ARA - Growth trajectory accelerated with new
strategic partner. Maintain BUY, TP raised to S$2.08
Hi-P - No growth for 3Q13, 2H13<1H13. Downgrade
to FULLY VALUED, TP cut to S$0.47
ARA Asset Management (ARA) and Straits Trading
Company (STC) have announced a strategic collaboration
to jointly invest in property. The transaction details: (1)
STC will acquire a 20.1% stake in ARA, from vendor share
sales by Cheung Kong and John Lim, (2) ARA will manage
STC’s entire real estate portfolio (ex hospitality) and (3)
STC and John Lim will set up a new S$950m coinvestment
vehicle (Straits Real Estate) to provide seed
capital for new fund products to be managed by ARA.
With a much-needed strong war chest to accelerate its
growth trajectory, we see exciting times ahead for ARA.
We have raised ARA’s TP to S$2.08 (Prev S$ 1.89).
Maintain BUY.
Hi-P has cut earnings guidance due to lower orders from
customers. 3Q is affected by inventory provisions; we
believe margins were lower than expected. We had earlier
warned of downside risks for Hi-P, in view of weak
demand and rising stockpiles of Blackberry and Apple
smartphones. However, the decline turned out to be more
severe than we had expected. FY13F/14F EPS cut by
37%/25%. Downgrade to FULLY VALUED, TP revised
down to S$0.47 (Prev S$0.65).
3Q13 results for Raffles Medical within expectations.
Hospital revenue growth a tad slower, but attributed to
one-off events. The group is in a strong cash position to
fund expansion plans internally. Maintain HOLD and TP of
S$3.15.
Petra Foods' deal to sell its cocoa ingredients business to
Barry Callebaut for US$950m - subject to adjustments at
completion - appears to have hit a more sour note as
Petra is now being asked by the buyer to assume a closing
price reduction to the tune of US$98.3m, on top of the
US$74m that was already cut earlier. Should Petra be
compelled to accept the closing price reduction, it would
mean a chunky 20% slice off the original offer price when
the deal was struck in December last year. This could also
US Indices Last Close Pts Chg % Chg
Dow Jones 15,568.9 (1.4) (0.0)
S&P 1,762.1 2.3 0.1
NASDAQ 3,940.1 (3.2) (0.1)
Regional Indices
ST Index 3,207.9 2.6 0.1
ST Small Cap 540.6 (4.7) (0.9)
Hang Seng 22,806.6 108.2 0.5
HSCEI 10,258.4 80.6 0.8
HSCCI 4,425.0 2.4 0.1
KLCI 1,818.4 0.8 0.0
SET 1,449.6 (5.3) (0.4)
JCI 4,590.5 9.7 0.2
PCOMP 6,539.8 (44.0) (0.7)
KOSPI 2,048.1 13.7 0.7
TWSE 8,407.8 61.2 0.7
Nikkei 14,396.0 307.9 2.2
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 600
Total Daily Vol (m shrs) 3,246
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
28 Oct
Target Price
($)
ST Engineering Buy 4.180 4.80
ComfortDelgro Buy 1.910 2.19
OCBC Bank Buy 10.400 12.40
Singapore Airlines Buy 10.460 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
28 Oct
Target Price
($)
Ezion Holdings Buy 2.220 3.10
CSE Global Buy 0.885 1.07
Frasers Centrepoint Trust Buy 1.870 2.14
Yoma Strategic Holdings Buy 0.755 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
mean that Petra's last announced initial net proceeds of
US$164m from the last agreed price of US$860m and the
net estimated gain on divestment of US$64m could be
whittled down to just US$66m in net proceeds and a
significant estimated net loss on divestment of about
US$34.3m.
ST Engineering’s aerospace arm, ST Aerospace and Jetstar
Asia has signed a three-year line maintenance contract. The
agreement covers a full suite of line maintenance support for
Jetstar Asia’s existing and future fleet of Airbus A320 aircraft.
King Wan Corp has secured five new mechanical and
electrical (M&E) contracts in Singapore worth a total of
S$26m during the period from August to October 2013.
With these new contracts, the Group’s order book to date
stands at S$168.9m, with M&E contracts which will keep the
group busy to 2016.
BH Global Corp expects to report a net loss for 3Q13, mainly
due to foreign exchange losses arising from the significant
depreciation in value of Indonesian Rupiah against Singapore
Dollar.
US markets finished mixed ahead of the mid-wk FOMC
meeting even as consensus expects the FED to continue its
USD85bil/mth bond purchases, cutting back on stimulus only
around March 2014. The US 10-year bond yield stay
generally flat around the 2.51% level in recent sessions. In
after hours, shares of Apple Inc fell 2.2% after it forecasts
lower-than-expected gross margins going forward despite
reporting better-than-expected quarterly results
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