Friday, February 28, 2014

Daily Summary 28 Feb 14

Europe was mixed last night while Dow +74 at 16273.  Dow's trend is up.  Dow's future is now -12.  Europe opened up.  

Asian bourses were mostly up. Nikkei -2, ShanghaiC +9, Hangseng +9.  STI closed +9 at 3106.  Volume was 1.9b shares.  Gainers were 201 to 244 losers.

Trend of STI is looking up again.

Top volumes were THBev +5, Albedo unchanged, MDR unchanged, Hankore unchanged, Armarda unchanged, Blumont +0.1, Equation +0.1, GoldenAgr -1, Transcu -0.1, SingHaiyi unchanged.

Market opened flat then stayed marginally positive in early part of the morning. It fell back to negative but some shortcovering in the last hour moved the STI to close at day high, +14.

Blue chips were mixed. Penny and speculatives were slightly weaker.

At the moment Europe are positive while Dow's future is slightly weaker.

Thursday, February 27, 2014

DBS Vickers Report 28 Feb 14

Today’s Focus
 ST Engineering – Strong 4Q13 results but dividend cut a
surprise. Maintain BUY with lower TP of S$4.30
 China Merchant - Record earnings and dividends exceed
expectations. Maintain BUY
 Thai Beverage - Strong 4Q; muted FY14 growth.
Maintain HOLD, TP slightly lower at S$0.56
The 4Q reporting season is about to end and thus far, the
earnings downward revision trend has yet to reverse. With
the Singapore market unable to draw strength from the
results season, focus is likely to return towards the economy
and monetary policy in the weeks ahead. This especially after
FED Chair Janet Yellen said while the central bank is likely to
keep trimming asset purchases, it may change its strategy for
reducing asset purchases should the economy weaken.
4Q13 results for ST Engineering in line, earnings up 10% y-oy.
Strong order wins reported in 4Q13; orderbook is at record
levels of S$13.2bn, underpins earnings visibility. STE cut its
dividend payout ratio from 90% to 80% in FY13 (final
dividend of 12Scts + 3Scts interim already paid out) as most
of the cash flow growth is trapped in the US operations due
to the 30% withholding tax hurdle. Nevertheless, net cash
levels remain elevated at S$692m and can be invested for
growth in US operations. Maintain BUY with lower target
price of S$4.30 (Prev S$ 4.90).
China Merchant Holdings (Pacific) reported FY13 results that
were ahead of our forecasts. FY13 net earnings of
HK$613.7m were 15.5% ahead of our forecast due to higher
operating earnings as well as forex gains. Gross profit rose by
27% y-o-y to HK$1.045bn on full year consolidation of Beilun
Port Expressway (vs 1.5 months a year ago) as well as firm
traffic growth on its roads (+7.9% y-o-y for the whole road
portfolio). A final dividend of S 4.25cts was also proposed,
bringing FY13 total dividends to S 7cts, 27% higher than the
company's guidance of S5.5cts and looking ahead, the
company has stated they will pay not less than 50% of
recurring net profit out to shareholders. We continue to like
the stock for its cheap valuations (below book of S$0.97, PE
of 9x on fully diluted basis with 7.8% dividend yield) and
longer term acquisition-driven growth story. Maintain BUY.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,272.7 74.2 0.5
S&P  1,854.3 9.1 0.5
NASDAQ  4,318.9 26.9 0.6
Regional Indices
ST Index  3,096.7 8.5 0.3
ST Small Cap  532.0 (1.3) (0.2)
Hang Seng  22,828.2 390.7 1.7
HSCEI  9,957.8 151.7 1.5
HSCCI  4,248.7 52.4 1.2
KLCI  1,831.7 9.1 0.5
SET  1,318.1 13.4 1.0
JCI  4,568.9 36.2 0.8
PCOMP  6,354.8 32.2 0.5
KOSPI  1,979.1 8.4 0.4
TWSE  8,639.6 38.7 0.5
Nikkei  14,923.1 (47.9) (0.3)
STI Index Performance
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Total Market cap (US$bn) 568
Total Daily Vol (m shrs) 3,083
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
27 Feb
Target Price
Keppel Corp Buy 10.44 12.60
ST Engineering Buy 3.82 4.30
Yangzijiang Buy 1.135 1.33
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
27 Feb
Target Price
Ezion Holdings Buy 2.26 3.26
China Merchants Buy 0.905 1.20
Pacific Radiance Ltd Buy 0.97 1.05
Nam Cheong Buy 0.335 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
Thai Beverage’s 4Q results above expectations, led by strong
Spirits and lower losses in Beer. Final DPS of THB0.30 (FY13:
THB0.44) equates to 58% payout was declared. FY13 was
strong but we expect muted growth in FY14F. Maintain
HOLD, target price slightly lower at S$0.56 (Prev S$ 0.57)
due to weaker THB.
Results for City developments were slightly below street
estimates, dragged by timing of residential profit
recognition. The group proposed final DPS of 8cts, bringing
full year DPS to 16cts. City Dev plans to offer two new
projects in Singapore, and adopt an active hotel asset
management strategy. Lacking of near catalyst, maintain
HOLD, target price $11.34 (Prev S$ 11.09)
4Q13 results for IHH Healthcare marginally above
expectations. Maiden DPS of 2 sen was declared. The Group
adopts a dividend payout policy of at least 20% PATMI
(excl. exceptional items). We adjust FY14F/15F earnings
down by 8% as we factor in a weaker Turkish Lira (TRY)
against MYR, offset partially by a stronger SGD. Maintain
HOLD, TP adjusted marginally lower to S$1.49/RM3.87 (Prev
S$ 1.53/ RM3.94). Positive prospects are largely priced in
with its rich valuations.
4Q13 results for Banyan Tree Holdings were hit by
Thailand’s political woes. Forward bookings for hotels
positive; though outlook in Thailand remains uncertain.
Maintain BUY, reduced target price to S$0.79 (Prev S$
Yanlord Land Group’s FY13 results in line but financial
position is better than expected. 2014 sales target of
Rmb16.8bn appears to be achievable. Yanlord continues to
speed up construction for future growth, but moving
inventory is more important. Maintain HOLD, target price
Yongnam’s results were below expectations due to margins,
write offs and provisions, and one-off items. Earnings of
S$5.5m were 87% lower than previous year (S$43.5m). We
cut our project win assumption to S$200m for FY14F and
S$300m in FY15F. Following our adjustment to project
wins, our earnings are cut by 29%/21% for FY14F/FY15F.
Yongnam has been invited to re-submit its bid for the
Hanthawaddy Airport (HIA) Project. While Yongnam has a
chance, we believe that it remains second best behind
Incheon Airport Consortium. Maintain HOLD and S$0.24
target price.
Venture’s net profit of S$38m (flat y-o-y, +8% q-o-q) fell
short of our expectations due to lower-than-expected sales.
Margin recovery continues but sustainability and further
improvement hinge on product mix. We have trimmed
FY14F earnings by 6%. Maintain BUY for attractive dividend
yield of over 6%. Target price reduced to S$ 7.80 (Prev S$
Croesus Retail Trust acquires two Tokyo properties for
S$176m. Acquisition to be fully debt funded, and will be
DPU accretive immediately. Maintain BUY, target price
S$1.05 (Prev S$ 1.02).
4Q/FY13 net profit for Petra Food was within expectations.
Final and special DPS amounting to 4.09 US cts proposed.
Maintain HOLD recommendation and target price of
S$3.65; still prefer to accumulate below S$3.15 for c.15%
United Envirotech has been awarded an engineering,
procurement and construction (EPC) contract from Fujian
Haixia to construct a 200,000 m3/day municipal wastewater
treatment plant in Fuzhou City, Fujian Province, China.
Upon completion, the plant will be the largest wastewater
treatment plant using the Membrane Bioreactor (MBR)
technology in China.
Global Logistic Properties has signed two new lease
agreements totaling 19,000 sqm with two third-party
logistics providers, across Greater Tokyo, reflecting strong
demand from 3PL providers catering to domestic
consumption. Both the leases were signed with existing
customers of GLP Japan.
Lorenzo International is proposing placement of up to
43.3m new shares at an issue price of S$0.066 each. The
estimated net proceeds of approximately S$2.67m will be
utilised for capital expenditure as well as general working
Singapore's services sector raked in 6.4% more in fourthquarter
sales than it did a year ago, but its pace of growth
has slowed from a revised 7.9% in Q3. Receipts were
boosted by all industries except recreation & personal
services, which contracted by 1.7%. Apart from that
segment, growth was broad-based across all activity clusters
reflected in the business receipts index (which excludes
wholesale & retail trade, and accommodation & food
U.S. stocks rose as FED Chair Janet Yellen said the central
bank may change its strategy for reducing asset purchases
should the economy weaken. Yellen said the central bank is
likely to keep trimming asset purchases, even as policy
makers monitor data to determine if recent weakness in the
economy is a temporary due to the weather. The FED is
open to reconsidering the QE tapering pace if there’s a
significant change in the outlook. Yellen also signalled the
Fed is moving away from its numerical threshold linking any
decision to raise its benchmark interest rate to the level of

OCBC Report 28 Feb 14

City Developments Limited: Looking outside for growth

4Q13 PATMI decreased 11.4% YoY mostly due to lower contributions from the property development segment and the absence of disposal gains recorded in 4Q12. On a full-year basis, FY13 PATMI cumulated to S$683.0m which was almost flat (up 0.7%) versus last year. Similarly, earnings per share came in 0.7% higher at 73.7 S-cents per share; this constituted 111% and 104% of our FY13 forecast and consensus, respectively, and somewhat lumpy from faster than anticipated progressive recognition but judged to be within expectations.  An ordinary final dividend of 8.0 S-cents per share was proposed. The group anticipates headwinds in the domestic residential market – its core business segment – going ahead and aims to accelerate its diversification plans into overseas growth markets, such as US, Japan, Australia, China and London. To this end, they have installed a new CEO, Grant Kelley who was the head of Apollo Global Management’s Asia Pacific real estate business, to spearhead this strategic shift. Maintain HOLD. Our fair value estimate dips to S$9.17 (30% RNAV disc), versus S$9.98 previously, mostly due to lower valuations of listed holdings and softer residential ASPs. (Eli Lee)


