Today’s Focus
CDL Hospitality Trusts - Turnaround in performance;
Maintain BUY, target price S$1.84
4Q13 results for CDL Hospitality Trusts signals a recovery in
performance. Portfolio-wide improvements expected in 2014,
complemented by Maldives acquisitions. CDREIT will
distribute a DPU of 2.92 Scts, +0.7% y-o-y after 10%
retention. Maintain BUY, target price S$1.84. We believe
CDREIT’s valuation is attractive at 1.0x P/BV, with FY14F-15F
yields of 7.3%-7.8%.
Positive earnings momentum for CapitaRetail China Trust
continued into Q4 despite income vacuum from MZLY.
However, DPU fell 5.5% y-o-y to 2.2Scts due to dilution from
an enlarged share base post-preferential offering. FY14
income growth will be supported by three drivers – maiden
full-year contribution from Grand Canyon Mall, completion of
the MZLY asset enhancement initiatives, as well as organic
rental growth. Maintain BUY, target price $1.56 (Prev S$
1.60). CRCT is trading at 7.2-8% FY14-15 DPU yield.
C&G Environmental Protection Holdings has entered into a
conditional acquisition agreement with Grandblue
Environment in relation to the proposed sale of the entire
shareholdings in C&G Environmental Protection (China)
Company. The principal terms of the acquisition agreement
are substantially the same as the principal terms of the
framework acquisition agreement which was entered into on
23 December 2013. Under the acquisition agreement, the
Group will sell its Waste-to-Energy (WTE) business and assets
(including concession rights) and its principal operating
subsidiaries in China to Grandblue for RMB1.85bn. The cash
proceeds will be used for expansion in Southeast Asia,
working capital as well as special dividend for shareholders.
WE Holdings has entered into sale and purchase agreements
to purchase four Singapore and Malaysia companies, namely
SingYaSin Technologies, SCT Technologies, LSP Technology
and LSP Advanced Sdn Bhd. The acquisitions are in line with
plan to achieve economies of scale for electronic and
component business, so as to provide systems integration
business and value-added testing solutions for enlarged
customer base.
US Indices Last Close Pts Chg % Chg
Dow Jones 15,738.8 (189.8) (1.2)
S&P 1,774.2 (18.3) (1.0)
NASDAQ 4,051.4 (46.5) (1.1)
Regional Indices
ST Index 3,047.9 (14.5) (0.5)
ST Small Cap 527.8 (2.0) (0.4)
Hang Seng 22,141.6 181.0 0.8
HSCEI 9,898.0 134.1 1.4
HSCCI 4,275.6 52.8 1.3
KLCI 1,789.2 8.0 0.4
SET 1,271.4 (0.4) (0.0)
JCI 4,417.3 75.7 1.7
PCOMP 6,069.8 47.0 0.8
KOSPI 1,941.2 24.2 1.3
TWSE 8,462.6 (135.7) (1.6)
Nikkei 15,383.9 403.8 2.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 558
Total Daily Vol (m shrs) 2,167
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
29 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.665 0.80
Keppel Corp Buy 10.540 12.60
ST Engineering Buy 3.820 4.90
Yangzijiang Buy 1.170 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
29 Jan
Target Price
($)
Ezion Holdings Buy 2.280 3.36
China Merchants Buy 0.900 1.20
Pacific Radiance Ltd Buy 0.950 1.05
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Eratat Lifestyle defaults on bond interest payment. The
redeemable 12.5% per annum non-convertible bonds in the
principal amount of RMB134m was issued on 24 June 2013
to SHK Securities (Nominees), which is now held by SWAT
Securitisation Fund, a fund managed by SWAT
Management, a wholly-owned subsidiary of Sun Hung Kai
Financial Ltd. Eratat will be suspended from trading pending
verification of Group’s cash balance.
Dragon Group International is expected to report a net loss
for FY2013 mainly due to:-
1. Realisation of reserve upon the Group’s completion of
its disposal of the distribution business; and
2. Cessation of its distribution business since May 2013.
Metech International expects to report a loss for the
financial period 2QFY2014 and 1HFY2014, primarily
attributed to (i) investment in market development and
marketing initiatives (ii) transitional costs involved in the
commencement of new business activities in Singapore and
United States (iii) higher costs and lower resultant margins
from US operations.
AEM Holdings is expected to record a loss for FY2013
mainly due to:
1. Lower revenue;
2. High development cost incurred for starting up its
new substrates programmes.
ASTI Holdings is expected to report a net loss for FY2013
mainly due to:-
1. Weak market demand for its Equipment business;
2. Realisation of reserve upon the Group’s
completion of its disposal of the distribution
business;
3. continuous research and development cost
incurred for development of semiconductor
packaging technologies; and
4. impairment of goodwill.
Advanced Systems Automation is expected to report a net
loss for FY2013, mainly due to weak market demand for its
Equipment business.
The annual average overall and citizen unemployment rates
in Singapore dipped to 1.9% and 2.9% respectively, while
the permanent resident rate stayed unchanged at 2.8%.
Income growth – based on the nominal median monthly
income of full-time employed citizens - also strengthened
last year, amid the tight labour market. It rose 7.1% to
$3,480 last June, better than the 5.8% gain to $3,248 in
the preceding year.
Singapore consumer confidence stays stable in Q4.
According to the latest consumer confidence index released
by Nielsen, the Republic recorded an index score of 97 in Q4
2013, down a touch from 98 in the previous quarter.
Nielsen attributed the slight pullback to a four-point
increase from Q3 in the number of consumers who were
worried about future job prospects; almost one in four
expressed worry in Q4.
U.S. stocks fell amid disappointing earnings forecasts from
Yahoo, Boeing and AT&T. Sentiment was further affected
with the Federal Reserve’s plan to reduce QE even amid the
latest currency volatility that befell some emerging countries
such as Turkey, Argentina and South Africa. The Turkish lira
depreciated as much as 2.4% today, even after the country
more than doubled its key interest rate to stem capital
outflows. South Africa’s rand also weakened as an
unexpected increase in its benchmark interest rate failed to
reassure investors.
FED policy makers pressed on with another USD10bil
reduction in the monthly bond purchases, lowering the
figure to USD65bil. Some officials expressed concern that
the FED’s record USD4.1tril balance sheet could create
asset-price bubbles
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