Tuesday, October 8, 2013

DBSVickers Report 9 Oct 13

MAS expected to maintain appreciating stance on
the Sing$
US markets fell as investors grew increasingly uneasy
about the current deadlock to raise the debt limit as the
deadline drew closer. The Treasury said it will exhaust
measures to avoid exceeding the debt limit on Oct 17 and
if that happens, the government will run out of cash to
pay all of its bills sometime from Oct 22 to Oct 31. STI
should start the session lower on the back of the
overnight fall on Wall Street. Our view that STI at c.3100
offers bargain hunt opportunities on the presumption that
US does not go into default stays valid. Moody’s Investors
Service, for example, said it sees a “very low” chance the
US will default on its debt payments. But with the first
deadline of Oct 17 draws closer, the odds are increasing
that a resolution may come sometime from Oct 17 to Oct
31. This can result in near-term volatility, and opportunity,
if one takes the view that the US “lifts” 1 foot off the cliff
but pulls back at the last minute.
Monetary Authority of Singapore (MAS) is widely
expected to keep the appreciating stance of the Singapore
dollar and announce no change to the slope, width and
midpoint of the band within which the Singapore dollar is
allowed to move, in its policy statement due on Monday.
This would reiterate that keeping inflation in check is the
chief priority behind the twice-yearly monetary policy
review.
Advance GDP figures for Q3 will also be released on the
same day and is expected to show that the Singapore
economy shrank an annualised 4.1% q-o-q - after a
15.6% surge in Q2.
Swissco Holdings has secured 2-years charter contracts for
two AHTs, to be deployed in West Africa. It has also secured
immediate short term contracts for two newly delivered
vessels. This reiterates the healthy demand for Swissco’s
vessels as the Group continues to focus on vessel expansion
and fleet renewal program to enhance its fleet capabilities.
Optus and Virgin Australia have signed a $60m
telecommunications agreement. The services will be
delivered over Optus’ managed data network with the
resilience and scalability required to meet Virgin
Australia’s critical quality assurance standards.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 14,776.5 (159.7) (1.1)
S&P 􀀙 1,655.5 (20.7) (1.2)
NASDAQ 􀀙 3,694.8 (75.5) (2.0)
Regional Indices
ST Index 􀀘 3,146.5 9.9 0.3
ST Small Cap 􀀘 533.2 4.8 0.9
Hang Seng 􀀘 23,178.9 204.9 0.9
HSCEI 􀀘 10,534.9 107.8 1.0
HSCCI 􀀘 4,545.2 59.4 1.3
KLCI 􀀘 1,777.5 0.7 0.0
SET 􀀘 1,434.1 19.4 1.4
JCI 􀀘 4,432.5 57.5 1.3
PCOMP 􀀘 6,454.9 11.6 0.2
KOSPI 􀀘 2,002.8 8.3 0.4
TWSE 􀀘 8,375.7 42.0 0.5
Nikkei 􀀘 13,894.6 41.3 0.3
STI Index Performance
Singapore
Total Market cap (US$bn) 579
Total Daily Vol (m shrs) 3,808
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
8 Oct
Target Price
($)
ST Engineering Buy 4.110 4.80
ComfortDelgro Buy 1.905 2.19
OCBC Bank Buy 10.180 12.40
Singapore Airlines Buy 10.190 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
8 Oct
Target Price
($)
Ezion Holdings Buy 2.160 3.10
Goodpack Buy 1.730 2.00
CSE Global Buy 0.880 1.07
Mapletree Commercial Trust Buy 1.215 1.35
CDL Hospitality Trust Buy 1.650 1.80
Frasers Centrepoint Trust Buy 1.840 2.14
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Sembcorp Industries announced that its joint venture in
Oman, Sembcorp Salalah Power & Water Company
(Sembcorp Salalah), has commenced trading of its ordinary
shares on the Muscat Securities Market. The IPO was 8.3
times oversubscribed and raised OMR53 million
(approximately S$173m), making it the largest in Oman this
year as well as one of the largest in the region. Following the
listing, Sembcorp Salalah is now 40% owned by Sembcorp’s
wholly-owned subsidiary Sembcorp Utilities; vs 60% before
the listing.
Ace Achieve Infocom proposed to raise up to 100m new
shares at an issue price of S$0.043 per share, representing a
discount of approximately 2.27% to the last volume
weighted price and raising S$4.3m. The funds will be mainly
used to fund research and development activities of the
Group, and also for the investment in software for research
and development purposes.
Koh Brothers Group has kick-started operations at its first
precast plant in Senai, within Iskandar, Malaysia. This plant is
expected to be fully operational in the last quarter of 2013.
Total land area for Precast Plants, including the 49,000 sqm
of land in Singapore, jumps to 96,000 sqm. The additional
production capacity of 75,000 m3 will boost total annual
production capacity to 150,000 m3. This can cater to strong
demand for precast concrete arising from ramp up of public
housing supply in Singapore and development of Iskandar
Malaysia. The new plant is also in response to the Singapore
Government’s call to raise productivity in the construction
sector.
Federal International (2000) has secured orders in relation to
the supply of flowline control and other oil and gas related
equipment totalling S$38m for deliveries in 2014.
The outlook for Singapore is on course to remain positive for
Q4, despite potential downside risks and uncertainties over
the tapering of quantitative easing in the US, according to
Dun & Bradstreet (D&B) Singapore's latest Business Optimism
Index (BOI). It said all six leading business indicators are in the
expansionary region for Q4, compared with five in the
previous quarter. The six indicators are net profits, volume of
sales, inventory levels, selling prices, new orders and
employment.

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