Today’s Focus
OSIM
- Buy for 3-pronged growth, target price raised to
S$3.08.
STI’s rebound thus far this week
has been capped at the 3100
level. Sentiment is likely to
stay muted today after the FED
said QE3 could end by this fall
and benchmark interest rates
could rise 6 months later from
that. US 10-year treasury yields
rebounded while the USD strengthened
against major
currencies. Last week’s low point
for the STI was at 3060. We
do not rule out the index heading
to 3050 followed by 3020
that is still within the 3000-3050
support range we
highlighted earlier, should the
3060 level fail to hold.
We find OSIM’s current business
model to be robust and
capable of supporting growth into
the future. OSIM’s threepronged
growth model comprises: i) Massage
chairs driving
growth through new products; ii)
TWG supplementing
growth with rapid store network
expansion; and iii) GNC
providing resilient earnings and
cashflows to the Group.
These factors, complemented by
the scaling up of OSIM’s
presence in China, is more than
capable of supporting
sustainable earnings growth going
forward. OSIM’s soon-tobe
launched new version of the uAngel
chair is set to build on
preceding model’s success while
TWG’s rapid expansion is
expected to positively impact
earnings growth. We expect
minimal EPS dilution of 1%/6%
for FY14F/FY15F from
convertible bonds (CB) conversion.
Maintain BUY, target price
raised to S$3.08 (Prev S$ 2.64)
as we raise our PE multiple to
18x on stronger business model.
Goodpack announced that it has
been approached by parties
for a possible transaction, which
may or may not trigger a
general offer. Discussions are
still on-going. The Company
has appointed Rippledot Capital
Advisers Pte Ltd as its
financial advisor. Company decided
to make public about the
development in view of the outperfomance
of share price
lately. The last time company
received such offer was back in
2008/2009 though eventually the
deal was called off as both
parties could not come to an agreement
on the offer price.
US Indices Last Close Pts Chg
% Chg
Dow Jones
16,222.2 (114.0) (0.7)
S&P
1,860.8 (11.5) (0.6)
NASDAQ
4,307.6 (25.7) (0.6)
Regional Indices
ST Index
3,080.8 (13.1) (0.4)
ST Small Cap
536.2 (2.6) (0.5)
Hang Seng
21,568.7 (14.8) (0.1)
HSCEI
9,360.7 18.4 0.2
HSCCI
4,005.3 12.3 0.3
KLCI
1,817.4 (3.3) (0.2)
SET
1,364.3 (8.8) (0.6)
JCI
4,821.5 15.8 0.3
PCOMP
6,462.5 (4.1) (0.1)
KOSPI
1,937.7 (2.5) (0.1)
TWSE
8,689.5 (42.5) (0.5)
Nikkei
14,462.5 51.3 0.4
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$bn) 576
Total Daily Vol (m shrs) 2,506
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large
Cap
Rec’n Price (S$)
19 Mar
Target Price
(S$)
ComfortDelgro Buy 1.925 2.19
Global Logistic Properties Buy
2.64 3.31
Keppel Corp Buy 10.52 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small
/Mid Cap
Rec’n Price (S$)
19 Mar
Target Price
($)
Ezion Holdings Buy 2.13 3.26
Goodpack Buy 2.23 2.25
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.995
1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P.,
DBS Bank
Singapore
Wired Daily
Page 2
Stahill Global REIT announced
that it has divested one
Japanese retail asset, Holon L
Property, for JPY1.03bn
(S$12.8m), a 6% premium to the
Dec-13 independent
valuation of JPY 0.97bn. This
translates to an exit yield of
4.03% (or 4.27% over valuation).
This property represents
11.5% of SGREIT's Japanese portfolio,
or 0.4% of the
REIT's total asset value. The
proceeds from this transaction
will be used to fully pay down
its JPY1.5bn bond due
2016. Total JPY loans post divestment
will be c.7.5bn, and
SGREIT's gearing will fall marginally
to 28.7% from 30%.
CapitaLand has sold its remaining
39.1% stake in
Australand Property Group, reaping
an expected net gain
of about $35.7m. CapitaLand sold
its remaining 226.2m
shares through a secondary placement
yesterday at an
average price of A$3.75 each,
3.6% below Australand's
Tuesday closing price but 5.3%
above its last reported net
tangible asset. CapitaLand said
it will receive about
$970.1m from the sale, which it
will deploy towards its key
markets of Singapore and China,
and for general working
purposes, including the repayment
of debt.
Global Logistic Properties has
signed a lease agreement of
approximately 53,000 sqm (570,000
sq ft) with a leading
FMCG company at GLP Park Hefei
Hi-Tech in Hefei, Anhui
Province, Midwestern China. With
this agreement, GLP
Park Hefei Hi-Tech is 100% leased.
Otto Marine has secured charter
contracts for its Multiple
Purposes offshore Supply Vessel
(MPSV), Go Explorer, for a
total of US$21m. Go Explorer will
initially be deployed to
work in Vietnam follow by Australia
working on a major
offshore construction project
based on the various
contractual arrangements.
HG Metal Manufacturing announced
that Mr Goh Kian
Sin, the Managing Director and
Chief Executive Officer of
the Company, has entered into
agreement for the sale of
284.05m shares to purchasers including,
Mr Yap Xi Ming,
the Chairman of the Company.
Forecasters polled by Singapore's
central bank expect the
economy to expand by 3.8% in 2014
- a less optimistic
outlook compared to 3.9% growth
three months ago. The
slip was due to softer growth
expectations for all sectors
within the economy, except for
the manufacturing sector.
Our economist is expecting 4%
GDP growth for 2014.
Premium and Grade A office rents
in Raffles Place and New
Downtown continue to climb in
the first quarter, according
to Colliers International. The
quarter also saw office
vacancies shrinking and firms
taking a proactive approach
to review expansion and relocation
options to lock in rents
before they rise further. Colliers
International said that the
average monthly gross rent for
Premium Grade offices in
the Raffles Place/New Downtown
area rose 3.6% quarter
on quarter to $10.67 psf in the
first quarter of this year,
hot on the heels of a 3.8% hike
in the fourth quarter of
last year. The property consultancy
group forecasts a fullyear
2014 increase of up to 15%. As
for Grade A space in
the same Raffles Place/New Downtown
micro-market, the
average monthly rent rose 5% quarter
on quarter to $9.73
psf in Q1 - a much bigger increase
than the 1.4% increase
in Q4 2013. Suburban Grade A rents
rose 5.7% to $4.85
psf in Q1, after inching up 0.4%
in Q4.
U.S. stocks fell after Federal
Reserve Chair Janet Yellen said
the central bank’s stimulus program
could end this fall and
benchmark interest rates could
rise 6 months later. As
expected, the FED trimmed its
monthly bond purchases by
US$10bil to US$55bil. The central
bank said it will look at a
wide range of data in determining
when to raise its rate,
dropping a pledge tying borrowing
costs to a 6.5 percent
unemployment rate.
But investors’ attention turned
to the following FED
statement that said officials
predicted their target interest
rate would be 1% at the end of
2015 and 2.25% a year
later, as they upgraded projections
for gains in the labour
market. The rates are higher than
previously forecasted.
Financial markets reacted with
the US 10-year treasury
yields rebounding to 2.7725%.
The USD strengthened
against major currencies with
the USD Index rising to 80
from 79.4. Equities sold off with
Walt Disney Co., General
Electric Co. and Boeing Co. losing
at least 1.4% each to
lead the Dow lower.
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