Monday, June 30, 2014

Today's Stock Pick 1 Jul 14

Buy Recommendations

DBSVickers
Global Logisttic Properties - tgt 3.42
DBS Mapletree Greater China Commercial Trust - tgt price 1.02
Thai Beverage - tgt 0.68
Vard Holding - tgt 1.34
Nam Cheong - tgt 0.47
Centurion Corporation - tgt 0.86

OCBC
Nam Cheong - tgt 0.445

UOB
M1 - tgt 4.05
SingTel - tgt 4.30

PS: I have simplified this blog by just posting the stock picks by some broking houses.

Daily Summary 30 Jun 14

Europe closed mixed on Friday while Dow was +6 at 16852.  Dow's trend is slipping down. Dow's future is now -2.  Europe opened up.

Asian bourses were mixed.  Nikkei +67, ShanghaiC +12, Hangseng -31.  STI closed -15 at 3256.  Volume was 2.5b shares.

Short term trend of STI is slipping down as well.

Top volumes were Transcu +0.1, Polaris +0.3, Oceanus +0.1, ChinaIntl +0.6, ICP +0.1, PNEMicron +0.5, APAC -0.1, Mirach +0.5, Adventus unchanged, Vibrant +0.7.

Market opened flat but slipped down and stayed at -5/6 pts for the whole morning. It fell further in the afternoon but closed off its low. Blue chips were mostly weaker. Penny and speculatives were also mostly weaker.

Market was expected to fall given the sharp fall in Dubai on Friday, a drop of 6.7% and a total of 25% from May. However this did not seem to have any impact on the regional bourses.

Dow and Europe are looking steady at the moment.

OCBC Report 30 Jun 14

KEY IDEA

Singapore REITs: Performing a reality check


Summary:
Our assessment of the recent performance of S-REITs show that their fundamentals have generally remained sound, and S-REITs continue to benefit from their past investments and higher secured rentals within their existing portfolios. On the capital management front, S-REITs have again stepped up their efforts to repay/refinance their borrowings ahead of their maturities and over a longer term, as well as hedge their interest rate exposure in anticipation of the potential hike in interest rates. We are retaining Suntec REIT [BUY, S$1.85 FV] and Starhill Global REIT [BUY, S$0.90 FV] as our sector picks. However, we now replace CapitaCommercial Trust with Frasers Centrepoint Trust [BUY, S$2.08 FV] as our preferred pick due to the former’s strong unit price run-up. Retain NEUTRAL on broader S-REITs sector. (S-REITs Team)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- A late-afternoon rally on Wall Street led by tech and small companies sent US stocks into positive territory on Fri.


- The Singapore government will commit ~S$4b in financial support over five years to the revamped national health insurance scheme that will offer lifelong coverage and better protection.


- OCBC said all the pre-conditions to an agreement to buy Hong Kong's Wing Hang Bank Ltd had been satisfied.


- SMJ International Holdings said on Fri that its IPO has been fully subscribed or purchased, with total proceeds of about S$5.67m.

- The trading of shares of IPS Securex Holdings Limited, a provider of security products and integrated security solutions, starts on Mon after all its placement units were subscribed.


- ICP is buying a 20% stake in Australian coal exploration company Tiaro Coal for A$3.05m, and selling off its 17% in another Australian gold exploration company for A$2m.


- Jackspeed Corporation is selling its leasehold factory in Loyang Drive for S$6.5m under its ongoing efforts to redeploy capital more efficiently.

- Vibrant Group, formerly known as Freight Links Express, recorded an 11.2% rise in full-year net profit on higher revenue.

