Singapore Hospitality - A modest recovery. Top picks:
Genting Singapore (Upgrade to BUY, TP of S$1.75) and
CDREIT (BUY, S$1.80)
We expect a modest recovery for the Singapore Hospitality
sector. At 10.5m visitor arrivals (+8.5% y-o-y) as of YTD
8M13, visitor arrival growth continue to exceed expectations.
Looking ahead, we believe 2014 will continue to see higher
visitorship given: (I) Robust outlook for travel within the
ASEAN region, especially major visitor source markets of
Indonesia, India and China (c.45% of total visitors), (ii) The
expected pick-up in business activities and a healthy pipeline
of MICE and major conferences in 1H14. As such, we expect
visitor arrivals to grow 6.0% y-o-y to 16.3m in 2014.
However, upside is expected to be capped by new hotel
openings. Over 4Q13-2014, the industry will see close to an
additional 3,400 rooms or a 6% increase in room supply,
mainly in the Central Business District (CBD) and along
Orchard Road.
In terms of stock pick, Genting Singapore (Upgrade to BUY,
TP of S$1.75) remains the main beneficiary of the sustained
growth in visitor arrivals and tourists spending in 2014.
Among the hoteliers, we believe CDL Hospitality Trusts (BUY,
S$1.80) offer the most leverage to the expected uptick in
business and MICE travellers amongst competition in the
market.
Rex International has signed an agreement with North Energy
ASA to acquire a 20% stake in a new licence in Norway. With
this new licence, Rex will have stakes in seven offshore
licences in Norway, up from four at its IPO in July 2013. Rex’s
portfolio in Norway is expected to grow up to 15 licences in
2014. Financing has been secured for drilling activities in
Norway into 2015.
Cambridge Industrial Trust enters into S$250m interest rate
swaps with several banks and reduces its all-in cost of debt to
3.33% to 3.45%.
South African coal miner Resource Generation said it was
taking action to obtain funds that Blumont has not yet paid
the firm. Blumont was to have paid the firm A$22.6m
(S$25.6m) for a placement of about 102m Resource
US Indices Last Close Pts Chg % Chg
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Regional Indices
ST Index 3,124.4 (36.3) (1.1)
ST Small Cap 531.3 (2.9) (0.5)
Hang Seng 23,712.6 (16.1) (0.1)
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KLCI 1,824.9 3.0 0.2
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KOSPI 1,984.8 (2.0) (0.1)
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Nikkei 15,177.5 (230.5) (1.5)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 580
Total Daily Vol (m shrs) 2,325
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$)
5 Dec
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.645 0.82
ComfortDelgro Buy 1.920 2.19
OCBC Buy 10.120 12.40
Singapore Airlines Buy 10.420 11.40
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
5 Dec
Target Price
($)
Ezion Holdings Buy 2.250 3.30
China Merchants Buy 0.925 1.20
CSE Global Buy 1.020 1.11
Nam Cheong Buy 0.295 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Generation shares at 22 Australian cents per share. This was
said to have been due on Wednesday. The proceeds were to
be used to develop Resource Generation's Boikarabelo coal
mine in Waterberg, South Africa. The subscription of the new
shares from Resource Generation was to give Blumont a 15%
stake in the company.
Home-grown international fashion label, Raoul, will expand to
the Middle East after clinching a franchise deal with The
Chalhoub Group, a leading player in the luxury business in the
region. The agreement, signed between FJ Benjamin Holdings
and Chalhoub's CGR FZE, will see nine standalone Raoul
stores open by 2017, with the first two in the United Arab
Emirates and Bahrain by next year. The deal is for an initial
period of five years with an option to renew for another five,
subject to compliances.
JTC changes industrial property rules. Industrialists and thirdparty
facility providers such as property funds/developers who
own industrial properties on JTC-leased sites will now be
required to hold these properties for a longer period before
they may sell them. JTC has also extended the minimum
occupation period for anchor tenants of third-party facility
providers. The changes took effect on Nov 15. The move is
aimed at safeguarding Singapore's scarce industrial land
resources for optimal use by genuine industrialists and
dampening property speculation. Market watchers say the
latest changes in JTC policies will benefit genuine industrial
users but discourage property speculators.
Global passenger traffic is picking up pace, clocking 6.6%
growth y-o-y in October, which is higher than the 5.2% rise
seen a month earlier. According to data from the International
Air Transport Association (Iata), this was more or less matched
by a 6.5% expansion in capacity, keeping load factor
essentially flat at 78.9%. Of the three regions with the biggest
share of the passenger traffic market - Asia-Pacific, Europe and
North America - Asia-Pacific carriers reported the strongest
increase with a 7.8% y-o-y rise in passenger traffic in October.
Capacity was 7.1% higher from the corresponding month in
2012, prompting load factor to gain 0.5 percentage point to
76.4%.
The European Central Bank (ECB) raised its eurozone
economic growth forecast to 1.1% for 2014 yesterday and
predicted 1.5% growth the following year. It has also
maintained its forecast that the 17-member eurozone
economy would shrink by 0.4% this year. The central bank has
kept its interest rates unchanged at 0.25%.
US market was down for a fifth consecutive day despite
positive economic data. The government has revised its initial
report on 3Q economic growth to 3.6%, up from the previous
estimate of 2.8%. The improvement was largely driven by
inventory growth as companies restocked their shelves ahead
of the holiday shopping season. And the number of Americans
filing first-time claims for unemployment benefits fell more
than expected last week, though the decline may have been
distorted by the Thanksgiving holiday.-----------------------------------
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