DBS Vickers Report

Today’s Focus
 Initiate coverage on OUE Hospitality Trust with a BUY
recommendation and target price of S$0.95.
STI’s rally last week was within our expectation even as the
break above 3150 2 days before the end of March came
early, as a pleasant surprise.
Further near-term upside to 3207 is seen with pullback
support at 3150. But gains beyond 3207 going into April
should be capped at 3250 or slight below, that coincides with
the 13.9x (average) 12-mth forward PE. Unless the 1Q results
season that ends mid-May is able to spring a positive surprise,
we believe it is more likely that the current rally will lose its
momentum at c.3250 around mid-April
Overseas attention turns to the numerous data releases from
the US this week that culminates with the March employment
data. The FED had stated that it would look at a wider data
range to determine when to raise the FED funds rate.
Economic figures for March will also give the earliest
indication whether the data slowdown over the Dec13 to
Feb14 period is indeed due to the cold weather.
We initiate coverage on OUE Hospitality Trust (OUE HT) with
a BUY recommendation and target price of S$0.95. OUE HT
portfolio comprises two revitalised assets in the heart of
Orchard Road worth S$1.76bn – the landmark Mandarin
Orchard Singapore with 1,077 rooms, and Mandarin Gallery,
which was birthed of a S$200m renovation of the hotel in
2009, and sports 152m of scarce Orchard Road frontage. The
Trust offers investors exposure to a diversified hospitality and
retail play in Singapore’s most expansive and frequentlyvisited
shopping destination. The high fixed income
component offers solid downside protection and income
resilience. In the Sponsor’s Right of First Refusal (ROFR) is
Crowne Plaza Changi Airport, a 320-room transit hotel in
Changi Airport. If acquired, it could boost the Trust’s portfolio
room count by 30% and give the Trust an opportunity to
benefit from the government’s plans to expand Changi
Airport and increase passenger traffic.
Nam Cheong has sold another two vessels worth
approximately US$43.1m, making it a record sale of seven
vessels within the first three months of this year. With these
two latest sales contracts, Nam Cheong’s order book has hit
RM1.4 bn. One AHTS was sold to a new customer, an
emerging oil and gas player in Malaysia. The PSV was sold to
a repeat customer in West Africa.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,323.1 58.8 0.4
S&P  1,857.6 8.6 0.5
NASDAQ  4,155.8 4.5 0.1
Regional Indices
ST Index  3,172.2 9.7 0.3
ST Small Cap  544.0 1.7 0.3
Hang Seng  22,065.5 231.1 1.1
HSCEI  10,001.8 128.3 1.3
HSCCI  4,133.0 89.4 2.2
KLCI  1,850.7 3.9 0.2
SET  1,368.9 13.0 1.0
JCI  4,768.3 45.2 1.0
PCOMP  6,359.6 43.9 0.7
KOSPI  1,989.0 8.0 0.4
TWSE  8,774.6 (4.9) (0.1)
Nikkei  14,696.0 73.1 0.5
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 588
Total Daily Vol (m shrs) 3,072
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$)
28 Mar
Target Price
(S$)
ComfortDelgro Buy 1.955 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.840 12.60
Yangzijiang Buy 1.075 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
28 Mar
Target Price
($)
Ezion Holdings Buy 2.180 3.26
Goodpack Buy 2.190 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 3
Interra Resources is proposing to undertake an issue of: (a)
up to 45.3m free bonus warrants on the basis of one (1)
Bonus Warrant for every ten (10) existing shares held and
(b) up to 22.7m additional free Company warrants (the
Piggyback Warrants) on the basis of one (1) Piggyback
Warrant for every two (2) Bonus Warrants which are
exercised. The exercise price of the bonus warrant is
S$0.275 per share while the Piggyback Warrants’ exercise
price is S$0.205 per share.
OCBC is nearing an agreement to acquire Wing Hang Bank,
Hong Kong's second-largest family-run bank, after securing
preliminary approval from the Hong Hong’s banking
regulator. The purchase of Wing Hang, which has a market
value of HK$35 bn (S$5.7 bn), could be announced as soon
as early next week, according to people familiar with the
matter, as reported in the press.
Olam and Tata Chemicals Limited (TCL) have signed a
termination agreement in which TCL will not proceed with
its proposed 25.1% equity participation in the greenfield
ammonia-urea fertiliser manufacturing project in the
Republic of Gabon, Africa, due to a change in TCL’s
investment focus away from overseas fertiliser
manufacturing and Olam’s intention to move to a minority
and non-consolidated position in the project. Nonetheless,
TCL will continue to provide any technical support that may
be requested by Olam or its other equity partners on this
project. Olam currently holds 80% stake while the
Government of the Republic of Gabon (RoG) holds the
remaining 20% in the fertiliser project. Olam is continuing
its discussions with other industry participants who have
expressed their desire to partner in the project, in an effort
to bring down its final equity stake to below 50%.
Separately, RoG will invest an additional US$56.8m towards
equity and increase its stakes in the Palm and Rubber joint
ventures with Olam in Gabon. On completion of this
transaction, Olam will own 60% equity interest in both
Olam Palm Gabon and Olam Rubber Gabon joint ventures,
with RoG holding the remaining 40%. For Olam, the
transactions are in line with its plan to unlock value by
seeking strategic partners to co-share investments in capital
intensive and long gestation projects. This is expected to
release cash of approximately US$30.0m for Olam and will
result in a gain of US$14.5m that will be credited to capital
reserves.
UMS Holdings is proposing a bonus issue of up to 85.9m
new shares on the basis of one (1) Bonus Share for every
four (4) existing shares held.
ST Engineering has injected new equity of $216m into the
capital of its wholly owned aerospace arm, ST Aerospace.
This brings ST Engineering’s total share capital contribution
in ST Aerospace to $368.5m. The increased capital is to
support the expansion of ST Aerospace's business.
Nera Telecommunications has received contracts of
approximately S$31.1m. The contracts are in relation to
Network Infrastructure and Wireless Infrastructure
Networks.
U.S. indices rose as consumer shares rebounded amid data
that showed household purchases rose the most in 3
months. Consumer discretionary stocks rose while
biotechnology shares lost further ground, weighing on the
Nasdaq. Red Hat Inc. fell after it said it expects to earn
$1.56/share this year that is lower than consensus estimate
for $1.62. BlackBerry Ltd. Fell after it warned sales won’t
grow until the fiscal year that begins next March, even after
cost-cutting helped the company post a smaller quarterly
loss than analysts estimated.