Monday, March 31, 2014

OCBC Report

KEY IDEA

Astro: FY14 results mostly in line

Astro Malaysia Holdings Berhad (Astro) saw FY14 revenue rising 11% to MYR4790.7m, or about 1% below our forecast, while net profit climbed 34% to MYR448.0m, or just 3% shy of our estimate. Astro declared an interim dividend of 2 sen/share and a final dividend of 1 sen, bringing the full-year payout to 9 sen. Going forward, Astro remains largely upbeat about its outlook, citing strong execution of its strategy to growing total revenue; guides for double-digit revenue growth in FY15. Although Astro may see higher costs relating to the 2014 World Cup broadcast, management remains confident that it should be able to contain these costs (also mitigated by lower B.yond swap-out costs). As such, we are keeping our FY15 estimates largely unchanged. Our DCF-based fair value though increases from S$3.13 to S$3.50. Maintain BUY.
(Carey Wong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks rose, with the S&P 500 ending both Mar and 1Q14 with moderate gains, after Fed Chair Janet Yellen relieved concerns about a rate hike coming earlier than expected.


- Pacific Radiance has bagged a contract worth up to US$100m for its latest maintenance work vessel.


- Ascendas Hospitality Trust will be offering 71.9m to 73.5m new stapled securities in a private placement to raise at least S$50m to fund acquisition of Osaka Namba Washington Hotel Plaza.


- SGX is proposing the introduction of electricity futures and is seeking the public's feedback.


-
Independent financial adviser to the exit offer for Chemoil Energy has advised its independent directors to recommend that shareholders accept the offer.

- Linc Energy has produced 650 barrels of crude oil during flow testing at a well in its Umiat oil field in Alaska, the first time crude oil has surfaced in quantities there since 1952.


- TT International will focus more on its retail operations going forward, following a strategic review in the wake of the 2008 global financial crisis.

- Singapore has the potential to become the infrastructure hub of the region, said International Enterprise Singapore as it announced new initiatives in that direction.

DBS Report

Today’s Focus
􀂃 ST Engineering - More room to flex its muscles; maintain
BUY and S$4.30 target price
􀂃 Pacific Radiance - Wins US$100m long-term charter
contract; maintain BUY, target price S$1.20
􀂃 OCBC Bank - Acquires Wing Hang Bank at HK$125 per
share or 1.77x P/BV
ST Engineering (STE) has been generating close to 30% return
on equity (ROE) while being in >S$500m net cash position.
After reducing payout ratio, STE can now focus on improving
medium-term growth prospects. Over time, STE has been
generating a larger share of profits from its US operations,
where dividends are subject to 30% withholding tax. This is the
main reason STE reduced dividend payout from 90% to 80%;
it does not reflect weaker Group operating performance.
Indeed, cash generation has been impressive and has registered
strong earnings execution and order wins lately. Stock remains
undervalued; maintain BUY rating and S$4.30 target price.
There is re-rating potential as the Group delivers on its growth
promise, going forward.
Pacific Radiance has secured a charter contract worth up to
US$100m for its latest Maintenance Work Vessel (MWV),
which is the first of the 14 new vessels scheduled to enter its
fleet in FY14. The contract with an international oil major is for
a term of up to 7 years, including extensions, and will be
deployed to provide maintenance services for a project in SE
Asia starting from 2Q14. The implied daily charter rate for the
contract works out to be about US$39,000 per day, which is
higher than our existing assumption of US$30,000 per day, and
signals the strength of the offshore accommodation and
inspection, repair, maintenance market in Asia. Our utilisation
assumptions for the accommodation work boat/ maintenance
work vessel segment is also conservative at 60% in FY14/15,
and thus, this contract demonstrates that Pacific Radiance can
still execute better than our forecasts. Maintain BUY with
target price of S$1.20.
OCBC Bank announced today that it has made a pre
conditional voluntary general offer to acquire the entire issued
share capital of Wing Hang Bank (WHB), which is listed on the
Hong Kong Stock Exchange, at an offer price of HK$125 per
WHB share, or a total of HK$38,428m (approximately
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,457.7 134.6 0.8
S&P 􀀘 1,872.3 14.7 0.8
NASDAQ 􀀘 4,199.0 43.2 1.0
Regional Indices
ST Index 􀀘 3,188.6 16.4 0.5
ST Small Cap 􀀙 544.0 (0.0) (0.0)
Hang Seng 􀀘 22,151.1 85.5 0.4
HSCEI 􀀘 10,075.1 73.3 0.7
HSCCI 􀀘 4,161.2 28.2 0.7
KLCI 􀀙 1,849.2 (1.5) (0.1)
SET 􀀘 1,376.3 7.4 0.5
JCI 􀀘 4,768.3 45.2 1.0
PCOMP 􀀘 6,428.7 69.1 1.1
KOSPI 􀀘 1,985.6 4.6 0.2
TWSE 􀀘 8,849.3 74.6 0.9
Nikkei 􀀘 14,827.8 131.8 0.9
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 588
Total Daily Vol (m shrs) 2,343
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$)
31 Mar
Target Price
(S$)
ComfortDelgro Buy 1.985 2.19
Global Logistic Properties Buy 2.650 3.31
Keppel Corp Buy 10.890 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
31 Mar
Target Price
(S$)
Ezion Holdings Buy 2.160 3.26
Goodpack Buy 2.140 2.60
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 1.055 1.20
Nam Cheong Buy 0.335 0.46
Centurion Corporation Buy 0.710 0.86
Singapore
Wired Daily
Page 2
S$6,234m) in cash. At HK$125 in cash for each WHB share,
the price works out to a premium of approximately 1.6% to
the last closing price, and a premium of approximately
67.3% to the 90-day average price. The proposed
acquisition value is approximately 1.77 times WHB’s
consolidated net book value as at 31 December 2013.
Global Logistic Properties has leased 21,000 sqm to Sagawa
Global Logistics, one of the largest third-party logistics (3PL)
providers in Japan, at GLP Hiroshima. This lease agreement
marks the first collaboration between GLP and the
customer.
LionGold Corp proposes to raise capital by issuing 37.3m
shares at an issue price of S$0.1340 each, to raise gross
proceeds of approximately S$5m. In addition, the Company
proposes to issue unsecured redeemable convertible bonds
due 2017, in the principal amount of S$15m (the “Tranche
1 Bonds”) and S$20m (the “Tranche 2 Bonds”). The total
net proceeds from the proposed offerings of approximately
S$39.7m will be used for gold mining operations and for
working capital purposes.
Charisma Energy Services has secured a contract with a
value of US$180m over a 15 year period to lease eleven sets
of hydro-electric power generation equipment for power
supply to a national utility board in South Asia. The
Company expects the lease to commence in 2Q2014. The
Group also announced the termination of a contract
(announced in Sep 13) to provide a rig to support a
Southeast Asian based national oil company in the
Andaman Sea, due to delays in the commencement of the
project.
Bank lending in Singapore in February grew at a slower clip
for the third straight month, with the loan business
involving two key industries - construction and finance -
registering particular weakness. Domestic banking unit
(DBU) loans stood at $584 bn in February, up 0.4% from
January. This was weaker than the 1.4% month-on-month
growth posted in January. On a year-on-year basis, loan
growth stood at 14.6%, which is also poorer than the
16.5% growth seen in January - and is the slowest gain
since November 2010. On a month-on-month basis,
business loans in February grew 0.5% to $358 bn. This is a
much smaller expansion compared with the 2.1% growth in
January. Loans to the building and construction segment -
which is the largest component of all business loans -
contracted in February over the month for the first time
since January 2011. Loans to financial institutions - the next
largest loan segment after construction - gained 0.6% to
$80.9 bn in February over the month. This is a marked
weakness from the 5.8% growth over the month in
January. As for consumer loans, the month-on-month
growth was 0.3% to $226 bn. This is a touch lower than
the 0.4% growth in January.
U.S. stocks rallied after FED Chair Janet Yellen signalled
continued monetary support and tensions appeared to ease
in Ukraine. Biotechnology and small-cap stocks rebounded.
Yellen said ‘‘considerable slack’’ in the labour market is
evidence that the central bank’s unprecedented
accommodation will still be needed for “some time” to put
Americans back to work. The comments are more dovish
than her earlier words on March 19, when she said that the
central bank’s monthly bond purchases could end this fall
and benchmark interest rates may rise about 6 months later.
Fed Bank of Chicago President Charles Evans said March 28
that the central bank will probably increase interest rates in
the second half of 2015. On the data front, the March
Chicago PMI came in worse than expected at 55.9
(consensus 59.8). Meanwhile, Russia and the U.S. agree on
the need for a diplomatic solution to tensions over Ukraine,
this according to the Russian Foreign Minister.
Johnson & Johnson accepted the US$4bil offer from Carlyle
Group LP made in January to acquire the Ortho Unit, its only
diagnostics division. AT&T Inc. has approved a plan to
repurchase 300 million shares, or about 6% of its
outstanding stock

Daily Summary 31 Mar 14

Dow and Europe closed firm on Friday.  Dow +59 at 16323.  Dow's trend is sideways.  Dow's future is now +60.  Europe also up on opening.

