Plantation Companies - Expect near-term correction in
palm oil prices, recommend take profit. Cut Indofood
Agri Resources to HOLD
Del Monte Pacific – Upgrade to BUY; recent weakness
looks overdone
Malaysia’s Nov13 palm oil stockpile of 1.978m MT (+7% mo-
m) was higher than expected on slowing exports. Dec13-
Jan14 stockpiles are projected to decline further on low crop
season and lower imports. Palm oil price discount to soybean
oil is expected to narrow further, but weaker soybean oil
prices may drag down CPO prices in 1QCY14. We expect
near-term correction in palm oil prices, and recommend
investors to take profit, following the strong-run since end of
Sep13. For SGX-listed CPO stocks, cut Indofood Agri
Resources to HOLD (TP: S$ 1.00) as it has priced in significant
earnings recovery next year. Lacking dividend policy, we
believe there remains limited return left at current level.
We upgrade Del Monte Pacific to BUY, TP revised down to
S$0.82 (Prev S$0.96), factoring in higher risk profile. The
recent sell down looks overdone, and may have more than
priced in uncertainty of its proposed US$1.675bn acquisition
of Del Monte Food’s Consumer Food Business (DMF-CFB). We
lowered our FY14F forecasts by 26%, taking into account an
estimated one-off transaction cost relating to the acquisition,
but have not factored in potential contribution from CFB.
Risks would include higher interest rates, integration and
performance of combined entity, and potential dilution from
equity issuance.
Yoma Strategic Holdings has entered into a conditional
agreement with Pun Hlaing Lodge (PHL) to acquire 80%
effective interests in a plot of land located in the Pun Hlaing
Golf Estate (PHGE). The land, with land area of 8,887 square
metres and valued at US$3.0m, is designated for the
construction of a hotel.
Yoma also updated that the deadline for acceptance of the
offer to acquire the land development rights of and to
participate in the development of the Riverside Development
Project has further extended as the company intends to focus
on its existing projects.
US Indices Last Close Pts Chg % Chg
Dow Jones 15,973.1 (52.4) (0.3)
S&P 1,802.6 (5.8) (0.3)
NASDAQ 4,060.5 (8.3) (0.2)
Regional Indices
ST Index 3,081.7 (31.9) (1.0)
ST Small Cap 529.4 (1.7) (0.3)
Hang Seng 23,744.2 (67.0) (0.3)
HSCEI 11,382.2 (50.8) (0.4)
HSCCI 4,661.0 (3.2) (0.1)
KLCI 1,843.9 2.0 0.1
SET 1,367.4 5.9 0.4
JCI 4,275.7 61.3 1.5
PCOMP 5,886.4 (122.5) (2.0)
KOSPI 1,993.5 (6.9) (0.3)
TWSE 8,443.4 (1.2) (0.0)
Nikkei 15,611.3 (38.9) (0.2)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 575
Total Daily Vol (m shrs) 2,092
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
10 Dec
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.630 0.82
ComfortDelgro Buy 1.930 2.19
OCBC Buy 9.920 12.40
Singapore Airlines Buy 10.080 11.40
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
10 Dec
Target Price
($)
Ezion Holdings Buy 2.220 3.30
China Merchants Buy 0.920 1.20
CSE Global Buy 1.020 1.11
Nam Cheong Buy 0.285 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
China Yuanbang Property is placing out 39m new shares to
raise S$9.6m. The placement price of S$0.245 each represents
a discount of approximately 4.5% to the last volume weighted
average. The funds will be mainly used for the development of
commercial and residential properties in China.
Civmec announced its first major award for its Darwin
operations following its expansion into the Northern Territory
of Australia earlier this year. As a result of this award,
combined with recent awards from Western Australian
operations, order book now stands at SG$$386m.
AusGroup announced the repayment of its senior debt
facilities. As at 30 November 2013, the Group has work-inhand
value at A$219m. This is up from A$179m advised in
their Q1 update following recognition of a number of
variations, extensions and new awards.
China’s industrial output growth fell slightly but retail sales
and exports grew more than expected in November. Though
growth shows signs of easing, this is in no way bad news for
China, which needs to redefine its model and focus on
achieving slower, more sustainable growth. Industrial output
increased 10% y-o-y in November, down from the 10.3%
growth recorded for October. The biggest drag came from
non-metal and ferrous metal manufacturing and the private
sector. The automobile sector performed the best; its growth
accelerated to a 19-month high of 20.3%, up from October's
18.2%.
Retail sales expanded 13.7% y-o-y in November, picking up
from 13.3% the month before. This was probably the result of
the marketing campaign around Singles' Day on Nov 11,
when e-retailers notched up unexpected takings.
Airlines are expected to carry 930m more passengers by 2017,
taking the total number of passengers to 3.91 bn, with Asia-
Pacific accounting for nearly a third of new passengers. Last
year, airlines carried 2.98 bn travellers. Of the 930m new
passengers, the bulk - or 638m - will be carried on domestic
routes and the rest on international routes, according to the
latest airline industry forecast by the International Air
Transport Association (Iata).
US stocks fall as market awaits retail sales data tomorrow and
Fed’s policy meeting next week, when it will decide whether
to continue pumping money into the economy at its current
rate of $85 bn a month. Headline growth for November retail
sales will look strong at 0.6% (MoM,sa) thanks to unit auto
sales, which recouped all of their Sep/Oct losses in the single
month of November. However, ex-autos, markets look for a
smaller 0.2% gain in sales. That would put on-year growth at
2.5% YoY, the lowest in nearly 4 years.
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