ST Engineering: FY13 results in line

STE reported a set of FY13 results that were generally in line with ours and the street's expectations. FY13 EPS of 18.73 S cents (flat versus FY12's 18.76 S cents) formed 99% and 104% of the street's and our prior forecasts. 4Q13 revenue grew 12% YoY and 25% QoQ to S$1.94b (recall that 3Q13 was a disappointing quarter). Land System's 4Q13 PBT jumped 126% to S$39.6m chiefly due to gain on disposal of a property, higher revenue and lower operating expenses. FY13 group revenue was S$6.63b, up 4%. PBT and net profit were S$730m (+2%) and S$581m (+1%). Final ordinary and special dividends of 4.0 S cents and 8.0 S cents bring FY dividends to 15.0 S cents, versus 16.8 S cents for FY12. Payout ratio is 80%, versus ~90% for FY09-FY12.Management expects group revenue and PBT in FY14 to be higher. We lower our FY14F EPS estimate slightly to 20.2 S cents from 20.6 S cents and trim our FV to S$3.84 (19x P/E peg) from S$3.91. Maintain HOLD. (Sarah Ong)

Yangzijiang Shipbuilding: FY13 results within our expectations

Yangzijiang Shipbuilding (YZJ) reported a 5% YoY fall in its 4Q13 revenue to RMB3.38b and a 8% decrease in PATMI to RMB746.3m, such that FY13 revenue and PATMI declined by 3% and 14% to RMB14.3b and RMB3.10b, respectively. This was within our expectations. A first and final dividend of 5 S cents/share was declared, similar to FY12, and translates into a yield of 4.4%. Management remained cautious on its outlook this year, but expects to see a rebound in vessel deliveries in 2015. Current order book stands at US$4.6b, comprising 111 vessels. Looking ahead, YZJ is seeking to clinch new order wins of US$2b in 2014 (FY13: US$2.9b). We make some minor adjustments to our FY14 PATMI forecast, and trim our fair value estimate from S$1.22 to S$1.21, still pegged to 9x FY14 core earnings. Maintain HOLD. (Low Pei Han and Andy Wong)

CSE Global: FY13 PATMI below expectations

CSE Global Limited (CSE) reported its FY13 results, with revenue from continuing operations falling 7.2% to S$416.0m, while core PATMI from continuing operations rose 5.5% to S$30.4m. This was below our forecast of S$34m due to additional provisions made for project overruns for a Middle-East project. Its current order book as at 31 Dec 2013 stood at S$227.2m, representing a decline of 18.4% from end 2012. On a bright note, CSE declared a final dividend of S$0.02/share and a special dividend of S$0.01/share. This will be paid on 20 May 2014 if approved by shareholders at its AGM. It also turned into a net cash position in end FY13, compared to a net gearing ratio of 19.2% as at 31 Dec 2012, due to proceeds received from its Servelec Group divestment which was used partly to repay its debt. We will attend an analyst briefing and will provide more details thereafter. Our Buy rating and S$0.96 fair value estimate (before adjustment for Servelec Group divestment) is under review due to a change in analyst coverage. (Wong Teck Ching Andy)

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


- The benchmark S&P 500 closed at a fresh record Thu, as investors welcomed dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee.

- Singapore's services sector raked in 6.4% more in 4Q13 sales than it did a year ago, but its pace of growth has slowed from a revised 7.9% in 3Q.

- A revaluation gain of S$489.6m for The Metropolis office project in Buona Vista provided a big boost to Ho Bee Land's 4Q13 and FY13 net earnings.

- An exceptional year-ago gain sent Thai Beverage Public Co's FY13 profit to a 33% drop from what would otherwise have been an 18% growth, the brewer of Chang beer said.

Daily Summary 27 Feb 14

Dow was +19 last night closing at 16198.  Europe were down.  Dow's short term up trend is still holding. Dow's future is now +32.  Europe opened mixed.

Asian bourses were mostly positive.  Nikkei -48, ShanghaiC +6, Hangseng +391.  STI closed +8 at 3097.  Volume was 3b shares.,  Gainers were 233 to 228 losers.

Trend of STI is still up but threatening to break down.

Top volumes were Transcu unchanged, SingHaiyi +0.2, KLW +0.1, LifeBrandz +0.2, GoldenAgr +2.5, Albedo unchanged, HanKore unchanged, CharismaEner -0.1, PSL +1.

Market opened down but recovered to close positive.  Blue chips were mostly firmer.  Penny and speculatives were mixed. Volume has slightly improved.

Dow and Europe are steady and also trading sideways.

Wednesday, February 26, 2014

OCBC Report 27 Feb 14


Sembcorp Industries: FY13 results within expectations

Sembcorp Industries (SCI) saw FY13 revenue rising 6% to S$10797.6m, or about 3% above our forecast (met consensus). Reported net profit climbed 9% to S$820.4m. However, excluding exceptional gains of S$35.5m (S$117m gain from the IPO of Salalah and S$48.5m impairment of Teesside being the main items), we estimate that core earnings would have been around S$784.9m, which is almost spot on our forecast (2% above consensus). SCI declared a final dividend of S$0.15/share as well as bonus dividend of S$0.02, bringing the total payout to S$0.17 versus S$0.15 last year. In light of the results and the guidance, we made some very minor tweaks to our FY14 estimates – all less than 1% change. We also maintain our BUY rating on the stock. But to reflect our recent adjustment in SembMarine’s fair value (from S$5.68 to S$5.26), our SOTP-based fair value slips from S$6.67 to S$6.42. (Carey Wong)


Nam Cheong: Reaching for the sky

Nam Cheong Limited delivered a record set of results for FY13, with revenue and PATMI growing 43.5% and 50.6% to MYR1,257.5m and MYR205.6m, respectively. The latter exceeded our FY13 forecast by 9.8%. This was partly due to a one-off reversal of deferred tax, excluding which Nam Cheong’s FY13 profit before tax (PBT) of MYR199.2m (+43.8%) would have been 2.0% above our PBT forecast. Management guided that it is targeting to deliver 35 vessels worth a total of US$700m in FY15, ahead of our estimate for 32 vessel deliveries, and also higher than its FY14 target. We lift our target PER peg from 8.5x to 9.5x in recognition of Nam Cheong’s solid execution track record and robust industry outlook. Applying this to our FY14F EPS estimate which has also been raised by 4.9%, we derive a higher fair value estimate of S$0.42 (previously S$0.37) on Nam Cheong. Maintain BUY. (Wong Teck Ching Andy)

BreadTalk Group: Aggressive expansion boosts FY13 results

BreadTalk’s FY13 revenue met our expectations as it increased 19.9% to S$536.5m, forming 99.6% of our forecast. PATMI came in slightly below our expectations, up 13.3% at S$13.6m, making up 96.3% of our forecast. In order to reach the S$1b sales target, a CAGR of 23.1% is required between FY14 to FY16, which we think has to be driven by new stores more than organic growth of recently opened stores. We think that expansion will become more challenging as BreadTalk gets larger and assume a lower growth of 15% for FY14. While lower than the implied CAGR of 23.1%, our assumed figure is still healthy by any measure. Given the growth prospects, we value BreadTalk with 16.6x PER, which is 1 s.d. above its five year historical average. We obtain a fair value estimate of S$0.85 (previous S$0.77) and maintain SELL as the stock seems overvalued now. (Yap Kim Leng)

Venture Corp: Results and dividends in-line with expectations

Venture Corp (VMS) reported a 5.1% YoY revenue growth in 4Q13 to S$622.9m, while PATMI came in flat at S$38.0m. For FY13, revenue slipped 2.4% to S$2,329.6m, or 1.3% ahead of our forecast. PATMI declined by 6.1% to S$131.1m, and was just a shade off our S$132.1m projection. As expected, a first and final dividend of S$0.50/share (similar to FY12) was declared, which will be payable on 19 May 2014 if approved by shareholders at its AGM. This translates into an attractive yield of 6.8%. During the year, VMS added four new customers, thus ending FY13 with a total of 187 customers. Looking ahead, management highlighted that the majority of its customers are showing some signs of recovery, although there are still some customers whose pace of recovery remains unclear. We believe visibility remains limited to the near-term, as there are still pockets of uncertainty in the global economy. For now, we maintain our BUY rating and S$8.50 fair value estimate on VMS, pegged to 15x FY14F EPS. (Wong Teck Ching Andy) 
ECS Holdings: FY13 results within our expectations

ECS Holdings (ECS) reported a 7.1% YoY increase in its 4Q13 revenue to S$1,093.9m and a 19.7% spike in PATMI to S$8.5m, such that FY13 revenue and PATMI grew by 15.3% and 16.1% to S$4,201.1m and S$34.4m, respectively. After adjusting for forex and other exceptional items, we estimate that FY13 core earnings would instead have increased by 11.8% from S$29.4m to S$32.8m. This was within our expectations, forming 99.5% of our full-year core PATMI estimate. ECS declared a first and final dividend of S$0.022/share, similar to FY12 and our projection. This translates into a yield of 3.4%. Looking ahead, ECS will continue its focus on mobile devices and cloud-based services. It will also seek to deepen and widen its distribution network in the region. As current valuation appears rich, we maintain our SELLrating and S$0.585 fair value estimate on the stock, pegged to 6x FY14F core EPS.(Wong Teck Ching Andy)