Asian bourses were mostly up.  Nikkei +132, ShanghaiC -8, Hangseng -86.  STI closed +15 at 3187.  Volume was 2.3b shares.  Gainers were 242 to 183 losers.  

Trend of STI is up.

Top volumes were Albedo -0.1, Transcu unchanged, Digiland unchanged, Memstar unchanged, LionGold +0.8, KLW +0.2, AviTech +0.5, GoldenAgr -0.5, Noble 2.5, Blumont +0.2

Market opened up and remained positive throughout the whole session. Blue chips were generally firmer. Speculatives and penny stocks too were seeing more gainers.

Europe and Dow are looking good for tonight.

Sunday, March 30, 2014

DBS Vickers Report

Today’s Focus
 Initiate coverage on OUE Hospitality Trust with a BUY
recommendation and target price of S$0.95.
STI’s rally last week was within our expectation even as the
break above 3150 2 days before the end of March came
early, as a pleasant surprise.
Further near-term upside to 3207 is seen with pullback
support at 3150. But gains beyond 3207 going into April
should be capped at 3250 or slight below, that coincides with
the 13.9x (average) 12-mth forward PE. Unless the 1Q results
season that ends mid-May is able to spring a positive surprise,
we believe it is more likely that the current rally will lose its
momentum at c.3250 around mid-April
Overseas attention turns to the numerous data releases from
the US this week that culminates with the March employment
data. The FED had stated that it would look at a wider data
range to determine when to raise the FED funds rate.
Economic figures for March will also give the earliest
indication whether the data slowdown over the Dec13 to
Feb14 period is indeed due to the cold weather.
We initiate coverage on OUE Hospitality Trust (OUE HT) with
a BUY recommendation and target price of S$0.95. OUE HT
portfolio comprises two revitalised assets in the heart of
Orchard Road worth S$1.76bn – the landmark Mandarin
Orchard Singapore with 1,077 rooms, and Mandarin Gallery,
which was birthed of a S$200m renovation of the hotel in
2009, and sports 152m of scarce Orchard Road frontage. The
Trust offers investors exposure to a diversified hospitality and
retail play in Singapore’s most expansive and frequentlyvisited
shopping destination. The high fixed income
component offers solid downside protection and income
resilience. In the Sponsor’s Right of First Refusal (ROFR) is
Crowne Plaza Changi Airport, a 320-room transit hotel in
Changi Airport. If acquired, it could boost the Trust’s portfolio
room count by 30% and give the Trust an opportunity to
benefit from the government’s plans to expand Changi
Airport and increase passenger traffic.
Nam Cheong has sold another two vessels worth
approximately US$43.1m, making it a record sale of seven
vessels within the first three months of this year. With these
two latest sales contracts, Nam Cheong’s order book has hit
RM1.4 bn. One AHTS was sold to a new customer, an
emerging oil and gas player in Malaysia. The PSV was sold to
a repeat customer in West Africa.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,323.1 58.8 0.4
S&P  1,857.6 8.6 0.5
NASDAQ  4,155.8 4.5 0.1
Regional Indices
ST Index  3,172.2 9.7 0.3
ST Small Cap  544.0 1.7 0.3
Hang Seng  22,065.5 231.1 1.1
HSCEI  10,001.8 128.3 1.3
HSCCI  4,133.0 89.4 2.2
KLCI  1,850.7 3.9 0.2
SET  1,368.9 13.0 1.0
JCI  4,768.3 45.2 1.0
PCOMP  6,359.6 43.9 0.7
KOSPI  1,989.0 8.0 0.4
TWSE  8,774.6 (4.9) (0.1)
Nikkei  14,696.0 73.1 0.5
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 588
Total Daily Vol (m shrs) 3,072
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$)
28 Mar
Target Price
(S$)
ComfortDelgro Buy 1.955 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.840 12.60
Yangzijiang Buy 1.075 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
28 Mar
Target Price
($)
Ezion Holdings Buy 2.180 3.26
Goodpack Buy 2.190 2.60
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 1.050 1.20
Nam Cheong Buy 0.325 0.46
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
Interra Resources is proposing to undertake an issue of: (a)
up to 45.3m free bonus warrants on the basis of one (1)
Bonus Warrant for every ten (10) existing shares held and
(b) up to 22.7m additional free Company warrants (the
Piggyback Warrants) on the basis of one (1) Piggyback
Warrant for every two (2) Bonus Warrants which are
exercised. The exercise price of the bonus warrant is
S$0.275 per share while the Piggyback Warrants’ exercise
price is S$0.205 per share.
OCBC is nearing an agreement to acquire Wing Hang Bank,
Hong Kong's second-largest family-run bank, after securing
preliminary approval from the Hong Hong’s banking
regulator. The purchase of Wing Hang, which has a market
value of HK$35 bn (S$5.7 bn), could be announced as soon
as early next week, according to people familiar with the
matter, as reported in the press.
Olam and Tata Chemicals Limited (TCL) have signed a
termination agreement in which TCL will not proceed with
its proposed 25.1% equity participation in the greenfield
ammonia-urea fertiliser manufacturing project in the
Republic of Gabon, Africa, due to a change in TCL’s
investment focus away from overseas fertiliser
manufacturing and Olam’s intention to move to a minority
and non-consolidated position in the project. Nonetheless,
TCL will continue to provide any technical support that may
be requested by Olam or its other equity partners on this
project. Olam currently holds 80% stake while the
Government of the Republic of Gabon (RoG) holds the
remaining 20% in the fertiliser project. Olam is continuing
its discussions with other industry participants who have
expressed their desire to partner in the project, in an effort
to bring down its final equity stake to below 50%.
Separately, RoG will invest an additional US$56.8m towards
equity and increase its stakes in the Palm and Rubber joint
ventures with Olam in Gabon. On completion of this
transaction, Olam will own 60% equity interest in both
Olam Palm Gabon and Olam Rubber Gabon joint ventures,
with RoG holding the remaining 40%. For Olam, the
transactions are in line with its plan to unlock value by
seeking strategic partners to co-share investments in capital
intensive and long gestation projects. This is expected to
release cash of approximately US$30.0m for Olam and will
result in a gain of US$14.5m that will be credited to capital
reserves.
UMS Holdings is proposing a bonus issue of up to 85.9m
new shares on the basis of one (1) Bonus Share for every
four (4) existing shares held.
ST Engineering has injected new equity of $216m into the
capital of its wholly owned aerospace arm, ST Aerospace.
This brings ST Engineering’s total share capital contribution
in ST Aerospace to $368.5m. The increased capital is to
support the expansion of ST Aerospace's business.
Nera Telecommunications has received contracts of
approximately S$31.1m. The contracts are in relation to
Network Infrastructure and Wireless Infrastructure
Networks.
U.S. indices rose as consumer shares rebounded amid data
that showed household purchases rose the most in 3
months. Consumer discretionary stocks rose while
biotechnology shares lost further ground, weighing on the
Nasdaq. Red Hat Inc. fell after it said it expects to earn
$1.56/share this year that is lower than consensus estimate
for $1.62. BlackBerry Ltd. Fell after it warned sales won’t
grow until the fiscal year that begins next March, even after
cost-cutting helped the company post a smaller quarterly
loss than analysts estimated.

