% y-o-y to
US$4.4bn in the three months to September, preliminary
data compiled by Thomson Reuters showed. Year-to-date,
equity deals have raised US$14.9 bn in Singapore. Real
estate investment trusts (Reits) have dominated Singapore
equity capital markets so far this year. Reits led the way
during the quarter, with Overseas Union Enterprise raising
US$521m from the spinning off of the OUE Hospitality
Trust and Singapore Press Holdings drawing US$440m for
its SPH Reit. For the nine months ended September, equity
deals from the real estate sector accounted for 39%, or
US$5.8 bn, of the total. On the new listings front, 86%,
or US$2.9 bn, of total year-to-date IPO proceeds were
raised by real estate plays.
EMS Energy has secured from its major shareholder,
Koastal Industries, a contract worth US$36m to build a
Derrick Equipment Set (DES), complete with full drilling
equipment, for an offshore tender assisted drilling rig,
commonly known as tender rig, and expects to secure
two more DES of similar value over the next few months.
EMS will deliver the first DES for the tender rig, over 18
months to Koastal for a China state-owned Shipyard. The
project is the largest that EES has secured to date. With
this first DES project secured, the Group’s order book has
increased to about S$67.8m from S$18.4m as announced
in August 2013.
Geo Energy Resources has entered into a mining services
contract and a coal mining cooperation agreement with
PT Parisma Jaya Abadi (PJA). PJA holds mining business
permits for an area of 5,000 hectares located in East
Kalimantan Province.
ISDN Holdings has acquired 80% stakes in two more
Indonesian hydropower-related businesses for a total of
US$1.9m. The acquisitions, funded by the company's
reserves, are the latest in a string of purchases made by ISDN
to expand in Indonesia's hydropower production sector.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,334.6 (66.Cool (0.4)
S&P  1,697.4 (4.4) (0.3)
NASDAQ  3,768.3 3.0 0.1
Regional Indices
ST Index  3,211.8 (2.5) (0.1)
ST Small Cap  580.1 0.0 0.0
Hang Seng  23,179.0 (192.5) (0.Cool
HSCEI  10,599.2 (118.6) (1.1)
HSCCI  4,434.9 (49.6) (1.1)
KLCI  1,792.5 (3.9) (0.2)
SET  1,417.8 (18.9) (1.3)
JCI  4,460.4 (102.4) (2.2)
PCOMP  6,461.4 (16.6) (0.3)
KOSPI  2,005.0 (2.1) (0.1)
TWSE  8,299.1 6.3 0.1
Nikkei  14,732.6 (9.Cool (0.1)
 


STI
Total Market cap (US$bn) 592
Total Daily Vol (m shrs) 5,185
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
24 Sep
Target Price
($)
ST Engineering Buy 4.220 4.80
ComfortDelgro Buy 1.940 2.19
OCBC Bank Buy 10.390 12.40
Singapore Airlines Buy 10.420 11.40
Suntec REIT Buy 1.680 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
24 Sep
Target Price
($)
Ezion Holdings Buy 2.370 3.20
Goodpack Buy 1.710 2.00
CSE Global Buy 0.905 1.07
Mapletree Commercial Trust Buy 1.200 1.35
CDL Hospitality Trust Buy 1.630 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Avic International Maritime is riding on the wave of China's
shipyard boom, via the strategic acquisition last year of
Deltamarin, which is known for its strengths in innovation
and design capabilities. Two factors have led Avic's rise in
profile among Chinese shipyards: Firstly, it has been able to
take advantage of the lack of in-house structured design
capabilities among Chinese yards to offer customised designs
for individual customers. Secondly, the Avic group, the
parent company of Avic International Maritime, is a Fortune
500, state-owned enterprise in China. This not only entitles it
to strong support from Chinese financial institutions, it also
means it can tap into its network to build its business.
Ley Choon Group has won four contracts amounting to
about $30.6m, raising its order book to $233.4m. Two of
the projects came from PowerGas, the third from JTC and
the last one is a subcontracting contract for supply and
installation of power cables. The group will continue to
leverage growth opportunities afforded by the increase in
public infrastructure projects to expand its business.
CCFH Ltd is placing out 124m new shares at an issue price of
S$0.0333 per share, amounting to S$4.1m. The issue price
represents a discount of approximately 9.98% to the last
volume-weighted average price. The proceeds will be used
for the general and corporate working capital requirements
of the Group.
US stocks fell as the debate among lawmakers continued.
Democrats offered a new proposal to fund the government
through Nov15, which complicates efforts to avoid a
government shutdown in a week. The 10-year treasury yield
dipped to a 6-wk low of 2.66% as investors bet that the FED
will not cut back on QE next month.