CWT Ltd: FY13 results above expectations

CWT’s FY13 revenue jumped 69% to S$9.1b, beating ours’ and street’s estimates by 18.0% and 34.6% respectively. However, PATMI decreased by 2% to S$106.0m due to exceptional S$22.5m gain from sale and leaseback (SLB) of a logistics property recorded in FY12. Nevertheless, FY13 PATMI exceeded ours’ and street’s estimates by 33.7% and 25.4% respectively. If we exclude the SLB, we estimate PATMI to have increased by 24.7% instead. While the surge in revenue was largely contributed by Commodity SCM business, the increase in gross profit was generated by Warehousing & Logistics services, Financial Services and Commodity SCM business. A final dividend of 3.5 S-cents is proposed, which implies a 2.7% yield based on yesterday’s closing price. We put our Buy and fair value estimate of S$1.68 under review pending a transfer of coverage. (Yap Kim Leng)

Yangzijiang Shipbuilding: FY13 results in-line with our expectations

Yangzijiang Shipbuilding (YZJ) reported a 5% YoY fall in its 4Q13 revenue to RMB3.38b and a 8% decrease in PATMI to RMB746.3m, such that FY13 revenue and PATMI declined by 3% and 14% to RMB14.3b and RMB3.10b, respectively. This was within our expectations, as PATMI came in 2% above our FY13 forecast. A first and final DPS of 5 S cents was declared, similar to FY12, and translates into a yield of 4.4%. Looking ahead, YZJ has begun to grow its fleet of vessels owned by the Shipping Logistics and Chartering segment as it sees an improving outlook for the commercial shipping market. We will provide more details after an analyst briefing scheduled later. For now, we place our Hold rating and S$1.22 fair value estimate under review. (Low Pei Han/Wong Teck Ching Andy)

Swiber Holdings: Strong contribution from South East Asia

For FY13, Swiber Holdings reported a 11.2% rise in revenue to US$1058.9m and a 36.0% increase in PATMI to US$62.1m, such that FY13 revenue and net profit accounted for 93% and 137% of our full year forecasts, respectively. We judge net profit to be above expectations, mostly due to a stronger-than-anticipated share of profits from associates. The topline increase was mainly due to a higher contribution from SE Asia, and net profits up from firmer sales contribution from associates and a fair value gain from an option agreement between Swiber and Vallianz. Gross margin for the year at 15.9% was again within expectations – and the order book now stands at S$800m. Maintain HOLD with our fair value estimate of S$0.72 under review. (Low Pei Han/Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

- US stocks finished a choppy trading session on Wed marginally higher, having pared most of the gains following a better-than-expected report on new home sales.

- Pacific Radiance posted a record 4Q13 net profit of US$16.4m, more than six times the US$2.4m it earned a year ago.

- China Aviation Oil reported a 25.7% YoY dive in net profit to US$13.5m for the 4Q13, largely due to lower contributions from associates.

- Hotel Properties Limited's net profit for FY13 jumped nearly 37% to S$177.64m.

DBS Vickers Report 27 Feb 14

Today’s Focus
 Sembcorp Industries – 4Q13 results beat expectations,
maintain BUY
 Sembcorp Marine – New contract wins lift YTD win to
S$1.6bn, forming 33% of our win assumption this year
4Q13 results for Sembcorp Industries beat expectations as
Marine & Urban Development exceed, Utilities in line. SCI has
proposed a bonus DPS of 2 Scts on top of an ordinary DPS of
15 Scts. 2014 earnings underpinned by Singapore’s
multiutilities/ cogen facilities and China water plant. Maintain
BUY. Asset divestments would provide earnings upside.
Venture’s 4Q13 results below forecast; net profit of S$38m
(flat y-o-y, +8% q-o-q) fell short of our S$45m, due to lower
than expected sales. Revenue was S$622.8 (+5% y-o-y, +6%
q-o-q) compared to our forecast of S$829m. No change to
DPS of S$0.50. Margin recovery continues but sustainability
and further improvement is dependent on product mix. We
are reviewing our forecast, target price and rating on the
Yangzijiang reported RMB3.1bn (-14% y-o-y) in FY13
earnings, on the back of RMB14.4bn (-3% y-o-y) revenue.
Gross profit margin was boosted by financial investments
segment to 33.2%; shipbuilding related segment gross profit
margin remains healthy at 27.4%. The Group also proposed
final cash dividend of 5.0 Singapore cents per share;
translating into a dividend payout ratio of 29.7%. Contract
win momentum continues with US$1.3 bn orders for
shipbuilding and offshore segment; outstanding order book
of US$4.6 bn supports near term shipbuilding outlook.
Sembcorp Marine (SMM) has signed contract for a jackup rig
worth US$214.3m with Marco Polo Marine (MPM), for
delivery slated in the fourth quarter of 2015, with options to
construct another two more units for delivery in the third
quarter of 2016 and the first quarter of 2017 respectively.
MPM principally engages in shipping (chartering of OSVs) and
shipbuilding businesses (repair, maintenance, outfitting and
conversion) with presence in Indonesia, Thailand, Malaysia
and Australia. This will be MPM's maiden drilling rig, marking
its venture into the new business.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,198.4 18.8 0.1
S&P  1,845.2 0.0 0.0
NASDAQ  4,292.1 4.5 0.1
Regional Indices
ST Index  3,088.3 (15.4) (0.5)
ST Small Cap  533.3 (0.5) (0.1)
Hang Seng  22,437.4 120.2 0.5
HSCEI  9,806.0 65.5 0.7
HSCCI  4,196.3 51.5 1.2
KLCI  1,822.6 (11.2) (0.6)
SET  1,304.6 0.7 0.1
JCI  4,532.7 (44.6) (1.0)
PCOMP  6,322.6 27.1 0.4
KOSPI  1,970.8 5.9 0.3
TWSE  8,600.9 25.2 0.3
Nikkei  14,971.0 (80.6) (0.5)
STI Index Performance
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Total Market cap (US$bn) 571
Total Daily Vol (m shrs) 2,115
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
26 Feb
Target Price
Keppel Corp Buy 10.430 12.60
ST Engineering Buy 3.820 4.90
Yangzijiang Buy 1.130 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
26 Feb
Target Price
Ezion Holdings Buy 2.240 3.26
China Merchants Buy 0.900 1.20
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.340 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
Sembcorp Marine (SMM) has also won two drillship orders
from repeat customer Transocean, totaling US$1.08bn,
scheduled for delivery in 2Q17 and 1Q18. It also comes with
options for three more units. Transocean currently operates
and owns six drilling rigs built by SMM including three
jackups and three semi-submersibles. This contract lifts
SMM's YTD win to S$1.6bn, ahead of Keppel's S$1.1bn,
forming 33% of our win assumption of S$5bn this year.
Maintain BUY and target price S$4.80 on SMM.
Croesus Retail Trust acquires two retail properties in Tokyo
for JPY14,250m (S$176.3m). The adjusted distribution per
unit (DPU) of Croesus Retail Trust is expected to increase by
5.7% to 7.41 cents for FY14.Post-acquisition, CRT’s net
lettable area (NLA) will increase by 9% and portfolio value
will increase by 28.3%, expanding its portfolio to six retail
properties in Japan. The acquisition of Luz Omori and NIS
Wave I will be funded through net debt proceeds from new
5-year Japanese onshore debt and proceeds from the
issuance of S$100m in principal amount of Fixed Rate Notes
due 2017.
Straits Construction Group signs MOU for potential reverse
take-over (RTO) of Transcu Group. The proposed (RTO) will
give Transcu a new lease of life and to increase Transcu’s
market capitalisation which may widen its investor base and
attract institutional investors. Straits Construction Group is a
reputable contractor with over 40 years of history primarily
in the construction of public housing and private residential
Global Logistic Properties (GLP) is expanding its relationship
with COFCO, China’s largest supplier of agricultural and
food products, into a strategic partnership. GLP will help
COFCO provide a national network of modern logistics
facilities in China. The partnership is expected to advance
the food logistics and distribution infrastructure system in
GLP has also signed an agreement with Vipshop (,
one of China’s leading e-commerce companies, to lease
36,000 sqm at GLP Park Huangpi in Wuhan, Midwestern
China. GLP Park Huangpi is now 100% leased, just one
month after completion.
GMG Global expects to report a loss in 4Q13 due mainly to
the decline in average selling price of natural rubber.
Notwithstanding the loss in 4Q13, the Group expects to
report a profit for FY13.
Singapore’s January industrial output grew a smaller-thanexpected
3.9% from a year ago, disappointing the market's
expectations of a stronger 6.5% expansion. Excluding the
biomedical sector, output would have increased 3.7% y-o-y.
After adjusting for seasonal factors, industrial production
declined 8.1% m-o-m in January - the first decline since
August last year. Excluding biomedical manufacturing,
output would have fallen 8.1% as well. This contraction
was significantly larger than what economists had forecast -
they had been expecting industrial production to fall a more
modest 3.7% in January from December, on a seasonally
adjusted basis. General manufacturing and precision
engineering contracted 4.2% and 1%, respectively, while
transport engineering and electronics output slowed
drastically in January, after sustaining several months of
double-digit increases. Transport engineering output grew
by only 2.7% in January from 14% in December, while
electronics output expanded 7.4% in January from 22.3%
the month before.
An unexpected rise in new U.S. home sales (actual 468k,
consensus 400k) boosted speculation FED Chair Janet Yellen
will reiterate plans to continue stimulus cuts in Senate
testimony today. Yellen had said earlier this month that the
US economy can weather cuts to the country’s stimulatory
bond buying program, adding that only a notable change to
the economic outlook would prompt the central bank to
slow the pace of tapering. However, mortgage applications
for the week ending Feb 21st fell 8.5% compared to 4.1%
the previous week. Our economist suspects the drop in
mortgage application is telling the more accurate story in
directional terms with regards to the health of the US
housing market. The weakness there is in line with the 15%
drop in existing home sales since July and the sideways-todownward
movement in housing starts over the past year.

OCBC Report 26 Feb 14

Dow and Europe were slightly down last night.  Dow -27 at 16180.  Trend of Dow is still up.  Dow's future is now +30.  Europe opened slighlty down.

