Monday, September 30, 2013

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%.

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