Daily Summary 24 Sep 13

Dow and Europe were slightly down last night. Dow -50 closing at 15401. Dow's uptrend is starting to break. Dow's future is now flat. Europe opened up.

Asian bourses were mostly down. Nikkei -10, ShanghaiC -14, Hangseng -193. Volume was 5.2b shares. Gainers were 258 to 262 losers.

Uptrend of STI has been broken.

Top volumes were YHM +1.5, TopGlobal +0.1, Hankore -0.2, Albedo +0.3, MetechInt +0.3, SingHaiyi +0.1, Oakwell +0.6, Rowsley -2.5, Digiland +0.1, AdvSct -0.1.

Market was positive for a couple of hours on opening but slided down through the day. It traded on a small range and closed near day low at -3.
Blue chips were mixed. Penny and speculatives were weak in the morning but buying activities came in late afternoon and many turned green. Big gainers of penny stocks were OceanSky +11, Tritech +4.5.

Europe and Dow are looking steady at the moment.

Monday, September 23, 2013

Maybank KE Report 24 Sep 13

Land Transport: Imminent Changes To Bus Operating Model | Neutral
Ø With stagnating bus fares and rising cost from inflationary pressure, the two existing operators have been running loss-making operations for years. Under a business model that is financially unviable, we believe that SMRT and SBS Transit, a subsidiary of ComfortDelGro, would be reluctant to renew their bus licences when they are due in 2016. Hence, a change to the bus model is imminent, in our view, in favour of a tender system to award packages of service contracts. We believe that the Land Transport Authority (LTA) is currently evaluating the merits of a tender system, as evident from the tender system used to award service contracts since the start of the year.
Ø In the near term, switching to a tender system will be positive for the Public Transport Operators (PTOs) as losses at their bus units will reverse. While competition from new entrants would pose a threat, we believe that the existing operators still have an edge over new entrants with their scale of operations. Even if the operators do concede market share, their profitability under a tender system would still be an improvement over their current loss-making operations.
Ø While switching to a tender system is positive for both PTOs, we maintain our preference for CDG over SMRT. We believe that our forecasts for significantly higher gearing at SMRT over the next few years will be reflected in lower stock valuations. Furthermore, PER valuations for CDG are relatively more attractive under various bus margin scenarios on a tender system. Reiterate BUY CDG, SELL SMRT.

Click here for full report derrickheng@maybank-ke.com.sg
Economics…
Singapore CPI, August 2013: Up Monthly, Moderate For The Year…
Ø Inflation rate picked up for the fourth successive month in Aug 2013 to +2.0% YoY (July 2013: +1.9% YoY) led by the “Housing” and “Food” components. Core inflation rate (CPI ex-accommodation and private road transport) also picked up to +1.8% YoY (July 2013: +1.6% YoY).
Ø From the previous month, inflation jumped by +0.8% MoM (July 2013: +0.3% MoM), the biggest sequential gain in six months.
Ø Year-to-date inflation rate averaged +2.6% YoY (Jan-Aug 2012:+ 4.8% YoY), but has been sliding from the high of 4.2% in Jan-Feb 2013. No change to our full-year estimate of +2.5% (2012: +4.6%), while the official forecast stays at 2%-3%.

