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$0.97, PE
of 9x on fully diluted basis with 7.8% dividend yield) and
longer term acquisition-driven growth story. Maintain BUY.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,272.7 74.2 0.5
S&P 1,854.3 9.1 0.5
NASDAQ 4,318.9 26.9 0.6
Regional Indices
ST Index 3,096.7 8.5 0.3
ST Small Cap 532.0 (1.3) (0.2)
Hang Seng 22,828.2 390.7 1.7
HSCEI 9,957.8 151.7 1.5
HSCCI 4,248.7 52.4 1.2
KLCI 1,831.7 9.1 0.5
SET 1,318.1 13.4 1.0
JCI 4,568.9 36.2 0.8
PCOMP 6,354.8 32.2 0.5
KOSPI 1,979.1 8.4 0.4
TWSE 8,639.6 38.7 0.5
Nikkei 14,923.1 (47.9) (0.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 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$)
27 Feb
Target Price
(S$)
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
Singapore
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$0.79 (Prev S$
0.83).
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
S$1.24.
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$
8.40).
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%
upside.
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
capital.
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
services).
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
unemployment.
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