Today’s Focus
Nam Cheong - Secures vessel sale contracts. Catalysts
expected from strong quarterly earnings delivery and
further order wins. Maintain BUY with slightly higher TP
of S$0.43
Nam Cheong has secured US$70m worth of vessel sale
contracts from repeat customer. With these sales, Nam
Cheong has already sold 17 of the 25 vessels in its 2014 builtto-
stock work programme. Our forecasts for Nam Cheong
don't include any future build-to-order wins. Hence, this
round of contract wins boosts our revenue and earnings
estimates for FY14/15. Our earnings estimate for FY14/15 is
revised up by about 5%. The weaker MYR-USD exchange
rate can also potentially have a beneficial impact on
shipbuilding margins, which we haven't taken into account.
Expect healthy net profit CAGR of 26% over FY12-15;
maintain BUY with a slightly higher TP of S$0.43 (Prev S$
0.42). Catalysts expected from strong quarterly earnings
delivery and further order wins.
SMRT reported weak 3QFY14 results, in line with our
expectations. Net profit tumbled 44% y-o-y. Fare revenue
segments reported larger EBIT loss of S$9m compared to 2Q.
The government recently approved a 3% increase in fares
with effect from 6 April 2014, with the remaining 3.4%
rolled over to next year. While this is a positive development
for SMRT, we also expect high operating expenses given the
requirement to maintain higher service standards and
minimise disruptions. This could negate the positive impact of
higher fares. Maintain cautious view; stock is FULLY VALUED
with S$1.08 target price.
CDL Hospitality Trusts' 4Q13 results. Topline and net property
income were 2.8% and 2.5% higher y-o-y at S$39.4m and
36.5m respectively. Growth was largely contributed by higher
performance from (i) Rendezvous Grand Auckland, coupled
by contribution from Angsana Velavaru. This offset the weak
performance for its Singapore hotels. We expect RevPAR
growth to turn positive in 2014 on back of returning
corporate travel market, boosted by a strong list of MICE
events. More updates post meeting with management this
morning.
US Indices Last Close Pts Chg % Chg
Dow Jones 15,928.6 90.7 0.6
S&P 1,792.5 10.9 0.6
NASDAQ 4,098.0 14.4 0.4
Regional Indices
ST Index 3,062.4 20.0 0.7
ST Small Cap 529.7 0.2 0.0
Hang Seng 21,960.6 (15.5) (0.1)
HSCEI 9,764.0 (28.6) (0.3)
HSCCI 4,222.8 3.2 0.1
KLCI 1,781.3 2.4 0.1
SET 1,271.8 (16.8) (1.3)
JCI 4,341.7 18.9 0.4
PCOMP 6,022.8 (58.8) (1.0)
KOSPI 1,916.9 6.6 0.3
TWSE 8,462.6 (135.7) (1.6)
Nikkei 14,980.2 (25.6) (0.2)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 554
Total Daily Vol (m shrs) 2,316
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$)
28 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.665 0.80
Keppel Corp Buy 10.62 12.60
ST Engineering Buy 3.82 4.90
Yangzijiang Buy 1.175 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
28 Jan
Target Price
($)
Ezion Holdings Buy 2.26 3.36
China Merchants Buy 0.90 1.20
Pacific Radiance Ltd Buy 0.92 1.05
Nam Cheong Buy 0.32 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
CapitaRetail China Trust reported 4.9% higher revenues of
S$41m, 3.4% higher net property income of S$26m. This was
largely attributable to higher revenue growth at CapitaMall
Xizhimen, CapitaMall Wanjing and CapitaMall Saihan,
although partially offset by the closure of Minzhonglequan for
asset enhancement initiative works. DPU fell 5.5% y-o-y to
2.20scts however, due to dilution of the share base post
preferential offering. Recommendation and target price under
review, and we will update accordingly after briefing by
management.