OCBC Report

KEY IDEA

CapitaLand Limited: Deepening presence in China

CapitaLand (CAPL) announced that it has acquired a 60% interest in two adjacent prime residential sites in Chengdu, China for RMB752m (S$155m). The project will yield ~4,600 residential units and the first phase is expected to launch by end 2014. The group has already successfully developed and launched Raffles City Chengdu, The Loft and The Botanica in the city, and we like CAPL’s strategy of deepening its presence in key sub-markets in which they have experience and expertise. The Chinese credit markets are experiencing increasing stress as authorities opt to let weaker companies go into financial default, and we believe this could throw up acquisition opportunities for CAPL as its Chinese peers grapple with tightening credit conditions and rising cost of debt. We note that the group enjoys a strong balance sheet with an estimated S$6.9b in cash and net gearing of 29%, after its recent AustraLand divestment. Maintain BUY on CAPL. Pending completion of these acquisitions, we opt to keep our fair value unchanged at S$3.50. (Eli Lee)


MORE REPORTS


Nam Cheong: Secures US$43.1m contracts for two vessel sales

Nam Cheong Limited announced this morning that it has clinched contracts worth a total of US$43.1m for the sale of one unit of Anchor Handling Towing Supply (AHTS) vessel (5,150 BHP) and one unit of Platform Supply Vessel (PSV) of 5,000 DWT under its built-to-stock model. Deliveries for both vessels are scheduled in 2014. This lifts Nam Cheong’s YTD contract wins to seven vessels amounting to US$113.1m. The AHTS was sold to a new customer, Kayfour Development Corporation Sdn Bhd, while the PSV was sold to a repeat customer E.A. Temile and Sons Development Company of Nigeria Limited. According to Nam Cheong, its order book stands at ~MYR1.4b following these order wins. We maintain our BUY rating and S$0.42 fair value on Nam Cheong. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES


- The US stock market pared most of its gains Fri after an early morning rally following generally positive consumer spending data petered out by mid-afternoon.


- The stronger SGD was a significant contributing factor to Singapore being ranked first in living costs for expatriates, according to a study by the Asia Competitiveness Institute.


- Olam International said that Tata Chemicals will no longer be taking a 25.1% equity stake in its fertiliser project in Gabon.

- Singapore Airlines has raised its stake in Virgin Australia Holdings Ltd to 22.17% from 19.83% for a total consideration of A$30.4m.

- The share price of Asia Fashion Holdings fell about 15% on news that a subsidiary was the subject of arbitration proceedings for alleged non-fulfilment of obligations in a compensation settlement.


- Interra Resources is proposing a warrant issue to reward its shareholders and raise funds for the company.


- Neo Group doubled its FY14 net profit to hit a record high of S$6.4m, buoyed by robust revenue.


- Tianjin Zhong Xin Pharmaceutical Group Corporation Ltd registered a 12% fall in net profit from 399.9m yuan (S$69.1m) to 352.3m yuan for FY13.

Friday, March 28, 2014

Daily Summary 28 Mar 14

Europe were flat last night.  Dow -5 at 16264.  Dow's trend is sliding down a bit.  Dow's future is now +20.  Europe opened up.

Asian bourses were mixed.  Nikkei +73, ShanghaiC -5, Hangseng +231. STI closed +7 at 3169.  Volume was 3.1b shares.  Gainers were 254 to 214 losers.

Trend of STI is up.

Top volumes were Memstar -11.9,  ICP -0.1, LionGold +0.3, HanKore -0.1, Federal +0.4, Noble +0.5, GoldenAgr -0.5, Equation -0.1, GeoEnergy -0.5, Albedo +0.1.

Market opened flat but climbed higher and stayed positive for the whole day. It closed off its day high. Blue chips were firm probably helped by some window dressing. Penny and speculatives were also firmer. Market is looking good for a run.

Europe and Dow are looking good at the moment.

Thursday, March 27, 2014

OCBC Report

KEY IDEA

CSE Global: Beginning on a fresh page

Following the successful divestment of CSE Global’s entire stake in Servelec Group in Dec last year, we believe management will focus on driving its growth largely from the oil and gas sector. CSE has significant exposure to the Gulf of Mexico (both the U.S. and Mexico side), and we expect it to benefit from positive trends arising from this area. Looking ahead, we also do not expect CSE to make any further provisions for cost overruns for its Middle-Eastern project, which would aid its margins recovery. We re-work our assumptions following a change in analyst coverage, and now forecast CSE to register core PATMI growth of 18.7% and 9.3% in FY14 and FY15, respectively. Applying a 9x target PER peg to our FY14 EPS forecast, we derive a fair value estimate of S$0.63 (previously S$0.96 before the Servelec Group divestment). Maintain BUY. (Wong Teck Ching Andy)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- The US stock market extended losses and finished lower Thu, amid concerns that improving economic indicators might force the Fed to start raising rates sooner than anticipated.


- SGX, which has been actively building its derivatives business as its securities division remains under pressure from low trading volumes, is said to be considering gold futures contracts.


- DBS Bank has introduced a new programme, DBS Multiplier Programme, to reward the emerging affluent for consolidating their finances with the bank.


- Sembcorp Industries has started building its largest energy-from-waste plant in Singapore.


- Addvalue Technologies said that the group's technology is attractive to players interested in expanding into the field of high-end broadband satellite communications.


- Asiasons Capital's attempt to acquire 20% of the issued common units in the share capital of Black Elk Energy Offshore Operations has been unsuccessful.  

DBS Vickers Report

Today’s Focus
 Asia Consumer - We pick Asia’s best “Born & Bred” retail
brands with promising growth potential. For SGX-listed
stocks, our top BUY is OSIM; BreadTalk is in our watch list
We pick Asia’s best “Born & Bred” retail brands with promising
growth potential. Asia holds more than 40% of the world’s
population. Asia will continue to generate its own growth,
driven by consumption. It is well-known that Asia is the
brighter spot for consumer companies, on the back of rising
affluence, disposable incomes, and urbanisation. Our selection
criteria is stringent, consist of only companies with their own
brands, growing presence and clear ambitions. For SGX-listed
stocks, our top BUY is OSIM (BUY, TP: S$3.08). OSIM makes it
to our list for its focus on brands, product innovation and
ambition to be the leading wellness and lifestyle product brand
in Asia. Also in our watch list is BreadTalk (Non Rated), for its
robust topline growth profile and its continuous product
innovation.
SIIC Environment Holdings announced that the Group has
decided to list its wholly-owned subsidiary, Wuhan Kaidi Water
Services (Target Company) for sale by way of open bidding on
the Shanghai United Assets and Equity Exchange (SUAEE) at a
minimum listed price of RMB7.88m. The Target Company is
principally engaged in the business of Engineering,
Procurement & Commissioning (EPC) of water purification and
treatment systems and facilities and the proposed disposal is in
line with the Group’s strategy to focus as an active investor and
operator of environmental assets.
IEV Holdings intend to dispose of its entire shareholding
interests of 19.18% in the capital of CNG Vietnam, listed on
the Ho Chi Minh Stock Exchange. CNG Vietnam operates a
CNG plant in Phu My Industrial Zone, supplying approximately
7,000 MMBTU (million British Thermal Unit) of CNG per day to
more than 20 customers without pipeline access in South
Vietnam. The net proceeds of about S$10.7m will be used
mainly for the funding of the Group’s various projects in the
petroleum and renewable energy sectors.
US retailer Brookstone, which was 55% owned by lifestyle
products firm OSIM International, has officially gone bust, two
months after it defaulted on an interest payment of its debt.
There will be no further financial effects on OSIM, which had
made a $77m write-off of Brookstone in 2009, according to an
OSIM spokeswoman.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,264.2 (4.8) (0.0)
S&P  1,849.0 (3.5) (0.2)
NASDAQ  4,151.2 (22.3) (0.5)
Regional Indices
ST Index  3,162.5 19.1 0.6
ST Small Cap  542.3 2.7 0.5
Hang Seng  21,834.5 (53.3) (0.2)
HSCEI  9,873.5 23.9 0.2
HSCCI  4,043.6 26.8 0.7
KLCI  1,846.9 7.7 0.4
SET  1,356.0 (4.5) (0.3)
JCI  4,723.1 (5.2) (0.1)
PCOMP  6,315.7 (32.8) (0.5)
KOSPI  1,978.0 13.7 0.7
TWSE  8,779.6 42.3 0.5
Nikkei  14,622.9 145.7 1.0

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$bn) 579
Total Daily Vol (m shrs) 2,432
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
27 Mar
Target Price
(S$)
ComfortDelgro Buy 1.960 2.19
Global Logistic Properties Buy 2.600 3.31
Keppel Corp Buy 10.670 12.60
Yangzijiang Buy 1.045 1.45
Stock Picks – Small Cap
Rec’n Price (S$)
27 Mar
Target Price
(S$)
Ezion Holdings Buy 2.150 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 1.050 1.20
Nam Cheong Buy 0.325 0.46
Singapore
Wired Daily
Page 2
Sembcorp Industries has started building its largest energyfrom-
waste (EfW) plant here. The $250m project on Jurong
Island, to be completed in early 2016, will be the first to use
industrial and commercial waste to produce steam for
supply to companies on the island. When the plant is ready,
Sembcorp will be able to supply a third of its customers'
steam needs using an environmentally friendly alternative
fuel.
In property news, more private homes are in the pipeline as
the government released three 99-year leasehold sites this
month that are expected to yield 1,300 more units. The two
executive condominium (EC) sites at Yishun Street 51 are
put up for tender from the confirmed list of the
Government Land Sales (GLS) programme for the first half
of this year, while the residential site at Margaret Drive will
be made available on the reserve list.The Yishun sites are
expected to yield 1,010 units. Parcel A has a maximum
gross floor area (GFA) of 50,302 sq m while Parcel B has a
GFA of 51,139 sq m.
U.S. stocks fell, led by banks and technology companies
with investors resuming a rotation out of the bull market’s
biggest winners. Citigroup Inc. dropped the most since
2012 after its capital plan failed Federal Reserve stress tests.
Tensions in Eastern Europe continued with President Obama
warning that the crisis in Ukraine may escalate. The U.S.
Senate and House passed separate bills imposing additional
sanctions on Russian officials. On the data front, February
pending home sales fell 0.8% m-o-m, worse off than
consensus expectation for a 0.2% gain.

