Monday, May 19, 2014

DBVickers Report 19 May 14

Today’s Focus
􀂃 Singapore Post - Riding on the e-commerce growth;
maintain BUY with higher target price of S$1.60
Despite STI’s resilience thus far in May, we remain watchful of
a correction in the short-term will pullback support at 3170.
We do not see the strong index performance from beginning
February extrapolating forward because 1) earnings downgrade
cycle continues 2) current PE valuation is above average 3) the
FIFA World Cup lull period is upon us and 4) tendency for the
US market to correct from April/May to September during midterm
election years. We remain watchful of a correction in the
short-term with pullback support at 3170.
Singapore Post’s FY14 underlying profit of S$145m (+3% y-oy)
and final DPS of 2.5Scts (flat y-o-y) were in line with our
estimates. E-commerce contributed 26% of group revenue;
overseas revenue accounted for ~28% of group revenue versus
19% last year. SingPost is on track to grow its non-postal
business in both domestic and regional markets. Maintain BUY
with higher DCF-based target price of S$1.60, as we roll over
to FY15F and raise terminal growth rate from 0% to 1%.
Del Monte Pacific has changed its financial year end from 31
December to 30 April, to align with that of DMFI. It will be
announcing its results for the period from 1 January 2014 to 30
April 2014. The Group expects to report a net loss for the
transition quarter ended 30 April 2014 due primarily to:
(i) Non-recurring DMFI acquisition-related expenses
(ii) Acquisition-related purchase accounting expenses
pertaining to inventory step-up and a one-time write
down of fixed manufacturing costs
First Pacific and Wilmar announce that they are proceeding
with due diligence following a recommendation by the Board
of Directors of Goodman Fielder to accept a joint takeover of
Goodman Fielder by a 50:50 joint venture between First Pacific
and Wilmar. Both First Pacific and Wilmar had submitted a nonbinding
all-cash offer for the joint acquisition of all of the
shares in Goodman Fielder via a scheme of arrangement at
A$0.65 per share, valuing the shares at A$1.27bn. The bid was
raised to A$0.70 per share, valuing Goodman Fielder at
A$1.37 bn. It is this revised offer that Goodman Fielder’s Board
has now unanimously recommended.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,491.3 44.5 0.3
S&P 􀀘 1,877.9 7.0 0.4
NASDAQ 􀀘 4,090.6 21.3 0.5
Regional Indices
ST Index 􀀙 3,262.6 (9.9) (0.3)
ST Small Cap 􀀙 541.9 (0.5) (0.1)
Hang Seng 􀀙 22,712.9 (18.0) (0.1)
HSCEI 􀀙 9,955.4 (15.9) (0.2)
HSCCI 􀀙 4,206.5 (9.4) (0.2)
KLCI 􀀘 1,883.3 3.5 0.2
SET 􀀘 1,405.3 10.1 0.7
JCI 􀀘 5,031.6 39.9 0.8
PCOMP 􀀙 6,817.7 (31.6) (0.5)
KOSPI 􀀘 2,013.4 3.2 0.2
TWSE 􀀘 8,888.5 7.8 0.1
Nikkei 􀀙 14,096.6 (201.6) (1.4)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 608
Total Daily Vol (m shrs) 1,792
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$)
16 May
Target Price
(S$)
ComfortDelgro Buy 2.280 2.30
Global Logistic Properties Buy 2.820 3.31
Keppel Corp Buy 10.570 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
16 May
Target Price
(S$)
Pacific Radiance Ltd Buy 1.165 1.20
Nam Cheong Buy 0.375 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
SIA is suspending services to Cairo and Riyadh from late
September in response to weak demand. SIA operates three
services per week to Cairo via Dubai while Riyadh is served
three times per week non-stop from Singapore. SIA will
continue to serve Jeddah in Saudi Arabia, although those
flights will now be operated via Dubai from Oct 2, instead
of via Riyadh.
In property news, City Developments (CDL) sold most of its
launch units in the Coco Palms project over the weekend
after trimming the price tag. Coco Palms, a joint venture
between CDL and Hong Realty, sold about 490 units at an
average price of $980 psf as at 3pm yesterday. The number
of units sold represents 82% of the 600 units available at
the weekend launch, or 52% of the 944 units in the entire
development. Singapore developers have been shaving
prices amid a slowdown in home sales. CapitaLand, for
example, in April sold 80 new units at Sky Habitat in Bishan
at a median price of $1,377 psf, or a 13% discount from its
year-ago initial launch price.

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