DBSVickers Report 30 Jun 14

Today’s Focus
􀂃 STI – In healthy consolidation phase. A decline down to
3220 or even 3180 is a buying opportunity
The FIFA World Cup tournament has dragged down the
average daily value of shares traded on the Singapore exchange
below S$1bn. We expect trading activity to recover by around
30% back to pre-World Cup levels from July 2.
Investors’ attention turn towards the following 2Q results
season that starts post World-Cup around mid-July and spans
through August 15. Based on our analysts’ earnings forecasts,
small caps O&G services stocks Vard, Nam Cheong and Pacific
Radiance offer the strongest growth potential for FY14. Among
these, Vard offers the highest upside potential to our
fundamental TP.
The outcome of the Indonesian presidential election on July 9 is
one event to watch for prior to the end of the World Cup
tournament. Developments in Indonesia and fluctuations in the
Rupiah affect Indonesian related stocks listed here such index
components Jardine C&C, Jardine Matheson and Jardine
Strategic, and also CPO stocks First Resources, Golden Agri,
Indofood Agri and Wilmar International.
STI’s recent pullback falling below 3270 indicates the start of
the anticipated consolidation. The pullback should test 3220
and if this support level fails subsequently, a dip to 3170-80 is
seen. We maintain that such a consolidation is a “healthy”
one. We see the STI heading higher post pullback. A decline
down to 3220 or better yet, a probe of 3180 is a buying
opportunity.
OCBC said all the pre-conditions to an agreement to buy Hong
Kong's Wing Hang Bank had been satisfied, as various
regulators had given their blessing to the US$4.95 bn deal.
OCBC said the parties had received approvals from the Hong
Kong Monetary Authority, Monetary Authority of Singapore,
Hong Kong's Securities and Futures Commission, Insurance
Authority and Mandatory Provident Fund Schemes Authority,
as well as the Monetary Authority of Macau. The transaction is
yet to be finalised, pending satisfaction of a number of
conditions.
Singapore
Wired Daily
Page 3
Global Logistic Properties (GLP) is stepping up its growth
plans, notably in China, where companies are vastly
under- served by an inefficient logistics and transportation
sector.GLP, which already boasts a property portfolio in 63
cities covering 25m sqm, has bumped up its global
development start budget for fiscal year 2015 by 38% to
US$2.7 bn. About US$1.7bn has been earmarked for
China, US$675m for Japan and US$390m for Brazil.
Otto Marine has signed a Memorandum of Agreement
(MOA) to dispose three of its vessels known to Go Marine
Services (M) Sdn Bhd, a company incorporated in Malaysia
in which it owns 49%, for a sum of US$37.5m.
First Ship Lease Trust has entered into a time charter
agreement with Tesoro Far East Maritime Company, a
wholly-owned subsidiary of Tesoro Corporation for the
FSL Shanghai, a 115,000 dwt crude oil tanker built in
2007. The new employment is anticipated to generate
approximately US$5.7m of headline revenues over the
next 12 months. This represents an increase of US$1.6m
over the previous time charter contract, representing a
40% increase in net revenue year-on-year.
RH Petrogas has commenced the acquisition of
approximately 550 line kilometres of 2D seismic survey in
Block SK331 onshore Sarawak. The survey is expected to
be completed in November 2014. Block SK331 is a large
block covering an area of 11,600 square kilometres. RH
Petrogas is the operator of Block SK331 and holds an
80% working interest in the block.
Six local contractors and local joint ventures have snagged
all of the nearly $1.4bn worth of contracts awarded so far
for the Thomson Line (TSL). The six contracts - out of 22
major contracts - total $1.361bn. They account for 27%
of the major civil contracts for the TSL - higher than the
nine out of 37 contracts, or 24%, awarded to local players
for the Downtown Line. The $18bn TSL is Singapore's
sixth MRT line and connects northern Singapore to the
CBD and Marina Bay area. It will be ready in phases from
2019 to 2021. The 30-kilometre long line will be fully
underground with 22 stations, of which six will be
interchanges.

Friday, June 27, 2014

Daily Summary 27 Jun 14

Europe closed mixed last night while Dow -21 at 16846.  Dow's short term trend is down. Long term uptrend is looking like breaking down with double top formation and a hangman. Dow's future is now -8. Europe opened up.

Asian bourses were mostly down.  Nikkei -213, ShanghaiC -2, Hangseng +24.  STI closed -10 at 3269. Volume was 1.7b shares.  Gainers were 195 to 221 losers.

Short term trend of STI is up.

