Today’s Focus
OCBC - In exclusive talks to acquire HK bank; long-term
positive.
OCBC released an announcement pertaining to exclusive
discussion on potential acquisition of shares in Wing Hang
Bank from the latter's substantial shareholders (Fung Family
and affiliates, and BNY International Financing Corporation,
collectively at 45%). The exclusive arrangement (valid up to
31 Jan) will enable OCBC to finalise the terms for a possible
transaction, which would, should it proceed, involve OCBC
making a general offer for all the shares of Wing Hang Bank.
Any possible offer would be subject to obtaining all relevant
regulatory and other approvals. It was reported that OCBC
may bid up to 2x BV of Wing Hang Bank, valuing the
transaction at S$6.7bn (based on Wing Hang Bank's latest
book value of HK20.4bn/US$2.63bn). The 2x multiple is
within our expectations.
We believe that OCBC may need to resort to other capital
raising options to fund this transaction should it materialise.
We believe this acquisition would enhance OCBC's regional
expansion to Greater China especially with its presence across
China's Pearl River Delta. Wing Hang Bank has more than 70
outlets in Hong Kong, Macau and China. Greater China
currently only contributes 5% of OCBC's pre-tax profits
(9M13). We see this transaction long-term positive to OCBC
with a caveat on pricing.
Midas’ JV unit kicks off 2014 with orders worth RMB1.11bn.
The first contract worth RMB520m is to supply 85 train cars
for the Suzhou Rail Transit Line 2 Extension. The second
contract worth RMB590m is to supply 78 additional train cars
for Nanjing Metro Line 1. Slated for delivery between 2015
and 2016, both contracts are expected to contribute
positively to the Group’s financial performance in 2015 and
2016.
ST Engineering announced that its marine arm, ST Marine has
secured new orders worth about S$446m in the fourth
quarter of 2013. These orders are in addition to the recent
contract worth about US$350m won by its US shipyard, VT
Halter Marine, Inc for the design and construction of two
units of Container Roll-on/Roll-off vessels and the bareboat
charter contract for the Roll-on/Roll-off Passenger vessel to
Nova Star Cruises Limited.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,425.1 (44.9) (0.3)
S&P 1,826.8 (4.6) (0.3)
NASDAQ 4,113.7 (18.2) (0.4)
Regional Indices
ST Index 3,123.8 (7.6) (0.2)
ST Small Cap 545.3 1.0 0.2
Hang Seng 22,684.2 (133.1) (0.6)
HSCEI 10,290.6 (146.2) (1.4)
HSCCI 4,386.2 (62.0) (1.4)
KLCI 1,829.2 (5.6) (0.3)
SET 1,230.8 6.2 0.5
JCI 4,202.8 (54.9) (1.3)
PCOMP 5,985.8 37.9 0.6
KOSPI 1,953.3 7.1 0.4
TWSE 8,500.0 (46.5) (0.5)
Nikkei 15,908.9 (382.4) (2.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013
100-Day MA
Index
STI
Total Market cap (US$bn) 569
Total Daily Vol (m shrs) 4,060
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$)
6 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.665 0.80
Keppel Corp Buy 11.110 12.90
OCBC Buy 9.870 12.40
Yangzijiang Buy 1.160 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
6 Jan
Target Price
($)
Ezion Holdings Buy 2.280 3.36
China Merchants Buy 0.920 1.20
Pacific Radiance Ltd Buy 0.925 1.05
Nam Cheong Buy 0.330 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
Global Logistic Properties has leased 106,000 sqm to
Riachuelo at GLP Guarulhos in São Paulo. The customer is the
largest fashion retail company in Brazil. This is GLP’s largest
lease agreement in Brazil GLP Guarulhos, a 435,000 sqm
development to be developed in phases, is currently 100%
leased.
Masirah Oil Limited & Partners, a subsidiary of Rex
International’s jointly-controlled entity, Lime Petroleum Plc,
announced it has begun drilling an exploration well in GA –
South (GAS#1) located in the Block 50 Oman concession, on
30 December 2013. This is the second well in the two-well
drilling programme in the concession.
CNA Group has clinched two contracts for Singapore Changi
Airport comprising a term contract for installation of a new
BMS in Terminal 2 and VIP Complex, as well as the extension
of contract for the operations and comprehensive
maintenance of the IBMS, worth a total of over S$9m. This
marks the fourth airport-related project secured in the region
for 2013, which brings the total worth of airport related
contracts in 2013 to S$24.6m. Airport-related business is a key
growth driver for 2013 and 2014.
Cacola Furniture proposes to undertake a reorganisation of its
share capital. Pursuant to the proposed capital reorganisation,
the par value of the shares shall be reduced from HK$0.10 to
HK$0.05 per share and thereafter, the authorised share capital
of the company shall be increased from HK$100m to
HK$200m.
Federal International (2000) has secured an order of US$25m
for the supply of flowline control and related equipment. The
total orders secured by the Group to-date totals S$70m.
Teledata is proposing to place up to 240m new shares at
S$0.0102 for each Placement Share. The issue price represents
a discount of approximately 7.27% to the last volume
weighted average price. The estimated net proceeds S$2.3m
shall be used for general working capital, payment of trade
payables and for general expansion of the business.
Blumont Group intends to seek a new share issue mandate
from its shareholders. The group said that this would enable it
to tap equity markets this year to repay loans under a recently
secured US$30m loan facility and to allow it to "capitalise on
fund raising opportunities as and when they might occur".
International Healthway has secured a financing facility of
RM190m with Public Bank. The Facility will solely finance IHC’s
integrated mixed-use project located at No. 19 & 19A, Jalan
Kia Peng, in Kuala Lumpur, Malaysia.
Singapore's manufacturing sector shrank in December.
December's purchasing managers' index (PMI), the first
industrial indicator released this new year, fell to a reading of
49.7, bucking the market's consensus forecast of 51.1,
following November's 50.8 reading. Seasonal factors and
structural constraints, such as labour supply and costs, may be
in play. Electronics PMI fell sharply to a reading of 50.1. This
was down from November's 51.2, and under the market
forecast for a reading of 51.4.
Growth in China's service sector dropped sharply. The
HSBC/Markit services sector Purchasing Managers' Index fell to
50.9 in December from 52.5 in the previous month, with new
business expansion the slowest in six months. The survey
mirrors the official services PMI which hit a four-month low of
54.6 and comes after both of the manufacturing PMIs also
dropped in December on weak external demand. The official
manufacturing PMI fell to 50.1, its first dip since June.
US stocks fell following a weaker-than-expected December
ISM non manufacturing index. The figure came in at 53, below
consensus for 54.7 and lower than November’s reading of
53.9. The ADP employment change (consensus 200k, previous
215k) for December and the FED minutes will be released
tomorrow. These come ahead of Friday’s official payroll
numbers.
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