Today’s Focus
Yoma Strategic -Moving forward on new fronts;
maintain BUY, target price S$1.02
Yoma Strategic is entering education with international and
private local schools. We could see small contributions likely
in end 2014. Yoma is also forming Yoma Agricultural &
Logistics Holdings (YAHL) with IFC, a member of the World
Bank Group, to tap on IFC’s debt and equity financing
package to further develop its agriculture and logistics
business. Its Agriculture & logistics initiatives include
coffee/milk production, cold chain businesses & commercial
vehicle leasing. We expect gearing to rise before earnings kick
in years later. But over time, Yoma’s franchise would be
fortified to facilitate future expansion. We are positive on
these developments but details are lacking at MOU stage.
Hence, no change to forecast and BUY rating, target price
S$1.02.
Building on its recent order win momentum, Vard Holdings
announced that it has signed a Letter of Intent (LoI) with
repeat Norwegian customer Solstad Offshore for the design
and construction of an advanced Offshore Subsea
Construction Vessel (OSCV) for delivery in 2Q 2016. The
OSCV is not only anticipated to be the largest vessel in the
Solstad fleet on delivery, but will also be the largest ever
constructed by Vard. The contract win, once finalised, will
represent the largest single vessel order in Vard's history and
we estimate this contract alone to be worth about NOK2bn.
This contract brings YTD-FY14 order wins to about NOK4bn,
making up 36% of our order win assumption of NOK11bn
this year. If the momentum in the OSCV space is sustained,
and orders for high-end AHTS vessels pick up as well, we may
look at revising up our new order win assumptions for FY14.
While order wins and backlog (which should exceed
NOK20bn by end-1Q14) look robust, there remains
considerable uncertainty however as to how much Group
EBITDA margins can recover in FY14/15. We thus maintain
our stance of waiting for more concrete evidence of margin
improvements in the coming quarters, before we turn more
positive on the stock. Maintain HOLD call and target price of
S$0.90.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,351.3 (67.4) (0.4)
S&P 1,867.6 (9.5) (0.5)
NASDAQ 4,307.2 (27.3) (0.6)
Regional Indices
ST Index 3,129.4 2.8 0.1
ST Small Cap 536.3 3.2 0.6
Hang Seng 22,269.6 4.7 0.0
HSCEI 9,520.3 (16.6) (0.2)
HSCCI 4,118.9 (3.4) (0.1)
KLCI 1,828.6 6.5 0.4
SET 1,364.3 15.2 1.1
JCI 4,704.2 27.0 0.6
PCOMP 6,529.6 42.4 0.7
KOSPI 1,963.9 9.4 0.5
TWSE 8,702.3 37.1 0.4
Nikkei 15,224.1 104.0 0.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 575
Total Daily Vol (m shrs) 2,883
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$)
11 Mar
Target Price
(S$)
ComfortDelgro Buy 1.955 2.19
Global Logistic Properties Buy 2.810 3.31
Keppel Corp Buy 10.760 12.60
Yangzijiang Buy 1.085 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
11 Mar
Target Price
($)
Ezion Holdings Buy 2.130 3.26
Goodpack Buy 1.940 2.25
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 0.975 1.05
Nam Cheong Buy 0.335 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Sembcorp Marine’s wholly owned Sembawang Shipyard
has signed an agreement with RCL Cruises Ltd., a member
of the Royal Caribbean Cruises Ltd. group, to perform the
extensive revitalisation of Royal Caribbean International’s
passenger-ship Voyager of the Seas. Cruise ship
repairs/upgrades and conversion is among the niche
markets that SMM has been strongly focused on. The
agreement to revitalise Voyager of the Seas, the largest
cruise ship home-porting in Asia, reinforces Sembawang
Shipyard’s position as Asia's leading shipyard for cruiseship
repairs, refurbishment and conversion. Voyager of the Seas
is scheduled to enter the shipyard in 4Q14. We could
expect more to come given Royal Caribbean's ongoing
fleetwide revitalization. With this, SMM has secured
S$1.7bn new contracts YTD, forming 34% of our order
win assumption. Maintain BUY, target price S$4.80.
JES International Holdings has secured contract plus
options worth up to US$120m, continuing on its recent
contract win momentum in 2014. The latest contract win is
for the construction of a Post-Panamax bulk carrier plus the
options for another 3 similar vessels. This new contract
comes on top of the Group’s two other recent
announcements earlier this year regarding the contract for
the construction of 4 Newcastlemax bulk carriers plus
options for further 4 similar vessels. Up to-date, the Group
has secured contracts for 6 vessels worth US$270m and
options for 7 vessels worth US$302m.
Viking Offshore & Marine announced that it would
participate in the ownership of a second cantilever drilling
jack-up rig, further strengthening its partnership with
Singapore rig veteran, Mr Chan Kwan Bian as it accelerates
its entry into mainstream offshore rig chartering. Both the
first and second rig is expected to be completed within the
fourth quarter of 2015.
Tiger Airway’s operating statistics for the month of
February 2014. For the 12 months to February 2014,
Tigerair Singapore recorded a 17.5% y-o-y increase in
traffic to 9.2 billion revenue passenger-kilometres (RPK),
while capacity increased by 26.1% to 11.7 billion available
seat-kilometres (ASK). Consequently, passenger load factor
was 5.8 percentage points lower at 78.6%. The number of
passengers carried grew by 15.8% to 5.0 m. For the
month of February 2014, Tigerair Singapore recorded a
13.8% y-o-y increase in traffic, while capacity increased by
27.1%. Consequently, y-o-y passenger load factor declined
by 8.8 percentage points to 74.6%. The number of
passengers carried grew by 13.6% y-o-y to 402,000. For
the month of February 2014, Tigerair Mandala’s passenger
load factor improved by 7.8 percentage points y-o-y to
78.0% while load factor for Tigerair Philippines improved
by 7.6 percentage points to 82.4%.
United Overseas Australia (UOA) has joined the growing
list of global companies venturing into the emerging
Myanmar market. The Group has formally agreed to pay
US$24m for an 80% stake in a Myanmar company which
owns and has the rights to develop 2.414 acres (0.977
hectare) of land in Dagon Township, Yangon region. UOA
estimated the cost of the first development project
comprising commercial and residential areas will be
US$80m, which will be funded from internal cash flow.
In property news, EL Development trumped four other bids
for a Yishun Avenue 9 site with its offer of $278.8m. This
works out to around $450.06 per sq ft per plot ratio,
exceeding consultants' expectations of $380-$431 psf ppr.
The Yishun condo site was one of five sites launched for
sale in December. The 99-year leasehold site has an area
about 221,239 sq ft, with a maximum gross floor area of
about 619,473 sq ft. It can yield about 685 units.
China’s interest rates will be liberalised within one to two
years, according to the head of the Chinese central bank,
Zhou Xiaochuan. He added that the liberalisation of
deposit rates would be the final step in the interest rate
liberalisation process. This move, which will let markets
decide the price of loans, has been high on the central
bank's agenda, but this is the first time an explicit timeline
was provided.
U.S. stocks fell as commodity shares slumped with copper
and oil prices amid concern over China’s economy. Copper
futures slid as much as 3% to the lowest level since July
2010 as signs of slowing economic growth in China
sparked concern demand will slump, this according to
Bloomberg. Investors eye February retail sales (consensus
+0.2% m-o-m) release tomorrow. Sentiment was also
affected by the developing geopolitical uncertainty in
Ukraine and China’s first onshore bond default after
Shanghai Chaori Solar Energy Science & Technology Co
failed to make an interest payment last week.
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