Overseas Education – Initiating coverage with BUY
recommendation and target price of S$1.03.
We are initiating coverage on Overseas Education with
Buy recommendation and target price of S$1.03, which
implies 36% potential upside. OEL, a top international
school in Singapore, presents a highly cash generative
business with operating cashflow growing at 48% CAGR
over 2010-2013. The stock also pays 4% dividend yield,
backed by strong cashflow generation. We expect fee
hikes of about 6% to 10% to support near term earnings
while the new campus, ready in 2016, to accelerate
growth.
Global Logistic Properties has leased 17,000 sqm to
Sankyu Logistics, an international third party logistics
provider. Sankyu Logistics is expanding its distribution
centers in Foshan (Southern China), Tianjin (Northern
China) and Suzhou (Eastern China) to meet growing
demand. The customer now leases 77,000 sqm (829,000
sq ft) across three locations with GLP in China.
Otto Marine has signed a Memorandum of Understanding
(MOU) for the newbuilding of 5 cement carriers ranging
from 7,500dwt to 15,000 dwt. Apart from the firm
orders, there is also potential for the Group to secure
contracts for the conversion of 2 additional bulk carriers
into cement carriers, and a further order for a 3,500bhp
Ocean Towing Tug from the same Indonesian customer.
Moody’s Investors Service has downgraded the
subordinated debt (sub-debt) ratings of the three
Singapore banks in a regionwide exercise to reflect the
increasing global trend of bail-in risks that all banks face.
The banks now have a sub-debt rating of Aa3, down a
notch from Aa2. The banks' senior obligation ratings and
standalone baseline credit assessments were unaffected.
Across the Asia-Pacific, other banks which faced similar
downgrades were in Australia, Hong Kong, the
Philippines, India, South Korea and Thailand.
US Indices Last Close Pts Chg % Chg
Dow Jones 14,937.5 6.6 0.0
S&P 1,655.1 2.0 0.1
NASDAQ 3,658.8 9.7 0.3
Regional Indices
ST Index 3,039.5 24.0 0.8
ST Small Cap 537.8 1.1 0.2
Hang Seng 22,598.0 271.8 1.2
HSCEI 10,338.9 105.9 1.0
HSCCI 4,329.2 27.2 0.6
KLCI 1,721.0 4.2 0.2
SET 1,313.5 10.3 0.8
JCI 4,050.9 (22.6) (0.6)
PCOMP 5,959.2 (9.1) (0.2)
KOSPI 1,951.7 18.6 1.0
TWSE 8,169.1 85.7 1.1
Nikkei 14,064.8 10.9 0.1
STI
Total Market cap (US$bn) 557
Total Daily Vol (m shrs) 3,876
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
5 Sep
Target Price
($)
ST Engineering Buy 3.950 4.80
ComfortDelgro Buy 1.865 2.19
OCBC Bank Buy 9.870 12.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
5 Sep
Target Price
($)
Ezion Holdings Buy 2.290 3.20
Goodpack Buy 1.635 2.00
Nam Cheong Buy 0.275 0.36
CSE Global Buy 0.860 0.97
Venture Corporation Buy 7.620 8.40
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
In property news, developers have been trimming launch
prices for new private residential projects to adjust to the
new market reality in the aftermath of the Total Debt
Servicing Ratio (TDSR) framework's rollout in late June. A
case in point is the 445-unit Thomson Three condo in
Bright Hill Drive, being developed by UOL Group and
Singapore Land. Without TDSR, the price range is about
$1,500 psf on average, or even higher, but now, the
developers are pricing it at a more realistic level, at
$1,350-1,400 psf. Downward adjustment of developers'
earlier pricing expectations is also set to surface for two
condo projects where sales begin today - The Skywoods
in the Dairy Farm area and The Glades in Tanah Merah.
All three projects are 99-year leasehold.
A mixed-use commercial and residential plot at Yishun
Central 1 drew a top bid from units linked to Frasers
Centrepoint Ltd (FCL) that far surpassed that of the
second-highest bidder and consultants' expectations,
though the number of bidders were at the tail end of
predictions. North Gem Development and FC North Gem
Trustee put in a top bid of $1.4 bn, or $1,077 psf ppr, for
the 99-year leasehold site. This is 47% higher than the
second-highest bid, and way above the top bid of $750
and $850 psf ppr that consultants had expected. In total,
five bids were placed, with consultants earlier expecting
between five and 15 bids.
SGX is stepping up its efforts to pursue mineral, oil and
gas (MOG) listings as it announced new mainboard
admission rules for such firms. With effect from Sept 27,
even if MOG firms are not yet in production and hence
unable to meet current listing rules for profit, operating
revenue and positive cashflows, they can list if they have
market capitalisation of not less than $300m, and disclose
its plans, milestones and capital expenditure for
progressing to production stage. However, they have to
satisfy all other listing requirements. Additionally, all MOG
firms, whether they are still in exploration stage or already
in production, will need to have achieved "indicated
resources" for minerals or "contingent resources" for oil
and gas. They should have sufficient working capital for
18 months from listing, and have at least one
independent director with appropriate industry experience
and expertise. They also have to include in their offer
documents a valuation report on its reserves, and provide
an independent qualified person's report on significant
resources or reserves.
US stocks continued to surge higher for a third
consecutive day. In a prelude to the August jobs report
tonight, the jobs numbers released by payroll processing
firm ADP showed hiring continuing at a modest pace. The
Labor Department's initial jobless claims figures also
pointed to a steady recovery in the job market, with fewer
people filing for unemployment. The 10-year Treasury
yields, however, continued to move up. The yield is
nearing 3%, a level it hasn't hit since July 2011.
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