OCBC Report 3 Dec 13

Telecoms Sector: Limited growth, steady dividends Summary: Going into 2014, we believe that there is a possibility of investors switching out of more defensive stocks into the cyclical ones as the developed economies continue to improve. And because of their outperformance in 2013, dividend yields have fallen to around 4.5%, making them merely “decent” when compared to the STI’s 3.5%. In summary, we think that the telcos will likely see just limited growth in the mobile market; stiffer competition in the broadband market; and a relatively unexciting Pay TV market. As such, earnings growth is not likely to be exciting. Hence we maintain our NEUTRAL rating on the sector. (Carey Wong) MORE REPORTS Yoma Strategic Holdings: Signs agreement with Ooredoo Myanmar Summary: Yoma reported that a consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar. This will facilitate Ooredoo’s commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year. We understand that Digicel Asian Holdings’ company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies.  We will speak further with management regarding this development and, in the meantime, maintain a HOLD rating with our fair value estimate of S$0.84 under review. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock indexes ended lower on Mon, with the Dow briefly falling below 16,000 ahead of the closing bell as investors debated whether a record rally has become overextended. - The massive construction of HDB flats will start to taper off from next year as balance is restored between demand and supply in the market, Minister Khaw Boon Wan said. - Better-quality Chinese companies will come to Singapore following last month's agreement between the regulators of the two countries. - Sitra Holdings has obtained JTC approval to sell its Sungei Kadut property to World Furnishing Hub Pte Ltd for S$8.65m. - Sembcorp Industries' new S$154m multi-utilities centre at Banyan sector has started supplying steam, water and on-site logistics services to petrochemical plants there. - A "software bug" gave M1's mobile data service the sniffles yesterday, with some of its users experiencing patchy 3G data access for several hours. - LionGold Corp, together with a subsidiary of associated firm ISR Capital and Chinese firm Suzhou Power, is partnering a new private equity fund that invests in natural resources.