Daily Summary 27 Mar 14


Europe were up last night but Dow -99 closing at 16269.  Dow's trend is still sideways.  Dow's future is now +22.  Europe opened  down.

Asian bourses were mixed.  Nikkei +146, ShanghaiC -17, Hangseng -53.  STI closed +19 at 3162.  Volume was 2.4b shares.  Gainers were 250 to 185 losers.

Trend of STI is up with a golden crossing.

Top volumes were HanKore -0.1, CharismaEner +0.2, AddvalTech -0.8. Albedo +0.1, LionGold +1.6, Noble +5, GSH +0.1, GoldenAgr unchanged, NexGenCom unchanged, Blumont +0.4.

Market opened flat but gained strength to close near day high.  Blue chips were mostly up.  Mid range stocks were also firmer.  Penny and speculatives were firmer as well.  Addvalue Tech was halted but resuming trading after making a press statement on the pending sale of its subsidiary. It confirmed that the sales price was reasonable but traders were advised to trade with caution.

Europe opened down but Dow's future is positive at the moment.

Wednesday, March 26, 2014

DBS Vickers Report

Today’s Focus
􀂃 Ascendas Hospitality Trust - Acquires Osaka hotel at 6.4%
yield. Maintain HOLD, TP raised to S$0.78
Ascendas Hospitality Trust has entered into a conditional sale
and purchase agreement to acquire Osaka Namba Washington
Hotel Plaza for JPY 8.9 bn (S$110.8m) or at 6.4% yield. The
hotel is located in the heart of Namba area, one of Osaka’s key
city centres, and performance is expected to remain robust,
supported by a lack of new competitive supply within the
Nanba area. The hotel comes with a fixed rent lease, which
improves income visibility, and offers potential upside upon
expiry at end 2015. DPU could be raised by 2%-7%,
depending on funding mix. FY15-16F yields are attractive at
8.6%-8.8%. Maintain HOLD, given limited upside to our target
objective of S$0.78 (Prev S$0.73).
Noble Group announced that it has established an associate
entity, The Quattro Grain Trust, which it will own 50%. The
principal activity of the trust is to build, own, and operate a
multi-user grain handling facility at Port Kembla, New South
Wales in Australia. The proposed new facility will have the
capacity to handle in excess of 1.3m tpa of export grain. The
new facility is expected to be operational by 2H15. This is
consistent with Noble's strategy to go asset light by entering
into strategic partnership to acquire asset that is necessary to
facilitate the supply chain management. Maintain HOLD, target
price S$1.09.
Hyflux has inked a joint venture agreement with Tolaram
Corporation to explore opportunities for the development of
membrane-based water treatment plants in Nigeria. In Nigeria,
Tolaram is involved in the distribution of food products and
provision of logistics services, as well as development of
infrastructure projects.
Sound Global had allotted 15.5m new shares upon the
conversion of RMB52.6m principal amount of Convertible
Bonds. The aggregate principal amount of Convertible Bonds
due 2015 remaining outstanding following the conversion is
RMB380.8m.
Imperial South East Asia, associate company of Lian Beng,
Heeton and KSH Holdings, has entered into a joint venture
agreement to form an investment company in Cambodia. The
principal activity of the new company will be real estate
development and investment holding in Cambodia.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,269.0 (98.9) (0.6)
S&P 􀀙 1,852.6 (13.1) (0.7)
NASDAQ 􀀙 4,173.6 (60.7) (1.4)
Regional Indices
ST Index 􀀘 3,143.3 39.2 1.3
ST Small Cap 􀀘 539.6 2.1 0.4
Hang Seng 􀀘 21,887.8 155.4 0.7
HSCEI 􀀘 9,849.6 158.8 1.6
HSCCI 􀀘 4,016.8 11.4 0.3
KLCI 􀀘 1,839.1 2.0 0.1
SET 􀀘 1,360.4 6.4 0.5
JCI 􀀘 4,728.2 25.1 0.5
PCOMP 􀀘 6,348.5 12.2 0.2
KOSPI 􀀘 1,964.3 23.1 1.2
TWSE 􀀘 8,737.3 48.0 0.6
Nikkei 􀀘 14,477.2 54.0 0.4
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 573
Total Daily Vol (m shrs) 2,493
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$)
26 Mar
Target Price
(S$)
ComfortDelgro Buy 1.960 2.19
Global Logistic Properties Buy 2.600 3.31
Keppel Corp Buy 10.670 12.60
Yangzijiang Buy 1.045 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
26 Mar
Target Price
($)
Ezion Holdings Buy 2.150 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 1.050 1.20
Nam Cheong Buy 0.325 0.46
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
China Environmental Resources, which has a primary listing
on the Stock Exchange of HK and a secondary listing on
SGX, is placing 157.1m new shares at the Placing Price of
HK$0.375 per share. The Placing Shares represent 20% of
the existing issued share capital and approximately 16.66%
of the enlarged share capital. The Placing Price represents a
discount of approximately 18.48% to the last closing price
on the Stock Exchange of HK. The gross proceeds of
approximately HK$58.93m are intended to be used for
general working capital of the Group.
Singapore’s industrial output surged 12.8% in February
from a year ago, the fastest pace of growth seen in two
years, largely due to double-digit jumps in biomedical
(19.3%), electronics (14.8%) and transport engineering
(11.1%) output. The robust growth in these clusters,
combined with expansion in all other segments, helped
manufacturing growth accelerate sharply from January's
revised year-on-year pace of 4.4% (previously estimated at
3.9%). Despite the strong growth, the market is still
expecting a sequential pullback in Q1 GDP of around 0.5%
as the strong surge were likely to have been flattered by
base and seasonal effects.
Singapore’s Changi Airport was voted as the World's Best
Airport by air travelers for the second consecutive year at
the 2014 World Airport Awards held in Barcelona, Spain.
U.S. stocks fell, led by technology and commodity
companies, after President Barack Obama warned the crisis
in the Ukraine may escalate and Facebook Inc. dropped the
most since 2012. US durable goods orders rose a betterthan-
expected 2.2% (consensus 0.8%) in February.
Facebook sank 6.9% after buying virtual-reality headset
maker Oculus VR Inc. Citigroup Inc. fell in extended trading
after the Federal Reserve said the bank’s capital plan failed
its stress tests. Citigroup was among five banks that failed
Fed stress tests, while Goldman Sachs Group Inc. and Bank
of America Corp, passed only after reducing their requests
for buybacks and dividends. Meanwhile, JPMorgan Chase
authorized a US$6.5bil buyback and looks to boost
quarterly dividend to 40c/shr from 38c. American Express
plans to increase quarterly dividend by 13% and buy back
up to US$4.4bil of common shares in 2014. Walt Disney Co.
agreed to buy Maker Studios, a supplier of online video
content to YouTube, for at least US$500mil. Disney also
agreed to pay as much as US$450mil more if Maker Studios
meets “strong” performance targets

Daily Summary 26 mar 14

Europe and Dow were up last night.  Dow +91 at 16368.  Trend of Dow is sideways by firm.  Dow's future is now +16.  Europe opened up.

Asian bourses were mostly up. Nikkei +54, ShanghaiC -4, Hangseng +155.  STI closed +42 at 3146.  Volume was 2.5b shares.  Gainers were 269 to 172 losers.  

Trend of STI is up.

Top volumes were Albedo +0.1, AddvalTech +9.4, HanKore -0.1, Globa +1, WEHldg +0.1, Noble +5.5, SkyOne +3.2, Equation unchanged, Oceanus +0.3, MirachEner +0.1.

