Today’s Focus
Vard
- Wins second newbuilding contract in a week,
robust order momentum continues
We peg STI’s year-end objective
at 13.9x (average) FY15F PE
that is currently at 3400 but
in the short-term, we remain
watchful of a correction to support
at 3170, base 3100. STI’s
current resilience even as it
stayed above average PE valuation
the recent dip in bond yields.
A dovish FED and macro
uncertainties such as China slowdown
concerns and
developments in Ukraine have led
to an up tick in interest for
bonds.
While South-East Asian (SEA) equity
indices have outperformed
this year, investors should stay
watchful of the current
developments in this region. If
the political situation in Thailand
and the territorial spat between
Vietnam and China worsens,
the strong performance enjoyed
by SEA equity indices YTD
could come to a pause.
Vard has secured another significant
newbuild contract from
repeat Norwegian customer Island
Offshore for the
construction of a high end Offshore
Support Vessel worth more
than NOK1bn. This is the second
newbuilding contract secured
in a week, following a PSV order
from Carlotta Offshore
recently. The value of the contract
comes as a surprise, as
typically high end AHTS and PSV
vessels built by Vard are below
NOK500m. The vessel will be delivered
from Vard Brevik yard in
Norway in 2Q-2016. The contract
brings Vard's YTD-FY14
contract wins to above NOK7bn,
which represents 50% of our
full-year assumption of NOK14bn.
Order win momentum has
been strong this year, in line
with recovery in OSV market as
well as continued strength in
subsea construction vessels space.
We maintain our BUY call with
target price of S$1.21.
Improving earnings execution on
a sequential basis hereon will
be the key catalyst.
Vallianz Holdings will be boosting
its fleet capabilities with the
addition of platform supply vessels
of Ulstein P128 and PX128
designs (New PSVs). The New PSVs
are the first of its kind in
the world and charts the start
of the modernisation and
diversification for Vallianz’s
current fleet of 28 vessels.
Q & M Dental has announced
a strategic partnership with IMC
Group (IMC) by way of signing
a call option with Heritas Helios
Investments (HHI), a healthcare
private equity fund seeded by
IMC and managed by IMC’s wholly
owned subsidiary, Heritas
Capital Management, granting HHI
the right to call upon Q&M
to issue 63m new shares within
a 2-year option period for a
minimum exercise price of S$0.48
per share. Q&M also
announced that QMH, together with
Dr Kelvin Koh and Dr
Felicia Koh, sells shares collectively
equivalent to 10% of Q&M
to HHI.
US Indices Last Close Pts Chg
% Chg
Dow Jones
16,606.3 63.2 0.4
S&P
1,900.5 8.0 0.4
NASDAQ
4,185.8 31.5 0.8
Regional Indices
ST Index
3,278.0 12.4 0.4
ST Small Cap
548.3 4.5 0.8
Hang Seng
22,965.9 12.1 0.1
HSCEI
10,121.1 11.5 0.1
HSCCI
4,317.1 47.5 1.1
KLCI
1,869.2 (5.9) (0.3)
SET
1,396.8 (8.4) (0.6)
JCI
4,973.1 3.2 0.1
PCOMP
6,811.3 (19.3) (0.3)
KOSPI
2,017.2 1.6 0.1
TWSE ??
9,008.2 38.6 0.4
Nikkei
14,462.2 124.4 0.9
STI Index Performance
Singapore
Total Market cap (US$bn) 611
Total Daily Vol (m shrs) 1,771
12m ST Index High 3,406
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large
Cap
Rec’n Price (S$)
23 May
Target Price
(S$)
ComfortDelgro Buy 2.380 2.50
Global Logistic Properties Buy
2.810 3.31
Keppel Corp Buy 10.710 12.60
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Stock Picks – Small
Cap
Rec’n Price (S$)
23 May
Target Price
(S$)
Pacific Radiance Ltd Buy 1.180
1.20
Nam Cheong Buy 0.380 0.47
Centurion Corporation Buy 0.740
0.86
Source: DBS Bank
Singapore
Wired Daily
Page 3
Sinjia Land announced its joint
venture with Real Time
Engineering (RTE) to explore new
business opportunities in
clean technologies. The joint
venture will leverage RTE’s 10-
year test-bedding partnership
agreement with JTC
Corporation under JTC’s CleanTech
Park Living Lab
Programme for the installation
and operation of a fuel cell
power plant that will generate
clean electricity for JTC’s
CleanTech One development in CleanTech
Park.
Inflation in Singapore grew at
a faster clip in April - rising
from 1.2% y-o-y in March to 2.5%
last month, slightly less
than the 2.6% growth that the
market had expected. The
jump in April's consumer price
index (CPI) was largely due to
a rise in car prices; private
road transport costs climbed
5.7% in April, reversing four
consecutive months of decline.
The increase reflected the rise
in COE premiums -
exacerbated by the low base in
April 2013 - and an edging
up of petrol pump prices. With
the exception of
accommodation - which moderated
further to 1.1% from
1.7% in March, mainly due to a
smaller increase in imputed
rentals on owner-occupied accommodation
- all other major
categories showed slightly stronger
price increases in April.
Core inflation, which excludes
accommodation and private
road transport costs, crept up
to 2.3% in April from 2% in
March. Services inflation was
higher at 2.7% compared to
2.4% in March, led by a pick-up
in the cost of holiday travel
and public road transport. Food
inflation, meanwhile, rose
to 3.1% from 2.9% a month ago,
reflecting steeper price
increases of both non-cooked food
and prepared meals.
MAS and MTI said that core inflation
is expected to "stay
elevated" at 2-3% in 2014,
while headline inflation is
projected to come in at 1.5-2.5%.
Car prices are likely to
add "negligibly" to
inflation, they said.
International ratings agency Standard
& Poor's (S&P) has
affirmed Singapore's sovereign
credit strength over the long
and short term with the vaunted
top risk-free ratings. S&P
has assigned triple A long-term
rating and A-1+ short-term
rating for Singapore's creditworthiness.
Even so, the agency
warned that brisk credit growth
relative in real terms and
vulnerabilities in a small and
open economy present some
risks to Singapore's credit profile.
US markets rose as data showed
purchases of new homes
climbed in April. The rise was
on very weak volume though,
as about 4.6bil shares changed
hands on U.S. exchanges,
the lowest figure for the year.
Sales of new U.S. homes
increased 6.4% to a 433k (consensus
425k), the most since
October. Hewlett-Packard shares
rose despite reporting an
11th straight quarter of declining
sales. This after CEO said
profit will be propped up by cutting
as many as 16,000
more employees, on top of 34,000
already announced.
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