Today’s Focus
Sembcorp Industries – 4Q13 results beat expectations,
maintain BUY
Sembcorp Marine – New contract wins lift YTD win to
S$1.6bn, forming 33% of our win assumption this year
4Q13 results for Sembcorp Industries beat expectations as
Marine & Urban Development exceed, Utilities in line. SCI has
proposed a bonus DPS of 2 Scts on top of an ordinary DPS of
15 Scts. 2014 earnings underpinned by Singapore’s
multiutilities/ cogen facilities and China water plant. Maintain
BUY. Asset divestments would provide earnings upside.
Venture’s 4Q13 results below forecast; net profit of S$38m
(flat y-o-y, +8% q-o-q) fell short of our S$45m, due to lower
than expected sales. Revenue was S$622.8 (+5% y-o-y, +6%
q-o-q) compared to our forecast of S$829m. No change to
DPS of S$0.50. Margin recovery continues but sustainability
and further improvement is dependent on product mix. We
are reviewing our forecast, target price and rating on the
stock.
Yangzijiang reported RMB3.1bn (-14% y-o-y) in FY13
earnings, on the back of RMB14.4bn (-3% y-o-y) revenue.
Gross profit margin was boosted by financial investments
segment to 33.2%; shipbuilding related segment gross profit
margin remains healthy at 27.4%. The Group also proposed
final cash dividend of 5.0 Singapore cents per share;
translating into a dividend payout ratio of 29.7%. Contract
win momentum continues with US$1.3 bn orders for
shipbuilding and offshore segment; outstanding order book
of US$4.6 bn supports near term shipbuilding outlook.
Sembcorp Marine (SMM) has signed contract for a jackup rig
worth US$214.3m with Marco Polo Marine (MPM), for
delivery slated in the fourth quarter of 2015, with options to
construct another two more units for delivery in the third
quarter of 2016 and the first quarter of 2017 respectively.
MPM principally engages in shipping (chartering of OSVs) and
shipbuilding businesses (repair, maintenance, outfitting and
conversion) with presence in Indonesia, Thailand, Malaysia
and Australia. This will be MPM's maiden drilling rig, marking
its venture into the new business.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,198.4 18.8 0.1
S&P 1,845.2 0.0 0.0
NASDAQ 4,292.1 4.5 0.1
Regional Indices
ST Index 3,088.3 (15.4) (0.5)
ST Small Cap 533.3 (0.5) (0.1)
Hang Seng 22,437.4 120.2 0.5
HSCEI 9,806.0 65.5 0.7
HSCCI 4,196.3 51.5 1.2
KLCI 1,822.6 (11.2) (0.6)
SET 1,304.6 0.7 0.1
JCI 4,532.7 (44.6) (1.0)
PCOMP 6,322.6 27.1 0.4
KOSPI 1,970.8 5.9 0.3
TWSE 8,600.9 25.2 0.3
Nikkei 14,971.0 (80.6) (0.5)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 571
Total Daily Vol (m shrs) 2,115
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
26 Feb
Target Price
(S$)
Keppel Corp Buy 10.430 12.60
ST Engineering Buy 3.820 4.90
Yangzijiang Buy 1.130 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
26 Feb
Target Price
($)
Ezion Holdings Buy 2.240 3.26
China Merchants Buy 0.900 1.20
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.340 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Sembcorp Marine (SMM) has also won two drillship orders
from repeat customer Transocean, totaling US$1.08bn,
scheduled for delivery in 2Q17 and 1Q18. It also comes with
options for three more units. Transocean currently operates
and owns six drilling rigs built by SMM including three
jackups and three semi-submersibles. This contract lifts
SMM's YTD win to S$1.6bn, ahead of Keppel's S$1.1bn,
forming 33% of our win assumption of S$5bn this year.
Maintain BUY and target price S$4.80 on SMM.
Croesus Retail Trust acquires two retail properties in Tokyo
for JPY14,250m (S$176.3m). The adjusted distribution per
unit (DPU) of Croesus Retail Trust is expected to increase by
5.7% to 7.41 cents for FY14.Post-acquisition, CRT’s net
lettable area (NLA) will increase by 9% and portfolio value
will increase by 28.3%, expanding its portfolio to six retail
properties in Japan. The acquisition of Luz Omori and NIS
Wave I will be funded through net debt proceeds from new
5-year Japanese onshore debt and proceeds from the
issuance of S$100m in principal amount of Fixed Rate Notes
due 2017.
Straits Construction Group signs MOU for potential reverse
take-over (RTO) of Transcu Group. The proposed (RTO) will
give Transcu a new lease of life and to increase Transcu’s
market capitalisation which may widen its investor base and
attract institutional investors. Straits Construction Group is a
reputable contractor with over 40 years of history primarily
in the construction of public housing and private residential
projects.
Global Logistic Properties (GLP) is expanding its relationship
with COFCO, China’s largest supplier of agricultural and
food products, into a strategic partnership. GLP will help
COFCO provide a national network of modern logistics
facilities in China. The partnership is expected to advance
the food logistics and distribution infrastructure system in
China.
GLP has also signed an agreement with Vipshop (vip.com),
one of China’s leading e-commerce companies, to lease
36,000 sqm at GLP Park Huangpi in Wuhan, Midwestern
China. GLP Park Huangpi is now 100% leased, just one
month after completion.
GMG Global expects to report a loss in 4Q13 due mainly to
the decline in average selling price of natural rubber.
Notwithstanding the loss in 4Q13, the Group expects to
report a profit for FY13.
Singapore’s January industrial output grew a smaller-thanexpected
3.9% from a year ago, disappointing the market's
expectations of a stronger 6.5% expansion. Excluding the
biomedical sector, output would have increased 3.7% y-o-y.
After adjusting for seasonal factors, industrial production
declined 8.1% m-o-m in January - the first decline since
August last year. Excluding biomedical manufacturing,
output would have fallen 8.1% as well. This contraction
was significantly larger than what economists had forecast -
they had been expecting industrial production to fall a more
modest 3.7% in January from December, on a seasonally
adjusted basis. General manufacturing and precision
engineering contracted 4.2% and 1%, respectively, while
transport engineering and electronics output slowed
drastically in January, after sustaining several months of
double-digit increases. Transport engineering output grew
by only 2.7% in January from 14% in December, while
electronics output expanded 7.4% in January from 22.3%
the month before.
An unexpected rise in new U.S. home sales (actual 468k,
consensus 400k) boosted speculation FED Chair Janet Yellen
will reiterate plans to continue stimulus cuts in Senate
testimony today. Yellen had said earlier this month that the
US economy can weather cuts to the country’s stimulatory
bond buying program, adding that only a notable change to
the economic outlook would prompt the central bank to
slow the pace of tapering. However, mortgage applications
for the week ending Feb 21st fell 8.5% compared to 4.1%
the previous week. Our economist suspects the drop in
mortgage application is telling the more accurate story in
directional terms with regards to the health of the US
housing market. The weakness there is in line with the 15%
drop in existing home sales since July and the sideways-todownward
movement in housing starts over the past year.
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