Market opened up and continue to gain strength to close near day high. Blue chips were mostly.  Penny and speculative were active with a few counters making big gains.  AddvalTech more than double on news of selling a subsidiary for $330m in cash. Unbelieveable value add and unbelieveable sales price.

Europe and Dow are looking good tonight.

Tuesday, March 25, 2014

Daily Summary 25 Mar 14

Dow and Europe were slightly weaker last night. Dow -26 at 16277.  Dow's trend is flat. Dow's future is now +12.  Europe opened up.

Asian bourses were mixed.  Nikkei -52, ShanghaiC +1, Hangseng -114.  STI closed -8 at 3104.  Volume was 2b shares.  Gainers were 192 to 231 losers.

Trend of STI is turning up.

Market opened down and remained down the most part of the day but trading at a small range. Blue chips were mixed. Penny and speculatives were slightly weaker. There is no direction and market is trading sideways.

Europe and Dow's future are looking firm at the moment.

Monday, March 24, 2014

OCBC Report

KEY IDEA

Telecom Sector: 4QCY13 results mostly tracking our estimates

Both M1 and SingTel reported 4QCY13 results that came in within our expectations, while StarHub’s results tracked below forecast. M1’s core FY13 earnings was 3.5% above our full-year forecast and SingTel’s 9MFY14 earnings met 73% of our FY14 estimate. But due to lower-than-expected EBITDA margin, StarHub’s core FY13 earnings was 5% below our forecast. Going forward, the telcos have largely kept their outlook unchanged from FY13. On the whole, we still think that yields are looking slightly more decent after the recent pullback. Hence we think that these stocks should continue to have a place in any portfolio also for their defensive earnings. Maintain NEUTRAL on the sector. (Carey Wong)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES


- US stocks bounced off session lows but still finished Mon lower as selloff in biotechnology companies weighed on indexes on a day light on economic news.


- Singapore's inflation rate eased more than expected to a four-year low of 0.4% in Feb, but economists were careful not to make too much of the fall.


- China Fishery Group has completed a series of transactions that would significantly enhance its capital structure and deployment as the company digests its acquisition of Copeinca ASA.


- Unionmet (Singapore) clarified that its substantial shareholder, Precious Stream Holdings, has had its rights entitlement scaled down from 87.9m shares to 23.9m, so as not to trigger a mandatory takeover.

- The trustee-manager of K-Green Trust has proposed an expansion of its investment mandate to cover a wider range of infrastructure assets.

- Independent directors of Singapore Land advised shareholders to either accept the takeover offer from United Industrial Corporation or sell their shares in open market if they can obtain a higher price.

- Oxley Holdings has invested 90m yuan (S$18.54m) in Sino-Singapore KAP Construction to undertake property development in China.

- Aberdeen International Fund Managers has ceased to be a substantial shareholder of Eu Yan Sang International Ltd, having disposed of 585,000 shares for about S$492,000.

DBS Report

Today’s Focus
􀂃 Nam Cheong - Offshore support vessel upcycle firmly in
place, raise FY14/15 EPS estimates by 7-9%. Maintain BUY
with higher target price of S$0.46
According to the latest guidance from the management of
Nam Cheong, the FY14/15 work programmes consist of 30 and
35 vessels respectively, including built-to-order vessels. We
estimate the built-to-stock programme target for both FY14/15
is likely to be around 28 vessels worth about US$560-570m per
year, higher than our existing estimate of 25 vessels worth
about US$520m per year. The larger FY14/15 built-to-stock
programmes envisaged by Nam Cheong are testament to the
improving outlook for the OSV market. Buoyed by the
scheduled double-digit growth in offshore rig fleet over the
next two years, combined with declining orderbook-to-fleet
ratios, OSV demand supply dynamics look positive. Rising day
rates for PSVs and AHTS, combined with high proportion of
replacement demand for older fleet above 25 years of age, will
result in more near-term requirements for OSVs.
Margin execution for Nam Cheong is also better than expected
in FY13. We therefore raise our FY14/15 EPS estimates by 7-
9%. Valuations look very attractive currently at 7x FY14 PE;
maintain BUY with higher target price of S$0.46 (Prev S$ 0.43).
United Engineers announced that its subsidiary, UE E&C has
been approached by parties in connection with a possible
transaction involving its shares in UE E&C, which may or may
not lead to a general offer for the shares of UE E&C. United
Engineers is in ongoing discussions with a third party and no
binding agreement has been reached. There is no assurance or
certainty that these discussions will result in any transaction.
KrisEnergy has been granted a US$100m revolving credit
facility maturing in March 2016 with an option to extend for an
additional one year. The Facility will be used for the acquisition
of hydrocarbon assets, general corporate purposes and
working capital requirements.
Singapore's inflation rate eased more than expected to a fouryear
low of 0.4% in February, smaller than January's inflation
of 1.4% and the 0.9% that the market is expecting. Much of
this was due to an unusually high base of comparison in
February 2013, and had been anticipated by the Monetary
Authority of Singapore (MAS) and the Ministry of Trade and
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,276.7 (26.1) (0.2)
S&P 􀀙 1,857.4 (9.1) (0.5)
NASDAQ 􀀙 4,226.4 (50.4) (1.2)
Regional Indices
ST Index 􀀘 3,111.8 38.4 1.3
ST Small Cap 􀀘 539.5 4.1 0.8
Hang Seng 􀀘 21,846.5 409.8 1.9
HSCEI 􀀘 9,695.0 267.6 2.8
HSCCI 􀀘 4,044.8 70.8 1.8
KLCI 􀀘 1,833.9 13.4 0.7
SET 􀀙 1,349.9 (10.6) (0.8)
JCI 􀀘 4,720.4 20.2 0.4
PCOMP 􀀘 6,400.7 61.4 1.0
KOSPI 􀀘 1,945.6 10.6 0.5
TWSE 􀀘 8,605.4 28.2 0.3
Nikkei 􀀘 14,475.3 251.1 1.8
STI Index Performance
Singapore
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 2,309
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$)
24 Mar
Target Price
(S$)
ComfortDelgro Buy 1.950 2.19
Global Logistic Properties Buy 2.630 3.31
Keppel Corp Buy 10.610 12.60
Yangzijiang Buy 1.070 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
24 Mar
Target Price
($)
Ezion Holdings Buy 2.170 3.26
Goodpack Buy 2.280 2.60
China Merchants Buy 0.955 1.32
Pacific Radiance Ltd Buy 1.070 1.20
Nam Cheong Buy 0.320 0.46
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Industry (MTI) in their commentary on January's CPI. Going
forward, pent-up wage pressures, rising food prices and a
weakening Singapore dollar may drive inflation back up
above 2% in the next few months. The 7.1% drop in
private road transport costs, a main contributor to last
month's low inflation, was due to the surge in COE
premiums in January last year that was captured in February
2013's CPI, alongside lower petrol pump prices. Core
inflation, which excludes accommodation and private
transport costs, was also tempered by high-base effects on
food and services inflation. February’s core inflation eased
to 1.6% from 2.2% in January.
Passenger traffic at Changi Airport dipped 0.2% y-o-y last
month while freight traffic was lower by 2.6%.
The airport registered 4.1 million passengers last month,
while cargo volume slipped to 127,681 tonnes. However,
aircraft landings and take-offs were up 3.2% at 26,764. The
decrease in February's passenger traffic could be partly due
to seasonal factors, since Chinese New Year was in February
last year. For the first two months of the year, Changi saw
8.7 million passengers passing through the airport, up 3.1%
y-o-y, while air freight edged up 0.8% to 279,057 tonnes.
Last year, Changi handled a record 53.7 million passengers,
a 5% increase over 2012. This year, Changi is projecting a
growth rate of 3-5% in passenger throughput, citing base
effects and macroeconomic conditions.
US stocks fell following a weaker-than-expected set of
March preliminary manufacturing PMI (actual 55.5,
consensus 56.5). This was in sync with China’s weaker-thanexpected
preliminary manufacturing numbers for March
released earlier in the day. Tensions between Russia and the
West over Ukraine also dampened sentiment. The yield on
the 10-year Treasury note edged down to 2.734% from
2.748%. Bio-tech sector led the decline. The S&P 500
Health Care index fell 1.4% with drug maker Pfizer posted
the biggest decline among the Dow component stocks.-

Daily Summary 24 Mar 14

Europe were up on Friday but Dow -28 closing at 16303.  Trend of Dow is flat. Dow's future is now +32. Europe opened down.  

Asian bourses were mostly up with Nikkei +251, ShanghaiC +19 and Hangseng +410.  STI closed +38 at 3112.  Volume was 2.3b shares.  Gainers were 288 to 193 losers.

