OCBC Report 27 Nov 13

KEY IDEA Consumer sector: Challenging 2014 ahead Summary: We expect the first half of 2014 to be an uneventful one for the consumer sector, and we maintain our UNDERWEIGHT rating. We feel that revenue growth is likely to be challenging given the recent spate of bearish data points both domestically and abroad, which indicate that consumer spending is likely to be subdued in 2014, and that companies will also continue to face margin pressures from rising operating expenses (i.e. higher staff and rental expenses). In addition, ongoing concerns over the overall macro environment and the focus on rising inflation will also keep a lid on consumer spending. Within our sector coverage our top picks are Sheng Siong Group [BUY; FV: S$0.78] as we like its defensive qualities in the face of weaker domestic sales, and Petra Foods [BUY; FYS$3.95] for its dominant leadership position in chocolate confectionary products. (Lim Siyi)

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NEWS HEADLINES - For 3Q13, IHH Healthcare’s revenue grew by 13% YoY to RM1.7b while PATMI, excluding exceptional items, increased 63% to RM138.3m. - Vallianz has received US$150m chartering contracts in the Middle East. - Willas-Array Electronics expects its shares to start trading on the Main Board of the SEHK on 6 Dec, having received approval-in-principle for the dual primary listing. - United Envirotech has announced the termination of the Transfer-Operate-Transfer project in Shangzhi, Harbin City, Heilongjiang Province, China. - Novo Group reports that it expects to see a higher loss for its half year ended 31 Oct. - Food Empire has established a S$200m multicurrency medium term note program.