DBS Vickers Report

Today’s Focus
 OCBC – Acquisition of Wing Hang Bank long-term
positive; EPS and ROE are expected to be accretive by
2017
OCBC’s Wing Hang Bank’s (WHB) acquisition deal is priced at
S$6.3bn or 1.77x Dec 13 book value which is below market
expectations. As OCBC completes the deal prior to WHB’s exrights
date (5 May), OCBC will compensate WHB’s shareholders
by adding dividends (interim and final) of HK$2.08 per share to
the selling price, which essentially bumps up valuations to 1.8x
BV. Earnings per share (EPS) and return on equity (ROE) are
expected to be accretive by 2017. Funding plans have yet to be
disclosed; we have assumed an 80% equity raising. EPS and
ROE could dilute by 7% and 1.1ppts respectively. Share price
should remain neutral in the near term, pending funding plan
disclosure. We believe this acquisition would be long-term
positive for OCBC. Maintain Buy and target price S$12.40.
COFCO Corporation and Noble Group have entered into
definitive agreements to form an agribusiness joint venture,
Noble Agri Limited (NAL). COFCO will acquire a 51% stake in
Noble Agri from Noble Group in an all cash transaction to
establish a 51%/49% joint venture. The transaction values
Noble Agri equity at 1.15x 2014 book value. On completion,
COFCO will make an initial payment of US$1,500m, which will
be adjusted so that the final consideration will be equal to
1.15x of 51% of the audited book value of NAL Group for
FY2014.
Yangzijiang gives an update on the shipbuilding contracts
entered by the Group. Following the 8 new effective orders
that were announced in February, there are an additional 18
effective orders worth US$815m secured by the Group in
March 2014. The 18 new effective orders comprise of two
82,000DWT, one 208,000DWT bulk carriers and four
10,000TEU containerships converted from existing options, and
11 new orders for 82,000DWT bulk carriers. The total of 18
new effective contracts are scheduled for deliveries in year
2015 to 2017. Year to date, the Group has secured a total of
26 effective shipbuilding contracts with an aggregate value of
US$1.07bn.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,532.6 75.0 0.5
S&P  1,885.5 13.2 0.7
NASDAQ  4,268.0 69.0 1.6
Regional Indices
ST Index  3,198.5 9.9 0.3
ST Small Cap  543.5 (0.5) (0.1)
Hang Seng  22,448.5 297.5 1.3
HSCEI  10,098.3 23.2 0.2
HSCCI  4,196.5 35.3 0.8
KLCI  1,847.8 (1.5) (0.1)
SET  1,387.5 11.2 0.8
JCI  4,873.9 105.7 2.2
PCOMP  6,514.7 86.0 1.3
KOSPI  1,992.0 6.4 0.3
TWSE  8,873.2 23.9 0.3
Nikkei  14,792.0 (35.8) (0.2)

STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 592
Total Daily Vol (m shrs) 2,033
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$)
1 Apr
Target Price
(S$)
ComfortDelgro Buy 1.995 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.830 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
1 Apr
Target Price
(S$)
Ezion Holdings Buy 2.130 3.26
Goodpack Buy 2.120 2.60
China Merchants Buy 0.950 1.32
Pacific Radiance Ltd Buy 1.100 1.20
Nam Cheong Buy 0.350 0.46
Centurion Corporation Buy 0.740 0.86
Singapore
Wired Daily
Page 2
KTL Global has entered into sale and purchase agreements
to purchase four commercial units in a development known
as KL Trillion for RM6.3m. The construction of the units is
scheduled to be completed in 2015 and the total area of
the units is approximately 6,007 sq ft. The units were
purchased for investment purposes.
China Mining International (CMI) is acquiring China
Minerals Energy (CME) for around $1 billion as it seeks to
transform itself from a property development company into
a pure mining play through a reverse takeover deal.
Following the acquisition, CME will undergo a restructuring
exercise where it will be the sole shareholder of Yukuang
Mujistone, Yukuang Nigeria, Yukuang Australia as well as
Excel Leading (Hong Kong), giving it interests in five mines.
Of the five, two are in China, one in South Australia, one in
Nigeria and one in Tajikistan. China Mining International is
also proposing a share consolidation, in line with the SGX
listing rules.
Prices of both private homes and HDB resale flats continued
their slide in the first quarter of this year based on the
government's flash estimates, and this is expected to set the
tone for the rest of this year. The HDB's Resale Price Index
dropped for the third consecutive quarter, by 1.5%. URA’s
private residential property index fell 1.3% islandwide over
the first three months, after a 0.9% decline in the fourth
quarter. This was in tandem with the decline in sales
transactions, with just 1,676 caveats lodged in the first
quarter, down from 4,260 a quarter earlier. Prices of nonlanded
homes declined across all regions, with those in the
core central region (CCR) sliding further for the fourth
consecutive quarter - 1.3%, after the 2.1% decline in Q4. In
the outside central region (OCR), prices dipped 0.3%, after
a one per cent decline in Q4. Private home prices in the rest
of central region (RCR) fell the most in Q1, 2.8%, against a
0.4% rise in the previous quarter, as fewer transactions
were made. Prices of landed homes slipped 0.6% in Q1,
after a one per cent decline in Q4.
China’s manufacturing activity improved slightly in March
from the month before, even as the HSBC/Markit
Purchasing Managers' Index (PMI) fell to an eight- month
low. The official Purchasing Managers' Index (PMI) came in
at 50.3, a touch higher than the 50.2 reading in February.
But the final HSBC PMI reading for March was only at 48,
lower than the flash estimate of 48.1 released last week.
U.S. stocks rose, led by consumer and technology shares
after the March ISM manufacturing (actual, 53.7, consensus
54) showed an improvement over the February reading of
53.2 that underpinned the hope that the US economy is
pulling out of the severe winter weather. Cisco Systems Inc.
led technology shares higher. MGM Resorts International
led casino stocks higher after Macau gambling revenue
increased last month. Ford Motor Co. rose after March sales
topped estimates. In other news, Goldman Sachs Group Inc.
is in talks to sell its New York Stock Exchange marketmaking
unit to IMC Financial Markets.