potentially revolutionary exploration technology.
Initiate with BUY and S$1.27 TP
US markets fell as political bickering ahead of the need to
raise the country’s debt ceiling picked up, uncertainty about
when the FED will start cutting back QE and heading into
election weekend in Germany. The US 10-year treasury yield
rose to an intra-session high of 2.77% before ending the
week at 2.73%. In Germany, Angela Merkel has won a
landslide personal victory in Germany's general election but
her conservatives appeared just short of the votes needed to
rule on their own and may have to convince leftist rivals to
join a coalition government.
The STI should start the week softer on the back of Friday’s
decline on Wall Street. A pullback to test the immediate
support at 3200 is possible this week. Index valuation
reached 13.9x (ave) 12-mth forward PE last week. With the
uncertainty that follows the deadline to raise the US debt
ceiling and a likely lack luster 3Q results season, STI’s shortterm
rally has likely come to a stall around 3250 last week. A
consolidation band from c.3200-3250 or a pullback to 3200
followed by 3165 is seen in coming weeks/month before
rising again.
We are initiating coverage on Rex International Holding
(RIH) with a BUY call and target price of S$ 1.27. RIH is an
independent E&P player armed with potentially
revolutionary exploration technology. We estimate that
the use of Rex VD could yield success rates in excess of
50%, compared to global average of around 15% using
traditional methods, thus potentially boosting project ROIs
to >100%. RIH has the first mover advantage in “seeing”
oil gives it a head start in cherry picking attractive licences.
It is a potential multi-bagger as it buys assets cheap and
spins off successful discoveries.
Keppel Corp has sold its entire stake in Berich Enterprises
and Keppel Kazakhstan LLP for US$32.5m cash. The
principal activities of Keppel Kazakhstan are the design,
engineering and construction of barges, pontoons, pipe
racks, modules, and drilling units for the oil and gas
industry in the Republic of Kazakhstan.
US Indices Last Close Pts Chg % Chg
Dow Jones 15,451.1 (185.5) (1.2)
S&P 1,709.9 (12.4) (0.7)
NASDAQ 3,774.7 (14.7) (0.4)
Regional Indices
ST Index 3,237.5 (14.3) (0.4)
ST Small Cap 579.1 (1.6) (0.3)
Hang Seng 23,502.5 385.1 1.7
HSCEI 10,769.5 181.5 1.7
HSCCI 4,488.1 34.9 0.8
KLCI 1,801.8 8.9 0.5
SET 1,486.8 (2.3) (0.2)
JCI 4,583.8 (86.9) (1.9)
PCOMP 6,424.5 (87.3) (1.3)
KOSPI 2,005.6 (7.
(0.4)
TWSE 8,209.2 (40.6) (0.5)
Nikkei 14,742.4 (23.
(0.2)
STI
Total Market cap (US$bn) 595
Total Daily Vol (m shrs) 5,487
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
20 Sep
Target Price
($)
ST Engineering Buy 4.210 4.80
ComfortDelgro Buy 1.960 2.19
OCBC Bank Buy 10.420 12.40
Singapore Airlines Buy 10.440 11.40
Suntec REIT Buy 1.690 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
20 Sep
Target Price
($)
Ezion Holdings Buy 2.380 3.20
Goodpack Buy 1.720 2.00
CSE Global Buy 0.905 1.07
Mapletree Commercial Trust Buy 1.200 1.35
CDL Hospitality Trust Buy 1.630 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
YHM Group has secured a contract with a value of up to
approximately US$183m over a 3-year period with an
additional 2 year extendable option to provide a
semisubmersible rig to be used by a Southeast Asian based
national oil company to support its oil and gas activities in
the Andaman Sea. The company is in the process of forming
a joint venture company to own the Semi. The Semi will be
upgraded and refurbished and is expected to be deployed in
the Andaman Sea between end 2013 and early 2014.
Telcos are reporting an increase in the number of subscribers
busting their data cap. SingTel sees a trend that 4G
customers are using more data on average than 3G users,
about 20-30% increase. Already, SingTel's last-reported
quarter ended June 30, 2013, saw 13% of post-paid
subscribers on tiered plans exceeding their monthly data
limits, up from 10% in the quarter before that. Over at
StarHub, the faster 4G network has been a boon for data
usage, and this trend is expected to continue. There has
been a similar trend at M1. In its last reported quarter, 15%
of its post-paid users on tiered data plans exceeded data
caps - up from 9% the previous quarter.
In property news, UOL Group and Singapore Land move 160
units at Thomson Three on the first day of sales bookings
this week. This was out of the 200 units they released. The
developers plan to release a further 120-150 units this
weekend. Located on Bright Hill Drive, the project comprises
435 apartments and 10 strata semi-detached houses. The
average price of the 99-year leasehold development is about
$1,350 psf. According to UOL, without TDSR (total debt
servicing ratio), it could easily have priced this project at
$1,500 psf on average, or even higher.
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