Sunday, October 13, 2013

DBSVickers Report 14 Oct 13

Singapore’s 3Q GDP contracted 1.0% q-o-q; MAS
keeps currency stance unchanged
 Perennial China Retail Trust - Operating performance
improving, new completions to boost income visibility
On the STI, we maintain our view that in the immediate
term, a rise above 3200 should see resistance increasing
towards 3250 as the index moves closer towards its
average 12-mth forward PE at slightly above 3250.
For this week, the results reporting will go into full swing,
starting with REITS and the Keppel Group. We are not
expecting any negative surprises for this quarterly results
reporting for REITS.
Singapore's 3Q GDP contracted 1.0% q-o-q, better than
consensus estimate of 4.0% contraction, due to a strong
performance by the services sector and improvement in
manufacturing. This compared with an upwardly revised
16.9% increase in the second quarter. On a y-o-y basis,
the economy is estimated to have expanded 5.1%,
compared with the market estimate of 3.9% increase.
GDP rose a revised 4.2% from a year earlier in the second
quarter. Output in the manufacturing sector rose 4.5% in
the third quarter from a year earlier compared with a
1.3% expansion in the previous quarter. Services sector
output grew 5.7% on year, while the construction sector
expanded 3.6%.
MAS kept its monetary policy unchanged and said it
would continue to guide the local dollar on its current
appreciation path, citing an improved global economic
situation. The central bank said it would maintain the
policy of a modest and gradual appreciation of the
Singapore dollar's nominal effective exchange rate policy
band. There would be no change to the slope and width
of the policy band, as well as the level at which it is
centered.
Our site visit to Perennial China Retail Trust’s portfolio of
assets reaffirms our view that operating performance is
improving with 85% of its IPO portfolio completed and
operational. New completions like Chengdu Qingyang
Mall and Dongzhan Mall which are to open in 2014, are
expected to boost income visibility. We maintain our Buy
US Indices Last Close Pts Chg % Chg
Dow Jones  15,237.1 111.0 0.7
S&P  1,703.2 10.6 0.6
NASDAQ  3,791.9 31.1 0.8
Regional Indices
ST Index  3,179.7 9.8 0.3
ST Small Cap  539.2 (0.5) (0.1)
Hang Seng  23,218.3 267.0 1.2
HSCEI  10,580.8 120.6 1.2
HSCCI  4,552.6 32.4 0.7
KLCI  1,785.8 9.8 0.6
SET  1,457.8 5.9 0.4
JCI  4,519.9 33.2 0.7
PCOMP  6,489.8 53.8 0.8
KOSPI  2,024.9 23.5 1.2
TWSE  8,349.4 4.6 0.1
Nikkei  14,404.7 210.0 1.5

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 Oct
Target Price
($)
ST Engineering Buy 4.190 4.80
ComfortDelgro Buy 1.910 2.19
OCBC Bank Buy 10.220 12.40
Singapore Airlines Buy 10.220 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
11 Oct
Target Price
($)
Ezion Holdings Buy 2.250 3.10
Goodpack Buy 1.760 2.00
CSE Global Buy 0.890 1.07
Mapletree Commercial Trust Buy 1.225 1.35
CDL Hospitality Trust Buy 1.675 1.80
Frasers Centrepoint Trust Buy 1.840 2.14
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
call on PCRT with S$0.84 TP for its attractive 0.8x P/bk NAV
valuation. As its properties ramp up operations and improve
earnings visibility ad sustainability, we believe the gap
between share price and asset backing will narrow.
SPH FY13 results were within expectations. Net earnings
ended 25% down y-o-y to S$430m on the back of a 3.9%
drop in newspaper & magazine ad revenues, higher
operating expenses (+29.6%) and higher finance costs
(+30.6%). More importantly, final and special dividends of 15
Scts are in line with forecast. SPH declared a final dividend of
8 S cts & special dividend of 7 S cts, bringing total dividend in
FY13 dividends to 40 Scts. This implies a dividend yield of
9.7% for FY13. In terms of the outlook, advertising
performance is dependent on macro, which remains
uncertain while newsprint prices are expected to remain flat
in the near term.
Del Monte Pacific - which is dual-listed in Singapore and the
Philippines - is acquiring the consumer food business of
privately-owned Del Monte Foods of the US for close to
US$1.7 bn. Del Monte Pacific said it will fund the US$1.675
bn transaction using a combination of US$745m of equity in
Del Monte's new acquisition vehicle - Del Monte Foods
Consumer Products - as well as long-term debt financing of
US$930m that has been committed by a syndicate of banks.
As part of its equity financing, Del Monte Pacific also plans to
issue common and preferred shares in the market. The
acquisition opens doors for Del Monte Pacific to enter the US,
one of few key markets it neither has a direct presence nor its
own brands.
AusGroup anticipates that it will incur a net loss for Q1. The
anticipated loss is due to :-
1. Cost overruns from two contracts that are approaching
completion;
2. Delays in the commencement of new contracts; and
3. Restructuring costs.
IEV Holdings has been awarded three pile grouting and two
free span correction contracts by three engineering,
procurement, installation and commissioning (“EPIC”)
contractor. The work program for the pile grouting service
covers seven offshore platforms in Malaysia and Indonesia,
while the free span correction service will be performed on
four pipelines in Indonesia. The contracts, with aggregate
value of approximately US$2.2m are expected to be
completed in 4Q2013.
LionGold Corp announced that the proposed placement of
up to 180m new shares and up to 135m new warrants first
announced on 14 August 2013 have been terminated owing
to the recent volatility in the price of the company’s shares

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