Sunday, September 8, 2013

DBSVickers Report 9 Sep 13

OUE Hospitality Trust - Resilient earnings with
multiple growth drivers; fair value S$0.93
Markets have been weighed down by the anticipation of
FED QE tapering; emerging markets sell-off and the risk of
a military strike on Syria. We look for bargain/value
hunting opportunities should the STI dips moderately
lower towards 2900 that coincides with 12.3x (-1SD) 12-
mth forward PE. Guided by a 10.4% EPS growth forecast
for FY14, the Singapore market currently trades at 12.6x
FY14F PE, which is reasonably attractive. Singapore
market should recover past the September-October period
of uncertainty. Expect the STI to recover pass 3200 (13.1x
(-0.5SD) FY14F PE) but cap below 3400 [(13.9x (average)
FY14F PE) by year-end.
We continue to prefer stocks with exposure to developed
markets, and avoid emerging markets. Stocks with
earnings visibility supported by yield are likely to remain in
favour. Our picks are SingPost, Comfort Delgro, ST Eng,
HPH Trust and Overseas Education.
DBSV Research issues an Equity Explorer report on OUE
Hospitality Trust with a fair value of S$0.93, offers 8%
upside. OUE HT is a Singapore-based REIT with an initial
portfolio of two properties in prime locations - the 1051-
room Mandarin Orchard Hotel, and the accompanying
Mandarin Gallery retail mall. The properties are collectively
worth S$1.7bn as of 31 Mar13. The Trust has resilient
earnings structure with strong visibility. Multiple growth
drivers are also in place. While earnings are sensitive to
RevPAR changes, we expect earnings volatility to RevPAR
changes to be limited given a high % of income pegged
to fixed rates. In addition, yields of 7.6%-8.0% are higher
than S-REIT peers.
Ramba Energy has received an offer from a Jakarta-listed
company for a 51% stake in the firm. Sugih Energy, an
Indonesian energy producer, will make a voluntary
conditional cash offer at 65 cents a share. This represents
a 3.2% premium over Ramba's last traded price. Sugih,
which has a market capitalisation of 10.73 trillion rupiah
(S$1.22 billion), holds equity interests in two exploration
blocks in Sumatra in Indonesia, namely a 49% stake in
Lemang block, and a full stake in Kalyani block as an
operator.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 14,922.5 (8.4) (0.1)
S&P �� 1,655.2 2.1 0.1
NASDAQ �� 3,660.0 11.0 0.3
Regional Indices
ST Index �� 3,048.4 32.9 1.1
ST Small Cap �� 537.4 0.7 0.1
Hang Seng �� 22,621.2 295.0 1.3
HSCEI �� 10,334.1 101.0 1.0
HSCCI �� 4,324.4 22.4 0.5
KLCI �� 1,723.8 7.0 0.4
SET �� 1,336.3 33.0 2.5
JCI �� 4,072.4 (1.1) (0.0)
PCOMP �� 5,974.6 6.3 0.1
KOSPI �� 1,955.3 22.3 1.2
TWSE �� 8,164.2 80.8 1.0
Nikkei �� 13,860.8 (193.1) (1.4)
STI Index Performance
Singapore
Total Market cap (US$bn) 562
Total Daily Vol (m shrs) 3,011
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
6 Sep
Target Price
($)
ST Engineering Buy 3.980 4.80
ComfortDelgro Buy 1.855 2.19
OCBC Bank Buy 9.890 12.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
6 Sep
Target Price
($)
Ezion Holdings Buy 2.270 3.20
Goodpack Buy 1.640 2.00
Nam Cheong Buy 0.270 0.36
CSE Global Buy 0.865 0.97
Venture Corporation Buy 7.620 8.40
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
XMH Holdings has entered into an agreement to acquire
Mech-Power Generator for approximately S$17.4m.
Boasting a history of about 30 years, the target company
is engaged in the manufacturing, assembly, sale and
servicing of diesel powered generator sets and has
operations based in Singapore and Malaysia. The
acquisition will be synergistic to XMH’s existing operations
and would also help to grow more in the non-marine
sector applications. This is the first major M&A for XMH
since building a war chest of cash at its IPO and after
investment by Credence Capital.
Hotel Grand Central is purchasing Lot S3 of 300 Finders
Street Building, Melbourne, Australia for A$48.5m. The
proposed acquisition will enable the group to diversify its
investments in Australia to the commercial market in
Melbourne, Australia.
Sunpower Group has clinched a contract of RMB85.1m
with Shenhua Group, one of the largest coal companies
in China, to supply ZLD technique & key equipments and
Flare System EPC service for Shaanxi Methanol
downstream processing project of Shenhua Group. The
securing of contract underscores the long-standing
relationship between the Group and conglomerate
Shenhua Group.
China's exports rose more than expected in August,
boosted by improving demand for the country's goods in
major markets. Exports rose 7.2% y-o-y in August and
imports rose 7%, leaving the country with a trade surplus
of US$28.6 bn for the month. The figures are better than
market expectations of a rise of 6% in exports, an 11.3%
rise in imports and a trade surplus of US$20 bn. Exports
to ASEAN nations jumped 30.8% in August, outpacing
July's gains, while exports to the US rose 6.1%, faster
than July's 5.3% gains. Exports to the European Union
rose 2.5%, little changed from July's gain, while exports
to Japan contracted for the seventh straight month.

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