Wednesday, May 7, 2014

DBSVickers Report 7 May 14

Today’s Focus
 OSIM - New uDiva and TWG Tea to support growth in
subsequent quarters. Maintain BUY with higher S$3.26
target price
OSIM International reported 1Q14 results in line with
expectations, both revenue and earnings rose by 15% y-o-y to
S$172m and S$29m, respectively, driven by uInfinity, uDivine
App, and uAngel. 1 Scent DPS was declared, on track to meet
our full year estimate of 6 Scents. Full year DPS could beat our
expectations, with net cash expected to reach close to S$290m
post conversion of convertible bonds into shares. We expect
subsequent quarters to remain strong, supported by the
recently launched mid market segment uDiva chair (newer
version of the uAngel) and the consolidation of TWG. Maintain
BUY with higher S$3.26 (Prev S$ 3.08) target price as we roll
over our target PE of 18x to FY15F earnings.
1Q net profit for Sembcorp Industries in line, met 20% of our
FY14F forecast. Urban Development exceeded on strong land
sales in China; its 3rd growth pillar is shaping up nicely. Steady
outlook for Utilities; future growth bolstered by +76% power
capacity and +21% water capacity. Maintain BUY and S$6.20
target price.
FY14 net profit for SIA Engineering was down 2% y-o-y as
margins were affected by rising labour and subcontracting
costs in Singapore. Airframe MRO rates under pressure; growth
at engine MRO centers also likely to plateau. Special DPS of
5Scts was declared for FY14, which is unlikely to be repeated in
FY15/16 as earnings growth is muted. Maintain HOLD for yield
of about 5%; target price cut to S$4.70 (Prev S$ 4.80).
Wing Tai reported lower results y-o-y, expected due to lower
residential sales. Upcoming launch of The Crest should extend
income visibility. Maintain BUY and S$2.22 target price. Wing
Tai is currently trading at a 51% discount to RNAV of S$4.04
and at 0.55x P/bk NAV.
Asian Pay Television Trust’s 1Q14 EBITDA of S$49.7m was on
track and comprised 25% of our full year forecast. Commercial
operations in the new areas may start in early 2H14F;
reaffirmed distribution guidance for FY14F. Maintain BUY with
TP of S$0.91. The stock is currently trading at 11% yield, partly
reflecting concerns about its high debt (4.8x total debt to
EBITDA), in our view.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,401.0 (129.5) (0.8)
S&P  1,867.7 (16.9) (0.9)
NASDAQ  4,080.8 (57.3) (1.4)
Regional Indices
ST Index  3,245.6 4.0 0.1
ST Small Cap  543.9 2.5 0.5
Hang Seng  21,976.3 (284.3) (1.3)
HSCEI  9,743.3 (59.2) (0.6)
HSCCI  4,135.7 (27.9) (0.7)
KLCI  1,860.4 (0.1) (0.0)
SET  1,404.0 (17.5) (1.2)
JCI  4,834.5 (8.0) (0.2)
PCOMP  6,765.9 (0.5) (0.0)
KOSPI  1,959.4 (2.3) (0.1)
TWSE  8,912.4 42.0 0.5
Nikkei  14,457.5 (27.6) (0.2)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 606
Total Daily Vol (m shrs) 1,291
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$)
6 May
Target Price
(S$)
ComfortDelgro Buy 2.050 2.19
Global Logistic Properties Buy 2.780 3.31
Keppel Corp Buy 10.570 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
6 May
Target Price
(S$)
Goodpack Buy 2.350 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 1.080 1.20
Nam Cheong Buy 0.360 0.46
Centurion Corporation Buy 0.720 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Yangzijiang has successfully delivered its second 10k TEU
containership, just shortly after the first one in March.
Yangzijiang was the first Chinese yard to clinch mega
containership orders in mid-2011 and has secured a total of
21 units of 10k TEU containerships from reputable customer
Seaspan. The on time delivery of the first two mega
containerships signifies Yangzijiang's ability to execute the
orders despite being new to this product category and to
compete with the Korean peers. As Yangzijiang's large
containerships begin to ply global waters, it raises its profile
as one of the most competent large containership builders
and set the stage for them to secure orders of larger
containerships such as the 14k or 16k TEU. Maintain BUY,
target price S$1.55.
Rotary Engineering records strong first quarter 2014 with
S$199m revenue and net profit of S$14.4m.
The strong revenue was from execution of on-going
projects while productivity improvements contributed to
better margins. Singapore and the Middle East continue to
contribute the bulk of the group’s revenue. Accompanying
the improvement in profitability was its strong balance
sheet. Net cash position improved from S$134m at 31
December 2013 to S$147m as at 31 March 2014.
C&G Environmental Protection achieves 240.8% rise in net
profit in 1Q14 to HK$13.0m. Revenue up 16.1% to
HK$136.3m on the back of stronger waste handling and
power generation services; EBITDA increases 37.1% y-o-y to
a record of HK$94.3m. The proposed sale of WTE business
and assets of the principal subsidiaries in the PRC is on
track. Post sale, the Group will focus on expansion of its
WTE operation in Southeast Asia and other diversified
environmental protection businesses.
Mun Siong Engineering is proposing to undertake a
renounceable non-underwritten rights issue of up to
166.7m warrants at an issue price of S$0.0015 for each
Warrant, each Warrant carrying the right to subscribe for
one (1) new share at an exercise price of S$0.01 for each
New Share, on the basis of four (4) Warrants for every ten
(10) existing shares held. The Exercise Price represents a
discount of approximately 89.4% to the last transacted
price.
In property news, Wheelock Properties' condominium
project in Ang Mo Kio, The Panorama, is gearing up for a
re-launch this Sunday, with agents saying that new prices
could be as much as 10 per cent lower than those at the
initial launch. The re-pricing comes on the heels of earlier
price cutting by its rivals to hasten sales amid mounting
pressure from upcoming condo launches.
Global air passenger traffic growth eased to 3.1% y-o-y in
March, slowing from February when traffic rose 5.6%.
Global capacity (measured in available seat-kilometres)
expanded at a faster pace of 5.3%, pushing load factor
down to 79%, according to data from the International Air
Transport Association (Iata). Still, global air traffic has grown
by 5.6% for the first quarter of this year, which is stronger
than the overall growth of 5.2% registered for 2013 as a
whole.
US stocks fell with financials and technology shares leading
the decline. Continued geopolitical uncertainties in Eastern
Europe also dampened investors’ sentiment. Efforts by
Ukraine’s government to expel insurgents from the
easternmost regions are at risk of stalling before a May 25
presidential election. Twitter shares sank as about 480mil
shares from insiders became eligible for sale, more than 4
times the amount available for trading. American
International Group Inc shares fell with 1Q profit falling
27% as claims costs climbed at the property-casualty
business. Chinese Internet company Alibaba Group Holding
Ltd filed for what could become the largest US IPO.

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