Sunday, December 1, 2013

DBS Vickers Report 2 Dec 13

Ezion - Ample room for appreciation, reiterate
conviction BUY with TP raised to S$3.30
We maintain our view for STI 3150 to hold intact in the
current year-end lull with upside bias towards 3290 (13.9x
or average FY14F PE). Weighed down by the risk of rising
current account deficits and political uncertainties, South
East Asian equities have clearly underperformed their
North East Asian counterparts in recent months. Political
uncertain in Thailand deepens after protesters seeking to
oust Thai Prime Minister Yingluck Shinawatra vowed to
incite more unrest this week after clashes left 3 dead in
Bangkok at the weekend and the Thai central bank
warned the standoff was hurting the economy. The USDBaht
exchange rate is currently at 32.273, higher by 0.7%
compared to Friday.
Capital outflow from this region has weighed on
Singapore equities. But Singapore remains a safe haven as
the country has been enjoying current account surplus
and economic growth is picking up. As a result, Singapore
equities here have outperformed their neighbours.
We reiterate our conviction BUY on Ezion with TP raised
to S$3.30 (Prev S$2.65) as we roll over valuation to FY14,
still pegged to 14x PE. Trading at less than 9x FY14 and 7x
FY15 PE, valuation for Ezion is undemanding against 42%
2-year EPS CAGR, which has strong visibility as 90/72% of
FY14/15F revenue are backed by secured contracts. Ezion
is a safer proxy to ride the growth prospects of its two
associates – Ocean Sky and Charisma - which have yet to
deliver. We estimate that the two associates could add
approx. S$390m or 32 Scents to Ezion’s share price (our
TP reflects only 1.5 Scents). Ocean Sky will take time to
ramp up Port Melville while we await greater clarity on
Charisma’s strategy and financials.
Centurion acquires RMIT Village in Australia, expanding its
business scope and regional presence. This acquisition will
be immediately earnings accretive in FY14, adding S$3.5m
to pre tax profit on a 9M YTD basis or a 9% return on
investment. However, we believe the extent of accretion is
contingent on the interest costs of the funding structure.
Maintain Buy, TP unchanged at S$0.77.
Vard Holdings has secured a new contract with Island
Offshore for the construction of one advanced offshore
support vessel. The value of the contract amounts to
approximately NOK 400m. The vessel is scheduled for
delivery from Vard Brevik in Norway in 1Q 2015.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,086.4 (10.9) (0.1)
S&P 􀀙 1,805.8 (1.4) (0.1)
NASDAQ 􀀘 4,059.9 15.1 0.4
Regional Indices
ST Index 􀀙 3,176.4 (10.0) (0.3)
ST Small Cap 􀀙 535.3 (0.5) (0.1)
Hang Seng 􀀘 23,881.3 92.2 0.4
HSCEI 􀀘 11,441.3 56.0 0.5
HSCCI 􀀘 4,683.7 42.4 0.9
KLCI 􀀘 1,812.7 5.1 0.3
SET 􀀘 1,371.1 11.7 0.9
JCI 􀀘 4,256.4 22.5 0.5
PCOMP 􀀘 6,208.8 38.9 0.6
KOSPI 􀀙 2,044.9 (0.9) (0.0)
TWSE 􀀘 8,406.8 44.4 0.5
Nikkei 􀀙 15,661.9 (65.3) (0.4)
STI Index Performance
Singapore
Total Market cap (US$bn) 581
Total Daily Vol (m shrs) 1,747
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
29 Nov
Target Price
($)
Hutchison Port Holdings Trust Buy 0.680 0.82
ComfortDelgro Buy 1.965 2.19
OCBC Buy 10.440 12.40
Singapore Airlines Buy 10.460 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
29 Nov
Target Price
($)
Ezion Holdings Buy 2.100 3.30
China Merchants Buy 0.910 1.20
CSE Global Buy 1.000 1.11
Frasers Centrepoint Trust Buy 1.770 2.14
Yoma Strategic Holdings Buy 0.740 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 3
Keppel Corp is currently negotiating conversion and
liquefaction contracts with Golar LNG on the conversion of
an existing LNG carrier into a Floating Storage and
Liquefaction Vessel (FLSV). The terms and conditions of the
contracts, including the contract value and expected
completion timeline, have yet to be finalised.
GSH Corporation has signed an agreement to acquire a
prime land parcel for RM132.4m. The leasehold land parcel