Click here for full report suhaimi_ilias@maybank-ib.com

DBSVickers Report 24 Sep 13

Silverlake Axis - Offers double-digit growth and 4.5%
yield; maintain BUY with revised TP of S$0.82
 Yangzijiang - Best proxy to shipbuilding recovery;
maintain BUY on higher S$1.32 TP
We maintain BUY call on Silverlake Axis with revised TP of
S$0.82 (Prev S$0.80), implying potential returns of over
18%. Silverlake Axis offers double-digit growth and 4.5%
yield. The backlog of ~RM325m at the end of FY13
provides 12-month visibility. The group is also pursuing
seven deals at the moment; big order win from a
Malaysian bank could be a catalyst.
Yangzijiang Shipbuilding is launching the first 10k TEU
containership on schedule. The on-track construction
progress of Yangzijiang's first large containership is a
confidence booster. We have raised FY14F earnings on
better margins and order wins; FY15F earnings are
expected to benefit from property income. Its investment
segment is well managed. Yangzijiang is the best proxy to
shipbuilding recovery; maintain BUY on higher S$1.32 TP
(Prev S$ 1.02).
Tiger Airways has pulled ahead of the pack, widening the
gap between itself and its competitors, according to a
latest report on the low-cost carrier (LCC) sector by the
Centre for Aviation (CAPA). The group now accounts for
33% of LCC capacity at Changi International Airport -
more than the 26% and 23% LCC capacity share of rivals
AirAsia and Jetstar, respectively. By year-end, Tigerair,
including Tigerair Mandala and Tigerair Philippines, will
account for almost 11% of total seat capacity at Changi,
compared with just under 8% each for Jetstar and
AirAsia, the report said. Tigerair Group attributed the
growth in capacity to its own fleet expansion strategy,
which will see a total of six A320 aircraft being delivered
by year-end.
Global Logistic Properties signs agreement with Vipshop,
a leading e-commerce company, to develop 130,000 sqm
of new built-to-suit facilities in Kunshan, Eastern China.
Construction of the first phase comprising 60,000 sqm
(646,000 sq ft) commenced in August 2013.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,401.4 (49.7) (0.3)
S&P  1,701.8 (8.1) (0.5)
NASDAQ  3,765.3 (9.4) (0.3)
Regional Indices
ST Index  3,214.3 (23.3) (0.7)
ST Small Cap  580.1 1.0 0.2
Hang Seng  23,371.5 (131.0) (0.6)
HSCEI  10,717.7 (51.Cool (0.5)
HSCCI  4,484.5 (3.7) (0.1)
KLCI  1,796.4 (5.5) (0.3)
SET  1,436.7 (50.1) (3.4)
JCI  4,562.9 (21.0) (0.5)
PCOMP  6,477.9 53.5 0.8
KOSPI  2,009.4 3.8 0.2
TWSE  8,292.8 83.6 1.0
Nikkei  14,742.4 (23.Cool (0.2)
 


