DBS Vickers Report 19 Feb 14

Today’s Focus
􀂃 China’s SOE invests into Global Logistics Properties
􀂃 China plans RMB2tril spending to tackle water pollution
Global Logistic Properties has signed an agreement with a
group of Chinese state-owned enterprises and financial
institutions for an up to US$2.5bil investment in the
company. The transaction is expected to increase GLP's
growth substantially. Its strategic partners include Bank of
China Group Investment, a wholly owned unit of Bank of
China, HOPU Funds and a large Chinese insurance company.
They will invest US$163mil in new shares of GLP's listed entity
at $2.755 per share, representing 1.5% of the issued and
outstanding shares. The remaining investment of up to
US$2.35bil will be in new shares of GLP's wholly owned
Chinese subsidiary, giving the partners a stake of up to
30.3%.
China plans to spend RMB2tril on an action plan to tackle
pollution of its scarce water resources. The plan is still being
finalised but the budget has been set, this according to the
China Securities Journal, citing the Ministry of Environmental
Protection. It will aim to improve the quality of China's water
by 30 to 50% through investments in technologies such as
waste water treatment, recycling and membrane technology.
The paper did not say how the funds would be raised, when
the plan would take effect, or what timeframe was visualised.
Our picks in the water sector are SIIC Environment and United
Envirotech.
CapitaLand achieved Group revenue of S$3.98bil for FY
2013, up 20.5% y-o-y, driven by higher revenue from its four
strategic business units – CapitaLand Singapore, CapitaLand
China, CapitaMalls Asia and The Ascott. Group operating
PATMI rose 42.9% to S$527.7mil in FY13 led by higher
contribution from development projects in China, as well as
the shopping mall business. Earnings before Interest and Tax
of S$1.80bil in FY 2013 is 10.9% lower than FY 2012. This
was mainly attributable to divestment loss as compared to a
gain in FY 2012 and higher impairments, partially mitigated
by higher operating profit and fair value gains from the
revaluation of investment properties. A dividend of 8cts per
share is declared.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,130.4 (24.0) (0.1)
S&P 􀀘 1,840.8 2.1 0.1
NASDAQ 􀀘 4,272.8 28.8 0.7
Regional Indices
ST Index 􀀘 3,070.8 1.5 0.0
ST Small Cap 􀀘 532.3 2.9 0.5
Hang Seng 􀀘 22,587.7 51.8 0.2
HSCEI 􀀙 10,057.8 (43.4) (0.4)
HSCCI 􀀙 4,280.1 (16.7) (0.4)
KLCI 􀀙 1,825.2 (2.2) (0.1)
SET 􀀙 1,326.2 (6.2) (0.5)
JCI 􀀘 4,556.2 0.8 0.0
PCOMP 􀀘 6,194.0 26.2 0.4
KOSPI 􀀘 1,946.9 0.6 0.0
TWSE 􀀘 8,556.2 36.7 0.4
Nikkei 􀀘 14,843.2 450.1 3.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 3,336
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$)
18 Feb
Target Price
(S$)
Hutchison Port Hldgs Trust (US$) Buy 0.635 0.76
Keppel Corp Buy 10.510 12.60
ST Engineering Buy 3.800 4.90
Yangzijiang Buy 1.135 1.32
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
18 Feb
Target Price
($)
Ezion Holdings Buy 2.330 3.36
China Merchants Buy 0.890 1.20
Pacific Radiance Ltd Buy 0.950 1.05
Nam Cheong Buy 0.335 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
US indices finished mixed with the S&P 500 Index climbing
to within 8 points of a record as M&A news offset slower
growth in New York-area manufacturing. The Fed Bank of
New York’s general economic index fell to 4.48 (consensus
8.5) in February from 12.5 in January. The Fed will release
minutes from its Jan. 28-29 meeting tonight, giving
investors details on central bank policy makers’ decision to
trim bond purchases by US$10bil for a second time. Our
economist notes that the biggest risk to the outlook and to
Fed policy is in the housing sector. It is not supporting
growth like it once was. In the 4Q GDP accounts, home
construction fell by 9.8% (QoQ, saar). That will be repeated
if mortgage applications and home sales don’t make a Uturn
soon. Several Fed officials have said that serious
trouble would be necessary to push the Fed off its tapering
path. Falling home sales qualify