Asian bourses were mixed.  Nikkei -81, ShanghaiC +7, Hangseng +120.  STI closed -15 at 3088. Volume was 2.1b shares.  Gainers were 202 to 267 losers.

Trend of STI is still up.

Top volumes were AdvSCT unchanged, HanKore unchanged, Albedo unchanged, OEL +0.5, Blumont -0.8, Equation unchanged, GoldenAgr -1.5, WEHldg -0.1, SingHaiyi -0.1, CharismaEner -0.1.

Market opened marginall down and remained down for the whole day.  Blue chips were mostly in the red.  Penny and speculatives were mixed.  Market is trading sideways with very low volume.

Europe are a bit down at the moment while Dow's future is now positive.

Tuesday, February 25, 2014

DBS Vickers Report 26 Feb 14

Today’s Focus
 Jaya Holdings - Downgrade to HOLD with target price of
S$0.78; switch to Pacific Radiance
 Vard Holdings - Margin execution will be the key;
maintain HOLD, target price S$0.90
Jaya Holdings proposes sale of its operating businesses to
Mermaid Marine Australia for S$625m cash. Net proceeds of
about S$0.78 per share is likely to be paid out to shareholders
as cash dividend The pricing is below book and is not very
exciting at only 5.5% premium to lat weighted average price.
Downgrade to HOLD with target price of S$0.78 (Prev S$
0.91); we recommend switching to Pacific Radiance.
4Q13 operating numbers for Vard Holdings below as Vard
Niteroi in Brazil continues to disappoint with further losses.
Order wins is the silver lining. Vard has maintained the
momentum in FY14, with 3 orders worth more than NOK2bn
secured already. Orderbook of NOK19.4bn as of end-FY13 is
the highest since 2008 and implies about 1.7x book-to-bill,
securing revenue visibility in FY14/15 to a large extent.
Margins will recover hereon, but extent and speed of recovery
remain uncertain. Maintain HOLD with revised target price of
S$0.90 (Prev S$ 0.84), pegged to a higher multiple of 10x
FY14F earnings (from 9x previously), in line with improved
revenue visibility.
Core recurring net profit for Del Monte Pacific within
expectations but headline net profit slipped by 50% to
US$16.1m, mainly on the back of higher one-off acquisition
expenses relating to the acquisition of US-based Del Monte
Foods’ consumer business (DMFI). With the >30% share price
correction since late last Oct, we believe this presents a
buying opportunity, especially with financing of the
acquisition largely firmed up through issuance of bonds and
bank financing. Key share price catalyst is post-acquisition
integration, execution and extraction of synergies. Maintain
BUY, target price unchanged at S$0.82.
First Resources’ 4Q13 core earnings of US$64m were beyond
expectations; backed by stronger refining & processing profit.
More biodiesel sales and higher forward average selling price
boosted refining & processing EBITDA by 272% y-o-y. With
expiry of forward contracts from FY14F; we cut FY14F/15F
US Indices Last Close Pts Chg % Chg
Dow Jones  16,179.7 (27.5) (0.2)
S&P  1,845.1 (2.5) (0.1)
NASDAQ  4,287.6 (5.4) (0.1)
Regional Indices
ST Index  3,103.6 (2.2) (0.1)
ST Small Cap  533.8 (0.1) (0.0)
Hang Seng  22,317.2 (71.4) (0.3)
HSCEI  9,740.6 (57.3) (0.6)
HSCCI  4,144.8 (13.9) (0.3)
KLCI  1,833.8 5.1 0.3
SET  1,303.9 2.5 0.2
JCI  4,577.3 (46.3) (1.0)
PCOMP  6,295.6 (0.8) (0.0)
KOSPI  1,961.4 12.3 0.6
TWSE  8,575.6 15.0 0.2
Nikkei  15,051.6 213.9 1.4
STI Index Performance
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Total Market cap (US$bn) 572
Total Daily Vol (m shrs) 2,438
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
25 Feb
Target Price
Keppel Corp Buy 10.430 12.60
ST Engineering Buy 3.820 4.90
Yangzijiang Buy 1.145 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
25 Feb
Target Price
Ezion Holdings Buy 2.250 3.26
China Merchants Buy 0.905 1.20
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.345 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
earnings by 3%/4% each. HOLD call maintained for c.2%
dividend yield. Target price slightly raised to S$2.22 (Prev
FY13 results for Pan-United Corporation in line with our
estimate; growth was driven by the ready concrete mix
(RMC) and port businesses. Final DPS of 2.75 Scts was
declared, increasing FY13 DPS to 4.25 Scts. We are positive
on RMC business this year, but CCIP port acquisition will be
a drag on earnings growth. Maintain HOLD and target price
of S$1.03.
Cosco Corp’s 4Q13 results were disappointing, dragged by
provision for cost overruns. While order win momentum has
been encouraging, we believe the spotlight stays on
earnings delivery and potential financial impact from the
drillship saga in the near term. Maintain FULLY VALUED;
target price reduced to S$0.69 (Prev S$ 0.76).
Nam Cheong’s FY2013 revenue surpasses the billion mark
to reach a record of RM1.3bn, +43% y-o-y. FY2013 net
profit registered a strong double-digit growth of 51% to
RM206.2m. For 4Q13, the group achieves record revenue
and net profit of RM406.1m and RM70.2m respectively.
Strong gross profit margin of 20% for 4Q 2013 was
maintained. A total dividend of 1.0 Singapore cent was
proposed for FY2013.
Pacific Radiance reports a sterling set FY2013 results as its
net profit sailed past the US$50m mark for the first time, to
US$56.8m, +76%. The Group sees strong profit
contribution from subsea services. The timely fleet
expansion sets the Group in prime position to ride rising
E&P spending in key markets in Asia, Africa and South
Global Logistic Properties has entered into a strategic
alliance with Guangdong Holdings (GDH), a leading China
state-owned company, to jointly develop logistics and
industrial facilities in Dongguan, Southern China. Both
parties will collaborate on Guangdong GDH Equipment
Technology Industrial Park (“the Park”), the largest
investment project in Dongguan.
In property news, MCL Land (Brighton) has swooped in on
two adjoining executive condominium (EC) plots in Choa
Chu Kang, offering $375.05 psf ppr for one and $338.94
psf ppr for the other. This works out to a tender price of
$232.5m for Plot A and $210.1m for Plot B. The premium
paid over the second-highest bid for Parcel A and B was
0.48% and 1.74% respectively.
Five more small industrial sites in Tuas were launched
yesterday, in line with JTC Corporation's plan to offer more
affordable land parcels to small and medium-sized
industrialists. The market expects the sites to attract at least
five bids each, with the expected top bid of between $80
and $100 per square foot per plot ratio (psf ppr).
U.S. stocks fell after data showed slower growth in home
prices and a drop in consumer confidence. Home prices in
the U.S. climbed at a slower pace in the year through
December, indicating the market is entering a new stage
that will help sustain further progress. The S&P/Case-Shiller
index of property values in 20 cities rose 13.4% y-o-y in
December after increasing 13.7% the prior month. It was
the first deceleration since June. Meanwhile, consumer
confidence fell to 78.1 (consensus 80) in February from 79.4
the prior month.

Daily Report 25 Feb 14

Dow and Europe were up last night.  Dow +104 at 16207.  Dow's trend is up.  Dow's future is now -18.  Europe opened down.  

Asian bourses were mixed.  Nikkei +214, ShanghaiC -42, Hangseng -71.  STI closed -2 at 3104.  Volume was 2.4b shares.  Gainers wre 218 to 236 losers.

Trend of STI is up but levelling.

Top volumes were HanKore unchanged, Albedo -0.1, OttoMarine -0.2, MirachEner -0.7, Vallianz -0.3, KLW -0.1, SingHaiyi -0.1, PSL +2.5, Federal -0.1, GoldenAgr unchanged.

Marker opened up but slipped down to closed marginally lower  Blue chips were mixed with more gainers.  Penny and speculatives were mixed but with more losers.

Dow and Europe are looking a bit weaker at this moment.

Monday, February 24, 2014

OCBC Report 25 Feb 14


Sembcorp Marine: Better-than-expected FY13 showing

Sembcorp Marine (SMM) reported better-than-expected FY13 results. Revenue of 5525.9m (+25%) was about 8% above our forecast (6% above consensus). Reported net profit came in at S$555.7m, +3%, while core earnings rose 11% to S$553m, which was 7% above our estimate (5% above consensus). SMM declared a final dividend of S$0.06/share and a special S$0.02 dividend, bringing the total payout to S$0.13 (unchanged from last year). Overall, management maintains a pretty upbeat outlook, backed by a net order book of S$12.3b with visibility stretching out to 2019. While we are largely keeping our FY14 estimates unchanged, our SOTP-based fair value slips from S$5.68 to S$5.26. Maintain BUY. (Carey Wong)


Raffles Medical Group: FY13 results within expectations

Raffles Medical Group’s (RMG) FY13 revenue and core PATMI growth of 9.4% and 14.5% to S$341.0m and S$60.6m, respectively, were both within our expectations. A final dividend of 4 S cents/share was declared, bringing full-year DPS to 5 S cents (FY12: 4.5 S cents/share). Once RMG’s local expansion plans are completed in 2016, we believe it will enhance its position as a leading healthcare services provider. We trim our FY14 EPS forecast marginally by 1.5% due to an enlarged share base. Given that management has implemented a concrete plan to deploy its cash in a more efficient manner which is expected to enhance shareholders’ return in the longer-term, coupled with RMG’s continued solid execution track record, we assign a slightly higher PER target peg of 30x (previously 29x) to our FY14F EPS. This raises our fair value estimate from S$3.61 to S$3.68. Maintain BUY. (Wong Teck Ching Andy)