STI
Total Market cap (US$bn) 595
Total Daily Vol (m shrs) 4,539
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
23 Sep
Target Price
($)
ST Engineering Buy 4.23 4.80
ComfortDelgro Buy 1.96 2.19
OCBC Bank Buy 10.40 12.40
Singapore Airlines Buy 10.38 11.40
Suntec REIT Buy 1.675 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
23 Sep
Target Price
($)
Ezion Holdings Buy 2.35 3.20
Goodpack Buy 1.725 2.00
CSE Global Buy 0.90 1.07
Mapletree Commercial Trust Buy 1.20 1.35
CDL Hospitality Trust Buy 1.645 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
LionGold Corp has signed an ore processing agreement with
Australian-listed A1 Consolidated Gold in Victoria which may
boost revenues over a three year period. Up to 150,000
tonnes per year of ore from the A1 Gold Mine would be
processed at the nearby Ballarat gold plant, wholly-owned by
LionGold subsidiary, Castlemaine Goldfields. In conjunction
with the agreement, LionGold will subscribe to 34.5m new
A1 shares at A$0.116 per share, representing about 19.9%
of A1’s enlarged share capital, for a consideration of
S$4.7m. A1 will use the total proceeds to advance the
development of its A1 Gold Mine, which is targeted to begin
trial processing at Castlemaine’s Ballarat Mine within the
next six months. In addition to nearly doubling throughput at
the Ballarat plant, the collaboration with A1 represents an
opportunity to consolidate gold operations in southeast
Australia.
Oceanus Group reported that Typhoon Usagi has hit
Guangdong, coastal Zhejiang and Fujian provinces in China
where the majority of its abalone production is sited. The
group is assessing the damages caused.
The Singapore government is tightening the foreign
manpower regime further, with a 10% hike to the minimum
salary required to hire a young foreign professional on an
employment pass (EP) - the category of work passes not
subject to quotas and levies. Also, under new rules to ensure
Singaporeans get fair consideration before foreigners are
hired, employers will have to advertise job vacancies on a
new national jobs bank for two weeks before any
applications for EPs for those professional, managerial and
executive (PME) jobs will be accepted.
Singapore’s consumer price index (CPI) in August rose 2%
from a year ago, picking up from July's increase of 1.9% and
in line with market expectations of 2%. This slight rise was a
result of stronger increases in the costs of accommodation,
food and services - though these were partly offset by a
smaller gain in private road transport costs. Climbing at a
faster pace was the MAS core inflation measure, which
excludes costs of accommodation and private road transport.
This rose to 1.8% in August from 1.6% in July, due to
higher contributions from food and services. Food prices
increased 2.4% last month, up from 2.1% in July, mainly
due to costlier hawker and restaurant meals. Services
inflation picked up to 2.7% in August from 2.5% a month
earlier, driven by a stronger rise in cable TV charges and
tertiary education fees.
The flash HSBC Purchasing Managers' Index (PMI) for China
climbed to 51.2 last month from August's 50.1, hitting a
high not seen since March as stronger domestic and foreign
demand added to recent signs of a tentative turnaround in
the economy. New export orders jumped to a 10-month
peak of 50.8, up sharply from August's 47.2. It was the first
time in 6 months that exports had shown growth in the PMI.
Meanwhile, business activity in the Eurozone also grew
faster-than-expected in September as new orders flood in.
Markit's Flash Composite Purchasing Managers' Index (PMI)
jumped to 52.1 from last month's 51.5, its highest since
June 2011 and beating expectations for 51.9. The pace of
growth in the bloc's dominant services sector beat all
forecasts in a Reuters poll. The PMI came in at 52.1, well
ahead of August's 50.7 and comfortably above median
expectations for a more modest rise to 51.0.
US markets fell with investors still uncertain about the
timetable for QE cut back and as the democrats and
republicans hardened their positions on the stance regarding
the federal budget and borrowing limits. In line with Asian
bourses starting the Tuesday session lower, STI should begin
the current session modestly down but the intra-day
direction looks to be up as the index.

OCBC Report 24 Sep 13

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

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


NEWS HEADLINES

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

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

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

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

- Hotel Grand Central has received the go-ahead from local authorities to redevelop the site of a hotel and investment property in Christchurch, New Zealand, that was demolished after it was damaged in the 2011 earthquake.

OCBC Report 24 Sep 13

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

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


NEWS HEADLINES

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

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

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

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

- Hotel Grand Central has received the go-ahead from local authorities to redevelop the site of a hotel and investment property in Christchurch, New Zealand, that was demolished after it was damaged in the 2011 earthquake.

Daily Report 23 Sep 13

Europe were weaker on Friday while Dow -185 to close at 15451. Trend of Dow is still up but levelling. Dow's future is now +26. Europe opened up.

Asian bourses were mixed. Nikkei closed, ShanghaiC +29, Hangseng -131. STI -23 at 3214. Volume was 4.5b shares. Gainers were 200 to 310 losers.

Trend of STI is also levelling.

Top volumes were YHM +0.7, Hankore +0.5, Sunmoon unchanged, Digiland unchanged, Albedo -0.1, MetechInt +0.3, Rowsley +2.5, EMSEner +0.6, Ipco +0.1, AdvSct unchanged.

Market dipped on opening but remained steady and closed off its low. Blue chips were much weaker. Penny stocks and speculatives also opened mostly down but ended firmer. Several of these made decent gains. RexIntl +6.5, Rowsley +2.5. The mid caps gainers were Ezra +10, Liongold +7.5, Blumont +16.5,

Dow was affected by the rejection of Obamacare last Friday but seemed to have taken the beating quite well with Dow's future now positive. Europe too are positive at the moment.