of 5,800 sq metres, - which GSH plans to develop into a
residential and commercial development, is located on Jalan
Kia Peng in the prime section of Kuala Lumpur’s city centre,
popularly known as the Golden Triangle.
ST Engineering announced that its electronics arm, ST
Electronics has set up a wholly owned subsidiary, ST
Electronics (Tianjin) in Tianjin Eco-City, China with a paid up
capital of RMB 10m (about S$1.97m). ST Electronics Tianjin
is wholly owned by ST Electronics (Shanghai) Co., Ltd, a
wholly owned subsidiary of ST Electronics.
Separately, ST Engineering announced that it has
streamlined its US entities, by merging Vision Technologies
Systems, Inc., with VT Systems, Inc., through a short-form
merger. VT Systems, Inc. will be liquidated as of 30
November 2013 and all its assets and personnel will be
transferred to Vision Technologies Systems, Inc. Business will
continue seamlessly. Vision Technologies Systems, Inc.,
which has been operating as ST Engineering’s US
headquarters, will continue to leverage the global
capabilities of the Group to expand and grow in the US
market.
Wing Tai Holdings has been awarded the tender for a
leasehold land parcel Plot 17/2, Huai Hai Middle Road
Precinct No. 45 in Shanghai Huangpu District having an
approximate site area of 8,593.9 square metres at the price
of RMB1.104bn.
Innopac Holdings has moved into China's natural gas
market, after a false start in 2011. It will pay $17.1m for
81.82% stake in Shandong CNG firm. Part of the purchase
consideration at $7.2m will be in cash; the balance of $9.9m
will be met through the issuance of 300m new shares in
Innopac at an issue price of 3.3 cents per share.
Business loans continued to power Singapore's bank lending
growth in October, with total loans rising 1.4% over the
month from 1.1% in September. On a year-on-year basis,
however, credit growth slowed slightly, increasing 15.6% to
$554.3 bn last month, compared to 15.7% in September.
Loans to businesses grew 2% in October to $332.1 bn, after
rising 1.4% in September. Year-on-year growth picked up as
well to 19.4% in October, faster than the 18.6% seen in the
month before.
Business lending momentum was largely driven by the
general commerce, and transport, storage and
communication sectors. In year-on-year terms, loans growth
for the former continued to rise at a rapid clip of 28.8% in
October; the latter grew 26%. In contrast, on a year-on-year
basis, consumer loans growth slowed to 10.4%, from
September's 11.7%. Over the month, consumer loans grew
at the same pace of 0.6% in October as they did in
September, to reach $222.2 bn.
Singapore is targeting to welcome 1.5 million cruise
passengers by 2015, up from the 913,000 that sailed into
the island last year, as it sets its sights on winning a sizable
slice of the rapidly growing Asian cruise industry. The
Singapore Tourism Board (STB) believes it is able to hit these
numbers as the sector in Singapore and the region is still in a
nascent stage and has strong growth potential, especially if
it is able to attract more international cruise passengers here.
JTC Corporation has launched four industrial sites zoned for
Business-2 development, in Woodlands Industrial Park E9
and Tuas South, for sale by public tender.
The Land Transport Authority (LTA) has awarded two civil
contracts for the building of the MRT's Woodlands North
and Napier stations and their associated tunnels. The
contracts for these Thomson Line stations are worth $526m.
Woodlands North station goes to Penta-Ocean while Napier
station goes to Sinohydro.
Chinese manufacturing grew more than expected in
November, indicating that the nation's economic recovery is
sustaining momentum amid government efforts to rein in
credit growth. The Purchasing Managers' Index was 51.4.
That's the same reading as October, which was an 18-month
high, and exceeded 24 out of 26 estimates in a Bloomberg
News survey.

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