COSCO Corp: Margin pressure likely to continue

COSCO Corp (Singapore) reported FY13 revenue of S$3,508.1m, representing a decline of 6.1% and formed 97.4% of our FY13 estimate. PATMI fared much worse, plunging 71.0% to S$30.6m and came in 17.0% below our full-year forecast (31.0% below Bloomberg consensus). The miss was partly due to a S$51.0m allowance made for expected losses recognised on construction contracts and a S$7.5m allowance for inventory write-down in 4Q13. We believe this reflects the execution risks still faced by COSCO. A first and final DPS of S$0.01 was declared, half that of FY12. Looking ahead, management highlighted that it is targeting to win US$2.2b of new orders in FY14, which we believe will be dominated by offshore marine orders, especially in the accommodation units segment. However, operating conditions are expected to remain challenging in 2014, since construction will commence for some of its shipbuilding contracts which were secured at low prices, coupled with continued learning curve for its offshore marine business. Hence we expect margin pressure to remain as a key concern. Maintain SELL and S$0.61 fair value estimate on COSCO. (Low Pei Han and Andy Wong)
Vard Holdings: FY13 results within expectations

Vard Holdings Limited (VARD) reported its FY13 results this morning which was in-line with our expectations. Revenue was flat (+0.2%) at NOK11,155m and was 3.7% above our full-year forecast. PATMI slumped 55.6% to NOK357m, or 1.0% below our FY13 estimate. During 4Q13, VARD delivered five vessels and clinched contracts for three new buildings, bringing its end 2013 order book to NOK19,356m (end FY12: NOK15,096m). However, VARD highlighted that its Niteroi shipyard in Brazil continued to face further delays and cost overruns, although operations were stable at its shipyards in Europe and Vietnam. A negative surprise came from VARD’s decision to not declare any dividends in FY13, which we believe would disappoint the market. We were expecting a S$0.02 first and final DPS. Management attributed this to an extraordinarily high dividend payout in FY12, record high investments in 2013 and a sharp fall in profitability. We will review our Hold rating and S$0.84 fair value estimate pending an analyst briefing later. (Wong Teck Ching Andy)

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


- US stocks climbed on Mon, boosted by M&A activity, an upbeat German confidence report and bets that the S&P 500’s foray into new high ground could spur further buying.

- Inflation may have dropped to a near four-year low in Jan - dipping to 1.4% from 1.5% in Dec - but economists say the benign headline rate masks underlying price pressures.

- United Industrial Corporation said that it was taking its 80.36% subsidiary, Singapore Land, private at S$761.67m.

- Impairment charges totalling US$20.8m sent Rickmers Maritime's earnings into the red, with net losses of US$8.04m for 4Q13, compared with net profit of US$2.24m a year earlier.

- Super Group, whose stock is now trading at S$3.90, has proposed a one-for-one bonus share issue to boost trading liquidity.

- China XLX Fertilizer has posted a net profit attributable to owners of 264.05m yuan (S$54.8m) for FY13, a 15.1% decline from the previous year's 311.12m yuan.

- Wheelock Properties sank deeper into the red with a loss of S$91.3m for 4Q13, versus a loss of S$30.8m in the corresponding period a year earlier.

- Q&M Dental Group has signed a binding master agreement for a full stake in specialised dental materials manufacturer Qinhuangdao Aidite High Technical Ceramic Co for 80m yuan (S$16.7m).

DBS Vickers Report 25 Feb 14

Today’s Focus
􀂃 Sembcorp Marine - Rebound in 4Q13 margins a
confidence booster. Upgrade to BUY, TP S$4.80
􀂃 Super Group - Soft outlook ahead; proposed 1-for-1
bonus issue. Maintain HOLD, TP S$4.09
4Q13 net profit for Sembcorp Marine (SMM) beat
expectations. The outperformance came from higher revenue
recognition and tax incentives of S$33m. EBIT margin
rebounded 0.3ppts y-o-y and 1.1ppts q-o-q to 11.1%.
Dividend payout ratio remained at 50%; management
proposed final/special DPS of 8.0Scts, bringing total FY13 DPS
to 13.0Scts, unchanged from FY12, translating to a dividend
yield of 3.2%. Brazil yard is on track to assume integration
work for first drillship in June. SMM is a purer play in the
offshore & marine sector with stronger EPS CAGR of 15% in
FY13-15F. We believe the good results, margin recovery and
on-schedule Brazilian projects should restore confidence and
reverse the downtrend in SMM’s share price since Nov (-9%)
after it reported a weak 3Q set of results. Upgrade to BUY
with unchanged target price of S$4.80.
FY13 results for Super Group slightly ahead on better-thanexpected
gross margins. Final DPS of 7 Scents was declared.
The Group is also proposing a 1 for 1 bonus issue. We expect
weaker growth outlook on soft demand, and higher input
costs. Maintain HOLD, target price S$4.09.
4Q13/ FY13 core profits for Raffles Medical within
expectations. Final DPS of 4 Scts was proposed. Expansion
remains on track; we expect no major impact from CFO’s
resignation. We maintain our HOLD recommendation with
our target price raised slightly to S$3.27, as we roll valuations
over to the average of FY14F/15F earnings, still based on 24x
First Resources reported 4Q13 net profit of US$64m (+36%
y-o-y; +25% q-o-q) - significantly above our expectation of
US$48m. This brought FY13 earnings (excluding biological
asset gains) to US$217m - or 8% above our full year forecast.
The better-than-expected performance was driven by 105%
q-o-q jump in refining and processing revenue on top of 13%
q-o-q rise plantations revenues. Our forecasts and target price
of S$2.19 are under review, pending management inquiries
and further analysis.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀘 16,207.1 103.8 0.6
S&P 􀀘 1,847.6 11.4 0.6
NASDAQ 􀀘 4,293.0 29.6 0.7
Regional Indices
ST Index 􀀘 3,105.8 5.9 0.2
ST Small Cap 􀀙 533.9 (2.7) (0.5)
Hang Seng 􀀙 22,388.6 (179.7) (0.8)
HSCEI 􀀙 9,797.9 (138.4) (1.4)
HSCCI 􀀙 4,158.7 (68.1) (1.6)
KLCI 􀀙 1,828.7 (2.1) (0.1)
SET 􀀙 1,301.4 (2.8) (0.2)
JCI 􀀙 4,623.6 (22.6) (0.5)
PCOMP 􀀙 6,296.3 (12.0) (0.2)
KOSPI 􀀙 1,949.1 (8.8) (0.4)
TWSE 􀀙 8,560.6 (41.3) (0.5)
Nikkei 􀀙 14,837.7 (28.0) (0.2)
STI Index Performance
Total Market cap (US$bn) 569
Total Daily Vol (m shrs) 2,234
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
24 Feb
Target Price
Keppel Corp Buy 10.440 12.60
ST Engineering Buy 3.800 4.90
Yangzijiang Buy 1.145 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
24 Feb
Target Price
Ezion Holdings Buy 2.260 3.26
China Merchants Buy 0.890 1.20
Pacific Radiance Ltd Buy 0.950 1.05
Nam Cheong Buy 0.340 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
Asian Pay TV Trust (APTT) results and distributions inline,
10.7% yield intact for FY14F. APTT declared an ordinary
distribution of 4.13 Scts per unit for 2H13, inline with
forecasts. The management has reaffirmed FY14F
distribution guidance of 8.25 Scts per unit (10.7% yield)
after raising capex guidance. APTT also guided for FY15F
distributions not to be impacted by expansion capex.
Maintain BUY, target price S$ 0.91.
Cosco Corp's net profit for FY13 slid 71% to $30.6m. This
came on the back of a 6% decline in revenue to $3.51bn
and a 34% fall in gross profit to $321.2m. The fall in
turnover was largely due to lower shipyard revenue. A
dividend of 1cts per share was proposed, versus 2cts in the
previous financial year.
Pan-United Corp posted a 37% rise in quarterly net profit
attributable to equity holders to S$11.98mil, up from
S$8.75mil a year ago. Revenue was largely unchanged at
S$186.26mil, compared to S$186.38mil in FY2012. For FY,
net profit rose 4% to S$44.6 mil, due partly to an increase
in port activities and in the group's share of Changshu
Xinghua Port (CXP) from 51.3% to 85.5% in September
2013, and higher contribution from its basic building
resources (BBR) division. Excluding vessel disposal gains of
S$2.2mil in FY2012, the group's PATMI would be 9%
higher y-o-y.
For 4Q2013, Vard recorded a 22.5% y-o-y increase in
revenue to NOK 3.1 nil, up from NOK 2.5bil a year ago on
the back of high yard utilization and good project progress.
While showing an improvement from the previous two
quarters, 4Q2013 EBITDA decreased 45% to NOK 158mil
compared to NOK 287mil in 4Q2012, as further delays and
cost overruns at the Niterói yard in Brazil continue to weigh
on overall margins. EBITDA margin was 5.1% for 4Q2013.
UIC made an unconditional cash offer for all the issued and
paid-up ordinary shares in the capital of Singapore Land, at
an offer price of S$9.40 per share. The price offered
represents an 11% premium to last transacted price, and
c.8% premium to average price traded over the past 12
months. Based on the offer price, UIC will pay a maximum
of S$762m for the remaining 19.6% stake in Singland
(c.81m shares), representing 18.8% of UIC’s market cap,
and will be funded by internal resources and external
borrowings. UIC offered the following rationale for its offer:
(a) the opportunity for cash exit for investors, given low
historical trading volume and (b) the ability to consolidate
and optimise Singland’s resources and operations.
Jaya Holdings is proposing to dispose the entire issued and
paid up share capital of all its subsidiaries (the “Sale
Companies”) to Mermaid Marine Australia for aggregate
cash consideration of S$625m. The Sale Companies
represent materially all of the business of Jaya. The purchase
consideration taken together with the US$10m cash held at
the company as of 31 December 2013 represents S$0.826
on a per share basis (Gross Implied Value). The Gross
Implied Value also represents a premium of 5.5% to the last
volume weighted average share price. Following completion
of the proposed transaction, the company intends to
distribute a significant portion of the purchase consideration
to shareholders by way of a cash dividend.
Sembcorp Industries (Sembcorp) continues its growth
momentum in China with the expansion of two of its
utilities facilities – its wind power plant in Huanghua, Hebei
province, which will see its wind power capacity increase by
almost 50%, and its industrial water plant in Nanjing,
Jiangsu province, which will have its industrial water
capacity doubled. Sembcorp will build, own and operate an
additional 48-megawatt wind farm in Huanghua. The
RMB454.9m expansion will increase the wind power
capacity in Huanghua by almost 50%, from 99 megawatts
to 147 megawatts, and is expected to be completed by the
first half of 2015. In addition, Sembcorp will be doubling its
industrial water capacity from 120,000 cubic metres per day
to 240,000 cubic metres per day in the Nanjing Chemical
Industrial Park (NCIP), Jiangsu province. The total expansion
cost will amount to RMB65.2m. Besides meeting the
country’s growing energy and water needs in a sustainable
manner, the expansions also demonstrate the Group’s focus
on growth in China, a key market for Sembcorp.
Yongnam consortium, which is one of four shortlisted
consortiums that has been invited by the authorities of
Myanmar to resubmit, by 22 April 2014, its proposal for the
design, construction, operation and maintenance of
Hanthawaddy International Airport (HIA) and its facilities on
the basis of a public-private partnership agreement for a 30-
year concession period.
Sino Construction expects a loss for FY2013, mainly due to
declining financial performance arising from deteriorating
business environment the Group operates in.
CNA Group has established a partnership with Mitsui
Knowledge Industry (MKI) to explore bringing MKI’s IT
cloud-based energy management solution called Green
energy Management (GeM2) into Singapore. This
partnership marks MKI’s first step into penetrating the
Singapore market and GeM2 will be the first MKI solution
available for Singapore’s buildings and various specialised
facilities such as cinemas.
January inflation dipped to 1.4% from 1.5% in December, a
near four-year low. The easing in overall inflation was
mainly due to a larger decline in private road transport
costs, which fell 3.5% in January after a 2.8% decline in
Wired Daily
Page 3
December. This was in turn due to lower COE premiums at
the end of 2013. Core inflation - which strips out the costs
of accommodation and private road transport, however,
remained on an upward trend, rose at a faster 2.2% from
2% in December, due to higher contributions from services
and food prices. Services inflation edged up to 2.9% in
January from 2.8% in the preceding month, led by a
stronger increase in holiday travel cost and pre-school fees.
Food inflation crept up to 3% from 2.7% in December,
reflecting the seasonal uptick in food prices during Chinese
New Year.