Trend of STI is turning up.

Top volumes were Albedo +0.2, AdvSCT -0.1. Digiland +0.1, HanKore unchanged, Armarda -0.1, OceanSky -1.4, LionGold -0.6, Memstar +0.6, WEHldg -0.1, CCM unchanged.

Market opened up and moved higher in line with regional bourses. Blue chips made good gains. Penny and speculatives were also firmer.
Volume has improved slightly but still low.

Dow is looking positive for tonight but Europe opened weaker.

Sunday, March 23, 2014

OCBC Report

KEY IDEA
Ascott Residence Trust: Acquires rental housing in Fukuoka

ART announced last Friday that it has acquired a 389-unit rental housing property in Fukuoka for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to increase FY13 distribution per unit by 2.1%. This is the second property agreement announced after ART’s rights issue in Dec 2013. In Feb, ART entered into a conditional agreement to acquire its first serviced residence in Dalian for RMB571m (~S$118.6m) with an EBITDA yield of 5.5%. On a pro forma basis, that accretive acquisition was expected to increase FY13 DPU by 1.5%. We assume that any remaining acquisition or acquisitions to be announced in 1H14 will total S$153m with a 5.5% EBITDA yield. Incorporating the Fukuoka and Dalian acquisitions, we maintain our FV of S$1.33 and BUY rating on ART. (Sarah Ong)


MORE REPORTS


Tiger Airways: LT fleet renewal and expansion

Tiger Airways Holdings (TR) has entered into an agreement with Airbus and Pratt & Whitney for the order of 37 fuel-efficient Airbus A320neo aircraft. The purchase agreement also gives Tigerair the option to increase its order by up to 13 additional aircraft and convert the A320neos into the larger A321neo model. Consequent to the agreement, the airline’s existing order of nine Airbus A320 aircraft, that were part of a larger 2007 order, will now be cancelled. These aircraft were originally scheduled for delivery in 2014 and 2015. The cancellation of the nine orders, together with the staggered delivery of the new A320neo aircraft over a period of eight years from 2018 to 2025, will better allow Tigerair to manage its capacity going forward and improve its cost efficiency. However, given the continued challenges TR faces in its core markets, we maintain our SELL rating and fair value of S$0.38 on TR. (Sarah Ong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks reversed early gains and finished Fri lower but still recorded modest weekly gains.


- Announced M&A deals involving Asia-Pacific companies got off to a strong start this year, powered by a property deal in China and the purchase of a Korean brewer.


- Banks in Singapore and elsewhere are facing challenges against the backdrop of Basel III, which has made it expensive to own overseas units.

- DBS Group expects income growth from its SME segment to outpace last year's growth of over 10%, and is pushing for more income from emerging markets.


- Tritech Group has won a S$6.68m contract to provide engineering design services for the construction of Lentor Station on the Thomson Line MRT system.


- Hotel Royal Limited is looking to acquire Burasari Resort in Phuket, Thailand for about 1.3b baht (S$51m).

DBS Report

Today’s Focus
 Mapletree Industrial Trust – Secured new Build-to-Suit
(BTS) facility. Maintain BUY, target price raised to
S$1.50
The FED’s hawkish statement last week with regards to the
timing and pace of the eventual interest rate hike speaks of
the central bank’s confidence on the US economy. This
coupled with expectations of the Eurozone pulling out from
recession this year should rekindle optimism of a global
recovery. Still, Asian indices are likely to underperform the US
on concerns about China’s bad loans and the influence of a
slowdown in the Chinese economy.
Goodpack is one stock we highlighted as a global recovery
proxy at the start of the year that has done well on news of a
potential takeover. An uptick in recovery optimism should
also underpin the SMC proxies in the O&M sector. Our picks
are Ezion, Kim Heng, Pacific Radiance, Nam Cheong, Vard
and Rex. But sentiment towards interest rate sensitive sectors
such as SREITs and property should be affected with the FED
turning more hawkish.
Our stated STI near-term support range from 3000-3050
stayed unchallenged last week despite the index’s
choppiness. We stick to our ‘bargain hunt on dip’ stance in
the short term, underpinned by possible bargain hunting of
blue chips ahead of their trading “ex dividend”. We look to
stay with this view until the next seasonal trend to “sell in
May and go away” comes.
Data releases this week include 1) Singapore’s February
industrial production (consensus +13.7% y-o-y) and CPI
(consensus +0.8% y-o-y) 2) HSBC China manufacturing PMI
(consensus 48.7) and 3) US consumer confidence (consensus
78.6) and new home sales (-4.9% m-o-m)
Mapletree Industrial Trust (MINT) announced that they have
secured to develop a new Build-to-Suit (BTS) facility for
Hewlett Packard (HP) for a total consideration of S$250m. HP
will, upon completion of this BTS in FY18F, sign a long term
lease of 10.5 years, with two 5-year extension options,
providing strong income visibility for MINT. The proposed
development is estimated to yield 9.0% on total cost and is
positive for MINT in many ways. Upon completion in FY18F,
MINT will benefit from (i) higher property specifications with
the property repositioned as a hi-tech property, (ii) higher
revenues through the maximization of un-utilized plot ratios
(1.3x to 2.5x) resulting in c. 89% increase in GFA, (iii)
stronger income visibility through a longer weighted average
lease expiry (WALE) backed by a strong tenant.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,302.8 (28.3) (0.2)
S&P  1,866.5 (5.5) (0.3)
NASDAQ  4,276.8 (42.5) (1.0)
Regional Indices
ST Index  3,073.4 16.2 0.5
ST Small Cap  535.4 1.4 0.3
Hang Seng  21,436.7 254.5 1.2
HSCEI  9,427.3 224.3 2.4
HSCCI  3,974.0 27.5 0.7
KLCI  1,820.5 2.3 0.1
SET  1,360.5 (1.0) (0.1)
JCI  4,700.2 1.2 0.0
PCOMP  6,339.3 (78.1) (1.2)
KOSPI  1,945.3 10.3 0.5
TWSE  8,577.2 (20.2) (0.2)
Nikkei  14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 1,790
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$)
21 Mar
Target Price
(S$)
ComfortDelgro Buy 1.945 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.580 12.60
Yangzijiang Buy 1.060 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
21 Mar
Target Price
($)
Ezion Holdings Buy 2.170 3.26
Goodpack Buy 2.250 2.60
China Merchants Buy 0.970 1.32
Pacific Radiance Ltd Buy 1.030 1.20
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
At c. 9% yield, this development project is expected to be
yield enhancing to earnings upon completion. Gearing is
estimated to hit c. 41% upon completion in the medium
term. Given the phase investment, we believe that there is
no urge need to raise new equity. Maintain BUY, target
price raised to S$1.50 (Prev S$ 1.44).
Tigerair has entered into an agreement with Airbus and
Pratt & Whitney (P&W) for the order of 37 fuel-efficient
Airbus A320neo aircraft powered by Pratt & Whitney
PW1100G-JM engines. The purchase agreement also gives
Tigerair the option to increase its order by up to 13
additional aircraft and convert the A320neos into the larger
A321neo model. Consequent to the agreement, the airline’s
existing order of nine Airbus A320 aircraft, that were part of
a larger 2007 order, will now be cancelled. These aircraft
were originally scheduled for delivery in 2014 and 2015.
K-Green Trust will be proposing an expansion of its
investment mandate and a change of the Trust’s name to
Keppel Infrastructure Trust. In alignment with the wider
business activities of KI, K-Green Trust is proposing
expanding its current focus on “green” infrastructure assets
to cover a wider range of infrastructure assets.
F&N has signed an agreement to acquire a 70% stake in
Yoke Food Industries (YFI), a Malaysia-based company with
an annual turnover of more than RM85m (S$32m). YFI
manufactures, markets and distributes beverages in
Malaysia, as well as exports to Singapore, Indonesia and
Indochina, under brands such as Day Day, SoSoy and Juice
Secret.
Hotel Royal is looking to acquire Burasari Resort in Phuket,
Thailand for about 1.3 billion baht (S$51m) via the
acquisition of the entire issued and paid-up share capital of
Panali Company. The resort is situated at Ruamjai Road, and
is less than three minutes' walk from Patong beach. The
four-star property has 186 rooms and sits on freehold land
area of about 6,722 sq m with an approximate gross floor
area of about 11,441 sq m. According to Hotel Royal, the
acquisition is an opportunity for the group to expand its
hotel operations in the region.
Enviro-Hub Holdings has been awarded a piling contract
with a contract value of approximately S$19.2m. The
contract is expected to contribute positively to the Group’s
financial performance for the current financial year ending
31 Dec 14.
Announced merger and acquisition (M&A) deals involving
Asia-Pacific companies got off to a strong start this year,
powered by a property deal in China and the purchase of a
Korean brewer. The total value of such deals in Asia-Pacific
excluding-Japan was up 22% y-o-y at US$112.7 bn in the
first three months of 2014, according to a preliminary
report by Thomson Reuters. China companies continued to
be choice targets, with US$39.1 bn of announced deals
involving them. Singapore companies attracted some
US$12bn of the Asia-Pacific M&A volumes.
China’s economy slowed this quarter, with industries
including retail and mining showing weaker revenue growth
while loans through non-traditional channels became more
expensive, according to the China Beige Book survey. Even
with the moderation, the labour market and wage growth
were little changed from the previous quarter, the private
survey showed

Friday, March 21, 2014

Daily Summary 21 Mar 14

Europe were mixed last night but Dow +109 closing at 16331.  Dow's trend is trying to find a direction. Dow's future is now +40.  Europe opened up.

