Today’s Focus
• Ezion - Vessel acquisitions accretive to EPS. Maintain
BUY; TP adjusted slightly higher to S$3.36.
Attention returns once again to the monthly US employment
numbers scheduled for release this week. The QE tapering
process has begun, this week’s data releases and FED minutes
will continue to provide clues on the pace of QE tapering
going forward. Near-term support for the STI is at 3130 that
coincides with the 15-day exponential moving average, firmer
at 3080.
Our Singapore economist says not to read too much into the
2.7% (q-o-q saar) decline for 4Q13 advanced GDP estimates
because the figure can be subject to significant revision. The
final 4Q13 GDP figure could contract by a lesser 0.8% q-o-q.
This is because the three factors that dragged on growth in
4Q13 are transient.
Ezion has proposed to acquire the Liftboat #4, which was
divested as part of the sale and leaseback exercise in Feb
2012. The buyback is part of Ezion’s effort to raise charter
rates in its upcoming renewal in 2Q14 by re-flagging the
vessel to domestic flag, which can’t be done under current
ownership. In addition, having Indonesian-flagged vessels also
sharpens Ezion’s competitive edge in Indonesia in the long
run. Separately, Ezion is also acquiring the remaining 50%
stake in the Alaskan jackup #1 from partner looking to exit.
We estimate that the two transactions are accretive and could
add 1.8% to both FY14 and FY15 EPS. Net gearing increase
of 0.1x is manageable. Maintain BUY; TP adjusted to S$3.36
(Prev S$ 3.30). We continue to like Ezion’s strong growth
profile and earnings visibility.
OCBC is reported to have made a binding bid for Hong
Kong's family- run Wing Hang Bank Ltd. BT reported that
OCBC conducted due diligence and offered less than the two
times book value Wing Hang was seeking. The Hong Kong
bank has a market value of US$4.6 bn, which is 1.7 times its
estimated 2013 book value, data compiled by Bloomberg
shows. Buying Wing Hang would be OCBC's biggest
acquisition. The Singapore bank, which gets almost twothirds
of its revenue from its home country, is stepping up
overseas expansion plans as it seeks to offset the lowest
lending margins in South- east Asia.
Keppel T&T is thinking of listing a data centre real estate
investment trust (Reit) on the mainboard of the Singapore
Exchange. Keppel T&T said it was reviewing the properties
that will form the Reit's portfolio and the terms on which
they will be injected into the trust. Other details, such as the
size and timeframe of any offering to be made where the Reit
is concerned, are also being considered.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,470.0 28.6 0.2
S&P 1,831.4 (0.6) (0.0)
NASDAQ 4,131.9 (11.2) (0.3)
Regional Indices
ST Index 3,131.5 (43.2) (1.4)
ST Small Cap 544.3 (1.7) (0.3)
Hang Seng 22,817.3 (522.8) (2.2)
HSCEI 10,436.8 (272.6) (2.5)
HSCCI 4,448.2 (114.6) (2.5)
KLCI 1,834.7 (18.2) (1.0)
SET 1,224.6 (6.2) (0.5)
JCI 4,257.7 (69.6) (1.6)
PCOMP 5,947.9 (36.3) (0.6)
KOSPI 1,946.1 (21.1) (1.1)
TWSE 8,546.5 (66.0) (0.8)
Nikkei 16,291.3 112.4 0.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 570
Total Daily Vol (m shrs) 3,648
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$)
3 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.675 0.80
Keppel Corp Buy 11.030 12.90
OCBC Buy 10.020 12.40
Yangzijiang Buy 1.170 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
3 Jan
Target Price
($)
Ezion Holdings Buy 2.280 3.30
China Merchants Buy 0.920 1.20
Pacific Radiance Ltd Buy 0.915 1.05
Nam Cheong Buy 0.325 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 3
OUE announced that SGX has issued the ‘eligibility-to-list’
letter for the proposed IPO of OUE Commercial REIT.
Asia Fashion Holdings is proposing to acquire 100% of the
share capital of China Construction Material (Hong Kong)
(CCMH). CCMH’s principal activities are the manufacture and
sale of Base material boards, Floor and grainy board,
Decorative boards and Aluminium products. The purchase
consideration of RMB100m shall be satisfied by the issuance of
shares worth RMB50m and the balance in cash. Asia Fashion
recorded net loss in FY12 and reported 2Q13 total loss of RMB
451.5m. It may be placed on the Watch-List if it continues to
record pre-tax losses for the next two financial years.
Croesus Retail Trust has established a US$500m Euro Medium
Term Note Programme. The proceeds will be used for
financing or refinancing acquisitions and/or investments.
Otto Marine has entered into a Memorandum of Agreement
to sell seven (7) vessels for an aggregate consideration of
US$10m. The transaction is not expected to have a material
impact on the consolidated net tangible assets per share or
earnings per share for FY Dec 13.
Singapore Exchange buyback activity fell to its lowest level in
three years with 69 companies recording 1,068 filings worth
$451m in 2013 - sharply down from 2012 (98 firms, 1,521
filings, $719m) and 2011 (96 companies, 1,730 filings, $1.06
bn). Buyback totals were also lower than the yearly averages
of 82 firms, 1,252 filings and $685m from 2007 to 2012.
Firms got off to a very slow start in 2013. The activity picked
up in Q2 and Q3 - but dipped sharply in Q4. Buybacks are not
used by listed firms to drive share prices up but as a means of
price support in a fast falling market. Firms buying back shares
last year accounted for an average of 6% of their stocks'
trading volume in 2013.
Growth in China's services sector fell to a four-month low in
December as business expectations dropped. The official
purchasing managers' index (PMI) for the non- manufacturing
sector dropped to 54.6 in December from November's 56. The
services PMI follows two manufacturing PMIs out recently that
showed growth in China's factories slowing in December as
export orders weakened.
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