Sunday, November 24, 2013

DBS Vickers 25 Nov 13

STI – 3150 support despite last week’s decline, 3290
view intact but delayed beyond this year-end
􀂃 China Merchants benefits from better traffic numbers
& lower finance cost, earnings estimates & TP raised
to $1.20 (from $1.07)
The current relative underperformance in the STI could be
due to South-East Asian equities falling out of favour among
investors as this region is seen as having a higher risk when
the FED starts to taper QE. The penny stocks rout over the
past 2 months and the year end lull period provides a further
drag.
But we continue to see the prospect of the index higher
towards 3290 despite STI’s 29pt decline last week. The
likelihood of this happening though looks to be delayed
beyond the year-end lull period.
The short-term support levels for the index are 3150 and
3100. With the STI currently trading closer to 13.12x (-0.5SD)
FY14F PE at c.3100, GDP forecasted to improve next, there is
not much more that the STI can dip if the rest of the world
continues to stay firm. Unless global equities slip into a
correction, we expect the first support level at 3150 to hold.
Crude oil slid and gold declined and equity futures gained
after Iran agreed to limit its nuclear program in exchange for
relief from some sanctions. Brent crude fell 2% to USD108.81
pbl.
We believe that traffic for China Merchant’s toll roads will
grow at a mid to high single digit pace over the next few
years. Core earnings are poised to improve steadily in through
FY14 before flattening out in FY15. We raised our FY13 and
FY14 estimates by 10% and 11% respectively. Completion of
the sale of the Group’s NZ property business will also further
boost its coffers, and allow room for potentially more
acquisitions. We increase our DCF-based (WACC 9.1%)
target price to S$1.20 (from $1.07) due to our higher
earnings estimates and lower WACC assumptions. The stock
offers an attractive dividend yield of 6.3% and is trading at
just 8.8x core fully diluted FY13 PE, or 7.7x FY14 PE.
ISDN, through its wholly-owned subsidiary, Aenergy Holdings
Company Limited, plans to acquire a larger equity stake in the
Datara mini hydropower project in South Sulawesi through a
proposed JV between PT SDM and the Gowa Regency
Government in Sulawesi. ISDN through PT SDM will own
76% of the JV company while the Gowa Regency
Government retains its 20% ownership. The Datara mini
hydropower project is targeted to have am installed base
capacity of 10 megawatt.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,064.8 54.8 0.3
S&P 􀀘 1,804.8 8.9 0.5
NASDAQ 􀀘 3,991.6 22.5 0.6
Regional Indices
ST Index 􀀘 3,172.9 0.5 0.0
ST Small Cap 􀀙 532.9 (0.3) (0.1)
Hang Seng 􀀘 23,696.3 116.0 0.5
HSCEI 􀀘 11,448.7 115.6 1.0
HSCCI 􀀘 4,608.8 6.3 0.1
KLCI 􀀙 1,794.5 (0.1) (0.0)
SET 􀀙 1,359.1 (16.8) (1.2)
JCI 􀀙 4,318.0 (8.2) (0.2)
PCOMP 􀀙 6,084.8 (38.1) (0.6)
KOSPI 􀀘 2,006.2 12.5 0.6
TWSE 􀀘 8,116.8 17.3 0.2
Nikkei 􀀘 15,381.7 16.1 0.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 582
Total Daily Vol (m shrs) 1,487
12m ST Index High 3,454
12m ST Index Low 2,987
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
22 Nov
Target Price
($)
Hutchison Port Hldgs Trust (US$) Buy 0.680 0.82
ComfortDelgro Buy 1.940 2.19
OCBC Buy 10.460 12.40
Singapore Airlines Buy 10.230 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
22 Nov
Target Price
($)
Ezion Holdings Buy 2.050 2.65
CSE Global Buy 1.015 1.11
Frasers Centrepoint Trust Buy 1.790 2.14
Yoma Strategic Holdings Buy 0.745 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 3
Keppel Land has completed the divestment of its 51% stake
in Jakarta Garden City to PT Modernland Realty Tbk
(Modernland). Based on a sale consideration of about
S$249mil, this translates into net proceeds of about S$237
million. The divestment will enable Keppel Land to realise a
net gain of about S$149 million. The sale of Keppel Land's
stake in Jakarta Garden City will allow the company to
redeploy capital to new residential and commercial projects
in Indonesia, with a focus on Jakarta.

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