Wednesday, November 20, 2013

DBS Vickers Report 21 Nov 13

F&N – Value uncapped; upgrade to BUY, target price
revised to S$6.50
DBSV research upgrades F&N to BUY, as shareholders’
value is unlocked through dividend-in-specie of its
property unit, Frasers Centrepoint Limited (FCL). Its JV
partner in Myanmar Brewery Limited (MBL) has issued a
notice of arbitration on FNN’s 55% stake. The outcome is
unknown at this stage, but we believe in the worst case
scenario, impact on RNAV is low, at 2.5%. Stripping out
the estimated value of F&B, we estimate that FCL is
trading at a steep 47%/27% discount to RNAV and book
value, higher than the property sector’s average of 31%
and c.5%, despite FCL’s established position. We revised
our TP to S$6.50 (Prev S$9.52), after incorporating the
recent capital distribution (S$3.28/share).
SIA has unveiled plans with India's Tata group again to set
up a joint-venture airline in that country. SIA said it had
signed a Memorandum of Understanding with Tata Sons
and applied for Foreign Investment Promotion Board (FIPB)
approval to establish a new full-service airline in India.
Total initial investment will be US$100m, with Tata Sons
owning 51% for its US$51m share and SIA the remaining
49%. SIA and Tata had first tried - and failed - to start up
their joint-venture airline in India back in 1994.
Albedo has agreed to a $774.1m reverse takeover (RTO)
with a company majority owned by Malaysian tycoon Tan
Sri Dato’ Danny Tan that will see Albedo transformed into
a major property developer in Iskandar, Malaysia’s special
economic zone in the southern state of Johor. Seven
parcels of land in Iskandar valued at RM2.7 bn will be
injected into Albedo; two more parcels under
negotiations. The company will focus on property
development and management in Malaysia after the RTO.
Albedo will pay for the acquisition by issuing 34.55 bn
new shares representing about 95% of the enlarged
issued capital of the company at around 2.24 Singapore
cents per share.
ComfortDelGro has incorporated a wholly-owned subsidiary
with an initial paid-up capital of RMB1m in China. The
principal activity of the subsidiary is operation of a driving
school.
US Indices Last Close Pts Chg % Chg
Dow Jones �� 15,636.6 (40.4) (0.3)
S&P �� 1,722.3 (3.2) (0.2)
NASDAQ �� 3,789.4 5.7 0.2
Regional Indices
ST Index �� 3,251.8 57.9 1.8
ST Small Cap �� 580.7 7.1 1.2
Hang Seng �� 23,502.5 385.1 1.7
HSCEI �� 10,769.5 181.5 1.7
HSCCI �� 4,488.1 34.9 0.8
KLCI �� 1,792.9 21.5 1.2
SET �� 1,489.1 49.9 3.5
JCI �� 4,670.7 207.5 4.6
PCOMP �� 6,511.7 177.7 2.8
KOSPI �� 2,005.6 (7.Cool (0.4)
TWSE �� 8,209.2 (40.6) (0.5)
Nikkei �� 14,766.2 260.8 1.8
STI Index Performance
Singapore
Total Market cap (US$bn) 600
Total Daily Vol (m shrs) 5,768
12m ST Index High 3,454
12m ST Index Low 2,946
Source: Bloomberg Finance L.P
Stock Picks – Large Cap
Rec’n Price ($)
19 Sep
Target Price
($)
ST Engineering Buy 4.270 4.80
ComfortDelgro Buy 1.960 2.19
OCBC Bank Buy 10.460 12.40
Spore Airlines Buy 10.470 11.40
Suntec REIT Buy 1.705 1.78
Stock Picks – Small /Mid Cap
Rec’n Price ($)
19 Sep
Target Price
($)
Ezion Holdings Buy 2.400 3.20
Goodpack Buy 1.740 2.00
CSE Global Buy 0.905 1.07
Mapletree Commercial Trust Buy 1.195 1.35
CDL Hospitality Trust Buy 1.620 1.80
Source: Bloomberg Finance L.P, DBS Vickers
Singapore
Wired Daily
Page 2
Hiap Tong is proposing to acquire a leasehold industrial
property located at Soon Lee Road Singapore, with an
estimated land area of 26,131 square metres, for S$18m.
The proposed acquisition is for the Group’s operations and
business activities. Its current leasehold property at Pandan
Loop, expiring on 15 January 2014, has been granted a one
year tenancy (from 16 July 2013 to 15 July 2014) from
Jurong Town Corporation.
Hiap Seng Engineering has been awarded two contracts
worth approximately S$57m for the provision of piping and
equipment installation works and the provision of
mechanical, equipment erection and structural works in
Singapore. Both contracts are expected to commence in
September 2013 and scheduled for completion in the
financial year ending 31 March 2015.
In property news, rental demand for homes continued to
strengthen in Q2, driven by a surge in interest in shoebox
units. According to data from Square Foot Research, a total
of 12,352 rental contracts in the non-landed private
residential market were reported in Q2, up 11.6% y-o-y. In
the first six months of this year, a total of 22,937 rental
contracts were signed, a 10.2% rise compared with the
previous year. Rental demand for shoebox units, defined as
units ranging from 300 to 500 sq ft, rose 93% to 748
contracts in H1 2013.
US markets eased, taking a breather from the rise the prior
session triggered by the FED’s decision to postpone cutting
down QE. The 10-yr yield rebound a tat to 2.75% while the
USD Index tapped up slightly to 80.36. Existing home sales
rose 1.7% m-o-m, better than the -2.6% consensus
expectations. The September Philadelphia Fed Business
Outlook also gained a better 22.3 compared to 10.3
consensus expectations.

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