Sunday, October 27, 2013

DBSVickers Report 28 Oct 13

Ezra - Turnaround in the offing? Upgrade to HOLD,
TP raised to S$1.34
􀂃 Starhill Global REIT - Positives priced in; downgrade
to HOLD
The 3Q results season that spans till mid-Nov should set
the tone as the calendar year heads towards the
traditional year-end holiday lull period. With few
exceptions, we expect a generally lack lustre 3Q reporting
season. We maintain our view for the STI to be range
bound from c.3150-3250 before heading towards 3300
by year-end on the assumption that the current reporting
season turns out benign with no major downward revision
to FY14F earnings forecast.
Traders looking to position into stocks that have the
potential to not only report healthy growth but also stand
a good chance of beating forecasts in their upcoming
results should consider Nam Cheong, Ezion, Centurion &
Yoma given their ample upside to TP.
Investors expect the FED not to start tapering QE at
Thursday’s FOMC meeting. The recent US federal
government partial shutdown has pushed back consensus
expectation for the start of QE tapering to March 2014. to
leave While long bond yields should remain suppressed in
the short-term and S-REITs continue to be underpinned by
tapering delay, further gains for the sector could be tame.
Delay does not mean terminate and it won’t be too long
into early 2014 when QE tapering concerns re-emerge.
Our SREITs picks are Fraser Centrepoint Trust and Cache.
Investors who seek exposure to REITs without the interest
rate risk can consider ARA. Technically, we continue to
see $1.82 upside for this stock.
4Q13 results for Ezra beat our estimates. Subsea division
turns around; we expect stable margins hereon with
legacy projects completed. FY14 core earnings were raised
by 33% on better margin assumptions, in line with
improving execution and charter market recovery. TP
raised to S$1.34 (Prev S$ 0.90); upgrade to HOLD.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 15,570.3 61.1 0.4
S&P 􀀘 1,759.8 7.7 0.4
NASDAQ 􀀘 3,943.4 14.4 0.4
Regional Indices
ST Index 􀀙 3,205.2 (12.7) (0.4)
ST Small Cap 􀀙 545.3 (1.1) (0.2)
Hang Seng 􀀙 22,698.3 (137.5) (0.6)
HSCEI 􀀙 10,177.8 (144.3) (1.4)
HSCCI 􀀙 4,422.6 (14.9) (0.3)
KLCI 􀀙 1,817.6 (1.4) (0.1)
SET 􀀙 1,454.9 (11.4) (0.8)
JCI 􀀙 4,580.8 (14.0) (0.3)
PCOMP 􀀙 6,539.8 (44.0) (0.7)
KOSPI 􀀙 2,034.4 (12.3) (0.6)
TWSE 􀀙 8,346.6 (67.1) (0.8)
Nikkei 􀀙 14,088.2 (398.2) (2.7)
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$bn) 600
Total Daily Vol (m shrs) 2,264
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
25 Oct
Target Price
($)
ST Engineering Buy 4.160 4.80
ComfortDelgro Buy 1.915 2.19
OCBC Bank Buy 10.400 12.40
Singapore Airlines Buy 10.480 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
25 Oct
Target Price
($)
Ezion Holdings Buy 2.230 3.10
Goodpack Buy 1.900 2.00
CSE Global Buy 0.890 1.07
Frasers Centrepoint Trust Buy 1.865 2.14
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
3Q13 results for Starhill Global REIT in line. Weaker overseas
income mitigated by strong performances at Ngee Ann City
and Wisma Atria. Backed by a quality portfolio with good
earnings visibility, we believe that positives have already been
priced in at this level. Downgrade to HOLD, given limited
upside to our rolled-forward TP of S$0.87 (Prev S$ 0.84).
Strengthening SGD-INR continues to be a drag on Ascendas
India Trust earnings. Gross revenues and NPI declined by a
9% and 14% y-o-y to S$28.9m and S$16.4m respectively.
Development of Aviator is on track, with 100% of space
committed. Low gearing of 21% opens opportunities for
growth. Maintain HOLD, TP revised to S$0.73 (Prev S$ 0.75).
3Q13 results for Ascott Residence Trust slightly ahead.
Refurbishments completing in subsequent quarters are
expected to drive organic growth. Divestment of Somerset
Grand Fortune Garden Beijing is positive. Maintain BUY with
TP S$1.42 for its attractive 6.8%-7.2% yields.
Hi-P slashed its 3Q13 earnings guidance despite higher
revenue because of a S$4.4m inventory provision due to
lower orders from an existing customers. Y-o-y, the company
now expects 3Q13 profits to be flat. For the full year, Hi-P
now expects higher sales in 2H13 vs 1H13 but expect lower
profits. We had earlier warned of earnings downside risks for
Hi-P due to demand weakness and rising stockpiles for both
smartphone customers Blackberry and Apple. However, the
magnitude of decline is much substantial than we had
expected. Although our current forecast is already the lowest
in the street, we now expect at least another 15% downside
to our FY13F of S$38m. This is assuming 2H13 is 20% lower
h-o-h. We will review our earnings as well as TP (last @
S$0.65) and HOLD recommendation pending details from
management.
Ezion has received a letter of intent with a contract value of
up to about US$ 65m over a 3 year period to provide a
Service Rig to be used by an oil major to support its oil & gas
activities in South East Asia.
Triyards has secured 2 contracts worth an additional
US$59mil that includes its 10th Self-Elevating Unit (SEU)
order and the construction of a turret for a Floating Storage
Offloading (FSO) in Indonesia. The latest contract win lifts
total orders over the past 12 months to about US$209mil.
Rex is proposing to place up to 70m new shares at the
placement price of S$0.755 per share. The Placement Price
represents a discount of 9.6% to last weighted average price.
The company intends to use the net proceeds of about
S$50.5m mainly for exploration and drilling activities.
Lum Chang has been awarded the construction contract
worth S$178.6m for the Glades condominium at Bedok Rise.
This latest award brings the total outstanding value of
construction projects still in progress to S$566.4m.
Boustead Singapore enters into joint venture for
developments in Iskandar Malaysia. The JV Company intends
to develop six parcels of vacant industrial land in Nusajaya,
Iskandar Malaysia’s Flagship Zone B.
Sheng Siong has acquired 18,000 sq ft of shop space at
Junction Nine, a mixed development located at 18 Yishun
Avenue 9. The property has a 99 year lease period and costs
S$55m. Funding will be by internal cash. As of 3Q13, SSG
has net cash of S$107m. Immediate impact on cash; no
change to our earnings estimates and dividends.
Singapore’s industrial production for September posted its
biggest rise since February 2012, expanded by 11.3% y-o-y,
following a revised growth of 4% y-o-y in August, and better
than market expectation of a 9.3% growth. This rise is on the
back of a 20% surge in electronics output and a busy time
for rig and ship-builders. After adjusting for seasonal factors,
manufacturing output rose 3.7% m-o-m. Excluding the
biomedical cluster, output would have grown 5.8% from
August.

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