Top volumes were Polaris +0.4, PNE +0.9, Mirach -1.5, Oceanus +0.2, CompactMetal +0.4, Adventus +0.1, Vallianz +0.1, Charisma unchanged, WCorp +0.1, Blumont -0.2.

Market opened down and stayed down the whole day. Volume was a low of 1.7b shares.  Blue chips were mostly down.  Penny and speculatives were mixed.

Europe are up at the moment while Dow's future is slightly down.

OCBC Report 27 Jun 14

KEY IDEA

Ascendas REIT: First acquisition in 2014

Ascendas REIT (A-REIT) yesterday proposed to acquire Hyflux Innovation Centre from Singapore-listed Hyflux Ltd’s subsidiary for S$170.0m. An upfront land premium of S$21.2m will be payable to JTC, thus bringing the total purchase consideration to S$191.2m. At 100% occupancy, the acquisition is expected to generate an initial NPI yield of 6.98% and add to add an annualised 0.118 S cents to A-REIT’s pro forma FY14 DPU, assuming the acquisition was funded by 40% debt and 60% equity. Apart from being DPU-accretive, we note that the acquisition would improve the portfolio weighted average lease to expiry from 3.85 years to 3.96 years as well as broaden its tenant base – a move that we view positively given the overall lacklustre industrial market. We maintain BUY on A-REIT with unchanged fair value of S$2.45. (Kevin Tan)


MORE REPORTS


Yoma Strategic Holdings: Private placement of 135m shares at 70 S-cents

Yoma announced that it would raise S$92.8m (net) through a private placement of 135m new shares at 70 S-cents. These new shares will make up ~10.45% of the enlarged issued and paid-up capital, and Yoma intends to use the proceeds to help fund the growth and expansions of the group’s various businesses. The group has also recently been offered the right to acquire a 70% stake in 10.8m sq ft of land in Pun Hlaing Golf Estate (PHGE), comprising 9.6m sq ft of golf course and country club and 1.2m sq ft of land development rights (LDR). Assuming that this proposed acquisition is approved by shareholders, the recently proposed rights of 1 for every 8 shares at S$0.38 would likely be revised to 1 for every 3 shares. Note that the new placement shares will also eligible for the proposed rights issue ahead. Maintain BUY on Yoma; our fair value dips slightly to S$0.82, from S$0.85 previously, from the effect of dilution after the recent placement. (Eli Lee)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- The US stock market staged a rebound in the afternoon session Thu, paring most but not all of the losses by the end of the day.

- Singapore's economic growth now faces downside risks for 2Q14 and 2014 after the manufacturing sector slipped into contraction mode last month, for the first time since Jun last year.


- Aspial Corporation CEO Koh Wee Seng has continued to buy shares in LCD Global Investments at prices above the 17 cents a share buyout offer from Lum Chang's Raymond and David Lum, fuelling further market talk of a counter-bid.

- Anwell Technologies yesterday said a trade creditor has obtained a court order to auction 229.4m yuan (S$46.5m) worth of assets from its subsidiary Henan Kerry Digital Co Ltd.


- Spackman Entertainment Group, which owns film production labels Zip Cinema and Opus Pictures, lodged its preliminary offer document for its proposed IPO with SGX yesterday.


- Global Invacom Group announced that it would raise US$15.0m (S$18.7m) from a placement in conjunction with a listing of new shares on the Alternative Investment Market (AIM) of the London Stock Exchange.

