Wednesday, September 11, 2013

DBSVickers Report 12 Sep 13

OEL TP tweaked lower to $1.01 (prev. $1.03),
maintain Buy post increase in campus construction
cost
�� CRCT – Higher rental revision trend to continue and
value is emerging , Maintain Buy
Overseas Education has awarded construction of its Pasir
Ris campus to Woh Hup P/L. The contract sum of
S$233.5m together with a land premium of S$28m
means the cost of the new campus YTD is S$261.5m. This
is higher than management’s S$200m forecast at the time
of IPO. Apart from S$130m of cash and IPO proceeds, we
estimated OEL would need another S$150m for the new
campus. Assuming all debt funded, net gearing would
increase to 0.42 and 0.22 in FY15 and FY16 respectively.
While interest costs would be higher, the impact is mostly
offset as we lower staff cost assumptions post
management update. Consequently, our DCF fair value
would be lowered to S$1.01 from S$1.03 previously. We
expect share price to soften on news of over-budget but
considering that the expansion is on course, we maintain
Buy.
The coming two years could be transformational for
CapitaRetail China Trust. After fine-tuning its portfolio
tenant mix and the completion of various asset
enhancements, CRCT’s portfolio of malls have been
consistently seeing strong shopper traffic and tenant sales,
resulting in higher rental reversions (averaging 17% over
2Q12-2Q13) compared to the average of 12% over
1Q11-1Q12. With a renewed tenant mix and a stronger
operational footing, we believe this trend is likely to
continue going forward. We see value emerging after the
recent price decline. The stock offers an attractive FY13-
15F DPU yield of 7.0%-8.3%, which is higher than the SREIT
peer average of 6.3-6.7%. Maintain Buy TP $1.60
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,326.6 135.5 0.9
S&P �� 1,689.1 5.1 0.3
NASDAQ �� 3,725.0 (4.0) (0.1)
Regional Indices
ST Index �� 3,108.2 (15.7) (0.5)
ST Small Cap �� 549.7 2.6 0.5
Hang Seng �� 22,937.1 (39.5) (0.2)
HSCEI �� 10,636.7 (60.7) (0.6)
HSCCI �� 4,430.5 12.2 0.3
KLCI �� 1,768.5 3.5 0.2
SET �� 1,411.2 18.0 1.3
JCI �� 4,349.4 (8.7) (0.2)
PCOMP �� 6,214.9 125.2 2.1
KOSPI �� 2,003.9 9.8 0.5
TWSE �� 8,209.0 0.2 0.0
Nikkei �� 14,425.1 1.7 0.0
 


STI
Total Market cap (US$bn)
Total Daily Vol (m shrs)
12m ST Index High
12m ST Index Low
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
11 Sep
Target Price
($)
ST Engineering Buy 4.100 4.80
ComfortDelgro Buy 1.870 2.19
OCBC Bank Buy 10.01 12.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
11 Sep
Target Price
($)
Ezion Holdings Buy 2.290 3.20
Goodpack Buy 1.640 2.00
Nam Cheong Buy 0.270 0.36
CSE Global Buy 0.905 1.07
Venture Corporation Buy 7.590 8.40
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Sembcorp Marine’s Jurong Shipyard announced this
morning that it has secured a contract to build a second
Semi-submersible Well Intervention Rig at US$346m for
Helix Energy Solutions. This is SMM's second specialised
platform with well intervention and subsea capacilities.
Price is 10% lower than the first one secured in Mar-
2012, which was priced at US$385.5m. While the
functions are pretty similar, there could be some
differences in terms of specs and equipment furnished.
The latest contract lifts SMM's YTD wins to S$3.65bn,
representing 73% of our full year assumption of US$5bn.
Maintain Hold (TP: $4.70)
Ezion subsidiary, Teras Australia Pty Ltd has entered into a
share swap arrangement with Aboriginal Maritime Pty Ltd
(AML). AML is a 25% Aboriginal-owned marine services
company that provides maritime training and employment
to Indigenous workers in Australia. We believe the
rationale for this share swap is to enhance Ezion
competitive strength in bidding for projects in the
Aboriginal dominated region and solve their crew / staff
recruitment issue when projects are secure. Hence, while
this transaction is immaterial, it may be a harbinger for
new offshore logistic projects. Maintain Buy (TP: $3.2)
Popular Holdings net profit for the fiscal 1Q fell 18.8% yo-
y to $5.32mil. Revenue rose 12.1% to $133.52mil
largely due to higher revenue in the property, retail and
distribution divisions.
The Monetary Authority of Singapore (MAS) announced
new rules to cap the amount of credit card and other
unsecured loans that banks can extend to individuals in a
bid to rein in borrowing. The changes, to be implemented
in stages from Dec 1, include a limit on the total amount
of unsecured loans an individual can take to 12 times that
person's monthly income. The changes are "aimed at
improving lending practices by financial institutions and
enabling individuals to make better borrowing decisions",
this according to the MAS.
US indices rose with the 30-stock DJIA gained more than
the broader market S&P500 as concerns about a military
strike against Syria eased. Meanwhile, shares of Apple Inc
tumbled as investors reacted in dissapointment to the
launch of the latest iPhone models.


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