Wednesday, March 26, 2014

DBS Vickers Report

Today’s Focus
􀂃 Ascendas Hospitality Trust - Acquires Osaka hotel at 6.4%
yield. Maintain HOLD, TP raised to S$0.78
Ascendas Hospitality Trust has entered into a conditional sale
and purchase agreement to acquire Osaka Namba Washington
Hotel Plaza for JPY 8.9 bn (S$110.8m) or at 6.4% yield. The
hotel is located in the heart of Namba area, one of Osaka’s key
city centres, and performance is expected to remain robust,
supported by a lack of new competitive supply within the
Nanba area. The hotel comes with a fixed rent lease, which
improves income visibility, and offers potential upside upon
expiry at end 2015. DPU could be raised by 2%-7%,
depending on funding mix. FY15-16F yields are attractive at
8.6%-8.8%. Maintain HOLD, given limited upside to our target
objective of S$0.78 (Prev S$0.73).
Noble Group announced that it has established an associate
entity, The Quattro Grain Trust, which it will own 50%. The
principal activity of the trust is to build, own, and operate a
multi-user grain handling facility at Port Kembla, New South
Wales in Australia. The proposed new facility will have the
capacity to handle in excess of 1.3m tpa of export grain. The
new facility is expected to be operational by 2H15. This is
consistent with Noble's strategy to go asset light by entering
into strategic partnership to acquire asset that is necessary to
facilitate the supply chain management. Maintain HOLD, target
price S$1.09.
Hyflux has inked a joint venture agreement with Tolaram
Corporation to explore opportunities for the development of
membrane-based water treatment plants in Nigeria. In Nigeria,
Tolaram is involved in the distribution of food products and
provision of logistics services, as well as development of
infrastructure projects.
Sound Global had allotted 15.5m new shares upon the
conversion of RMB52.6m principal amount of Convertible
Bonds. The aggregate principal amount of Convertible Bonds
due 2015 remaining outstanding following the conversion is
RMB380.8m.
Imperial South East Asia, associate company of Lian Beng,
Heeton and KSH Holdings, has entered into a joint venture
agreement to form an investment company in Cambodia. The
principal activity of the new company will be real estate
development and investment holding in Cambodia.
US Indices Last Close Pts Chg % Chg
Dow Jones 􀀙 16,269.0 (98.9) (0.6)
S&P 􀀙 1,852.6 (13.1) (0.7)
NASDAQ 􀀙 4,173.6 (60.7) (1.4)
Regional Indices
ST Index 􀀘 3,143.3 39.2 1.3
ST Small Cap 􀀘 539.6 2.1 0.4
Hang Seng 􀀘 21,887.8 155.4 0.7
HSCEI 􀀘 9,849.6 158.8 1.6
HSCCI 􀀘 4,016.8 11.4 0.3
KLCI 􀀘 1,839.1 2.0 0.1
SET 􀀘 1,360.4 6.4 0.5
JCI 􀀘 4,728.2 25.1 0.5
PCOMP 􀀘 6,348.5 12.2 0.2
KOSPI 􀀘 1,964.3 23.1 1.2
TWSE 􀀘 8,737.3 48.0 0.6
Nikkei 􀀘 14,477.2 54.0 0.4
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 573
Total Daily Vol (m shrs) 2,493
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$)
26 Mar
Target Price
(S$)
ComfortDelgro Buy 1.960 2.19
Global Logistic Properties Buy 2.600 3.31
Keppel Corp Buy 10.670 12.60
Yangzijiang Buy 1.045 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
26 Mar
Target Price
($)
Ezion Holdings Buy 2.150 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.960 1.32
Pacific Radiance Ltd Buy 1.050 1.20
Nam Cheong Buy 0.325 0.46
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
China Environmental Resources, which has a primary listing
on the Stock Exchange of HK and a secondary listing on
SGX, is placing 157.1m new shares at the Placing Price of
HK$0.375 per share. The Placing Shares represent 20% of
the existing issued share capital and approximately 16.66%
of the enlarged share capital. The Placing Price represents a
discount of approximately 18.48% to the last closing price
on the Stock Exchange of HK. The gross proceeds of
approximately HK$58.93m are intended to be used for
general working capital of the Group.
Singapore’s industrial output surged 12.8% in February
from a year ago, the fastest pace of growth seen in two
years, largely due to double-digit jumps in biomedical
(19.3%), electronics (14.8%) and transport engineering
(11.1%) output. The robust growth in these clusters,
combined with expansion in all other segments, helped
manufacturing growth accelerate sharply from January's
revised year-on-year pace of 4.4% (previously estimated at
3.9%). Despite the strong growth, the market is still
expecting a sequential pullback in Q1 GDP of around 0.5%
as the strong surge were likely to have been flattered by
base and seasonal effects.
Singapore’s Changi Airport was voted as the World's Best
Airport by air travelers for the second consecutive year at
the 2014 World Airport Awards held in Barcelona, Spain.
U.S. stocks fell, led by technology and commodity
companies, after President Barack Obama warned the crisis
in the Ukraine may escalate and Facebook Inc. dropped the
most since 2012. US durable goods orders rose a betterthan-
expected 2.2% (consensus 0.8%) in February.
Facebook sank 6.9% after buying virtual-reality headset
maker Oculus VR Inc. Citigroup Inc. fell in extended trading
after the Federal Reserve said the bank’s capital plan failed
its stress tests. Citigroup was among five banks that failed
Fed stress tests, while Goldman Sachs Group Inc. and Bank
of America Corp, passed only after reducing their requests
for buybacks and dividends. Meanwhile, JPMorgan Chase
authorized a US$6.5bil buyback and looks to boost
quarterly dividend to 40c/shr from 38c. American Express
plans to increase quarterly dividend by 13% and buy back
up to US$4.4bil of common shares in 2014. Walt Disney Co.
agreed to buy Maker Studios, a supplier of online video
content to YouTube, for at least US$500mil. Disney also
agreed to pay as much as US$450mil more if Maker Studios
meets “strong” performance targets

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