OCBC Report 13 Jun 14

KEY IDEA SingTel: Furthering its Digital Life strategy SingTel, through amobee, has bought two digital ad technology firms for a total of US$359m to further its Digital Life strategy of being the global leader in the mobile-led digital advertising space (US$100b global market opportunity in 2017 according to eMarketer). But we believe that it is still a “work in progress”, and may take a while before we see any meaningful bottom-line contributions. Separately, we are also positive on the recent move by Chinese e-commerce giant Alibaba to take a 10.4% stake in SingPost for S$312.5m. We opine that the partnership between Alibaba and SingPost could also benefit SingTel, as it could open the door for the telco to the Chinese market; not so much in the traditional telco space but more in e-services and digital advertising. There are no major changes to our FY15 and FY16 estimates, but we made minor tweaks to our estimates further out, resulting in our fair value edging up from S$4.00 to S$4.08. Maintain BUY. (Carey Wong)

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NEWS HEADLINES - The US stock market fell on Thu, as a spike in oil prices and softer-than-expected economic data dented sentiment on Wall Street. - Changi Airport is launching a $100m fund to help airlines cope with costs, as well as to boost productivity and transit traffic at the airport as the industry finds itself battling headwinds. - Shares of STATS ChipPAC took a hard knock yesterday on news that talks with a third party interested in taking over the loss-making semiconductor group have been discontinued. - The Ascott Limited, the serviced residence arm of CapitaLand, has inked its first franchise agreements in Vientiane, the capital city of Laos, and Bali in Indonesia. - Low Keng Huat (Singapore) Limited has posted a net profit of S$14.6m for the three months ended 30 Apr this year, as revenue increased by 36% YoY to S$24.2m. - Del Monte Pacific posted a net loss of US$42.8m for the transitional four months ended 30 Apr, compared to a profit of US$6.6m for the equivalent period pre-consolidation. - LifeBrandz posted a wider net loss of S$872,000, for the third quarter ended 30 Apr, from a loss of S$328,000 a year ago. - Youyue International has entered into a deal to acquire Chinese firm Harbin Promlite Energy Saving Technology Co Ltd, in a bid to branch out into sustainable development business.