Wilmar - A strong comeback; upgrade to BUY, target
price revised up to S$3.83
Far East Hospitality Trust - Limited re-rating catalysts;
downgrade to HOLD, TP S$0.95
With about one more week to go before the end of the
results reporting season, more than half of the stocks in
our coverage list have reported results. So far, it has been
unexciting and uninspiring, with FY13F and FY14F
earnings cut by about 2% each.
The economy, however, is looking better. Our Singapore
economist raises the country’s GDP for 2013 to 3.8%
(previous 2.9%) and that for 2014 to 4% (previous
3.5%).
Proxies to Singapore 2013 & 2014 GDP upward revision
include the banks and SPH. While Singapore banks have
generally guided for high single digit loan growth in 2014,
there is possible upside surprise to loan growth given the
positive GDP outlook. Loan growth typically lags GDP
growth by 4-6 quarters based on historical trends.
Our pick is OCBC for its strong banking operations,
better-than-average asset quality indicators and product
offerings over peer UOB.
SPH is benefitting from recovering GDP growth and
attractive yield. Its final and special dividend of a total of
15cts will go ex on 6 December 2013 and payment will be
on 20 December. This implies a yield of 3.5% based on
current price. Total dividend yield for the whole of 2013 is
a whopping 9.7%. For next year, we are expecting yield
of about 5% to 6%.
Wilmar’s 3Q13 core earnings of US$391m (+1% y-o-y;
+60% q-o-q) were above our expectations. Earnings were
buoyed by contributions from Sugar and Oilseeds &
Grains M&P. FY13F-15F earnings revised up by
12%/7%/5%, as we impute higher Sugar contribution,
better M&P and Consumer margins. Rating upgraded to
BUY, target price revised up to S$3.83 (Prev S$3.53).
US Indices Last Close Pts Chg % Chg
Dow Jones 15,594.0 (152.9) (1.0)
S&P 1,747.2 (23.3) (1.3)
NASDAQ 3,857.3 (74.6) (1.9)
Regional Indices
ST Index 3,177.3 (24.8) (0.8)
ST Small Cap 539.7 0.5 0.1
Hang Seng 22,744.4 (136.6) (0.6)
HSCEI 10,390.7 (83.6) (0.8)
HSCCI 4,451.2 (40.0) (0.9)
KLCI 1,804.5 (2.1) (0.1)
SET 1,405.0 (20.2) (1.4)
JCI 4,476.7 (9.4) (0.2)
PCOMP 6,355.2 (81.3) (1.3)
KOSPI 1,984.9 (19.2) (1.0)
TWSE 8,229.6 (54.1) (0.7)
Nikkei 14,086.8 (141.6) (1.0)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 593
Total Daily Vol (m shrs) 1,928
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
8 Nov
Target Price
($)
ST Engineering Buy 4.200 4.90
ComfortDelgro Buy 1.915 2.19
OCBC Bank Buy 10.450 12.40
Singapore Airlines Buy 10.440 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
8 Nov
Target Price
($)
Ezion Holdings Buy 2.010 2.60
CSE Global Buy 0.920 1.07
Frasers Centrepoint Trust Buy 1.830 2.14
Yoma Strategic Holdings Buy 0.770 1.02
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Far East Hospitality Trust reported a weak quarter. Gross
revenues and net property income came in 9.4% below
forecasts at S$31.5m and S$27.5m respectively. Room rates
are still under pressure. Going forward, refurbishments and
repositioning strategies are expected to drive growth. Given
limited re-rating catalysts in the immediate term, we
downgrade our BUY call to a HOLD, TP revised down to
S$0.95 (Prev S$0.97) after accounting for lower DPU
estimates and rolling forward to FY14.
3Q13 results for Venture Corp slightly below our and market
expectations, mainly because of lower than expected
revenue. Margin recovery was encouraging; expect further
improvement in 4Q to meet our FY13F earnings. Multiple
customer engagements are expected to drive future growth.
Maintain BUY and S$8.40 TP; dividend yields of > 6% are
attractive.
Amtek Engineering’s 1Q14 results in line, earnings are
bottoming out, formed 26% of FY14F earnings. New
customers and product wins led the recovery while
automation helped contain costs. Management is cautiously
optimistic; further re-rating dependent on stronger pick up.
Maintain HOLD for its 6-7% dividend yield while waiting for
stronger momentum to emerge. Target price S$0.48.
Results for UOL Group in line; boosted by higher gross
margins, led by hotel operations. Looking ahead, the Group
would continue to drive all business segments. New
residential launches from FY14; One KM and recent
Myanmar hotel JV are expected to boost recurrent income in
medium term. Maintain BUY and S$7.86 TP.
LionGold Corp is expected to report a loss before tax for the
half year ended 30 September 2013.
The loss is mainly attributable to:
1. care and maintenance costs from the Group’s gold mining
operations in Bolivia and Ghana; and
2. substantial losses arising from the unrealised loss on
financial assets at fair value through profit and loss.
PSL Holdings is expected to report a loss for the 3Q13 mainly
due to: reduction in the Group’s revenue as a result of stiffer
competition; and decrease in other operating income.
CSC Holdings has been awarded a contract valued in excess
of RM80m, for the construction of foundations as well as a
two-storey basement for the new development, Bora
Residences @ Tropicana Danga Bay in Iskandar, Johor.
Malaysian Contracts secured by the Group to date exceeds
RM200m. CSC’s current order book stands at approximately
$250m. CSC expects to complete the bulk of its projects over
the next six months.
Chasen Holdings is proposing to undertake a renounceable
non-underwritten rights issue of up to 112m Warrants, at an
issue price of S$0.01 for each Warrant. Each Warrant carries
the right to subscribe for one (1) new share at an exercise
price of S$0.12, on the basis of four (4) Warrants for every
ten (10) existing Shares held.
The residential resale property market softened in October,
with prices falling for both private and public homes. The
flash report released by the Singapore Real Estate Exchange
(SRX) showed the resale price index for non-landed
residential private homes dipping 0.1% to 176.2 from
September. As for HDB homes, the resale price index fell
1.6% to 148. An increasing or upcoming supply of homes
and government measures that tempered demand are likely
the main reasons for the price fall.
China's industrial output rose 10.3% y-o-y in October,
beating market expectations, while retail sales were up
13.3%. Fixed-asset investment, an important driver of
economic activity, climbed 20.1% in the first 10 months from
the same period last year. Exports increased 5.6% y-o-y in
October, driven by the United States, China's largest trading
partner, and a sharp turnaround in demand from the
European Union where export growth jumped to 12.7%
after a one per cent contraction in September. Inflation
accelerated slightly to 3.2% in October led by higher food
prices, a marginal increase from the 3.1% recorded in
September. Inflation for the first 10 months of the year
through October came in at 2.6%, well below the
government's full-year target of 3.5%
No comments:
Post a Comment