DBSVickers Report 27 Jun 14

Today’s Focus
 Asian Game Changers - Business impact of digital
technology
 Ascendas REIT - Acquisition of Hyflux Innovation Centre
value accretive. Maintain BUY with slightly higher target
price of S$2.51
We issue a report on Asian Game Changers, where we look at
the business impact of digital technology. The first wave -
smart phone proliferation – is empowering consumers and
small businesses using apps and social media. The second
wave –big analytics - has just begun whereby businesses can
predict a consumer’s next purchase. The third wave -
connecting everything to the Internet – while not there yet, will
be the most disruptive one. No sector will remain untouched.
Even traditional sectors will feel the heat. We highlight
potential winners and losers in this report. For SGX listed
stocks, Key beneficiaries are SingPost, Global Logistic Properties
and Cache Logistics Trust. Companies that may face challenges
include SPH, Suntec REIT and Keppel REIT.
Ascendas REIT (A-REIT) announced the acquisition of Hyflux
Innovation Centre located at 80 Bendemeer Road for
S$191.2m. This is a high-spec property and is well-located at
the fringe of the central business district. Hyflux will lease back
50% of the GFA for 15 years upon completion, expected to be
in Jun’14. As the property has an occupancy rate of 83.9%;
Hyflux will provide income support for the remaining vacant
space for three years. This acquisition is value accretive to
portfolio, and A-REIT will emerge with improved weighted
average lease expiry (WALE). Maintain BUY with slightly higher
target price of S$2.51 (Prev S$ 2.47). A-REIT continues to offer
attractive yields of 6.4-6.6%.
For Hyflux, the divestment boosts bottom-line and unlocks
capital to fund potential projects, albeit a temporary uplift.
Core operations are still in need of new contracts and good
project execution. Despite aggressive biddings in Oman,
Nigeria, India and Singapore, Hyflux has yet to secure new
contracts. The S$84m disposal gain would lift FY14F earnings
significantly and target price to S$1.33 (Prev S$ 1.23). Maintain
HOLD. We feel the stock could be range bound until signs of
an operation turnaround emerge due to major contract wins or
fast track execution of its India project.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,846.1 (21.4) (0.1)
S&P  1,957.2 (2.3) (0.1)
NASDAQ  4,379.0 (0.7) (0.0)
Regional Indices
ST Index  3,278.6 17.0 0.5
ST Small Cap  559.9 1.3 0.2
Hang Seng  23,197.8 331.1 1.4
HSCEI  10,337.0 157.0 1.5
HSCCI  4,347.1 52.5 1.2
KLCI  1,890.0 0.4 0.0
SET  1,477.5 9.0 0.6
JCI  4,872.4 33.4 0.7
PCOMP  6,892.2 57.5 0.8
KOSPI  1,995.1 13.3 0.7
TWSE  9,320.9 78.8 0.9
Nikkei  15,308.5 41.9 0.3

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$bn) 612
Total Daily Vol (m shrs) 1,896
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
26 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.690 3.42
Mapletree Greater China
Commercial Trust
Buy 0.870 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
26 Jun
Target Price
(S$)
Vard Holdings Buy 1.090 1.34
Nam Cheong Buy 0.395 0.47
Centurion Corporation Buy 0.715 0.86
Source: DBS Bank
Ling Lee Keng (65) 6682 3703 leekeng@dbs.com
www.dbsvickers.com
Refer to important disclosures at the end of this report
Singapore
Wired Daily
Page 2
PNE Micron Holdings announced that it is in late stage
discussions with potential investors who are interested to
acquire up to 30% stake in the company.
Stats ChipPac, whose shares surged as much as 17.8%
yesterday, amid renewed speculation that the firm might
be bought over. A report from tech news provider
Digitimes, citing unnamed industry sources, named several
companies reportedly vying to buy Stats ChipPac, among
them Taiwan's Advanced Semiconductor Engineering
(ASE), Changjiang Electronics Technology, Samsung
Electronics and Huatian Technology
Global Invacom Group is raising US$15m from a placing in
conjunction with a listing of new shares on the Alternative
Investment Market (AIM) of the London Stock Exchange
(LSE).
Singapore’s manufacturing sector slipped into contraction
mode last month, for the first time since June last year.
Contrary to expectations of a 2.4% rise, factory output
declined 2.5% in May year-on-year (sharply down from
April's upwardly-revised 5.3% increase), pulled lower by
drops in both the electronics and biomedical
manufacturing clusters. Excluding the volatile biomedical
sector - which contracted 9.2% last month on lower
production of active pharmaceutical ingredients - output
would still have fallen, albeit by a smaller 0.5%. The
electronics cluster, which retains the largest weight of
33.4% on the industrial production index, proved the
biggest drag on manufacturing output. Electronics
production fell 7.5% y-o-y in May; the semiconductors,
computer peripherals, and data storage segments fell
6.4%, 11.8%, and 29.2% respectively. Output of all other
clusters rose, except general manufacturing industries
which fell 1.1%.
In property news, two private residential sites in Sengkang
and an executive condominium (EC) plot along Choa Chu
Kang Drive, which together can yield about 1,700 homes,
were launched for sale yesterday. The three 99-year
leasehold sites are the last on the confirmed list of the H1
2014 Government Land Sales programme to be released
for tender.
US stocks staged an afternoon comeback, erasing most of
an earlier tumble that was fueled by worries about interest
rates. The Dow Jones Industrial Average and S&P 500
ended the day slightly lower, while the Nasdaq finished
flat. Home goods retailer Bed Bath & Beyond tumbled
over 7.2% after earnings came in lower than expected.
Philip Morris International lost almost 3%, after the
cigarette maker dimmed its forecast for the year due to
currency troubles and economic challenges in Europe.
On the other hand, Alcoa bounced 2.7% after unveiling a
$2.85 billion cash-and-stock deal to acquire Firth Rixson,
which makes jet-engine parts.

