Today’s Focus
Frasers Centrepoint Trust - Overhang cleared; time to buy.
Target price maintained at S$2.13
Frasers Centrepoint Trust’s (FCT) recent share placement was
well taken. The fund raised was to partially fund its S$305m
acquisition of Changi City Point (CCP). As CCP is still in its first
rent cycle and c.60% of leases are up for renewal in FY14/15,
the Manager is uniquely poised to deliver earnings growth by
refreshing the mall’s tenant mix to better cater to its growing
catchment population. We forecast that FCT to deliver 2-year
earnings CAGR of 6% for FY15-16. At current levels, FCT
offers an attractive FY14-16F yield of 6.0-6.8%, which is higher
when compared to Singapore-focused retail S-REITs, which are
trading at yields ranging 5.5-6.6%. Maintain BUY, target price
S$2.13.
Yoma Strategic Holdings said it has received a written notice
from Myanmar's Serge Pun & Associates offering the right to
acquire the economic benefit of 70% of the land in Pun Hlaing
Golf Estate (PHGE). The 250 acres (10.8 million sq ft) land
comprises 9.6 million sq ft of a golf course and country club
and 1.2 million sq ft of land development rights, alongside
some related businesses infrastructure and facilities. Yoma
estimates the land value of 100% of PHGE and the related
businesses, infrastructure and facilities to be about US$100m. If
it accepts the offer, the group intends to undertake a rights
issue to fund the transaction. This is likely to result in a revision
of the terms of the recently announced rights issue from one
rights share for every eight existing shares to one rights share
for every three existing shares. But the issue price of the rights
share will remain at S$0.38 per rights share, said Yoma.
Nam Cheong has sold 2 accommodation work barges (AWBs)
worth US$84m to repeat Malaysian customer Perdana
Petroleum Berhad. Perdana also has an option to purchase
another two vessels. The vessels, each of 123m length and with
accommodation capacity for 500 men, are the largest
accommodation vessels built by Nam Cheong to date and will
be the first-of-its-kind in Malaysia when delivered, according to
Nam Cheong. These vessels will be constructed on a build-toorder
basis in one of the Group's subcontracted yards in China
for delivery in 2016. This brings the Group's orderbook to
about RM1.5bn, including other built-to-order contracts and
built-to-stock vessels that have been sold already. We expect
Nam Cheong to continue riding the cycle well in the offshore
services space and register over 20% CAGR in earnings over
FY13-15. Maintain BUY with unchanged target price of S$0.47.
Further catalysts from vessel sale contracts and gross margin
outperformance are likely in the rest of FY14.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,937.3 (9.8) (0.1)
S&P 1,962.6 (0.3) (0.0)
NASDAQ 4,368.7 0.6 0.0
Regional Indices
ST Index 3,257.4 (1.4) (0.0)
ST Small Cap 557.7 (1.9) (0.3)
Hang Seng 22,804.8 (389.3) (1.7)
HSCEI 10,198.1 (197.4) (1.9)
HSCCI 4,264.1 (62.7) (1.4)
KLCI 1,884.0 (1.8) (0.1)
SET 1,468.7 1.4 0.1
JCI 4,842.1 (5.6) (0.1)
PCOMP 6,762.0 31.0 0.5
KOSPI 1,977.2 2.2 0.1
TWSE 9,228.4 (45.4) (0.5)
Nikkei 15,369.3 19.9 0.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 612
Total Daily Vol (m shrs) 2,003
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$)
23 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.670 3.42
Mapletree Greater China
Commercial Trust
Buy 0.865 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
23 Jun
Target Price
(S$)
Vard Holdings Buy 1.095 1.34
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.720 0.86
Source: DBS Bank
Yeo Kee Yan (65) 6682 3706 keeyan@dbs.com / Ling Lee Keng (65) 6682 3703
leekeng@dbs.com
www.dbsvickers.com
Refer to important disclosures at the end of this report
Singapore
Wired Daily
Page 2
Olam announced a partnership with Mitsubishi
Corporation of Japan (MC), in which MC will invest
US$64m for 80% equity interest in wholly owned
subsidiary - Olam Grains Australia (OGA), while Olam will
continue to hold the remaining 20% stake. OGA’s
business comprises mainly origination, trading, logistics
and marketing activities as well as a 32.5% stake in
Newcastle Agri Terminal, which commenced operations in
February 2014. MC, a Japanese conglomerate, develops
and operates businesses globally across diverse fields
including environment and infrastructure, industrial
finance and logistics, energy, metals, machinery,
chemicals, living essentials and business services. We view
the development positively. The partnership lays a strong
foundation to build a profitable and sustainable grains
business in Australia, leveraging on the growing Asian
demand for grains and competing effectively in the
Australian grain industry as they plan to invest in
upcountry procurement and logistics to scale up the local
presence.
Pacific Radiance has incorporated a Mexican JV company,
CR Offshore (CRO). CRO will be principally engaged in
management and operation of offshore support vessels
for the offshore oil and gas sector in Mexico.
KS Energy has entered into a contract with Shanghai
Zhenhua Heavy for the construction and delivery of one
(1) new build jack-up drilling rig, with an option granted
to KS Energy for the construction and delivery of a second
rig of the same design.
United Envirotech was awarded a RM 45m engineering
procurement and construction (EPC) project in Johor
Bahru, Johor, Malaysia. The project will commence
immediately and is expected to be completed by end
2015.
Soilbuild Construction Group has been awarded with a
S$38.6m contract by Pepperl+Fuchs to construct a Global
Distribution Center for the member of the German
Pepperl+Fuchs Group. Located at Pioneer Turn, the
proposed building will be a five-storey fully automated
high-tech warehouse, logistics and office building. This
construction project will commence in June 2014 and is
expected to complete by the third quarter of 2015. This
updates the Group’s order book to S$531.5m to-date.
Karin Technology has secured the distributorship in Hong
Kong for Infrastructure Management, Application
Performance Management, Security and Application
Delivery solutions by CA Technologies.
The four parties eyeing the Wearnes group's automotive
business are likely to submit their bids this week. The
interested bidders are said to be Swire Pacific, OUE, a
Malaysian car distributor and Al-Futtaim Group. United
Engineers, which bought Wearnes for a total of almost $1
billion last May, is understood to be seeking as much as
$450m for the automotive division, which represents 12
brands in six Asian countries. The amount includes the
stocks, infrastructure and land that are held by Wearnes
Automotive.
Activity in China's factory sector expanded in June for the
first time in six months as new orders surged, a
preliminary HSBC survey showed yesterday. The
HSBC/Markit Flash China Manufacturing Purchasing
Managers' Index (PMI) rose more than expected to 50.8 in
June from May's final reading of 49.4, beating a Reuters
poll forecast of 49.7 and creeping above the 50-point
level that separates growth in activity from contraction. It
was the first time since December that the PMI was in
growth territory, and the highest reading since November,
when it was also 50.8.
US and European equities fell after data showed weakness
in euro-area manufacturing and services. The euro-area
PMI composite gauge slipped to 52.8 in June, below
consensus expectation of 53.4 amid a slowdown in the
French economy. Oil slumped the most in more than a
month as Iraq’s army recaptured territory from militants.
Iraqi government forces took back the Al Waleed border
crossing into Syria and the Traibil passageway near Jordan.
Brent crude is currently traded at USD113.6pbl, off the
highest point at USD115pbl a last week.
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