Today’s Focus
Dairy Farm - Strengthening market position, upgrade to
BUY with higher target price of US$10.07
Singapore equities recovered from the initial negative reaction
to the Russia-Ukraine conflict to finish 26pts higher last week.
The recovery strength above pre-conflict level could come
from growing anticipation that US economic activity would
pick up again once the cold winter passes. Another possibility
is a temporary flow of funds out of Europe seeking safer
haven countries.
Still, the geopolitical uncertainty continues after pro-Russian
Crimean lawmakers voted to go ahead with a referendum to
be held on March 15 to decide on whether Crimea would
leave Ukraine to be part of Russia. The interim government in
Kiev has denounced the vote. Russia’s stated owned energy
company Gazprom has warned Ukraine that its gas supply
might be cut off. Meanwhile, the rift between Russia and the
West continues.
In US, non-farm payrolls rose a better-than-expected 175k.
But over in China, the weak data trend continues CPI rising
2%, the slowest rate in 13 months while PPI fell 2%. On
trade data, an unexpected trade deficit of US$22.98 bn in
February was recorded.
We see STI resisted at 3150 through 1QCY14 with support at
3000-3050 on the pull back. We expect the index to move
pass 3150 only beyond 1QCY14, with a potential to reach
c.3250-3300 by the end of 2Q14.
FY13 earnings for Dairy Farm were above expectations on
lower than expected operating expenditure. Management
continues to be Asia-focused, and will expand to attractive
markets and business segments while seeking to attain better
operating efficiencies. We raised FY14F earnings by 14% on
higher margin assumptions. Upgrade to BUY with higher
target price of US$10.07 (Prev US$ 9.46) on higher earnings.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,452.7 30.8 0.2
S&P 1,878.0 1.0 0.1
NASDAQ 4,336.2 (15.9) (0.4)
Regional Indices
ST Index 3,136.3 7.1 0.2
ST Small Cap 534.8 1.8 0.3
Hang Seng 22,660.5 (42.5) (0.2)
HSCEI 9,709.5 36.5 0.4
HSCCI 4,216.0 (31.3) (0.7)
KLCI 1,832.3 (6.4) (0.3)
SET 1,355.1 2.9 0.2
JCI 4,685.9 (2.0) (0.0)
PCOMP 6,481.8 (35.0) (0.5)
KOSPI 1,974.7 (0.9) (0.0)
TWSE 8,714.0 0.2 0.0
Nikkei 15,274.1 139.3 0.9
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$bn)
Total Daily Vol (m shrs)
12m ST Index High
12m ST Index Low
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
7 Mar
Target Price
(S$)
ComfortDelgro Buy 1.955 2.19
Global Logistic Properties Buy 2.850 3.31
Keppel Corp Buy 10.650 12.60
Yangzijiang Buy 1.115 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
7 Mar
Target Price
($)
Ezion Holdings Buy 2.200 3.26
Goodpack Buy 1.905 2.25
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 0.970 1.05
Nam Cheong Buy 0.335 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Nine stocks will be added to the FTSE ST Small Cap Index.
The nine stocks are Del Monte Pacific, Linc Energy, Pacific
Radiance, OUE Commercial Reit, Soilbuild Business Space
Reit, Centurion, OKH Global, Zhongmin Baihui Retail
Group and Riverstone Holdings. The additions take effect
on March 24. But 15 stocks will be excluded which means
the number of constituents will fall to 107 from 113. Of
the 15 stocks that will be excluded from this index,
Rowsley, OUE Hospitality Trust and Asian Pay Television
Trust will be joining the FTSE ST Mid-Cap Index, replacing
Mandarin Oriental International, Fortune Real Estate
Investment Trust and Hotel Properties.
China's consumer prices rose at their slowest rate in 13
months in February as pork prices fell by their most in over
a year. The consumer price index rose 2% in February from
a year earlier, exactly in line with market expectations. Pork
prices fell 9%. Producer prices fell for the 24th consecutive
month by dropping 2%, slightly above forecasts for a
1.9% drop. Prices were down across the board, from
means of production to raw materials - both of which were
at their weakest in seven months.
On trade data, China went into an unexpected trade deficit
of US$22.98 bn in February. The figure compared with a
surplus of US$14.8 bn in the same month last year, and a
median forecast of an US$11.9 bn surplus. Exports fell
18.1% to US$114.1 bn, while imports were up 10.1% to
US$137.1 bn during the month, which included most of
the Lunar New Year holiday.
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