Today’s Focus
ARA Asset Management - Tentacles of growth;
maintain BUY with target price of S$2.08
ARA Asset Management recently entered into a conditional
sale and purchase agreement to acquire a real estate platform
in Korea; making immediate foothold into a new market. The
private funds business continues to grow steadily, with the
launch of a new platform, Morningside Investment Partners,
LLC. We believe that the group remains on track to meet its
targeted S$2bn growth in asset under management (AUM)
for 2014, supported by new private funds, while its REITs
continue to acquire and grow its recurring income fee base.
Maintain BUY with target price of S$2.08.
SPH REIT reported results for the period July 24, 2013 to Nov
30, 2013 which were in line with expectations. The resilient
results were supported by strong performance of Paragon
Mall. We see minimal risks for Clementi Mall as most of the
expiring leases have been renewed. Maintain HOLD, TP
S$0.97. At the current price, the stock offers a dividend yield
of 5.4%-5.5%.
Ezra’s core net profit for 1Q-FY14 came in at about US$4.0m,
excluding some US$2.4m in one-off gains on dilution of
interest in associate. This is lower than our assumptions, but
maintains a return to profitability that Ezra achieved in 4QFY13.
Revenue was up 22% to US$339.8m, mainly driven by
the subsea division EMAS AMC. Offshore chartering division
EMAS Marine recorded about 90% fleet utilisation, but
performance and margins were affected by higher vessel
maintenance costs and mobilisation/ demobilisation charges.
Hence, overall gross margins of 15% are lower than the 18%
recorded in 1Q-FY13 and 4Q-FY13. Orderbook still stands at
over US$2bn, including about US$1.25bn for subsea division,
about half of which will be delivered in FY14. The Group
continues to evaluate strategic options for subsea division
EMAS AMC to unlock value for shareholders.
Recommendation and TP under review pending further
updates from management later today.
Indonesian Parliament is deliberating revision to Plantations
Law No. 18/2004. The proposals include, among others, (1)
limit foreign ownership in plantations to 30%, and (2) require
the development of downstream businesses. It is unclear
US Indices Last Close Pts Chg % Chg
Dow Jones 16,444.8 (18.0) (0.1)
S&P 1,838.1 0.6 0.0
NASDAQ 4,156.2 (9.4) (0.2)
Regional Indices
ST Index 3,145.4 (5.2) (0.2)
ST Small Cap 545.9 (1.1) (0.2)
Hang Seng 22,787.3 (209.3) (0.9)
HSCEI 10,152.8 (177.0) (1.7)
HSCCI 4,394.8 (28.7) (0.6)
KLCI 1,828.2 (3.1) (0.2)
SET 1,258.3 0.5 0.0
JCI 4,201.2 0.6 0.0
PCOMP 5,937.5 (49.0) (0.8)
KOSPI 1,946.1 (12.9) (0.7)
TWSE 8,514.7 (41.3) (0.5)
Nikkei 15,880.3 (241.1) (1.5)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 570
Total Daily Vol (m shrs) 3,110
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$)
9 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.675 0.80
Keppel Corp Buy 11.060 12.90
OCBC Buy 9.740 12.40
Yangzijiang Buy 1.220 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
9 Jan
Target Price
($)
Ezion Holdings Buy 2.340 3.36
China Merchants Buy 0.925 1.20
Pacific Radiance Ltd Buy 0.995 1.05
Nam Cheong Buy 0.340 0.42
Source: Bloomberg Finance L.P., DBS Vickers
Singapore
Wired Daily
Page 2
whether the bill can be passed and supporting government
regulations can be issued before Parliamentary elections in
Apr14. Indonesian subsidiaries of SGX and Bursa-listed
planters may be affected if the bill is passed.
SingHaiyi Group announced that it will participate in the
acquisition of TripleOne Somerset by taking a 20%-stake,
worth S$66m, in a consortium, consisting of Boustead
Singapore and several other investors, to purchase the
property for S$970m. The 17-storey property comprises two
office towers with two floors of retail space and total gross
floor area of about 766,550 square feet, and is situated
adjacent to the Somerset Mass Rapid Transit Station. The
transaction marks SingHaiyi’s first investment in commercial
property in Singapore.
Units of OUE Commercial Real Estate Investment Trust (OUE
C-Reit) are said to have been priced at 80 cents each,
representing a dividend yield of 6.8% for its $400m initial
public offering. To comprise an initial portfolio of OUE
Bayfront in Singapore and the Lippo Plaza in Shanghai, OUE
C-Reit is the second Reit in six months to be spun off from
OUE Ltd, which listed OUE Hospitality Trust (OUE H-Trust) last
July.
Figures released by the Building and Construction Authority
(BCA) forecast construction demand this year at between $31
bn and $38 bn. Last year, construction demand hit a record
$35.8 bn, preliminary estimates showed. While construction
will contribute positively to economic growth in 2014, its
impact is likely to be moderated. According to BCA's
estimates, the public sector is expected to contribute close to
60% (equivalent to $19 bn to $22 bn) of the industry's total
demand in the coming year, compared with $14.8 bn last
year. The private sector on the other hand is expected to take
a back seat in driving construction demand because of current
market volatility, said the BCA.
China’s inflation rate fell to a seven-month low in December
on the back of easing food prices, reducing the odds of
monetary tightening. The consumer price index (CPI) eased to
2.5% in December from 3% the previous month. This was
well below the 3.5% target set by the government and a
touch lower than consensus forecast of 2.7%. Meanwhile, the
producer price index (PPI) - a measure of the cost of goods as
they leave the factory - fell 1.4% in December from a year
earlier, the 22nd consecutive drop.
U.S. stocks were little changed as retailers slumped and
investors await tonight’s official jobs report for clues to
whether the Federal Reserve will accelerate the pace of
stimulus cuts. Employment figures released thus far this week
coming from the ADP employment change, Challenger job
cuts and initial jobless claims have all pointed towards a
better-than-expected set of figures tonight. Consensus expects
December non-farm payrolls to register 197k while the
unemployment rate stays at 7%
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