Thursday, June 26, 2014

Daily Summary 26 Jun 14

Europe were down last night but Dow +49 at 16867.  Dow's short term trend is down though long term trend is still up.  Dow's future is not flat. Europe opened flat.

Asian bourses were mostly up. Nikkei +42, ShanghaiC +13, Hangseng +331.  STI closed +12 at 3274.  Volume is 1.9b shares. Gainers were 246 to 185 losers.

Short term trend of STI is turning up.

Top volumes were Vallianz -0.7, Adventus +0.5, JES +0.4, Mirach -3.5, ICP unchanged, STATSChipP +8, Oceanus +0.1, Blumont +0.1, GSH +0.1, Cacola +0.3.

Market opened slightly up and gained strength by noon to close near day high.  Blue chips were mostly up.  Penny and speculatives were mixed. Volume is still low with quiet trading.

Dow and Europe are looking flat at the moment.

Wednesday, June 25, 2014

Daily Summary 25 Jun 14

Europe were mixed last night. Dow -119 closing at 16818.  Dow's short term trend is starting to turn down.  Dow's future is now +5.  Europe opened down.

Asian bourses were mostly down.  Nikkei -110, ShanghaiC -8, Hangseng -14.  STI closed +2 at 3264.  Volume was 2.2b shares.  Gainers were 170 to 267 losers.

Trend of STI is still down but stabilising.

Top volumes were Memstar -0.1, AdvanceSCT unchanged, ChinaGaoxian +0.3, Polaris +0.2, Teledata unchanged, Metech +0.1, JES +0.3, Scintronix unchanged, WCorp -0.2, Vallianz -0.1.

Market opened flat but managed to stay positive throughout the session. Blue chips were mixed. Penny and speculatives were weaker. It was another day of directionless trading.

Europe are looking a bit weak at the moment.  Dow's future is marginally up.

OCBC Report 25 Jun 14

KEY IDEA

United Envirotech: Secures Johor EPC contract

United Envirotech Ltd (UEL) has just been awarded a MYR45m (~S$17.5m) EPC contract in Johor Bahru, Johor, Malaysia to construct a sewer pipeline and a sewage treatment plant by end 2015. While the award of this sizable contract is noteworthy, we believe that the market is probably keener on UEL’s prospects in China’s WWT (waste-water treatment) industry. The Chinese government is expected to pass a CNY2t (US$320b) water pollution action plan into legalization soon. We expect the move to benefit players with established track record like UEL. In view of the positive development, we bump up our FY15 and FY16 earnings forecasts by 1.5-2.8%. We are also rolling forward our 28x peg to blended FY15/FY16F EPS, thus raising our fair value to S$1.50 from S$1.30. But the recent run-up may have captured most of the good news in its share price, hence we maintain our HOLD rating. (Carey Wong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- A late afternoon selloff on Wall Street sent US stocks lower on Tue, with the Dow Jones Industrial Average falling by the most points in more than a month.


