Thursday, December 5, 2013

DBS Report 9 Dec 13

F&N - Sweetened its offer to bondholders by tacking
an additional 375 to 600 basis points to its original
proposal
We continue to see the prospect for the STI to head
higher towards 3290. But, the likelihood of this
happening looks to be delayed beyond the year-end lull
period.
On the economy, China’s recent data suggests that the
country’s economy is stabilising after a long slowdown.
Manufacturing and services PMIs have stabilized and the
producer price index has also stopped falling, offering
hope of a recovery.
Companies that can benefit from China’s anticipated
recovery include OSIM, which is poised to benefit from
rising consumption in China, given that 55% of its sales
are from North Asia. Midas is a recovery play on
expectations of more high-speed bullet train contracts
from China. Prospects for China Merchant remain bright.
Economic conditions in the G3 are improving as well.
Policy stimulus has lifted economic performance in Japan
while Europe is out of recession. The US is still on the
recovery path, albeit a slow one. With the macro
backdrop improving, being an export driven country,
Singapore is poised to benefit from the improved global
outlook. This has led our economist to raise Singapore
GDP growth forecasts for 2013 and 2014. One of the
sectors to benefit from the improving Singapore GDP
growth is the banking sector. Our pick is OCBC (BUY, TP:
S$12.40). Our banking analyst believes that there is
potential upside surprise for loan growth while net
interest margin is on a gradual uplift.
F&N has sweetened its offer to bondholders by tacking an
additional 375 to 600 basis points to its original proposal,
to avert a bond technical default as the group plans listing
spin-off of property business. F&N sought bondholders'
approval to give it a call option to redeem its $108.25m of
5.5% notes due 2016 at par plus 6.5%, vs its earlier offer
for this series, which was rejected last month, for par plus
2.75%. For the $200m 6% notes due 2019, F&N raised
its proposed early redemption offer to par plus 9%. The
earlier proposal of par plus 3% was also rejected.
CordLife Group has increased its stake in its associated
company, StemLife Berhad to approximately 31.81%
stake after acquiring an additional 11.89% stake for
RM17.7m cash from various shareholders of Stemlife.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,020.2 198.7 1.3
S&P 􀀘 1,805.1 20.1 1.1
NASDAQ 􀀘 4,062.5 29.4 0.7
Regional Indices
ST Index 􀀙 3,114.2 (10.2) (0.3)
ST Small Cap 􀀙 529.6 (1.7) (0.3)
Hang Seng 􀀘 23,743.1 30.5 0.1
HSCEI 􀀙 11,376.2 (19.6) (0.2)
HSCCI 􀀘 4,646.2 2.7 0.1
KLCI 􀀘 1,827.0 2.1 0.1
SET 􀀙 1,361.6 (15.1) (1.1)
JCI 􀀙 4,180.8 (36.1) (0.9)
PCOMP 􀀙 6,014.9 (16.0) (0.3)
KOSPI 􀀙 1,980.4 (4.4) (0.2)
TWSE 􀀙 8,367.7 (7.8) (0.1)
Nikkei 􀀘 15,299.9 122.4 0.8
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 574
Total Daily Vol (m shrs) 1,732
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price ($)
6 Dec
Target Price
($)
Hutchison Port Hldgs Trust (US$) Buy 0.650 0.82
ComfortDelgro Buy 1.960 2.19
OCBC Buy 10.050 12.40
Singapore Airlines Buy 10.220 11.40
Stock Picks – Small /Mid Cap
Rec’n Price ($)
6 Dec
Target Price
($)
Ezion Holdings Buy 2.210 3.30
China Merchants Buy 0.925 1.20
CSE Global Buy 1.020 1.11
Nam Cheong Buy 0.290 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 3
Wilmar and global consumer goods leader Unilever signed a
Memorandum of Understanding (MoU) that aims to
accelerate sustainable market transformation for palm oil. In
parallel, and key part of the MoU, Wilmar launched a new
“No Deforestation, No Peat, No Exploitation” policy that
aims to advance an environmentally and socially responsible
palm oil industry.
Ipco International signed a Framework Agreement with the
Haiyang City Housing & Construction Planning Authority for
a 30-year natural gas distribution concession in Haiyang City,
Shandong Province, Peoples Republic of China. As
construction is expected to commence in the second half of
2014, there should be no significant impact in the current
financial year. The total investment cost is estimated at RMB
120m.
Separately, Ipco said that it is expected to report a loss and
asset impairment for the half year ended 31 October 2013.
This is primarily attributable to declines in value of Financial
Assets, of which the most significant is the Groups holding
of 9.74% of the issued share capital of Blumont Group Ltd
(Blumont).
Hiap Seng Engineering has been awarded, under a
consortium with Petroleum Maintenance Service Joint Stock
Company of Vietnam, a turnaround maintenance contract
worth approximately US$10m for the provision of
maintenance, overhaul and repair services including
inspection, testing and cleaning of process equipment for
Dung Quat Refinery in Vietnam.
Vallianz Holdings is exploring options to establish an Islamic
Trust Certificates Programme to broaden and deepen its
investors' pool.
Cacola Furniture is proposing to issue 2.0% equity linked
redeemable structured convertible notes due 2016 with an
aggregate principal amount of up to S$60m. The proceeds
are expected to be used for development and exploration of
new investment opportunities and other corporate activities.
China's exports handily beat forecasts in November, adding
to recent evidence of a stabilisation in the world's secondlargest
economy as its leaders embark on an ambitious
restructuring plan. Exports rose 12.7% y-o-y, against a
median forecast of a 7.1% rise. Imports rose 5.3%, below a
forecast of 7.2%, leaving a trade surplus of US$33.8 bn
against forecasts for US$21.7 bn

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