Asian bourses were mixed.  Nikkei -238, ShanghaiC +54 and Hangseng +255.  STI closed +12 at 3070.  Volume was 1.6b shares.  Gainers were 271 against 172 losers.

Trend of STI is still down but steady.

Top volumes were HanKore +0.4, AdvSCT unchanged, Digiland -0.1, Globa +0.8, CharismaEner +0.1, WEHldg unchanged, GoldenAgr -1, CCM unchanged, LionGold +1.1, Vibrant +0.2.  

Market opened up, ran to a high of 3090 but closed at 3070.  There were more gainers across the board after the last few days of weaknesses. Volume was still very low.

Europe and Dow are looking firm for tonight.

Thursday, March 20, 2014

OCBC Report

KEY IDEA
Consumer Sector: Looking for resilience of growth

We see three trends among our coverage’s 4QCY13 and CY13 earnings: 1) strong revenue growth, 2) stable margins, and 3) USD-denominated results being hurt by weaker regional currencies. Though the street expects FTSE Consumer Services Index’s EPS to increase by 10.6% to 44.3 in CY14, we maintain UNDERWEIGHT on the sector. We think the trading premium of 1 s.d. above its 2-year historical average could be eroded readily with downturn in market sentiments as seen in Feb-14. Other than strong expected corporate earnings, we are looking for resilience to headwinds in this jittery market. We continue to like Sheng Siong Group [BUY; S$0.68 FV] and Petra Foods [BUY; S$4.08 FV] but not BreadTalk Group [SELL; S$0.85 FV]. (Yap Kim Leng)


MORE REPORTS

Ascott Residence Trust: Acquires Japan rental housing property

ART has acquired a rental housing property in Fukuoka named Infini Garden for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to have increased FY13 distribution per unit by 2.1% from 8.40 S cents to 8.58 S cents. ART acquired the 389-unit Infini Garden from The Ascott Limited (Ascott) and ArcResidential Japan Investments Limited. We maintain our BUY rating on ART but place our fair value of S$1.33 under review. (Sarah Ong)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES


- US stocks reversed post-Fed meeting losses and finished Thu with modest gains. Upbeat data from Philadelphia Fed, showing a rebound in manufacturing in Mar, boosted confidence.


- The US Federal Reserve will probably end its massive bond-buying programme this autumn, and could start raising interest rates around six months later, Fed chair Janet Yellen said.


- SGX enjoyed a 70% surge last year in the volume of OTC and exchange-traded commodity derivatives, outpacing the global commodity derivatives growth of 23%.


- Singapore banks are expected to issue more Basel III compliant securities, with about 25% of their Basel II securities callable, or reaching maturity, this year, Moody's said.


- Mapletree Industrial Trust has signed an agreement with Hewlett-Packard to develop and lease a new S$250m build-to-suit facility at its existing Telok Blangah Cluster.


- Sim Lian Group will launch the first phase of its integrated development, Vision Exchange, for sale tomorrow.


- CCM Group said that its wholly owned subsidiary, CCM Industrial Pte Ltd, had on Mon received a notice of termination of a Shenton Way contract.

DBS Vickers Report

Today’s Focus
􀂃 CWT - Undervalued logistics play. Initiate coverage with
BUY recommendation and target price of S$1.82
We initiate coverage on CWT with a BUY recommendation
and target price of S$1.82. CWT is a leading logistics player in
Singapore with global presence in commodity logistics and
marketing. We forecast a 13% EPS CAGR over FY13-15F,
driven by logistics and commodity marketing segments. CWT
is undervalued at just 7.2x FY14 PE and 1x FY14 P/BV vis-a-vis
peers and historical trading bands.
Goodpack is in talks for potential takeover offer. Discussions
are ongoing and it is premature to speculate on the likelihood
of a takeover offer, price, and consequences to Goodpack at
this stage. While Goodpack’s founder, Mr David Lam, who
has a controlling stake of 32%, is open to a takeover offer,
we believe current low valuations could be a hurdle, given
that the autopart business could be an X factor for further rerating
of the stock. We like Goodpack’s resilience during
downturns and ability to leverage the upcycle with
continuous market share gains. Reiterate BUY with higher
target price of S$2.60 (Prev S$ 2.25) as we roll over our
valuation to FY15 (FYE Jun).
Mapletree Industrial Trust has signed an agreement with
Hewlett-Packard Singapore (HP) to develop and lease a new
build-to-suit (BTS) facility at its existing Telok Blangah Cluster.
HP has committed to lease the BTS Facility for an initial tenure
of 10.5 years. The Property will be redeveloped and
repositioned as a high-tech industrial cluster at an estimated
total cost of S$250m.
Rex International announced that North Energy, in which the
Group holds an approximate stake of 5.35%, will commence
drilling campaigns at two of its licences in the third and
fourth quarters of 2014. North Energy is using Rex Virtual
Drilling in high grading possible drilling targets in its portfolio.
Ascott Residence Trust has acquired a rental housing property
in Fukuoka named Infini Garden for JPY6.3 billion (about
S$78.4m) at an EBITDA yield of 6.6%. On a pro forma basis,
the accretive acquisition is expected to increase FY 2013
distribution per unit by 2.1% to 8.58 cents. Ascott REIT
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,331.1 108.9 0.7
S&P 􀀘 1,872.0 11.2 0.6
NASDAQ 􀀘 4,319.3 11.7 0.3
Regional Indices
ST Index 􀀙 3,057.2 (23.6) (0.8)
ST Small Cap 􀀙 534.0 (2.2) (0.4)
Hang Seng 􀀙 21,182.2 (386.5) (1.8)
HSCEI 􀀙 9,203.1 (157.6) (1.7)
HSCCI 􀀙 3,946.5 (58.8) (1.5)
KLCI 􀀘 1,818.2 0.7 0.0
SET 􀀙 1,361.5 (2.8) (0.2)
JCI 􀀙 4,699.0 (122.5) (2.5)
PCOMP 􀀙 6,417.4 (45.1) (0.7)
KOSPI 􀀙 1,919.5 (18.2) (0.9)
TWSE 􀀙 8,597.3 (92.1) (1.1)
Nikkei 􀀙 14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
Total Market cap (US$bn) 570
Total Daily Vol (m shrs) 1,869
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$)
20 Mar
Target Price
(S$)
ComfortDelgro Buy 1.915 2.19
Global Logistic Properties Buy 2.580 3.31
Keppel Corp Buy 10.430 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
20 Mar
Target Price
($)
Ezion Holdings Buy 2.080 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.985 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
has acquired the 389-unit Infini Garden from The Ascott
Limited (Ascott) and ArcResidential Japan Investments
Limited.
TEHO International has entered into an agreement with
TIEC to acquire the entire issued and paid-up share capital
of TIEC for S$12.3m. TIEC has ongoing property
development projects worth S$60.8m. The diversification
would reduce any over-reliance on the Group’s existing
businesses and contribute an additional stream of revenue
and earnings. The acquisition will be funded by S$7.3m
cash and the remaining to be paid by the issuance of new
shares.
Viva Industrial Trust announced that Standard & Poor's has
reaffirmed Viva Industrial Real Estate Investment Trust's
credit rating of BB+ with a stable outlook.
Tritech Group has been awarded a RMB24.4m waste water
treatment contract in Henan, China. The duration of the
contract is 400 days from the signing of the contact.
US stocks rose as better-than-expected Mar Philadelphia
FED business outlook (actual 9, consensus 3.2) and initial
jobless claims (actual 320k, consensus 322k) overshadowed
concerns that interest rates may rise by 2Q 2015. Investors
also watched the situation in Ukraine, where the
government of Kiev said it plans to reinforce its
eastern border with Russia and withdraw troops from
Crimea. President Obama said the US will impose financial
sanctions on a wider swath of Russian officials and a
Russian bank. Microsoft rose to the highest since July 2000
as CEO Satya Nadella is expected to debut a version of
Office for the iPad at an event next week. AT&T Inc. rose to
lead a rally in phone stocks. Guess? Inc fell after its FY
earnings projection trailed analysts’ predictions

Daily Summary

Dow and Europe were down last night. Dow -114 at 16222.  Dow's trend is weakenging a bit.  Dow's future is -10 at the moment.  Europe opened down.

