Tuesday, December 3, 2013

DBS Vickers Report 4 Dec 13

Singapore Banks - proxy for positive GDP momentum
Banks are a proxy for positive GDP momentum. Our
economist has upgraded Singapore 2014 GDP growth to
4.0% (from 3.5%). While banks have generally guided for
high single digit loan growth in 2014, there is room for
upside surprises given the positive outlook on the global front
which should pair nicely with Singapore’s GDP growth
outlook. NIM (net interest margin) may start to inch up as
credit spreads are expected to widen and we do not have to
wait for an upswing in the interest rate cycle. In the event of
an interest rate cycle revival, NIM and earnings would almost
certainly see an upswing. In terms of stock pick, we are
sticking to OCBC (BUY, TP: S$12.40) vs UOB (HOLD, TP:
S$21.90), a contrarian view.
CDL Hospitality Trusts is acquiring a second Maldives
property, Jumeirah Dhevanafushi. To be acquired at
US$59.6m at a pro forma annualised net property income
yield of 6.2% for the nine months ended 30 September
2013, this acquisition is DPS accretion of 2.2%, with potential
upside as the resort is currently still undergoing gestation.
This new high quality resort is well-positioned in the luxury
segment to benefit from the growing affluence of Asian
travellers and attendant demand for top-tier resort
experiences, presenting opportunity for CDLHT to further
participate in the buoyant hospitality sector of the premium
Maldives market, one of the highest RevPAR markets in the
world.
Tiong Seng Holdings has secured a S$204.5m contract from
Housing and Development Board (HDB) to construct 11
blocks of 14/16-storey residential building together with two
blocks of multi-storey carpark, commercial/community
facilities, precinct pavilion at Woodlands Crescent and
Woodlands Rise. The new contract win brings latest order
book to S$1.28 bn.
Global Logistic Properties has signed a lease agreement of
approximately 30,000 sqm with Womai.com, the B2C ecommerce
platform of COFCO, China’s largest food
processing, manufacturing and trading company. GLP’s
partnership with COFCO now extends to three cities.
US Indices Last Close Pts Chg % Chg
Dow Jones  15,914.6 (94.1) (0.6)
S&P  1,795.2 (5.8) (0.3)
NASDAQ  4,037.2 (8.1) (0.2)
Regional Indices
ST Index  3,187.7 (1.1) (0.0)
ST Small Cap  536.2 1.1 0.2
Hang Seng  23,910.5 (128.1) (0.5)
HSCEI  11,448.4 (99.7) (0.9)
HSCCI  4,679.7 (23.6) (0.5)
KLCI  1,824.3 6.1 0.3
SET  1,383.9 9.6 0.7
JCI  4,288.8 (33.2) (0.8)
PCOMP  6,179.5 (43.9) (0.7)
KOSPI  2,009.4 (21.4) (1.1)
TWSE  8,392.6 (22.1) (0.3)
Nikkei  15,749.7 94.6 0.6
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 583
Total Daily Vol (m shrs) 1,642
12m ST Index High 3,454
12m ST Index Low 3,004
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
3 Dec
Target Price
(S$)
Hutchison Port Holdings Trust Buy 0.680 0.82
ComfortDelgro Buy 1.960 2.19
OCBC Buy 10.350 12.40
Singapore Airlines Buy 10.530 11.40
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
3 Dec
Target Price
($)
Ezion Holdings Buy 2.190 3.30
China Merchants Buy 0.925 1.20
CSE Global Buy 0.985 1.11
Nam Cheong Buy 0.295 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
WE Holdings has entered into an agreement to acquire
Everbest Industrial with profit guarantee from vendor of at
least US$1m a year for each of FY2015, FY2016 and FY2017.
Everbest Industrial is a Hong Kong-based components
distributor with 13 years of history and profitable track record
for past three financial years. This acquisition is in line with the
group’s plan to achieve economies of scale in its electronic and
component business and to broaden the revenue stream.
Singapore's latest purchasing managers' index (PMI) reflects a
mixed manufacturing performance in November. While the
overall PMI reading fell short of expectations mainly due to
dips in orders and output - dipping 0.4 to expand at 50.8 last
month - the electronics index continued to strengthen. The
electronics PMI - which expanded further to 51.2 from 51 in
October - gels well with recent economic indicators; just a
week ago, another double- digit jump in electronics output
boosted Singapore's manufacturing performance in October.
Singapore households have been given a clean bill of health as
far as their debt is concerned. Despite warnings of an
increasing exposure to mortgages, net wealth has grown
robustly over the past decade and stands at about four times
GDP, according to the Monetary Authority of Singapore
Financial Stability Review 2013. While household debt
continues to increase, savings are piling up faster and massive
cash deposits outweigh total liabilities, the review showed.
Alongside firm growth of household sector assets and net
wealth over the past few years, household debt has trended
up, with mortgages accounting for a large share of household
sector liabilities. Property assets account for a large share of
household assets, and property price increases have been the
key driver of the significant rise in household net wealth over
the past few years. Housing loans account for about threequarters
of total household liabilities, and could be a
significant source of risk for households, MAS said.
The household debt-to-income ratio has risen from a low of
1.9 times in 2008 during the Lehman crisis to 2.1 times in
2012. In addition, household debt has grown more quickly
than household assets since Q2 2011. In Q3 2013, household
debt grew by 7.9% y-o-y, while household assets grew by
6.8%

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