Sunday, September 22, 2013

UOBkayhian Report 23 Sep 13

Market News
The FSSTI lost 14.25pt to close at 3,237.53 after India unexpectedly
raised its key interest rate. Bucking the trend, Sino Grandness Food
gained 0.4% to close S$1.27 after its subsidiary agreed to sell its entire
51% stake in Yunnan Shizong Zhenhua Food for Rmb10m. The broader
market saw 176 gainers and 307 losers, with total trading value at
S$1.51b.
US markets slumped on Friday as investors reacted to the uncertainties
of central bank's tapering stance. The DJIA fell 1.2% to 15,451.09 while
the S&P 500 index dropped 0.7% to 1,709.91. A Federal Open Market
Committee member had signalled that the Fed could curb stimulus next
month and another was critical of the decision not to taper in September.
Blackberry fell 17% after the Canadian smartphone maker said it would
lay off 40% of its global workforce and reported a nearly US$1b in
second-quarter loss.
What’s in the Pack
Singapore Airlines- Bumpy ride ahead for the new Indian JV.
(SIA SP/HOLD/S$10.37/Target: S$11.50)
Maintain HOLD and target price of S$11.50, valuing the stock at 0.8x
forward book value (ex-SIAEC) and adjusting for its fair value stake in SIA
Engineering. Our target price reflects 1x FY14F book value. Entry price is
S$10.15.
Weekly Watch: Mid-caps - In multi-year growth sectors and with
catalysts
ISOTeam (ISO SP/BUY/Target: S$0.55)
Kori Holdings (KHLL SP/BUY/Target: S$0.525)
Ying Li Intl’ Real Estate (YINGLI SP/BUY/Target: S$0.64)
Mid-cap stocks are back on the radar after the non-tapering
event...ISOTeam is in a defensive sector that is growing with the
Singapore population...We remain upbeat on Kori Holdings with its recent
fund-raising reinforcing its expansion plans... Ying Li International’s
presence in Chongqing allows it to benefit from the city’s upbeat
economic indicators.-----------------------------------

DBSVickers Report 23 Sep 13

Rex International - Independent E&P player with
potentially revolutionary exploration technology.
Initiate with BUY and S$1.27 TP
US markets fell as political bickering ahead of the need to
raise the country’s debt ceiling picked up, uncertainty about
when the FED will start cutting back QE and heading into
election weekend in Germany. The US 10-year treasury yield
rose to an intra-session high of 2.77% before ending the
week at 2.73%. In Germany, Angela Merkel has won a
landslide personal victory in Germany's general election but
her conservatives appeared just short of the votes needed to
rule on their own and may have to convince leftist rivals to
join a coalition government.
The STI should start the week softer on the back of Friday’s
decline on Wall Street. A pullback to test the immediate
support at 3200 is possible this week. Index valuation
reached 13.9x (ave) 12-mth forward PE last week. With the
uncertainty that follows the deadline to raise the US debt
ceiling and a likely lack luster 3Q results season, STI’s shortterm
rally has likely come to a stall around 3250 last week. A
consolidation band from c.3200-3250 or a pullback to 3200
followed by 3165 is seen in coming weeks/month before
rising again.
We are initiating coverage on Rex International Holding
(RIH) with a BUY call and target price of S$ 1.27. RIH is an
independent E&P player armed with potentially
revolutionary exploration technology. We estimate that
the use of Rex VD could yield success rates in excess of
50%, compared to global average of around 15% using
traditional methods, thus potentially boosting project ROIs
to >100%. RIH has the first mover advantage in “seeing”
oil gives it a head start in cherry picking attractive licences.
It is a potential multi-bagger as it buys assets cheap and
spins off successful discoveries.
Keppel Corp has sold its entire stake in Berich Enterprises
and Keppel Kazakhstan LLP for US$32.5m cash. The
principal activities of Keppel Kazakhstan are the design,
engineering and construction of barges, pontoons, pipe
racks, modules, and drilling units for the oil and gas
industry in the Republic of Kazakhstan.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,451.1 (185.5) (1.2)
S&P  1,709.9 (12.4) (0.7)
NASDAQ  3,774.7 (14.7) (0.4)
Regional Indices
ST Index  3,237.5 (14.3) (0.4)
ST Small Cap  579.1 (1.6) (0.3)
Hang Seng  23,502.5 385.1 1.7
HSCEI  10,769.5 181.5 1.7
HSCCI  4,488.1 34.9 0.8
KLCI  1,801.8 8.9 0.5
SET  1,486.8 (2.3) (0.2)
JCI  4,583.8 (86.9) (1.9)
PCOMP  6,424.5 (87.3) (1.3)
KOSPI  2,005.6 (7.Cool (0.4)
TWSE  8,209.2 (40.6) (0.5)
Nikkei  14,742.4 (23.Cool (0.2)
 


