DBS Vickers Report 20 Jan 14

Today’s Focus
• Ascendas REIT - Inorganic growth to drive earnings;
maintain BUY, TPS$2.44
Results releases are much focused on SREITs this week with
11 companies scheduled to report. Outside of this group, M1,
Keppel Corp, Keppel Land and SGX are also scheduled to
release results.
M1 is our preferred pick for the telco sector while Keppel
Corp is our pick for yards. Keppel Land trades at a steep 48%
discount to RNAV of $6.21. This is an attractive entry level as
the discount magnitude places it more than -1SD below
mean valuation for property stocks. It is one of our picks
within the property sector.
We are less optimistic about SGX. The value of shares traded
on the Singapore Exchange averaged S$990mil/day in
4QCY13. This is 25% lower q-o-q compared to S$1.32bil for
3QCY13 and 19.5% lower y-o-y compared to S$1.23bil for
4QCY12.
The Global Economic Prospects report by the World Bank last
week underpins our strategy to go for stocks that stand to
benefit from the economic recovery in the developed
economies of US and Europe. According to the World Bank,
global GDP is projected to grow from 2.4%in 2013 to 3.2%
this year, stabilizing at 3.4% and 3.5% in 2015 and 2016,
respectively, with much of the initial acceleration reflecting a
pick-up in high-income economies.
Our picks are HPH Trust, Venture Corp, Goodpack and ST
Engineering.
The improving sentiment about global recovery should also
sustain interest in O&G stocks. Our picks are asset
owners/operators such as Pacific Radiance and Jaya, shipyards
Nam Cheong while Ezion should see sustainable earnings
growth from strong execution in its niche vessel segment.
China’s 4Q GDP, December industrial production, retail sales
and fixed assets investment will be released at 10am this
morning.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,458.6 41.6 0.3
S&P 􀀙 1,838.7 (7.2) (0.4)
NASDAQ 􀀙 4,197.6 (21.1) (0.5)
Regional Indices
ST Index 􀀘 3,147.3 6.9 0.2
ST Small Cap 􀀙 542.3 (1.2) (0.2)
Hang Seng 􀀘 23,133.4 146.9 0.6
HSCEI 􀀙 10,167.3 (20.2) (0.2)
HSCCI 􀀙 4,443.3 (5.9) (0.1)
KLCI 􀀙 1,813.0 (11.0) (0.6)
SET 􀀙 1,295.4 (6.1) (0.5)
JCI 􀀙 4,412.2 (0.3) (0.0)
PCOMP 􀀘 5,987.1 4.9 0.1
KOSPI 􀀙 1,946.2 (11.1) (0.6)
TWSE 􀀙 8,596.0 (16.1) (0.2)
Nikkei 􀀙 15,734.5 (12.7) (0.1)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 574
Total Daily Vol (m shrs) 3,117
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$)
17 Jan
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.680 0.80
Keppel Corp Buy 11.010 12.90
ST Engineering Buy 3.850 4.90
Yangzijiang Buy 1.210 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
17 Jan
Target Price
($)
Ezion Holdings Buy 2.400 3.36
China Merchants Buy 0.920 1.20
Pacific Radiance Ltd Buy 0.965 1.05
Nam Cheong Buy 0.330 0.42
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
3Q14 performance for Ascendas REIT was in line. A-REIT
continues to offer a steady growth profile over FY14F/15F.
In additional, A-REIT is also likely to acquire the remaining
stake in Aperia, which is expected to lift earnings further.
Maintain BUY, TPS$2.44. We continue to like A-REIT’s
steady earnings growth profile which is visible and
achievable, while maintaining a conservative gearing profile
of <35%, in our view.
Cambridge Industrial Trust reported DPU of 1.251 Scts, in
line with expectations. Going forward, we expect
acquisitions and developments to fuel growth in
2014/2015. CREIT continues to offer steady, resilient yields
of 7.3%-7.7%. Our HOLD Call and target price of S$0.74 is
maintained, given limited upside.
Osim has increased its stake in subsidiary TWG Tea
Company to 70%, up from 53.7% previously, after TWG
undertook a rights issue to raise $25m. The funds raised will
be utilised mainly for expansion during 2014 and to repay a
bank loan and a shareholder loan. The investment is
expected to be earnings accretive for Osim this financial
year.
Data errors in trade data collection has skewed trade
figures. Total trade and NODX for 2013 are expected to
come in lower than expected due to data revisions. October
2013's non-oil domestic exports (NODX) was said to have
grown 2.8%, when in fact it had shrunk 2.7%. Data for
September was also overstated - NODX was initially said to
have shrunk 1.2% when the actual contraction was a larger
2% - due to the "multiple counting of some trade permits".
International Enterprise (IE) said that the errors were traced
back to changes to a trade declaration system known as
Access, which is used by four air express companies to
declare their consolidated imports and exports.
Rental yields for non-landed private homes fell below the
4% psychological mark at 3.9% in 2013, from 4.2% the
previous year, according to the Singapore Real Estate
Exchange (SRX). Four locations, comprising Orchard,
Tanglin, Southern Islands (Sentosa Cove) and Newton, saw
gross rental yields below 3%. On the other end of the
spectrum, Outram, Yishun, Geylang, Tampines and Jurong
West registered gross yields of 4% or above.