Daily Summary 24 Feb 14

Dow was -30 on Friday closing at 16103.  Europe closed positive.  Dow's trend is still up but appears to be consolidating at this level.  Dow's future is now -10.  Europe opened mixed.  

Asina bourses were mostly down.  Nikkei -28,  ShanghaiC -37,  Hangseng -180.  STI closed +6 at 3106.  Volume was 2.2nb shares.  Gainers were 209 to 263 losers.

Trend of STI is up.

Top volumes were MirachEner +0.7, CCM +0.1, Albedo -0.1, KLW +0.2, Vallianz +0.7, Cedar -0.1, OttoMarine +0.3, HanKore -0.1, CNA +0.7, Federal -0.1.

Market opened up but slipped momentarily to negative before closing at +6. Volume was low.  Blue chips were mixed. Penny and speculatives were also mixed. It was a sideway market but steady.

Dow and Europe are mixed at the moment.

Sunday, February 23, 2014

OCBC Report 24 Feb 14


Sheng Siong Group: Slower growth ahead

Sheng Siong Group’s (SSG) FY13 results came in within our expectations. Revenue increased 7.9% to $$687.4m and forms 99.9% of our FY13 forecasts. Core net profit increased 18.6% to S$38.9m, or about 99.2% of our FY13 forecasts. A final dividend of 1.4 S-cents per share is proposed, bringing the total dividend to 2.6 S-cents per share in FY13, or a yield of 4.3% based on Friday’s closing price. We expect stable margins but slower growth in FY14 as the 11 stores opened in FY11 and FY12 mature. We look favourably upon management’s prudence in opening of new stores and execution of e-commerce. We maintain our BUY with a new fair value of S$0.68 (previous: S$0.70) as we roll forward our model.  (Yap Kim Leng)


Noble Group Ltd: Maintain HOLD for now

Noble Group (Noble) reported its FY13 results, with revenue rising 4% to US$97.878b, or just 1% below ours and street’s forecast, while reported net profit tumbled 48% to S$243.5m. But if we exclude the non-cash charge of US$103m from its share of Yancoal's loss, Noble noted that its core earnings would have come in around US$349m, or about 15% above our forecast (8% above consensus). Noble declared a final cash dividend of US$0.0091/share, versus US$0.0181 last year; but still around 25% of its earnings. For now, we are largely keeping our FY14 estimates unchanged; although we expect better margin improvements in FY15. Our fair value remains at S$1.03, still based on 11x FY14F EPS. Maintain HOLD. (Carey Wong)

SG Budget: Tribute for pioneers
Summary: The Singapore government announced its Budget 2014, with the focus primarily on thanking and honouring the pioneers of Singapore. The unprecedented S$8b pioneer fund consists of health-care benefits for some 450k pioneers for the rest their lives. Also included were measures to help older workers and elderly Singaporeans as well as address the health-care cost concerns of tomorrow’s seniors. For the corporates, the government has extended the PIC (Productivity and Innovation Credit) scheme to 2018, which gives tax breaks for firms that improve their processes, among other measures. Overall, we think that the Budget would be most positive to the health-care sector; hence we maintain our OVERWEIGHT on the sector, with Raffles Medical (BUY, S$3.61 FV under review) as our top pick. Other businesses may experience slightly higher manpower cost with the 1% point increase in employer’s CPF contribution (which will go into Mediasave). We note that the levy for Basic Skilled/R2 Work Permit Holders will be increased from $600 to $700 in Jul-16, while levies for Higher Skilled/R1 Work Permit Holders will remain unchanged. Meanwhile, the unexpected hike of 25% on alcohol tax could impact F&B outlets that rely heavily on sale of alcoholic drinks.  (Carey Wong)
Raffles Medical Group: FY13 results within expectations

Raffles Medical Group (RMG) reported its FY13 results this morning that were within our expectations. Revenue rose 9.4% to S$341.0m and was 1.9% below our forecast. PATMI surged 49.3% to S$84.9m, but was partly boosted by fair value gains of investment properties (S$3.9m) and a disposal gain from its Thong Sia building divestment (S$20.4m). Excluding these items, we estimate that core PATMI rose 14.5% to S$60.6m, forming 99.8% of our core earnings projection. The improved performance was attributed to growth from both RMG’s Hospital Services and Healthcare Services divisions, which registered an increase in revenue of 12.4% and 6.2%, respectively. This was in turn driven by higher patient loads and increased depth of medical specialties offered. A final dividend of 4 S cents/share was declared, bringing full-year DPS to 5 S cents (FY12: 4.5 S cents/share). We will provide more updates after the analyst briefing. For now, maintain BUYon RMG, but our fair value estimate of S$3.61 is under review. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.


- US stocks stepped lower Fri and finished mostly down for the week, as the S&P 500 snapped a two-week winning streak that has left it just below a record level.

- Otto Marine sank to a net loss of US$9.7m for its 4Q13 after three quarters of gains, even though it managed to report a net profit for the full year.

- QAF Ltd reported a 13% decline in net profit to S$30.19m for FY13 due mainly to its provision for unrealised foreign exchange loss.

- ValueMax posted a 34.8% decline in FY13 net profit to S$9.36m on lower revenue.

- Strong momentum and higher agent productivity drove AIA Singapore's growth in FY13, with its operating profit after tax rising 15% to US$396m.

- Millennium & Copthorne's FY13 pretax profit jumped 54% due to accrued one-time revenue from condominium sales by its Singapore subsidiary.

- Hiap Hoe and Heeton signalled caution over the Singapore property market amid weaker 4Q13 results, and have indicated more expansion opportunities overseas.

- Swissco more than doubled its net profit to S$12.9m for its 4Q13 from S$6.4m a year ago.

