Thursday, June 12, 2014

DBSVickers Report 12 Jun 14

Today’s Focus
􀂃 Yangzijiang - Rough waters but remains on a steady
course. Maintain BUY, target price unchanged at S$1.55
Update on Yangzijiang. Based on our recent discussions with
management, its first jackup rig is c.40% completed and on
track for delivery in mid-2015. Industry fundamentals remain
sound. We remain sanguine on the bulk carrier segment,
which is seeing improving supply/ demand dynamics with a low
orderbook to fleet ratio of 22%. Yangzijiang is seeing healthy
order enquiries, and is also in talks for orders for first semisubmersible
and LPG carrier. Valuations have fallen to an
attractive 6x FY14F PE and 1.0x P/BV following Guoheng’s
allegations against Mr Ren. The current share price weakness
presents buying opportunities for investors who believe in the
fundamentals of Yangzijiang. Maintain BUY, target price
unchanged at S$1.55.
Tiong Seng Holdings is entering into a 44:51:5 Joint Venture
Agreement (JVA) with Geostr Corporation and Marubeni-
Itochu Steel Pte Ltd (MISP) to manufacture and supply precast
tunnel segments to the Singapore and Malaysia markets.
Geostr is market leader for precast tunnels in Japan, accounting
for more than 40% of total production volume in the country.
MISP is the Singapore subsidiary of Marubeni-Itochu Steel Inc, a
Japanese steel trading company based in Tokyo, which
specializes in providing business management expertise in
addition to its extensive distribution network. This enhances
Tiong Seng’s existing precast capabilities to tap on Singapore
MRT’s S$60 bn island-wide rail masterplan and other projects
in Malaysia. Tiong Seng’s order book as at 31st May 2014 is
S$1.27 bn, stretching to 2020.
Tigerair operating statistics for the month of May 2014. Tigerair
Singapore: For the month of May 2014, Tigerair Singapore
recorded a 17.2% y-o-y increase in traffic to 881 million
revenue passenger-kilometres (RPK), while capacity increased
by 16.0% to 1,038 million available seat-kilometres (ASK).
Consequently, y-o-y passenger load factor improved by 0.9
percentage point to 84.9%. The number of passengers carried
grew by 17.7% y-o-y to 473,000. For the 12 months to May
2014, passenger load factor was 5.6 percentage points lower
y-o-y at 78.4%. Tigerair Mandala: For the month of May 2014,
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,843.9 (102.0) (0.6)
S&P 􀀙 1,943.9 (6.9) (0.4)
NASDAQ 􀀙 4,331.9 (6.1) (0.1)
Regional Indices
ST Index 􀀙 3,290.0 (3.8) (0.1)
ST Small Cap 􀀙 556.9 (2.9) (0.5)
Hang Seng 􀀙 23,257.3 (58.5) (0.3)
HSCEI 􀀙 10,508.4 (10.4) (0.1)
HSCCI 􀀙 4,302.1 (25.3) (0.6)
KLCI 􀀘 1,878.4 1.8 0.1
SET 􀀙 1,463.7 (5.5) (0.4)
JCI 􀀘 4,971.9 25.9 0.5
PCOMP 􀀘 6,809.2 31.2 0.5
KOSPI 􀀘 2,014.7 2.9 0.1
TWSE 􀀘 9,229.8 7.4 0.1
Nikkei 􀀘 15,069.5 74.7 0.5
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 2,748
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
11 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.670 3.42
Mapletree Greater China
Commercial Trust
Buy 0.860 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
11 Jun
Target Price
(S$)
Vard Holdings Buy 1.160 1.34
Nam Cheong Buy 0.380 0.47
Centurion Corporation Buy 0.685 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Tigerair Mandala recorded a 31.5% y-o-y decline in traffic
to 148 million RPK, while capacity decreased by 30.8% to
180 million ASK. Consequently, passenger load factor fell by
0.9 percentage point to 82.2%. For the 12 months to May
2014, passenger load factor was 3.1 percentage points
higher at 75.9%.
Global Logistic Properties has signed new lease agreements
totaling 23,000 (sqm) (248,000 sq ft) with two leading
third-party logistics (3PL) providers in China including Best
Logistics, a strategic partner and one of GLP’s largest
customers by leased area in China.
Chasen Holdings had secured six new major projects in
FY15 worth S$7.8m. New contract wins include a relocation
and move-in services for a panel manufacturing plant in
Beijing, PRC worth RMB12m (equivalent to approximately
S$2.4m), underlying the Group’s continued strong presence
in the country. Out of the six new contracts, four are
overseas contracts from Malaysia, China as well as Vietnam.
Total Access Communication, Thailand's second-lar-gest
mobile operator, plans to delist its secondary listing on the
Singapore Exchange mainboard. This is due to low trading
volume, compliance costs and its intention to raise funds
only through its Thailand primary listing. The indicative last
day of trading on SGX and delisting date are Sept 16 and
29 respectively.
Standard & Poor’s Rating Services (S&P) has affirmed Sabana
REIT’s ‘BBB‐‘ long‐term corporate credit rating and ‘axA-‘
long-term ASEAN regional scale rating with a stable
outlook.
The 23 forecasters who responded to MAS' quarterly poll in
late May had a median inflation forecast for this year of
2.2%, down from 2.8% in March. The fall brings their
median forecast in line with the government's 2014
inflation forecast range of 1.5-2.5%. Our economist, who
has cut his full-year headline inflation forecast from 3% to
2.1% in April - said that the downgrades were probably to
account for the larger-than-anticipated impact from last
year's high base of COE (Certificate of Entitlement)
premiums, as well as falling imputed rentals.
U.S. stocks fell as investors, concerned about market
valuation following recent gains, took profit after World
Bank cut its forecast for global growth. The World Bank
forecasts that global economy will expand 2.8% this year,
down from a January projection of 3.2%, as growth in U.S.,
China, Russia, India and Brazil slows. It left the estimate for
world growth in 2015 unchanged at 3.4%. Bank of
America shares fell after the U.S. Justice Department seeks
about $17bil to settle probes into its handling of mortgages
ahead of the financial crisis.-----------------------------------
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