United Envirotech – Secured RMB286m contract;
Upgrade to BUY, TP: S$0.98
Follow through gains in early trade is seen riding on the
overnight strength on Wall Street. With recent data
suggesting that the slowdown in the Chinese economy
may be stabilizing, the possibility of a resolution to Syria’s
use of chemical weapons without having to commit a
military strike and short-term stability returning to
emerging markets, STI looks to have found an important
low late last month at 2990. Investors also have had more
than ample time (about 4 months since May 22) to react
to the possibility of the start of QE tapering come next
week’s FOMC meeting.
STI current trades at slightly above 13.1x (-0.5SD) 12-mth
forward PE. In the immediate term, slight pullback off
3132 is possibly but this should find support at/above
3055-3060. The index has the capacity to head towards
3220 in coming weeks should recent uncertainties
continue to ease.
United Envirotech has secured a RMB286m (S$59m)
Transfer-Operate-Transfer (TOT) cum Build-Operate-
Transfer (BOT) agreement with the municipal government
of Hong Wei District in Liaoyang City, China.
Upon completion, the plant will treat 30,000 m3/day of
municipal wastewater and 30,000 m3/day of industrial
wastewater. This contract win is positive and material.
Firstly, the construction of the BOT would add RMB261m
to UENV’s EPC orderbook, lifting YTD new win to
RMB451m, slightly ahead of our RMB400m assumption.
Secondly and more importantly, the additional
60,000m3/day capacity will add 6% to existing phase 1
capacity, lifting UENV’s total treatment capacity to 1.45m
m3/day. Based on minimum offtake for TOT and
staggered guaranteed offtake from 70% of the design
capacity for Year 1, this contract will boost our target
price of UENV to S$0.98 from S$0.90 previously. In view
of the improved upside, we upgrade United Envirotech to
BUY with revised TP of S$0.98.
Malaysia’s Aug13 palm oil output of 1.735m MT was in
line with forecast. Strong export of 1.524m MT (+7% mo-
m) was offset by 25% m-o-m drop in domestic intake;
keeping stockpile flat at 1.666m MT. We expect
Malaysia’s palm oil stockpile to re-accumulate to 1.824m
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,191.1 127.9 0.8
S&P �� 1,684.0 12.3 0.7
NASDAQ �� 3,729.0 22.8 0.6
Regional Indices
ST Index �� 3,123.9 35.7 1.2
ST Small Cap �� 547.0 3.6 0.7
Hang Seng �� 22,976.7 226.0 1.0
HSCEI �� 10,697.4 168.8 1.6
HSCCI �� 4,418.3 64.1 1.5
KLCI �� 1,765.0 17.9 1.0
SET �� 1,393.2 8.9 0.6
JCI �� 4,358.1 166.9 4.0
PCOMP �� 6,089.7 92.7 1.5
KOSPI �� 1,994.1 19.4 1.0
TWSE �� 8,208.8 16.7 0.2
Nikkei �� 14,423.4 218.1 1.5
S
STI
Total Market cap (US$bn) 571
Total Daily Vol (m shrs) 5,251
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
10 Sep
Target Price
($)
ST Engineering Buy 4.10 4.80
ComfortDelgro Buy 1.87 2.19
OCBC Bank Buy 10.04 12.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
10 Sep
Target Price
($)
Ezion Holdings Buy 2.28 3.20
Goodpack Buy 1.64 2.00
Nam Cheong Buy 0.27 0.36
CSE Global Buy 0.885 1.07
Venture Corporation Buy 7.65 8.40
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
MT by end Sep13. We do not expect the Indian
government to raise import duties on refined oils. The
Indonesian government’s new policy to raise biodiesel
blend, if realised, could have positive impact on CPO
prices. Our picks for SGX-listed CPO stocks are First
Resources and Bumitama Agri.
Overseas Education has awarded the construction
contract for the building of the new school campus. The
contract sum is S$233.5m and the contracted
construction period is 19 months from September 2013
to April 2015. Situated at the junction of Pasir Ris Drive 3
and Elias Road, the new school campus will consist of two
12-storey teaching blocks, a 7-storey administration
block, a performing arts centre and auditorium, elevated
sports field and 50-metre swimming pool, covered car
park and bus park lots and other facilities and amenities.
Asiatravel.com Holdings has appointed Green Olive Travel
& Tours as its General Sales Agency for TAcentre.com; its
online wholesale system. This appointment empowers
Green Olive to manage Myanmar’s growing travel trade
segment and develop new business through its sales and
customer service teams in their Yangon and Mandalay
offices.
Asia is not on the verge of financial crisis, despite the
recent turmoil in regional equity and currency markets,
Prime Minister Lee Hsien Loong said. He highlighted that
the Asian economies are in a stronger position than they
were in '97 when the crisis came, and we have got more
safeguards instituted now over the last decade and a half
since the Asian crisis, to deal with the likely consequences
of big capital flows.
In property news, a consortium comprising Hoi Hup
Realty, Sunway Developments and SC Wong Holdings has
narrowly emerged as the top bidder of a plum, 99-year
leasehold residential site at Mount Sophia. It drew as
many as nine bidders, on the higher end of consultants'
expectations. The trio's bid of $442.3m - or $1,156.53 psf
ppr - was just 0.06% higher than the second highest bid.
China’s industrial production grew 10.4% in August, its
fastest in 17 months, accelerating from 9.7% in July.
Retail sales, a key indicator of consumer spending, rose
13.4% y-o-y last month, and fixed asset investment, a
measure of government spending on infrastructure,
increased 20.3% in the first eight months of the year. The
better-than-expected data comes on the back of strong
trade figures and PMIs published earlier in September.
US markets extended gains as China’s August industrial
output and retail sales rose slightly better-than-expected
and as tensions surrounding Syria eased. US President had
asked senators to delay a vote authorizing military strikes
to allow time for talks on eliminating Syria’s chemical
weapons.
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