DBS Vickers Report 24 Feb 14

Today’s Focus
􀂃 Singapore Budget - Minimal impact on earnings from
increase in CPF contributions; boost for healthcare
industry but impact on listed healthcare players muted
􀂃 Frasers Centrepoint Ltd – Initiate coverage with a BUY
rating and target price of S$2.08
With the current 4Q results season unable to reverse the
downward earnings revision trend and the QE tapering
process still ongoing, we see no change to our view that the
STI should be capped at 3150 or just slightly above over the
course of CY1Q. STI’s correction ended at 2950 in early
February but the daily stochastics is now overbought
following the 150pt rally since then. Still, the ability to head
passed the immediate resistance level at 3050 last week
means that any pullback should be halted at 3030-3050.
Beyond CY1Q, we maintain our view for the STI to head
towards 3350.
The government has proposed to raise the employer’s CPF
contribution by 1% across the board, and 0.5% to 1%
additional contributions for older workers (above 50 years
old) from Jan 2015. The bulk of the increase will be
channelled to the employee’s Medisave account. This will
affect labour intensive industries in the service sectors such as
banks, hotels, hospitals, retail, transport, construction and
marine. However, the impact on these listed companies is
minimal, estimated at -0.3% to -1% of net earnings. In
addition, half of the first year’s additional CPF cost will be
subsidized by the government.
The government’s generous S$8b Pioneer Generation
Package is positive for the healthcare industry. However, the
impact on listed private healthcare players is relatively muted.
The thrust of the budget is to provide healthcare support for
the lower, middle-income households, as well as the aged -
Pioneer Generation. Traditionally, the target markets for the
private healthcare players are the more affluent patients, and
international patients. Maintain HOLD recommendation for
Raffles Medical (TP: S$3.15) and IHH Healthcare (TP: RM3.94/
S$1.53), as their positive long term prospects have been
priced in.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,103.3 (29.9) (0.2)
S&P 􀀙 1,836.3 (3.5) (0.2)
NASDAQ 􀀙 4,263.4 (4.1) (0.1)
Regional Indices
ST Index 􀀘 3,099.9 13.3 0.4
ST Small Cap 􀀘 536.6 3.1 0.6
Hang Seng 􀀘 22,568.2 174.2 0.8
HSCEI 􀀙 9,936.3 (41.8) (0.4)
HSCCI 􀀘 4,226.8 7.7 0.2
KLCI 􀀘 1,830.7 2.9 0.2
SET 􀀘 1,304.2 0.2 0.0
JCI 􀀘 4,646.2 47.9 1.0
PCOMP 􀀙 6,308.4 (44.4) (0.7)
KOSPI 􀀘 1,957.8 27.3 1.4
TWSE 􀀘 8,601.9 77.2 0.9
Nikkei 􀀘 14,865.7 416.5 2.9
STI Index Performance
Total Market cap (US$bn) 569
Total Daily Vol (m shrs) 2,261
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
21 Feb
Target Price
Hutchison Port Hldgs Trust (US$) Buy 0.630 0.76
Keppel Corp Buy 10.470 12.60
ST Engineering Buy 3.790 4.90
Yangzijiang Buy 1.140 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
21 Feb
Target Price
Ezion Holdings Buy 2.300 3.26
China Merchants Buy 0.900 1.20
Pacific Radiance Ltd Buy 0.955 1.05
Nam Cheong Buy 0.340 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
Telcos are key beneficiaries. Telecom companies will benefit
from the government’s broadband initiatives of S$500m to
subsidize SMEs for Fiber broadband connection and
landlords on broadband infrastructure. Starhub is the prime
Margin pressure on construction sector remains. The push
to raise productivity gains for construction companies and
raising levies on basic skilled workers will continue to put
pressure on margins. However, news that the government
will not impose further tightening measures on the inflow
of foreign workers is a relief, and will benefit Centurion, the
only listed operator of foreign workers’ dormitories.
We initiate coverage on Frasers Centrepoint Ltd (FCL) with a
BUY rating and target price of S$2.08. As the fourth largest
listed developer, FCL offers investors a sizeable listed
investment option with a market cap in excess of S$4bn and
asset value of S$11.5bn. An estimated 47% of its gross
asset value is exposed to development properties, 33% to
investment properties and REITs, and the remaining to
hospitality and other activities. Its core markets are
Singapore, China and Australia. FCL is a complete value
chain player with strong niche markets in Singapore, China
and Australia, and strong pre-sales that provides a very
visible earnings stream over the next 2-3 years. The Group
optimises risk and return with geographical and business
diversification, and strong balance sheet to support value
creation activities. Key risk is its small free float, with major
shareholders, TCC Group and Thai Beverage holding a total
87.9%, which we believe can be addressed in the longer
4Q13 core earnings for Wilmar were in line with
our/consensus expectations. S$0.055 final DPS was
declared. The drop in Sugar pretax was offset by much
stronger Oilseeds & Grains, Plantations and Consumer
pretax. Target price raised to S$3.92 (Prev S$ 3.83) on
reduced capex. We have not yet imputed the acquisition of
Shree Renuka, pending analysis. The lower expected
soybean/soybean oil prices in 2H14 should boost Wilmar’s
Merchandising and Processing (M&P) pretax. BUY call
reiterated for 17% potential return.
FY13 results for Noble Group largely in line. Final DPS of
0.91 UScents was declared, halved from 1.81 UScents a
year ago. We have lowered our FY14/15F core profits by
6.2%/5.5% after fine-tuning our operating cost, and net
interest expense assumptions. Accordingly, our target price
is reduced to S$1.09 (Prev S$ 1.15). We are awaiting
stronger recovery; maintain HOLD.
Global Logistic Properties (GLP) has signed a strategic
partnership agreement with Sinotrans Logistics to develop a
national network of logistics facilities across China. The
partnership enhances GLP’s access to strategic land holdings
and strengthens its position as the top logistics solution
provider in China.
Separately, GLP has also established a strategic partnership
with Best Logistics to develop a national network in China.
GLP and Best Logistics have signed lease agreements for
nine build-to-suit facilities totaling 143,000 sqm (1.5m sq ft)
RH Petrogas issued profit guidance for 4Q13, mainly due to
write-off for two unsuccessful exploration wells and also for
other exploration and evaluation expenditures.
Genting Hong Kong the Group is expected to record a
significant increase in net profit for FY Dec 13 as compared
with that of the FY12, mainly attributable to the gains on
disposal of certain stakes in Norwegian Cruise Line Holdings
as a result of its initial public offering.
K1 Ventures has entered into an agreement to divest
transportation leasing business for approximately US$152m.
The sale is part of the Company’s proactive management of
its investments with the aim of enhancing shareholder

Friday, February 21, 2014

Daily Summary 21 Feb 14

Dow closed +93 last night at 16133.  Europe was mixed.  Dow's uptrend is still holding.  Dow's future is now +36.  Europe opened marginally up.

Asian bourses were mostly up.  Nikkei +416, ShanghaiC -25, Hangseng +174.  STI closed +13 at 3100.  Volume was 2.2b shares.  Gainers were 289 to 174 losers.

Trend of STI is up.

Top volumes were Albedo unchanged, WCorp +0.2, AdvSct unchanged, SingHaiyi unchanged, MirachEner +2, Hankore +0.1, Genting -4, Federal +0.1, Noble -4, CCM unchanged.

Market gap up and stay up for the whole day but closing off its day high. Blue chips were mostly up. Penny and speculatives were mixed.

Europe and Dow are looking good for tonight.

Thursday, February 20, 2014

OCBC Report 21 Feb 14


Ezion Holdings: More growth to come

Ezion Holdings’ FY13 revenue rose 77.7% to US$281.9m, forming 95.4% of our FY13 forecast, while PATMI surged 103.4% to US$160.4m. If we exclude its gains on disposal items, we estimate that core PATMI jumped by 115.0% to US$140.7m. This met our expectations, coming in 2.1% above our projection. Looking ahead, we remain positive on the demand for service rigs, and expect Ezion to deploy more assets in FY14. A glitch though, came from two project delays, one of which was caused by bad weather and the other due to upgrading requirements by its customer. We keep our FY14 forecasts largely intact and introduce our FY15 projections. We expect Ezion to continue its growth trajectory, and forecast robust core earnings CAGR of 31.5% from FY13-15F. Maintain BUY and fair value estimate of S$2.57, pegged to 12x FY14F core EPS. (Low Pei Han and Andy Wong)


Hyflux: Downgrade to SELL

Hyflux reported a very disappointing set of FY13 results, with core earnings coming some 15% below our forecast. Going forward, Hyflux also warns of a slower first half in 2014, citing the timing of its projects. Nevertheless, management remains upbeat about its prospects over the next 12 months, where it sees significant opportunities in its key markets with an estimated US$8b worth of projects made available for tender. But we believe that investors may want to switch out of Hyflux first, hence we downgrade our rating from Hold to SELL. Our fair value also drops from S$1.23 to S$0.84, even as we push out our 20x valuation from FY14F to blended FY14/FY15F EPS. (Carey Wong)

Neptune Orient Lines: Turbulent waves in FY13

Neptune Orient Lines' (NOL) FY13 revenue came in within our expectations while PATMI loss was lower than expected. Group’s core EBIT narrowed 9% to a net loss of US$167m. Core EBIT for liner narrowed 8% to US$231m loss despite revenue decreasing 9%. This is largely due to cost of sales decreasing 8% from operational cost efficiencies and lower bunker prices. In the logistics business, core EBIT decreased 4% to S$64m while revenue increased 2% to US$1.59b. The decline in core EBIT is mainly because of an extended automotive plant shutdown in North America and slow sector recovery. We do not expect the latest rate increase in Jan-14 to hold up and think freight rates will continue to be under pressure as supply growth continues to outstrip demand. We derive a new fair value of S$0.97 and upgrade to HOLD on valuation grounds. (Yap Kim Leng)

Genting Singapore: FY13 results mostly in line - HOLD

Genting Singapore (GS) reported FY13 revenue of S$2847.3m, down 3%, and was about 3.8% below our forecast, mainly due to weaker-than-expected win percentages in 4Q13. Net profit was up 1% at S$589.4m, or around 2.8% above our forecast. GS also declared a final dividend of S$0.01/share, unchanged from last year. To reflect a higher capex spend due to the Jeju JV (construction likely to start in 2H13), we have adjusted our cashflow assumptions; this results in our DCF-based fair value easing slightly from S$1.48 to S$1.43. Given the limited upside from here, we continue to maintain our HOLDrating. (Carey Wong)

Wilmar: Decent FY13 showing

Wilmar International Limited (WIL) reported a fairly decent set of FY13 results. Although revenue was down 3% at S$44085.0m, it was spot on our forecast. Reported net profit climbed 5% to S$1318.9m; core earnings jumped 12% to S$1303m, or 4% above our forecast. WIL declared a final dividend of 5.5c/share (versus 3c last year), bringing the full-year payout to 8c (versus 5c in FY12). Going forward, WIL maintains a pretty positive outlook for FY14, saying it is optimistic on the future of China and its long-term prospects there. We will be attending an analyst briefing at noon and will have more updates after that. In the meantime, we maintain our HOLDrating but place our S$3.55 fair value under review. (Carey Wong)
Ascott Residence Trust: To acquire first property in Dalian, China

ART has entered into a conditional agreement with a third party to acquire its first serviced residence in Dalian for RMB571m (~S$118.6m) at an EBITDA yield of 5.5%. On a pro forma basis, the accretive acquisition is expected to increase FY13 distribution per unit by 1.5% from 8.40 S cents to 8.53 S cents. This is the first acquisition announced after ART's rights issue in Dec 2013 which raised S$253.7m. The 195-unit international serviced residence, which commenced operations in 2009, has an average occupancy of about 80%. ART will refurbish the property and it will be managed by The Ascott Limited (Ascott) as Somerset Grand Central Dalian when the acquisition is completed, which is expected to be by mid-2014. Management says it is also looking at potential acquisitions from the sponsor, Ascott, in key cities in China, Japan, Australia, Malaysia and Europe. We maintain our FV of S$1.33 and BUY rating on ART.(Sarah Ong)
Sheng Siong Group: FY13 results in-line

