Today’s Focus
Tiong Seng - Higher costs to sustain; downgrade to
HOLD with target price cut to S$0.20
Stocks are likely to start the session higher on the back of the
overnight rise on Wall Street. But we do not foresee much
follow through gains as STI had already snapped back nearly
all the intra-day loss from Monday in the past 2 sessions
before the geopolitical uncertainty began. The index ended
just 5 pts below last Friday’s close of 3110. The latest
development in Ukraine is at best neutral, not positive.
Instead, investors are likely to focus on US February job
numbers scheduled for release this Friday. We maintain our
view that a lack lustre 4QFY13 results season is likely to cap
the index at/below 3150 through the month of March.
US and European equities snapped back sharply in a
temporary relief from Monday’s sell-down after Russia said
there was no immediate need to invade eastern Ukraine.
Russian President Vladimir Putin said today that he’s not
considering taking control of the Black Sea region of Crimea
and would send troops into Ukraine only in extreme
circumstances. Treasuries and gold retreated while oil slipped
the most in two months. The US 10-yr bond yield rebounded
10bps to slightly below 2.7 while Brent Crude fell to
USD109.3pbl. The U.S. Treasury said it’s planning an
economic assistance package for Ukraine that includes an
USD1bil loan guarantee.
Tiong Seng’s FY13 earnings disappointed as margins
collapsed in 2H due to higher labour and sub-contracting
costs. We expect higher costs to sustain, and lower margins
to factor higher direct and operating costs. FY14F earnings
were slashed by 79%, on lower gross and operating margins.
Downgrade to HOLD with target price cut to S$0.20 (Prev S$
0.33).
Amtek Engineering announced that it was buying over US
precision engineering firm Interplex Industries for up to
US$210m. The acquisition comprises US$165m of enterprise
value, US$11m of deferred payments and up to US$34m of
earnout payments, depending on Interplex's earnings in the
next three years. Interplex offers miniature precision metal,
plastic and assembly solutions to a blue-chip customer base in
US Indices Last Close Pts Chg % Chg
Dow Jones 16,395.9 227.9 1.4
S&P 1,873.9 28.2 1.5
NASDAQ 4,352.0 74.7 1.7
Regional Indices
ST Index 3,104.7 17.2 0.6
ST Small Cap 529.2 2.6 0.5
Hang Seng 22,657.6 157.0 0.7
HSCEI 9,776.8 25.1 0.3
HSCCI 4,217.0 1.0 0.0
KLCI 1,826.5 1.8 0.1
SET 1,345.8 6.6 0.5
JCI 4,601.3 17.1 0.4
PCOMP 6,394.6 (12.9) (0.2)
KOSPI 1,973.7 19.5 1.0
TWSE 8,554.5 (47.4) (0.6)
Nikkei 14,721.5 69.3 0.5
STI Index Performance
Singapore
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 3,438
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$)
4 Mar
Target Price
(S$)
ComfortDelgro Buy 1.945 2.19
Global Logistic Properties Buy 2.800 3.31
Keppel Corp Buy 10.450 12.60
Yangzijiang Buy 1.130 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
4 Mar
Target Price
($)
Ezion Holdings Buy 2.220 3.26
Goodpack Buy 1.860 2.25
China Merchants Buy 0.970 1.32
Pacific Radiance Ltd Buy 0.960 1.05
Nam Cheong Buy 0.330 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
a variety of industries, including the automotive,
industrial/electrical, mobile devices and medical markets. In
the six months to last Nov 30, Interplex generated revenues
of US$182.4m and pro forma EBITDA (earnings before
interest, taxes, depreciation and amortisation) of US$16.5m.
The deal is expected to be completed in the second half of
the year.
Ezion Holdings has entered into a contract to provide a
Jack-up Rig to support a South Asian based national oil
company with a value of approximately up to US$ 87.6m
over a 3 year period. The Jack-up Rig which will be deployed
in the Arabian Sea in South Asia is expected to be working
by early 2015 after its refurbishment and upgrading.
Ezra has been awarded subsea construction and offshore
support contracts in Asia Pacific and West Africa with a
combined value exceeding US$125m, including options. Its
subsea services division EMAS AMC won nearly US$100m in
subsea projects, including a deepwater pipelay contract in
the South China Sea. The scope of work includes FPSO
mooring repair work in West Africa, and in Asia, the
installation of flowlines, associated pipeline end
terminations and spools in working water depths of up to
1,400m.
Noble Group is in talks with a consortium for a potential
joint venture on its agriculture business. No binding
arrangements have as yet been entered into with respect to
this transaction, Noble said in a filing to the Singapore stock
exchange. The company did not disclose the consortium but
according to Reuters, China's biggest grains trader COFCO
Corp is in talks to buy Noble's agribusiness arm, in a deal
that would value the division at around US$1 bn.
JES International proposes to place 50m new shares at
S$0.14463 each. The subscription price represents a
discount of approximately 10% to the last weighted
average price. The placement will help strengthen the
capital base of the Company, fund the growth and
expansion of business and for working capital requirements.
Elektromotive Group has secured a ￡2.4m contract to
supply up to 50 rapid charger stations across South East
England. Elektromotive expects to install up to 90 rapid
charger stations across the United Kingdom in the next 12
to 18 months.
Novo Group expects to record an increase of loss for the
nine months ended 31 January 2014 as compared to that
for 2013. The loss is mainly attributable to cost increased
and decrease in the profits of the Group’s trading business
caused by unfavourable market conditions.
Singapore Exchange (SGX) has placed nine mainboard
companies on its watch-list with effect from today. The nine
companies are: ASJ Holdings; Cacola Furniture; Dapai
International; Eucon Holding; Europtronic Group; Huan Hsin
Holdings; Nippecraft; Ouhua Energy; and W Corporation.
Companies are put on the watch-list by the SGX if they post
three straight years of pre-tax losses and have an average
daily market capitalisation of less than $40m.
Global shipments of personal computers fell 9.8% last year,
the worst contraction on record, and are likely to decline by
6.1% in 2014 due to lackluster demand in developing
countries, according to market research firm IDC. Long-term
growth in PC shipments is expected to remain just below
zero, with shipments in 2018 expected to decline 0.2%, IDC
said. Last week, IDC said that strong demand for
smartphones in China and other developing countries
would drive a 19% increase in global shipments of
smartphones in 2014, according to Reuters
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