Today’s Focus
• Centurion - Forging a new path in Indonesia; maintain
BUY, target price unchanged at S$0.77
Centurion recently acquires land in Bekasi District, Indonesia
for S$0.8m. Centurion will develop about 750 apartment
units catering to workers and executives, to be completed in
2016. While developments at this point are still nascent, we
note that this investment into Indonesia marks an important
milestone in the Group’s bid to diversify its business model,
both geographically as well as operationally. This venture is a
timely one, given the increasingly competitive bidding market
for new dormitory land in Singapore. Maintain BUY, target
price unchanged at S$0.77. We like Centurion for its
execution track record and its compelling growth story in the
next two years.
OCBC Bank is said to be getting its war chest ready for a
proposed takeover of Hong Kong's Wing Hang Bank and
talking to several banks about the funding. Under takeover
rules in Hong Kong, the acquirer has to show it has enough
cash or financial ability to launch a deal. A Bloomberg report
said that OCBC was talking to several banks, including HSBC
and Bank of America, on its financing commitment for the
acquisition. OCBC Bank is also increasing its presence in
China. It is slated to increase its stake in China's Bank of
Ningbo to the maximum 20% from 15.3% now, via private
placement.
United Envirotech (UEL) has inked an agreement to provide a
total water solution to a textile industrial park in Guangan, in
China's Sichuan province. Under the agreement, it will form a
90-10 joint venture with West Guangan Jean City Investment
Management (WGIM) to undertake build-operate-transfer
(BOT) projects. The projects include wastewater treatment
using UEL's advanced membrane technology - 20,000 cubic
metres/day (Phase 1) comprising 10,000 cu m/day each of
industrial and municipal wastewater. Long-term capacity is
expected to be 150,000 cu m/day, with industrial and
municipal wastewater at 100,000 cu m/day and 50,000 cu
m/day, respectively.
WE Holdings is proposing a renounceable non-underwritten
rights cum warrants issue of up to 1,313.8m new shares at
an issue price of S$0.015 for each Rights Share, with up to
US Indices Last Close Pts Chg % Chg
Dow Jones 16,257.9 (179.1) (1.1)
S&P 1,819.2 (23.2) (1.3)
NASDAQ 4,113.3 (61.4) (1.5)
Regional Indices
ST Index 3,135.5 (8.4) (0.3)
ST Small Cap 541.5 (3.9) (0.7)
Hang Seng 22,888.8 42.5 0.2
HSCEI 10,182.5 17.8 0.2
HSCCI 4,439.8 14.6 0.3
KLCI 1,835.0 8.4 0.5
SET 1,283.6 28.1 2.2
JCI 4,390.8 135.8 3.2
PCOMP 5,940.7 97.8 1.7
KOSPI 1,948.9 10.4 0.5
TWSE 8,566.2 36.9 0.4
Nikkei 15,912.1 23.8 0.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 576
Total Daily Vol (m shrs) 3,740
12m ST Index High 3,454
12m ST Index Low
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
13 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.675 0.80
Keppel Corp Buy 10.980 12.90
ST Engineering Buy 3.870 4.90
Yangzijiang Buy 1.240 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
13 Jan
Target Price
($)
Ezion Holdings Buy 2.360 3.36
China Merchants Buy 0.920 1.20
Pacific Radiance Ltd Buy 0.975 1.05
Nam Cheong Buy 0.330 0.42
Source: Bloomberg Finance L.P., DBS Research
Singapore
Wired Daily
Page 2
1,313.8m free detachable warrants, each Warrant carrying the
right to subscribe for one (1) new share at an exercise price of
S$0.030 for each Warrant Share on the basis of one (1) Rights
Share with one (1) Warrant for every two (2) existing shares
held. The estimated net proceeds ranging from S$12.7m to
S$39.4m will be used to fund the expansion into cement
business in Myanmar, coal business and improve the working
capital of the company.
Next-Generation Satellite Communications (Next-Gen) is set to
expand into mobile-content development and distribution in
China. It is acquiring a 75% stake in Star Cha-riot Limited (Star
Group) for $27.6m. Star Group is a wholly owned unit of C
Media, which will hold the remaining 25% stake. The deal will
be partially funded through the issuance of new ordinary Next-
Gen shares worth $19.8m; the remaining $7.8m will come
from transferring a special-purpose vehicle that holds
convertible notes to C Media.
Prices of private resale homes extended their decline in
December for a fourth straight month, led by falls in the core
central region (CCR), flash figures released by the Singapore
Real Estate Exchanges (SRX) showed. This trend is likely to
continue into 2014, say consultants, as the Total Debt
Servicing Ratio (TDSR) framework and other cooling measures
take their toll. Prices of homes in the city area fell 2.3% in
December, followed by those in the Outside Central Region
(OCR), which dipped one per cent. Only homes in the Rest of
Central Region (RCR) bucked the trend, rising 2.9%. Overall,
the price index eased 0.2% last month.
U.S. stocks fell amid concern over valuations as the quarterly
reporting season approaches. Stocks extended declines after
Federal Reserve Bank of Atlanta President Dennis Lockhart said
the U.S. economy is on “solid footing” and he would support
continued cuts to stimulus. Profits as a percentage of the S&P
500 Index’s price, known as the earnings yield, totalled 5.76%
last week, compared with the 2.86% payout on 10-year
Treasuries, according to data compiled by Bloomberg. At
2.9%, the gap, which narrows as equities get more expensive
relative to debt, is the smallest since March 2011. PE valuation
has also stretched higher with the MSCI US trading at around
its 15.3x (+1SD) 12-mth forward PE ratio. This compares with
just 11.7x (between ave to -1SD) 12-mth forward PE for the
MSCI Asia Ex-Japan and the 13.5x 12-mth forward PE for
MSCI Singapore.
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