Monday, March 10, 2014

DBS Vickers.Report 11 Mar 14

Today’s Focus
 United Envirotech – Downgrade to HOLD (TP: S$1.31)
following the strong share price performances
Our analyst met >60 investors during her recent marketing
trip for the water sector. Investors generally considered that
sector valuations were high and wondered if there are more
catalysts to drive upside. Some also raised questions on
possible risks. We believe that the spectacular performance
last year is unlikely to repeat but strong earnings growth and
execution could lead share prices higher.
Sound Global and SIIC are our top picks. We maintain BUY
on Sound Global and have raised TP to HK$10.31 as we
believe overwhelming contract wins by the company would
lead to accelerated earnings growth. Meanwhile, we remain
positive on SIIC (TP: S$0.25) for its strong growth potential,
backed by visible acquisition pipeline. Following the strong
share price performances, we have downgraded United
Envirotech (TP: S$1.31) to HOLD.
Hyflux has entered into a share purchase agreement for the
sale of its entire 50% equity interest in Hyflux Marmon
Development (HMD). HMD’s principal activities are research
and development on water treatment technologies, with
particular focus on combined membrane and media filtration,
which have since been successfully applied and integrated
into a wide range of consumer applications. Such
technologies are non-integral to Hyflux’s realigned product
focus and existing suite of consumer products. Going
forward, Hyflux will continue to expand and develop integral
membrane technology for applications across industries
including industrial and municipal markets. The total cash
consideration for the divestment is US$43.4m (equivalent to
S$55.1m). The excess of the sale proceeds over the net book
value and estimated transaction costs is approximately
S$53.9m. The sale proceeds from the divestment is intended
to be used for strategic investments and working capital
purposes.
Yoma Strategic Holdings plans to develop premium
educational facilities in the Thanlyin Township in areas
adjacent to the Group’s Star City development area. The
Group is in discussion with an international education group
Indices
Closed as of
10 Mar
% chg vs
previous close YTD (%) QTD (%)
Asia
PCOMP 6,487 0.1 10.1 10.1
JCI Index 4,677 -0.2 9.4 9.4
SET 1,349 -0.4 3.9 3.9
BSE Sensex 21,935 0.1 3.6 3.6
Taiex 8,665 -0.6 0.6 0.6
STI 3,127 -0.3 -1.3 -1.3
KLCI 1,822 -0.6 -2.4 -2.4
KOSPI 1,954 -1.0 -2.8 -2.8
MXFEJ index 510 -1.4 -3.2 -3.2
Hang Seng 22,265 -1.7 -4.5 -4.5
Shanghai A 1,999 -2.9 -5.5 -5.5
Nikkei 225 15,120 -1.0 -7.2 -7.2
HSCCI Index 4,122 -2.2 -9.5 -9.5
HSCEI Index 9,537 -1.8 -11.8 -11.8
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 577
Total Daily Vol (m shrs) 1,500
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$)
10 Mar
Target Price
(S$)
ComfortDelgro Buy 1.965 2.19
Global Logistic Properties Buy 2.820 3.31
Keppel Corp Buy 10.640 12.60
Yangzijiang Buy 1.085 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
10 Mar
Target Price
($)
Ezion Holdings Buy 2.130 3.26
Goodpack Buy 1.935 2.25
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.330 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
to operate an international school and a local education
group to operate a private local school in that area. Yoma
has also formalised plans to develop premium educational
facilities within its Pun Hlaing Golf Estate residential
development in Hlaing Tharyar Township, Yangon. As a
first step in establishing the first British curriculum school in
the vicinity, the Group has entered into a Memorandum of
Understanding with Harrow International Management
Services (HIMS) to manage an Early Years Centre on a four
acre-site in PHGE.
Besides entering into education development, Yoma is
gaining momentum in Myanmar's Agriculture and Logistics
sectors. It has formed a new investment holding company,
Yoma Agricultural & Logistics Holding, which is intended to
hold the Group’s interests in coffee, dairy, cold storage and
logistics, and also commercial vehicle leasing.
The Hongkong and Shanghai Hotels (HSH) and Yoma
Strategic Holdings have announced a definitive
shareholders’ agreement for the purpose of restoring the
former Myanmar Railway Company headquarters into a
hotel to be called The Peninsula Yangon. The agreement,
subject to conditions and approval, will seek to redevelop
and restore the heritage building, which dates from the
1880s and is one of the oldest existing colonial buildings in
Yangon.
Q & M Dental Group offers S$4.375m to acquire a 60%
stake in Nanjing Sucoronal Dentistry Technique Center,
China, to strengthen its presence in China. The proposed
acquisition will involve the acquisition of eight dental clinics
and a dental laboratory operated by Mr Zhang Haiquan. Q
& M will receive a profit guarantee of at least S$8.06m for
a 12-year period starting from 2014 until 2025. The
proposed acquisition exercise is expected to be completed
on 1 June 2014 and will be funded by internal cash, loans
and/or issuance of new Q & M shares.
Linc Energy has been awarded the Kobior Coal Exploration
License in the central Upper Silesian Coal Basin, Poland.
Based on data published by the Polish Geological Institute,
the area contains anticipated economic resources in the
order of 2.8 bn tonnes of coal. Following the successful
phase one exploration program and positive results in its
estimated 1.2 bn tonne Polanka Wielkie Drogi (PWD)
concession, Linc Energy see this as a significant addition to
its Poland portfolio which is now estimated to be in the
region of 4 bn tonnes.
Sysma Holdings has secured a contract to erect a twostorey
Detached Dwelling House at Sundridge Park Road –
its third construction contract win in three months. Worth
S$6.8m, the new contract with an established private
owner will begin in March 2014 and is expected to take
place over a period of 16 months.
WBL Corporation is selling its 78% stake in Suzhou
Industrial Park Jian Wu Heng Ye Property Development Co
Ltd (JWHY) to Genway Group for RMB490m (S$101.2m).
WBL is a 67%-owned subsidiary of United Engineers. The
estimated post-tax gain from the divestment of JWHY
stands at about $14m after making a provision for
transaction costs.
The Ministry of National Development (MND) announced
that developers are required to adopt productive
technologies and prefabricated components in new
projects. This is widely expected to translate into higher
costs for them in the short term. Developers will have to
adopt productive technologies for selected Government
Land Sale (GLS) sites from the second half of this year,
MND said during the Budget debate. These technologies
include prefabricated prefinished volumetric construction
(PPVC) for hotels and residential projects and crosslaminated
timber (CLT) for low and medium-rise buildings.
Cooling measures and the Total Debt Servicing Ratio
framework continued to send non-landed private home
resale volume on a controlled descent to a level not seen
since December 2008 during the global financial crisis.
Flash figures released yesterday by the Singapore Real
Estate Exchange (SRX) showed resale transactions down
18.5% m-o-m to an estimated 242 transactions last
month. The drop was a more pronounced 22.2% on a y-oy
basis, from 311 resale deals closed in February 2013

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