Tuesday, September 3, 2013

DBSVickers Report 4 Sep 13

SPH REIT - Initiating coverage with a HOLD call and
target price of S$ 0.97. The REIT offers exposure to
the retail and healthcare services industry, backed by
a strong Sponsor, SPH.

We are initiating coverage on SPH REIT with a HOLD call
and target price of S$ 0.97. SPH REIT offers investors a
unique exposure to the retail and healthcare services
industry in Singapore, backed by a portfolio of landmark
high quality commercial assets, and a reputable and
strong sponsor, SPH. We believe that the REIT will provide
a stable yield platform with growth potential from organic
and inorganic means. FY13-14F yields of 5.4%-5.6%
while attractive given its stability is noted to be currently
at a premium to other retail-focused S-REITs, which
currently offer yields in the range of 6.1%-6.5%.
In a move that would increase its reserves by 80%, Interra
is acquiring an Indonesian company for US$78.5m. The
company, PT Benakat Barat Petroleum (BBP), holds all the
rights to explore and develop the Benakat Barat field in
South Sumatra. It holds proven and probable (2P) reserves
of 19.9 million barrels of oil, according to a May 2010
reserve report. Interra now has 25 million barrels in
reserves. The transaction will be 80% paid for with cash,
financed through bank borrowings; the remaining 20%
will be funded by new shares issued at 45.91 cents - the
weighted average price for trades done yesterday. The
Benakat Barat field is adjacent to the Tanjung Miring
Timur (TMT) field, in which Interra holds full participating
interest. The contract to develop the Benakat Barat field
was assigned in 2009 for 15 years.
Tat Hong Holdings is embarking on a programme to
consolidate and optimise its Singapore operations and has
secured a 22-year lease from Jurong Town Corporation
for a 16,100 sq m plot of industrial land at Tuas South
Street 10. The consolidation of operations will free up one
of its lease-hold properties, at 11 Gul Crescent, which the
Group intends to divest through a public tender.
Depending on the final sale price and the completion
date, the Group is expected to recognise a gain on the
divestment of 11 Gul Crescent in the financial year ending
31 March 2014. The Group currently also operates out of
five other sites in the western part of Singapore.
US Indices Last Close Pts Chg % Chg
Dow Jones  14,834.0 23.6 0.2
S&P  1,639.8 6.8 0.4
NASDAQ  3,612.6 22.7 0.6
Regional Indices
ST Index  3,054.8 (0.9) (0.0)
ST Small Cap  537.1 1.6 0.3
Hang Seng  22,394.6 219.2 1.0
HSCEI  10,251.0 195.9 1.9
HSCCI  4,320.7 28.4 0.7
KLCI  1,724.2 6.7 0.4
SET  1,315.4 (8.3) (0.6)
JCI  4,164.0 62.8 1.5
PCOMP  6,083.9 22.1 0.4
KOSPI  1,933.7 8.9 0.5
TWSE  8,088.4 49.5 0.6
Nikkei  13,978.4 405.5 3.0
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 563
Total Daily Vol (m shrs) 4,455
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
3 Sep
Target Price
($)
ST Engineering Buy 4.000 4.80
ComfortDelgro Buy 1.815 2.19
OCBC Bank Buy 9.980 12.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
3 Sep
Target Price
($)
Ezion Holdings Buy 2.320 3.20
Goodpack Buy 1.650 2.00
Nam Cheong Buy 0.265 0.36
CSE Global Buy 0.855 0.97
Venture Corporation Buy 7.560 8.40
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Cordlife Group is acquiring a 19.92% interest in StemLife
Berhad, a company listed on Bursa Malaysia, for
RM29.58m to expand its overseas operations. The
transaction will enlarge the Group’s geographical
footprint in Asia and extend the Group’s reach of
complementary services such as umbilical cord tissue
banking. The aggregate consideration for the acquisition
will, unless elected by Cordlife to pay fully in cash, be
satisfied via the issuance of 8m new shares in Cordlife at
an issue price of S$1.30 per share and cash payment of
RM2.85m.
Global Logistic Properties will sell two wholly-owned
properties in Japan to GLP J-REIT. The properties comprise
a total gross floor area of 126,000 sqm and the sale price
of JPY28.5 bn (US$2871m) represents a 1% premium to
the properties’ newly appraised value as of 30 June 2013.
Completion of transaction is targeted to take place in
March 2014. Net cash proceeds from the sale are
estimated to be approximately JPY13.6 bn (US$137m).
GLP plans to hedge the proceeds and intends to reinvest
the capital to maintain its 15% interest in the J-REIT as
