Monday, April 28, 2014

DBSVickers Report 28 Apr 14

Today’s Focus
�� CDL Hospitality Trusts - Downgrade to HOLD, target price
unchanged at S$1.84. We believe share price has factored
in most positives.
The STI finish the week at 3267 that is above our stated 3250
near-term resistance. Still, we believe that forays above the
13.9x (average) 12-mth forward PE level that is current at
c.3255 are unsustainable so long as the earnings downward
revision trend has yet to reverse. Last week’s high of 3285 is
just 15pts shy of the 13.9x (average) blended FY14/15F PE level
at 3300. We maintain our view that a pullback for the STI is
due in the short-term.
This will be an important week for the 1Q reporting season as
all 3 banks, with a combined index weight of nearly 30%,
reports their quarterly results on Wednesday. Shipyards – Cosco
Corp and Yangzijiang, will also announce results on
Wednesday and SembCorp Marine on Friday. Keppel reported
a decent 1Q performance and we expect SembCorp Marine to
be on track. Yangzijiang could beat market expectations while
Cosco Corp struggles to keep its head above water.
Stocks are starting to go ex-dividend during this period. Index
component stocks going XD this week are OCBC, UOB, ST
Engineering and SembCorp Industries.
This will be a heavy week for US economic data releases
culminating with the April employment numbers. Ahead of
Friday’s employment numbers, the FED meeting on Thursday is
expected to result in a USD10bil cut to QE that reduces the
monthly purchase to USD45bil.
CDL Hospitality Trusts (CDL HT) reported a decent set of 1Q14
results, within expectations. DPU rise c.2.0% to 2.75Scts (23%
of estimates). This was on the back of a 15% y-o-y and 4%
growth in revenues and net property income, respectively.
Room rates are on an uptrend; Maldives resorts are expected to
perform strongly. While CDL HT remains a beneficiary of rising
RevPAR, its share price has performed well recently, up c.15%
higher YTD. We believe the share price has factored in most
positives. Downgrade to HOLD, target price unchanged at
S$1.84.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 16,361.5 (140.2) (0.Cool
S&P �� 1,863.4 (15.2) (0.Cool
NASDAQ �� 4,075.6 (72.Cool (1.Cool
Regional Indices
ST Index �� 3,267.6 (16.4) (0.5)
ST Small Cap �� 548.9 (1.1) (0.2)
Hang Seng �� 22,223.5 (339.3) (1.5)
HSCEI �� 9,798.7 (141.9) (1.4)
HSCCI �� 4,128.8 (36.1) (0.9)
KLCI �� 1,861.0 (4.3) (0.2)
SET �� 1,408.2 (14.5) (1.0)
JCI �� 4,897.6 6.6 0.1
PCOMP �� 6,685.1 (46.2) (0.7)
KOSPI �� 1,971.7 (26.7) (1.3)
TWSE �� 8,774.1 (171.3) (1.9)
Nikkei �� 14,429.3 24.3 0.2
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 609
Total Daily Vol (m shrs) 2,301
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$)
25 Apr
Target Price
(S$)
ComfortDelgro Buy 2.10 2.19
Global Logistic Properties Buy 2.78 3.31
Keppel Corp Buy 10.51 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
25 Apr
Target Price
(S$)
Goodpack Buy 2.33 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 1.065 1.20
Nam Cheong Buy 0.36 0.46
Centurion Corporation Buy 0.74 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Capitaland reported a 3.4% y-o-y drop in revenue from
continuing operations (excl Australand) to S$612.6m while
net profit was 13.3% lower at S$147.4m. Profits for the
rest of 2014 will be boosted by higher performance from
Singapore as well as contributions from China. The
privatisation offer for CMA is ongoing and if successful,
should lift Capitaland’s RNAV. Maintain Buy, and S$3.85
target price.
China Merchants Hldgs’ (CMHP) 1Q14 net profit of
HK$148m (+15% y-o-y) was largely in line with
expectations. Organic growth is expected to remain steady,
with 7% rise in toll revenue. CMHP’s balance sheet
continues to strengthen on firm cash flows, and with
completion of the disposal of its NZ property business with
proceeds of over HK$350m, the Group is in a good position
to make further toll road acquisitions to grow its business.
Maintain BUY and S$1.32 target price; the stock is currently
trading cum dividend of 4.25Scts.
Wilmar and Hong Kong's First Pacific Company have made
a A$1.3 bn (A$0.65 per share) takeover offer for Australian
food company Goodman Fielder. However, Goodman
Fielder said the offer undervalued the company. Wilmar,
which already owns 10.1% of the company, said Goodman
Fielder would be privatised and its shares would be de-listed
from the ASX and NZX if the deal proceeds.
China International Holdings is proposing private placement
of 150m new shares at S$0.051 per share. The placement
price represents a discount of approximately 1.92% to the
last volume weighted average price. The estimated net
proceeds of approximately S$7.6m will be used for general
working capital for the Group.
Singapore’s manufacturing sector grew by a surprising
12.1% in March from a year ago, boosted by double-digit
jumps in transport engineering and biomedical output. The
strong, broad-based growth caught the market off-guard;
median growth forecast was for 6.4% growth. March's
growth in industrial production marked the second
consecutive month of double-digit expansion, following
February's revised year-on-year pace of 13.1% (previously
estimated at 12.8%). Though the biomedical manufacturing
cluster grew 16.4% in March from a year ago - helped by a
19.4% expansion in the pharmaceuticals segment - it was
not the sole driver of growth. Output of the transport
engineering cluster surged 29.4%, boosted by its marine &
offshore engineering segment, which expanded 45.1%,
with several rig building and ship building projects achieving
milestone completion last month. All other clusters also
expanded in March. Electronics production grew 8.7%,
driven by a 14.1% output increase in the semiconductors
segment. Expansion was also seen in the chemicals (5.2%),
precision engineering (4.3%) and general manufacturing
industries (1%) clusters. In sequential terms, manufacturing
output outstripped market expectations of a 6.1% increase
from February, after seasonal adjustments. Excluding
biomedical manufacturing, output rose 1.6% from the
previous month.
Resale prices of public flats slipped for the third consecutive
quarter, and the market expects this downtrend to continue
amid market caution and a large supply of new flats coming
onstream. Data from the Housing and Development Board
(HDB) showed that resale prices in the first quarter fell 1.6%
from the previous quarter ago, following a 0.9% dip in the
third quarter and 1.5% decline in the fourth quarter of last
year. Resale transactions fell 5% in the quarter to 3,781.
U.S. stocks fell following disappointing results from
Amazon.com Inc. Amazon predicted an operating loss in
the current quarter. Geopolitical tension also contributed to
the sell-off. U.S. Secretary of State warned Russian President
that he’s running out of time to ease tension in Ukraine as
Russia began new military exercises on the country’s border.

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