Tuesday, September 17, 2013

DBSVickers Report 18 Sep 13

Singapore Property - No asset bubble but expect a
5% contraction in private home prices annually over
the next 2-3 years
We think that there will be no asset bubble leading to a
boom and bust situation in the Singapore private
residential market owing to forward thinking brakes put
in place. However, price and sales volume in residential
sector are expected to fall from the latter half of this year
until the supply peak in 2016-17. We expect a 5%
contraction in private home prices annually over the next
2-3 years as vacancies rise to a projected 8-9%. In terms
of primary transaction volumes, we estimate that primary
demand could contract by 20-30% this year to 17,000-
19,000. Meanwhile, prospects of rising positive real
mortgage rates amid downward pressure on rental yields
and caps on financing capabilities are also likely to keep
investment demand in check. We prefer retail, office and
residential sector in this order on the bases of rental and
price resilience. In terms of stock pick, we prefer
diversified developers with strong cashflow generating
capabilities such as UOL, Global Logistic Properties,
CapitaMalls Asia and Keppel Land.
Rex International is acquiring stakes in two more licences
in Norway. Total licences to increase to 15 in four regions
from initial 10 as at listing on 31 July. Rex anticipates
announcing more deal flows in the coming months as it
intends to grow its portfolio of licences to 20 by next July.
Global Logistic Properties has leased 26,000 sqm at GLP
Park Beijing Capital Airport to DHL Supply Chain China.
The company will lease the facilities to meet growing
demand for its warehousing and distribution solutions
from customers in the consumer sector expanding their
reach across Northern China.
Asiasons Capital breaks into oil & gas sector by acquiring a
27.5% stake of US-based Black Elk for S$218m. The
acquisition will be funded by the issuance of 194.6m new
shares at S$1.1948 per share. Producing about 14,000
barrels of oil per day from assets located in the Gulf of
Mexico, Black Elk represents Asiasons Capital’s second
acquisition of resource-based companies following the
acquisition 10% in LionGold Corp.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,529.7 34.9 0.2
S&P �� 1,704.8 7.2 0.4
NASDAQ �� 3,745.7 27.9 0.7
Regional Indices
ST Index �� 3,180.9 1.4 0.0
ST Small Cap �� 563.8 4.6 0.8
Hang Seng �� 23,180.5 (71.9) (0.3)
HSCEI �� 10,650.6 (56.0) (0.5)
HSCCI �� 4,483.1 21.8 0.5
KLCI �� 1,774.9 4.1 0.2
SET �� 1,443.8 (1.3) (0.1)
JCI �� 4,517.6 (4.6) (0.1)
PCOMP �� 6,344.1 41.4 0.7
KOSPI �� 2,005.6 (7.Cool (0.4)
TWSE �� 8,249.8 (5.6) (0.1)
Nikkei �� 14,311.7 (93.0) (0.6)
STI Index Performance
Singapore
Total Market cap (US$bn) 591
Total Daily Vol (m shrs) 3,738
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
17 Sep
Target Price
($)
ST Engineering Buy 4.230 4.80
ComfortDelgro Buy 1.930 2.19
OCBC Bank Buy 10.190 12.40
Spore Airlines Buy 10.440 11.40
Suntec REIT Buy 1.605 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
17 Sep
Target Price
($)
Ezion Holdings Buy 2.280 3.20
Goodpack Buy 1.690 2.00
CSE Global Buy 0.895 1.07
Mapletree Commercial Trust Buy 1.155 1.35
CDL Hospitality Trust Buy 1.595 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Jet fuel trader China Aviation Oil (CAO) will have global
expansion on its mind for the next three years, with plans for
all the major regions in the world. Over the next three years,
CAO plans to consolidate its position in the Chinese market
and increase its jet fuel trading market share in the region.
Where gas oil, fuel oil and petrochemicals are concerned,
CAO plans to secure supply contracts and increase its trading
activities.
US markets rose ahead of the conclusion of the FOMC
meeting that will decide on interest rates and the possibility
of the start of QE tapering. Consensus expects the FED to
reduce QE by some USD10-15bil/mth from the current
USD85bil/mth. US 10-year treasury yield eased to 2.8366%.
Singapore’s STI could start the session firmer but gains will
likely be modest while awaiting tonight’s FOMC outcome. To
the upside, we peg resistance at 3210-3225 that is just
slightly below the 13.9x (Ave) 12-mth forward PE.

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