Asian bourses were mostly down. Nikkei -238, ShanghaiC -28, Hangseng -387.  STI closed -24 at 3057. Volume was 1.8b shares.  Gainers were 152 and losers were 281.

STI's trend is going down.

Top volumes were HanKore +0.1, Equation -0.3, Digiland +0.1, OceanSky +0.8, Vallianz +0.3, Federal +0.3, LifeBrandz unchanged, CharismaEner -0.1, WEHldg unchanged, GoldenAgr -1.5.

Market opened down and remained down the whole day to close at day low.  Volume fell to below 2b shares again.  Blue chips were mostly down. Penny and speculatives were firmer. Market has been drifting sideways for several days.

Europe and Dow are looking a bit weak at the moment.

Wednesday, March 19, 2014

DBS Report 20 Mar 14

Today’s Focus
􀂃 OSIM - Buy for 3-pronged growth, target price raised to
S$3.08.
STI’s rebound thus far this week has been capped at the 3100
level. Sentiment is likely to stay muted today after the FED
said QE3 could end by this fall and benchmark interest rates
could rise 6 months later from that. US 10-year treasury yields
rebounded while the USD strengthened against major
currencies. Last week’s low point for the STI was at 3060. We
do not rule out the index heading to 3050 followed by 3020
that is still within the 3000-3050 support range we
highlighted earlier, should the 3060 level fail to hold.
We find OSIM’s current business model to be robust and
capable of supporting growth into the future. OSIM’s threepronged
growth model comprises: i) Massage chairs driving
growth through new products; ii) TWG supplementing
growth with rapid store network expansion; and iii) GNC
providing resilient earnings and cashflows to the Group.
These factors, complemented by the scaling up of OSIM’s
presence in China, is more than capable of supporting
sustainable earnings growth going forward. OSIM’s soon-tobe
launched new version of the uAngel chair is set to build on
preceding model’s success while TWG’s rapid expansion is
expected to positively impact earnings growth. We expect
minimal EPS dilution of 1%/6% for FY14F/FY15F from
convertible bonds (CB) conversion. Maintain BUY, target price
raised to S$3.08 (Prev S$ 2.64) as we raise our PE multiple to
18x on stronger business model.
Goodpack announced that it has been approached by parties
for a possible transaction, which may or may not trigger a
general offer. Discussions are still on-going. The Company
has appointed Rippledot Capital Advisers Pte Ltd as its
financial advisor. Company decided to make public about the
development in view of the outperfomance of share price
lately. The last time company received such offer was back in
2008/2009 though eventually the deal was called off as both
parties could not come to an agreement on the offer price.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,222.2 (114.0) (0.7)
S&P 􀀙 1,860.8 (11.5) (0.6)
NASDAQ 􀀙 4,307.6 (25.7) (0.6)
Regional Indices
ST Index 􀀙 3,080.8 (13.1) (0.4)
ST Small Cap 􀀙 536.2 (2.6) (0.5)
Hang Seng 􀀙 21,568.7 (14.8) (0.1)
HSCEI 􀀘 9,360.7 18.4 0.2
HSCCI 􀀘 4,005.3 12.3 0.3
KLCI 􀀙 1,817.4 (3.3) (0.2)
SET 􀀙 1,364.3 (8.8) (0.6)
JCI 􀀘 4,821.5 15.8 0.3
PCOMP 􀀙 6,462.5 (4.1) (0.1)
KOSPI 􀀙 1,937.7 (2.5) (0.1)
TWSE 􀀙 8,689.5 (42.5) (0.5)
Nikkei 􀀘 14,462.5 51.3 0.4
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$bn) 576
Total Daily Vol (m shrs) 2,506
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
19 Mar
Target Price
(S$)
ComfortDelgro Buy 1.925 2.19
Global Logistic Properties Buy 2.64 3.31
Keppel Corp Buy 10.52 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
19 Mar
Target Price
($)
Ezion Holdings Buy 2.13 3.26
Goodpack Buy 2.23 2.25
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.995 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Stahill Global REIT announced that it has divested one
Japanese retail asset, Holon L Property, for JPY1.03bn
(S$12.8m), a 6% premium to the Dec-13 independent
valuation of JPY 0.97bn. This translates to an exit yield of
4.03% (or 4.27% over valuation). This property represents
11.5% of SGREIT's Japanese portfolio, or 0.4% of the
REIT's total asset value. The proceeds from this transaction
will be used to fully pay down its JPY1.5bn bond due
2016. Total JPY loans post divestment will be c.7.5bn, and
SGREIT's gearing will fall marginally to 28.7% from 30%.
CapitaLand has sold its remaining 39.1% stake in
Australand Property Group, reaping an expected net gain
of about $35.7m. CapitaLand sold its remaining 226.2m
shares through a secondary placement yesterday at an
average price of A$3.75 each, 3.6% below Australand's
Tuesday closing price but 5.3% above its last reported net
tangible asset. CapitaLand said it will receive about
$970.1m from the sale, which it will deploy towards its key
markets of Singapore and China, and for general working
purposes, including the repayment of debt.
Global Logistic Properties has signed a lease agreement of
approximately 53,000 sqm (570,000 sq ft) with a leading
FMCG company at GLP Park Hefei Hi-Tech in Hefei, Anhui
Province, Midwestern China. With this agreement, GLP
Park Hefei Hi-Tech is 100% leased.
Otto Marine has secured charter contracts for its Multiple
Purposes offshore Supply Vessel (MPSV), Go Explorer, for a
total of US$21m. Go Explorer will initially be deployed to
work in Vietnam follow by Australia working on a major
offshore construction project based on the various
contractual arrangements.
HG Metal Manufacturing announced that Mr Goh Kian
Sin, the Managing Director and Chief Executive Officer of
the Company, has entered into agreement for the sale of
284.05m shares to purchasers including, Mr Yap Xi Ming,
the Chairman of the Company.
Forecasters polled by Singapore's central bank expect the
economy to expand by 3.8% in 2014 - a less optimistic
outlook compared to 3.9% growth three months ago. The
slip was due to softer growth expectations for all sectors
within the economy, except for the manufacturing sector.
Our economist is expecting 4% GDP growth for 2014.
Premium and Grade A office rents in Raffles Place and New
Downtown continue to climb in the first quarter, according
to Colliers International. The quarter also saw office
vacancies shrinking and firms taking a proactive approach
to review expansion and relocation options to lock in rents
before they rise further. Colliers International said that the
average monthly gross rent for Premium Grade offices in
the Raffles Place/New Downtown area rose 3.6% quarter
on quarter to $10.67 psf in the first quarter of this year,
hot on the heels of a 3.8% hike in the fourth quarter of
last year. The property consultancy group forecasts a fullyear
2014 increase of up to 15%. As for Grade A space in
the same Raffles Place/New Downtown micro-market, the
average monthly rent rose 5% quarter on quarter to $9.73
psf in Q1 - a much bigger increase than the 1.4% increase
in Q4 2013. Suburban Grade A rents rose 5.7% to $4.85
psf in Q1, after inching up 0.4% in Q4.
U.S. stocks fell after Federal Reserve Chair Janet Yellen said
the central bank’s stimulus program could end this fall and
benchmark interest rates could rise 6 months later. As
expected, the FED trimmed its monthly bond purchases by
US$10bil to US$55bil. The central bank said it will look at a
wide range of data in determining when to raise its rate,
dropping a pledge tying borrowing costs to a 6.5 percent
unemployment rate.
But investors’ attention turned to the following FED
statement that said officials predicted their target interest
rate would be 1% at the end of 2015 and 2.25% a year
later, as they upgraded projections for gains in the labour
market. The rates are higher than previously forecasted.
Financial markets reacted with the US 10-year treasury
yields rebounding to 2.7725%. The USD strengthened
against major currencies with the USD Index rising to 80
from 79.4. Equities sold off with Walt Disney Co., General
Electric Co. and Boeing Co. losing at least 1.4% each to
lead the Dow lower.