STI
Total Market cap (US$bn) 595
Total Daily Vol (m shrs) 5,487
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
20 Sep
Target Price
($)
ST Engineering Buy 4.210 4.80
ComfortDelgro Buy 1.960 2.19
OCBC Bank Buy 10.420 12.40
Singapore Airlines Buy 10.440 11.40
Suntec REIT Buy 1.690 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
20 Sep
Target Price
($)
Ezion Holdings Buy 2.380 3.20
Goodpack Buy 1.720 2.00
CSE Global Buy 0.905 1.07
Mapletree Commercial Trust Buy 1.200 1.35
CDL Hospitality Trust Buy 1.630 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
YHM Group has secured a contract with a value of up to
approximately US$183m over a 3-year period with an
additional 2 year extendable option to provide a
semisubmersible rig to be used by a Southeast Asian based
national oil company to support its oil and gas activities in
the Andaman Sea. The company is in the process of forming
a joint venture company to own the Semi. The Semi will be
upgraded and refurbished and is expected to be deployed in
the Andaman Sea between end 2013 and early 2014.
Telcos are reporting an increase in the number of subscribers
busting their data cap. SingTel sees a trend that 4G
customers are using more data on average than 3G users,
about 20-30% increase. Already, SingTel's last-reported
quarter ended June 30, 2013, saw 13% of post-paid
subscribers on tiered plans exceeding their monthly data
limits, up from 10% in the quarter before that. Over at
StarHub, the faster 4G network has been a boon for data
usage, and this trend is expected to continue. There has
been a similar trend at M1. In its last reported quarter, 15%
of its post-paid users on tiered data plans exceeded data
caps - up from 9% the previous quarter.
In property news, UOL Group and Singapore Land move 160
units at Thomson Three on the first day of sales bookings
this week. This was out of the 200 units they released. The
developers plan to release a further 120-150 units this
weekend. Located on Bright Hill Drive, the project comprises
435 apartments and 10 strata semi-detached houses. The
average price of the 99-year leasehold development is about
$1,350 psf. According to UOL, without TDSR (total debt
servicing ratio), it could easily have priced this project at
$1,500 psf on average, or even higher.

OCBC Report 23 Sep 13

Singapore Airlines: Not taking off yet

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

MORE REPORTS

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


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


NEWS HEADLINES

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

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

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

- Rex International’s 41% indirectly owned subsidiary HIREX Petroleum Sdn Bhd., has entered into a Collaboration Agreement with Bass Strait Oil Company Ltd to participate in exploration opportunities in the Gippsland Basin in Australia.

Friday, September 20, 2013

Daily Summary 20 Sep 13

Europe were up but Dow -40 at 15637. Dow's trend is up. Dow's future is now +1. Europe opened marginally down.

Asian bourses were mixed. Nikkei -24. Shanghai and Hongkong closed for holiday. STI closed -15 at 3237. Volume was 5.5b shares. Gainers were 174 to 340 losers.

Trend of STI is up.

Top volumes were Albedo -0.9, Digiland unchanged, HM +0.4, Hankore +0.3, Innopac -1.1, Sunmoon +0.1, Rowsley0.5, ChinaGaoxian -0.3, EMS Ener unchanged, WEHldg +0.1.

Mkt opened flat but drifted down through the day. It closed near day low, down 14 pts. Though there were some selling for the weekend, market was steady.

Blue chips were slightly softer. Penny and speculatives were mixed. The play is still there but many cleared out for the weekend. Adv Hldg +6c.

Europe and Dow are looking steady for tonight.

Thursday, September 19, 2013

OCBC Report 20 Sep 13

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

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


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NEWS HEADLINES

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

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

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

- Albedo has agreed to a S$774.1m reverse takeover with Tan Sri Dato’ Danny Tan’s company to buy land in Iskandar.