Sheng Siong Group’s (SSG) FY13 results came in within our expectations. Revenue increased 7.9% to $$687.4m and forms 99.9% of our FY13 forecasts. Gross margin improved from 22.1% to 23.0% due to better sales mix and utilisation of distribution centre. Core net profit increased 18.6% to S$38.9m, or about 99.2% of our FY13 forecasts. A final dividend of 1.4 S-cents per share is proposed, bringing the total dividend to 2.6 S-cents per share in FY13, or a yield of 4.3% based on yesterday’s closing price. We maintain our BUY and keep our fair value of S$0.70 under review pending an analyst briefing. (Yap Kim Leng)

Dyna-Mac Holdings: Secures new fabrication orders worth S$42m

Dyna-Mac Holdings announced that it has clinched three new fabrication orders for a provisional sum of S$42m. This is its first announced contract win for the year. These orders were awarded by Keppel FELS, Armada C7 Pte Ltd (JV of Bumi Armada and Shapoorji Pallonji Group) and Modec Production Systems (Singapore) Pte Ltd. Dyna-Mac is scheduled to deliver two structural blocks, six topside modules and six pipe-racks progressively by 1Q15. These latest orders form 15% of our FY14 orders win forecast. Maintain BUYand S$0.47 fair value estimate on Dyna-Mac, as we view the group as a strong proxy to the improving prospects in the Floating, Production, Storage and Offloading (FPSO) market.  (Wong Teck Ching Andy)

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


- US stocks finished with solid gains on Thu after a choppy start to the session, shaking off losses that came amid downbeat reports from the Philadelphia Federal Reserve, China and Europe.

- Otto Marine returned to the black in FY13 with a net profit of US$14.1m, versus a US$103.1m loss in FY12.

- Bonvests Holdings' net profit more than doubled to S$56.23m for FY13.

- ARA Asset Management saw net profit for 4Q13 jump 25% YoY to S$22.13m on the back of revenue rising 19% to S$43.83m.

- Chip Eng Seng's 4Q13 net profit fell 11.7% YoY, due to lower profits from its construction and property development divisions.

DBS Vickers Report 21 Feb 14

Today’s Focus
 Ezion – Maintain BUY; TP revised to S$3.26. We
continue to like Ezion’s strong growth profile and
earnings visibility.
Ezion’s FY13 recurring net profit surged 115% y-o-y, in line
with expectations. Gross margin inched up to 48.7%; net
gearing manageable at 1.1x. We are expecting solid c.50% 2-
year EPS CAGR, supported by fleet expansion backed by
charter contracts.
In its post results briefing, the management of Ezion has
addressed concerns on Port Melville, gearing and margins.
Ezion may stick with its plan to divest Port Melville so as not
to dilute management’s focus on service rig business and
burden on balance sheet. Net gearing could reach 1.3x by 1Q
with the buyback of two service rigs. Gross margins should be
sustainable in the near future but should moderate in the
medium term as Ezion moves towards time charter model.
We have trimmed FY14 EPS by 2% to reflect the delivery
schedule adjustment of two of its vessels. Maintain BUY; TP
revised to S$3.26 (Prev S$3.36). We continue to like Ezion’s
strong growth profile and earnings visibility.
Neptune Orient Lines reported another quarter of higher than
expected losses. Core net loss of US$277m in FY13 is lower yo-
y despite lower average freight rates, due to cost savings.
We are not expecting freight rates to be significantly higher in
FY14; operational efficiencies will be key for NOL. High
gearing of 1.8x is a cause for concern. Maintain HOLD and
S$1.10 target price. Despite hopes of slow economic recovery
and a possible return to profitability driven by cost savings,
we do not think NOL will be able to achieve normalised
returns in FY14-15, given the unfavourable demand-supply
dynamics in the industry.
Ascott REIT announced the proposed acquisition of a 125-
unit serviced residence in Dalian for Rmb 571m (cS$118.6m)
from a third party. This acquisition is accretive to earnings,
and we expect more to come. Maintain BUY and S$1.33
target price. We believe yields of close to 7.3%-7.5% remain
US Indices Last Close Pts Chg % Chg
Dow Jones  16,133.2 92.7 0.6
S&P  1,839.8 11.0 0.6
NASDAQ  4,267.5 29.6 0.7
Regional Indices
ST Index  3,086.6 (2.2) (0.1)
ST Small Cap  533.5 0.5 0.1
Hang Seng  22,394.1 (270.4) (1.2)
HSCEI  9,978.1 (79.5) (0.8)
HSCCI  4,219.1 (50.7) (1.2)
KLCI  1,827.8 (1.6) (0.1)
SET  1,304.0 (17.0) (1.3)
JCI  4,598.2 5.6 0.1
PCOMP  6,352.8 58.1 0.9
KOSPI  1,947.9 17.4 0.9
TWSE  8,524.6 (52.4) (0.6)
Nikkei  14,449.2 (317.4) (2.1)
STI Index Performance
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Total Market cap (US$bn) 569
Total Daily Vol (m shrs) 1,994
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
20 Feb
Target Price
Hutchison Port Hldgs Trust (US$) Buy 0.630 0.76
Keppel Corp Buy 10.450 12.60
ST Engineering Buy 3.760 4.90
Yangzijiang Buy 1.140 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
20 Feb
Target Price
Ezion Holdings Buy 2.30 3.26
China Merchants Buy 0.89 1.20
Pacific Radiance Ltd Buy 0.945 1.05
Nam Cheong Buy 0.34 0.43
Source: Bloomberg Finance L.P., DBS Bank
Wired Daily
Page 2
FY13 results for Sheng Siong slightly below expectations.
Final DPS of 1.4 Scents was declared, resulting in DPS of 2.6
Scents for FY13. Earnings growth for FY14F is adjusted
down to 1%, on moderate store opening expectations in
FY14F. Maintain BUY despite lower S$0.72 (Prev S$ 0.80)
target price as its valuations are still attractive.
Pan-United Corporation (PAN) has paid RMB437m at 1.3x
book for 90% stake in Changshu Changjiang International
Port (CCIP). The acquisition is funded by 50% debt and
50% internal cash. PAN plans to expand its existing CXP’s
port operations through CCIP’s additional capacity. Net debt
increased to 0.5x while earnings reduced by 8% on higher
interest cost. Downgrade to HOLD with lower S$1.03 target
price (Prev S$ 1.21).
4Q13 results for ARA Asset Management in line; final
dividend of 2.7 Scts was declared. ARA’s recurring earnings
base is expected to continue growing after a series of
opportunistic acquisitions in 2013 (Suntec, Prosperity,
Fortune and Cache). A key focus for ARA in 2014 will be
driving asset under management (AUM) growth from its
private funds. Maintain BUY, target price revised to S$2.00
(Prev S$ 2.08), after accounting for lower cash balances and
market prices of its REITs.
Results for Genting in line if not for poor VIP win rate. We
look forward to strong earnings recovery, more new
ventures abroad and Japan’s gaming liberalisation. Maintain
BUY and S$1.75 target price.
4Q13 core net profit for Wilmar came in at US$353m (-
12% y-o-y; -10% q-o-q) - in line with our and consensus
estimates. 4Q13 revenue was US$11,622m (flat y-o-y, -2%
q-o-q). The sequential drop in Sugar revenue was offset by
higher Oilseeds & Grains revenue and higher volumes in
most segments. Maintain BUY but target price of S$3.83
under review. More updates after briefing today.
Hyflux reported net losses of S$7m in 4Q13 as sales fell
another 57% y-o-y and 47% q-o-q to S$85m. Revenue
decline as Hyflux continues to work down its thinning
orderbook. Hyflux’s EPC orderbook continues to reduce to
S$732m, meaningful project execution, if any, would likely
be later part of the year. Balance sheet has deteriorated too
as net gearing shot to 1.15x from 0.6x previously. This is
due to higher borrowings taken up to fund the Singapore
desalination projects. Overall, we feel Hyflux remains stuck
in a rough patch for both earnings and contract wins.
Rex International Holding announced that its jointlycontrolled
entity, Lime Petroleum Norway has signed an
agreement with North Energy to acquire a 20% stake in a
new licence in Norway. Lime Norway’s portfolio has grown
at a good clip over the past year, from four initial licences to
the current 14, and at higher stakes.
Delong Holdings expects to report a net loss for 4Q2013,
and consequentially, for the full year ended 31 Dec 13, due
to (i) weaker steel prices; and (ii) lower volume of hot-rolled
coils and steel billets sold.
China Bearing is expected to report a net loss for FY2013.
The expected net loss for FY13 is mainly attributable to
amongst others:-
(i) Decrease in revenue;
(ii) Increase in administrative expenses;
(iii) Decrease in other operating income; and
(iv) Impairment on property, plant and equipment.
Dyna-Mac Holdings has secured three new fabrication
orders for a provisional sum of S$42m. The orders are
expected to be completed progressively by the first quarter
of year 2015.
Global Logistic Properties announced that GLP Brazil
Development Partners I (GLP BDPI) has raised additional
capital commitment of BRL 538mn (US$230m) for strategic,
value-added initiatives led by strong customer demand.
GLP’s assets under fund management now stand at
US$11.1 bn.
Growth forecasts for both total trade and non-oil domestic
exports this year are maintained at 1-3%, even though the
two put up a disappointing performance in 2013 NODX,
which barely grew in 2012, fell 6% last year against the
official forecast of a 4-5% decline. Total trade dipped 0.5%
to $980.2 bn in 2013, against a 1.1% rise the year before.
The decline fell short of the 1-2% growth that IE Singapore
had expected.-