Yoma has progressed from an earlier non-binding head of
agreement to a definitive agreement with The Hongkong and
Shanghai Hotels Limited (HSH) to develop a hotel on the
Landmark site. Yoma estimated that its overall investment for
this hotel development would be about US$30m (c.S$38m).
As we had mentioned earlier, the participation of HSH is
positive for Yoma as it would greatly relieved the funding
burden on the company. This US$30m investment is indeed
far more manageable than the total expected US$300-400m
needed to develop Landmark. Yoma exited 3Q14 with close to
S$40m cash or net cash of S$24m. In view of the various
business ventures Yoma is running concurrently, we feel that
there could still be some shortfall in capital when this
development begins. Hence, we would not rule out possible
fund-raising by Yoma in due course.
Global Logistic Properties (GLP) has signed a lease agreement
of approximately 46,000 sqm with Suning Commerce at GLP
Park Langfang, Hebei Province, Northern China. Suning is one
of China’s largest retailers, with a strong online presence. The
facility will support distribution for both e-commerce and retail
stores. The growth of e-commerce continues to drive demand
for GLP’s facilities.
Kris Energy announced its acquisition of a 60% stake in
exploration block G3/48 in the Gulf of Thailand from UAE's
Mubadala Petroleum. The deal is pending approval from the
Thai government and block partners.
The Urban Redevelopment Authority has awarded a land
parcel at East Coast Road to Keong Hong Holdings and Master
Contract Services at the tender price of S$352.8m, for the
purpose of development into a hotel. The land parcel has an
area of 8,238.5 square metres and a leasehold tenure of 99
years.
In property news, flash estimates for National University of
Singapore's Overall Singapore Residential Price Index (SRPI)
eased 0.6% for the whole of last year, compared with an
increase of 4.2 per cent in 2012, following five consecutive
month-on-month declines. The index had risen 8.7% in 2011,
11.7% in 2010 and 22.7% in 2009. Going forward, it is likely
that resale prices will continue to slide if resale volumes remain
muted due to the borrowing restrictions as well as some
buyers withholding their purchases and adopting a wait-andsee
attitude.
Developers are showing greater caution in bidding for
executive condominium (EC) sites, after a tender for a 99-year
leasehold site at Canberra Drive closed yesterday. A joint
venture between Verwood Holdings, a unit of City
Developments, and TID Residential made the highest offer out
of six bidders for the 2.86-hectare site, which is near
Sembawang Shopping Centre and about 1.2 kilometres from
Sembawang MRT station. Its bid of $226m, or $350.04 psf
ppr was 4.4% higher than the second highest offer $335.33
psf ppr, from MCL Land (Brighton). The top bid was in line
with earlier market estimates of between $320 and $380 psf
ppr.
HUDC estate Braddell View has been designated for
privatisation, the Ministry for National Development (MND)
said. It is the last of 18 HUDC estates to be designated for
privatisation.
U.S. stocks rose rebounded as corporate earnings topped
estimates and consumer confidence increased ahead of a
Federal Reserve policy meeting. The FOMC started its 2-day
policy meeting last night, which is also the final meeting under
Ben Bernanke. Consensus expects the FED to announce a cut
in QE pace by US10bil/mth to USD65bil/mth later tonight. The
Conference Board’s index of consumer confidence rose to
80.7 (consensus 78) in January from a revised 77.5 in the prior
month.
US equity futures are currently higher after Turkey’s central
bank raised all its main interest rates at an emergency
meeting. The bank in Ankara raised the benchmark 1-wk repo
rate to 10% from 4.5%. It also raised the overnight lending
rate to 12% from 7.75%, and the overnight borrowing rate to
8% from 3.5%. The Lira strengthened against the USD to
2.18. The currency cross had risen to as high as 2.39 just 3
days ago. The rebound in US indices is not surprising. We had
pointed out that the Dow had retreated to its immediate
support. Rebound upside in the near-term is seen capped at
16100-16250.
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