Today’s Focus
Biosensors - Slower growth, lower margins.
FY15F/FY16F earnings cut by 22%/27%
Far East Hospitality Trust – 4Q results below IPO
forecasts; maintain HOLD, target price revised down
S$0.92
3Q14 results for Biosensors below expectations as stent sales
and operating expenses (opex) disappoint. 9M14 net profit
accounts for only 67% of our full year forecast. We do not
expect revenue growth to pick up significantly in the coming
quarters while we believe Biosensors will operate at a higher
opex structure going into FY15F. FY15F/FY16F earnings cut
by 22%/27%. Maintain HOLD and lower target price to
S$0.90 (Prev S$ 0.94).
Far East Hospitality Trust (FEHT) reported 4Q13 gross
revenues and net property income (NPI) of S$33.6m and
S$30.5m respectively, which were -3.0% and -2.4% lower
than its IPO forecasts, due to softer-than-forecasted market
operating conditions in 4Q13. Going forward, refurbishments
and repositioning strategies remain key drivers to earnings
growth in the medium term. However, we expect near-term
earnings to remain below its true potential and expect
growth of c.1-2% p.a. over FY14-15F. Yields are attractive at
c.7.2-7.3%, which is likely to limit downside to its share price.
Maintain HOLD, target price revised to S$0.92 (Prev S$ 0.95).
3Q14 results for Religare Health Trust as expected; DPU of
1.95 Scts was declared. Operations remained strong. 1H15
distributions hedged at SGD/INR53.36. As a result of a
weaker INR, we project DPU to dip to 7.2 Scts in FY15F from
8.1 Scts in FY14F. We estimate that every 1% change in
SGD/INR rate will impact DPU by 1% correspondingly.
Maintain HOLD, target price: S$0.82 (Prev S$ 0.81). A key
upside risk to our recommendation is a significant
strengthening of INR against SGD.
SingTel posted a 3Q14 net profit for the Oct-Dec quarter of
S$872m, +5.5% y-o-y. Its earnings before interest, taxes,
depreciation and amortisation (EBITDA) were nearly flat from
a year earlier at S$1.26 bn. Operating revenue declined 7.3%
y-o-y to S$4.26 bn, hit by the sharp decline in the Australian
dollar. The company revised down guidance on segment
performance for the financial year ending March 2014,
US Indices Last Close Pts Chg % Chg
Dow Jones 15,963.9 (30.8) (0.2)
S&P 1,819.3 (0.5) (0.0)
NASDAQ 4,201.3 10.2 0.2
Regional Indices
ST Index 3,035.5 6.3 0.2
ST Small Cap 525.6 1.1 0.2
Hang Seng 22,285.8 322.8 1.5
HSCEI 9,996.8 139.9 1.4
HSCCI 4,302.5 74.8 1.8
KLCI 1,825.6 1.5 0.1
SET 1,314.1 17.8 1.4
JCI 4,496.3 26.1 0.6
PCOMP 6,112.3 6.3 0.1
KOSPI 1,935.8 3.8 0.2
TWSE 8,510.9 80.3 1.0
Nikkei 14,800.1 81.7 0.6
STI Index Performance
Singapore
Total Market cap (US$bn) 555
Total Daily Vol (m shrs) 2,731
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$)
12 Feb
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.660 0.76
Keppel Corp Buy 10.530 12.60
ST Engineering Buy 3.840 4.90
Yangzijiang Buy 1.150 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
12 Feb
Target Price
($)
Ezion Holdings Buy 2.270 3.36
China Merchants Buy 0.870 1.20
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
expecting low double-digit declines in consumer business
revenue and low single-digit falls in enterprise business
income, as a result of the weak Australian dollar and the
more cautious business environment and spending.
Both Ezion and Ocean Sky announced that the preconditional
mandatory cash offer dated 30 September 2013
has been terminated. Ezion had proposed to inject its
marine supply base asset into Ocean Sky at cost via a share
swap, whereby Ezion will issue 20.2m new shares @
S$2.351 per share in exchange for 440m new shares in
Ocean Sky @ S$0.108 per share. They decided not to
proceed with the transaction in view of the protracted
timings as SGX evaluated this to be a reverse takeover. We
do not expect material impact to Ezion. We will provide
further updates on Ezion's plan for Port Melville after
discussion with management. No change to our conviction
BUY on Ezion and target of S$3.36 (14x FY14 PE). We will
fine-tune our numbers (positive revision if we add back the
Marine Supply Base income) after its FY13 results due on
20th Feb along with company's update of delivery schedule.
For Ocean Sky (NOT RATED), it could be fair to infer that the
stock may fall back to the S$0.15-0.20 levels seen in 1H13
prior to talks of Ezion's injection.
SIA Engineering signs S$350m Services Agreement with
SilkAir. The agreement covers a broad spectrum of
maintenance, repair and overhaul (MRO) and fleet
management services for SilkAir’s new fleet of B737NG
aircraft. The MRO services portion of the agreement is firm
for five years, with a seven-year extension if agreed
conditions are met. The agreement for fleet management
service is firm for twelve years.
Koh Brothers Group has been awarded a contract worth
approximately S$98.0m from the Housing Development
Board (HDB) for building and contingency works at Vine
Grove @ Yishun. The project is expected to commence in
March 2014 for a duration of 31 months.
KSH Holdings has won a S$76.9m construction contract for
the construction, completion and maintenance of a
proposed seven-storey mixed use development, KAP & KAP
Residences, at 11 King Albert Park, Singapore. Construction
will commence on 1 April 2014 and is targeted to be
completed by 25 August 2016. The award of this new
contract has lifted KSH’s order book to over S$460m. The
order book is expected to contribute to the Group’s
financial results up to FY2017.
Otto Marine has secured a charter contract amounting to
US$11.3m for its vessel, Go Emerald. Go Emerald will be
deployed to Western Australia on long term charter.
IFS Capital is expected to report a net loss for 4Q13 as
compared to a profit recorded in 3Q13 and 4Q12. This is
mainly due to higher specific allowances for loan losses and
receivables set aside by the Malaysian operations in 4Q13.
Following this, the Group is expected to report a net loss for
FY13.
ISR Capital is expected to report a net loss for FY13, which
is mainly due to net fair value and impairment losses
recognised in respect of the Group’s investments in financial
assets, available-for-sale.
China will step up efforts to investigate and punish any
cases of falsified statistics, this according to the country's
chief statistician. The statement highlights the issue of
Chinese data reliability. "In the area of statistics, falsification
can be considered as the biggest form of corruption," said
Ma Jiantang, head of the National Bureau of Statistics, in a
reference to the Chinese government's broader crackdown
on corruption.
The value of China's total exports climbed 10.6% y-o-y in
January, more than 5 times higher than consensus forecast
for a 2% rise. The value of imports jumped 10% y-o-y, a
pace not seen since July and beating consensus forecast for
a 3% gain. One explanation for such strong exports could
be the momentum of the economy in the United States as
well as improving demand in Europe. But some market
watchers have expressed doubts about the reliability of the
data. If anything, they say, exports should have dropped last
month.
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