DBSVickers Report 11 Oct 13

STI – A rise above 3200 should see resistance
increasing towards 3250
Stocks should start the session with follow through gains
from the past 2 session on the back of the overnight rally
on Wall Street. US lawmakers worked towards a proposal
to delay the government exceeding the debt limit to Nov
22 from Oct 17. However, the federal government
shutdown continues. This eases the imminent danger of a
US debt default, providing a respite but does not remove
it altogether. In the near-term, it allows investors to
refocus back to the 3Q earnings season.
We were right to point out that STI on dip below 3150
towards c.3100 offered bargain hunting opportunities. In
the immediate term, a rise above 3200 should see
resistance increasing towards 3250 as the index moves
closer towards its 13.9x (ave) 12-mth forward PE at
slightly above 3250. Investors will still rein in their
enthusiasm unless the anticipated lack luster 3Q earnings
season shows it can surprise on the upside. That it, it’s still
pretty much 3150-3250 in the near-term, little different
from what we said back on September 19.
Malaysia’s Sep13 palm oil output rose by 10% m-o-m to
1.912m MT or 4% below forecast. Although FFB yields
continued to sequentially recover, the pace was slower
than expected. The higher palm oil supply was partly
offset by a 5% m-o-m increase in exports to 1.605m MT;
given jumps in shipments to India, Pakistan and
Bangladesh, which more than made up for lower
shipments to China, EU-27 and Iran. At the end of Sep13,
palm oil inventories in Malaysia consequently rose 7% mo-
m to 1.784m MT – or 2% below forecast. Planters are
due to report sequential earnings recovery. Despite lower
prospective palm oil prices in the near-term, we expect
most planters’ 2H13 earnings to rebound (vis-à-vis 1H13)
– premised on seasonally higher CPO sales volumes and
lower unit costs. For SGX-listed planters, we recommend
accumulating Bumitama Agri, First Resources, and
Indofood Agri, for better expected returns.
Keppel Corp has won a contract from Perforadora Central
to build a KFELS B Class jackup rig worth US$240m,
including owner furnished equipment. Scheduled for
delivery in 4Q 2015, the jackup rig is intended for
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 15,126.1 323.1 2.2
S&P 􀀘 1,692.6 36.2 2.2
NASDAQ 􀀘 3,760.7 83.0 2.3
Regional Indices
ST Index 􀀘 3,169.9 15.1 0.5
ST Small Cap 􀀘 539.7 6.6 1.2
Hang Seng 􀀙 22,951.3 (82.7) (0.4)
HSCEI 􀀙 10,460.2 (45.3) (0.4)
HSCCI 􀀙 4,520.3 (11.4) (0.3)
KLCI 􀀘 1,775.9 6.8 0.4
SET 􀀘 1,451.9 17.3 1.2
JCI 􀀘 4,486.7 29.2 0.7
PCOMP 􀀘 6,436.0 58.2 0.9
KOSPI 􀀙 2,001.4 (1.4) (0.1)
TWSE 􀀙 8,344.7 (30.9) (0.4)
Nikkei 􀀘 14,194.7 156.9 1.1

STI
Total Market cap (US$bn) 582
Total Daily Vol (m shrs) 3,523
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
10 Oct
Target Price
($)
ST Engineering Buy 4.150 4.80
ComfortDelgro Buy 1.915 2.19
OCBC Bank Buy 10.230 12.40
Singapore Airlines Buy 10.180 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
10 Oct
Target Price
($)
Ezion Holdings Buy 2.250 3.10
Goodpack Buy 1.730 2.00
CSE Global Buy 0.895 1.07
Mapletree Commercial Trust Buy 1.210 1.35
CDL Hospitality Trust Buy 1.655 1.80
Frasers Centrepoint Trust Buy 1.845 2.14
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
operations in offshore Mexico. The latest contract is the
fifth orders from the repeat Mexican customer, Perforadora
Central, since 2002. Keppel O&M has emerged to be the
leading rig provider to the Mexican market, with a total of
20 projects delivered or on order for Mexico, of which 15
are of Keppel's proprietary KFELS B Class design. This
brings Keppel Corp’s YTD order wins to S$5.3bn, making
up 89% of our FY13 assumption of S$6bn. If the orders for
six jackup rigs (part of the MOU with PEMEX to jointly
develop yard facility in Mexico) are effective before year
end, it could add c.S$1.6bn, blowing past our order win
assumption. Keppel’s strengthening of footprint in the
growing Mexico market reinforces its near market, near
customer strategy, proven track record and excellent
product quality. Maintain BUY and TP of S$12.90.
Tiger Airways operating statistics for the month of September
2013. Tigerair Singapore recorded a 20.9% (y-o-y) increase in
traffic to 711 million revenue passenger-kilometres (RPK),
while capacity increased 23.3% to 917 million available seatkilometres
(ASK). Consequently, y-o-y passenger load factor
was 1.5 percentage points lower at 77.5%. For the 12
months to September 2013, Tigerair Singapore recorded a
24.9% increase in traffic to 8.8 billion RPK, surpassing the
22.2% increase in capacity to 10.7 billion ASK.
Consequently, passenger load factor was 1.7 percentage
points higher at 82.9%. The number of passengers carried
grew 20.0% to 4.8 million, compared to 4.0 million in the
previous period.
The recent volatility in its share price has caused gold miner
LionGold Corp to call off talks over a potential offer for
Minera IRL, a Latin American precious metals mining
company. Negotiations end without any liability to each
other.
Chinese Premier Li Keqiang has said that China’s economic
growth probably exceeded 7.5% in the first nine months of
the year. The National Bureau of Statistics will report thirdquarter
growth on Oct 18. The market is expecting 7.8%
growth, up from the second quarter's 7.5%.
US markets surged with the Dow paring more than a third of
its recent decline after lawmakers moved toward an
agreement to increase the debt ceiling. Investors reacted to a
House Republican proposal for a short-term increase in the
debt ceiling that would reduce the prospects for a U.S.
default. The plan postpones the lapse of U.S. borrowing
authority to Nov. 22 from Oct. 17. However, the till date 10-
day-old partial shutdown of the federal government
continues. Meanwhile, weekly jobless claims (actual 374k,
consensus 308k) jumped to the highest level in 6 months,
providing the first statistical warning about the impact of the
government shutdown