well as developments in China, Japan and Brazil.
Separately, GLP Japan Income Partners I will sell seven
properties to GLP J-REIT for approximately JPY27.5 bn
(US$2771m), which is in line with the properties’ newly
appraised value as of 30 June 2013. GLP owns a 33.3%
stake in GLP Japan Income Partners I. The properties have
generated a cumulative net levered IRR in excess of 46%
for investors in GLP Japan Income Partners I, before
management fees and promotes, since they were
acquired in February 2012. Completion of transaction is
targeted to take place in October 2013. Net cash
proceeds from the sale are estimated to be approximately
JPY9 bn (US$91m), with GLP’s share at JPY3 bn
(US$30m). GLP plans to hedge the proceeds and intends
to reinvest the capital to maintain its 15% interest in the
J-REIT as well as developments in China, Japan and Brazil.
Acma is buying into a Russian private engineering
company with strong political connections, in a deal
which could enable it to regain a strategic foothold in a
market where it used to have a strong presence. It would
issue shares to buy a 30% stake in Russia's Avanguard
500 (AVG). The deal involves a guarantee of at least
US$10m in total pre-tax profit to Acma for the next three
years. The purchase consideration of US$3m will be paid
via the issuance of 123.1m new Acma shares at 3.11
Singapore cents each, representing 2.93% of Acma's
issued and paid-up capital. AVG, incorporated in Russia
on Dec 8, 2009, is mainly engaged in engineering and
engineering-related construction. Its chairman Igor
Alexandrovich Putin, a Russian businessman and
politician, is a first cousin of the country's president
Vladimir Putin.
A proposed $590m collective sale of Thomson View
Condominium is scuppered after the High Court found
that its marketing agent's offer of more than $548,000 in
incentive payments to four owners to get a requisite 80%
majority amounted to bad faith. Wee Hur has entered
into a conditional contract for the collective purchase of
all strata units and the common property of Thomson
View back in September 2012.
LionGold has signed an MOU with CBMI Construction, a
subsidiary of China’s State-owned engineering contractor
giant, SINOMA Group. The arrangement would also allow
LionGold to leverage on CBMI’s technical capabilities in its
efforts to bring its gold mining projects to production as
well as to acquire new gold mining projects. Also, as part
of the arrangement, CBMI would assist, where possible,
project financing for LionGold’s gold mining projects on
terms to be agreed.
CH Offshore has entered into two bareboat charters with
a third party for a period of three years each, with an
option for the Charterer to purchase the vessels.
After several months of outperforming its Asian peers,
Singapore's PMI headed in the opposite direction last
month, falling to 50.5 from 51.8 in July, below market
expectation of a slight rise, and followed news on
Monday that China, Taiwan and South Korea all posted
higher manufacturing PMIs. PMI fell because of a
slowdown in production, as manufacturers drew down
inventories that have been building up over the last few
months. The overall new export orders sub-index,
however, rose to 53.4, its highest reading since April
2011. Demand for electronic exports was especially
strong. The electronics new export orders sub-index rose
to 54, its highest reading since May 2011, pushing the
electronics sector PMI to a three-month high of 51.3.
A hotel site on Havelock Road has been triggered from
the Government Land Sales' Reserve List, after the URA
received a commitment from a developer to bid at least
$18.0m for the plot. The 60-year leasehold plot, which
measures about 16,535.5 sq ft, has maximum permissible
gross floor area of about 23,088.6 sq ft. Based on the
trigger price of $18.0m, this translates to about $780 psf
ppr.
US stocks rose modestly but eased off early session high
even as the August ISM manufacturing index increased to
55.7 (consensus 54) from 55.4 the previous month. The
reading is also the strongest since June 2011. Stocks back
tracked after US President won endorsement from the top
2 Republicans in the House for action against Syria. Asian
bourses are starting the mid-week session lower, reacting
to higher oil price on concerns about a strike on Syria.

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