- Longcheer Holdings is selling its wholly-owned subsidiary Mobell Technology for 240m yuan (~S$48m) to a company owned by Longcheer's executive directors.

- Oxley Holdings' tie-up with Sepang Goldcoast and Sepang Bay to develop two parcels of land in Selangor, Malaysia has fallen through.

- LionGold Corp's bid to raise S$5m from a proposed share subscription evaporated yesterday as the remaining four would-be subscribers backed out of the deal.


- ICP's subsidiary has entered into an agreement with budget hotel group Travelodge to acquire the registered trade mark rights to the brand name Travelodge in Asia for A$3m (S$3.51m).


- Armarda Group's independent auditor has flagged the group's larger net loss of S$88.25m and negative operating cash flows of S$70.04m for FY14, in an emphasis of matter.


- Polaris, a mobile phone and consumer electronics distributor and retailer, is in talks to acquire shares in a South-east Asian company with a similar business model.


- Yanlord Land Group has secured a three-year US$385m syndication loan from Hang Seng Bank, HSBC, Standard Chartered Bank (Hong Kong) and DBS Bank.

DBSVickers 25 Jun 14

Today’s Focus
CWT - Raising the roof; maintain BUY with higher target
price of S$2.08. Valuation remain attractive at less than 8x
FY15 PE
The Logistics and Financial Services segments for CWT are
tracking above expectations, with firm momentum. We expect
better margins at Logistics segment, while Financial Services
should grow its profit firmly as revenue continues to scale up.
FY14/FY15 forecasts raised by 10.3%/10.6% to
S$119m/S$135m. Maintain BUY, with raised target price of
S$2.08, as we roll over to FY14/15 numbers; valuation remain
attractive at less than 8x FY15 PE.
Keppel Corp has signed a conditional contract with Golar LNG,
to perform the world’s first-of-its-type conversion of an existing
Moss LNG carrier into a Floating Liquefaction Vessel (FLNGV).
Longcheer Holdings has entered into a conditional sale and
purchase agreement with First Prosperous International in
relation to the disposal of its entire interest in its wholly-owned
subsidiary, Mobell Technology for an aggregate cash
consideration of RMB240m. The proposed disposal is
conditional upon the company distributing RMB450m from (i)
its total distributable profits and retained earnings; and (ii) the
net proceeds from the proposed disposal to its shareholders, by
way of a cash dividend.
Informatics Education has signed a set of agreements
comprising a Memorandum of Understanding, an Institutional
Agreement and a Memorandum of Cooperation with the
University of South Wales (USW), UK to offer undergraduate
and postgraduate degrees in Business Studies/Administration
and also in Logistics and Supply Chain Management.
Informatics is responsible for providing support to students in
areas such as student accommodation, student counselling and
careers advice.
OEL (Holdings) has entered into a Heads of Agreement with
Unionmet to dispose its entire stake in Biofuel Research for
S$3m. Biofuel is in the business of processing acid oils and
greasy waste using different technologies including thermal
separation techniques and such related businesses.
XMH Holdings has secured five new contracts worth a total of
S$10.6m from the start of April 2014 till date, marking a
positive start to the financial year. The five contracts, catering
to three different and major industries will provide the MPG
Group with a flow of activities through to January 2016.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,818.1 (119.1) (0.7)
S&P  1,950.0 (12.6) (0.6)
NASDAQ  4,350.4 (18.3) (0.4)
Regional Indices
ST Index  3,262.0 4.6 0.1
ST Small Cap  559.1 1.4 0.2
Hang Seng  22,880.6 75.8 0.3
HSCEI  10,250.2 52.1 0.5
HSCCI  4,277.6 13.5 0.3
KLCI  1,892.3 8.4 0.4
SET  1,460.9 (7.8) (0.5)
JCI  4,862.2 20.1 0.4
PCOMP  6,793.1 31.1 0.5
KOSPI  1,994.4 19.4 1.0
TWSE  9,246.2 17.9 0.2
Nikkei  15,376.2 7.0 0.0

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$bn) 612
Total Daily Vol (m shrs) 1,702
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
24 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.660 3.42
Mapletree Greater China
Commercial Trust
Buy 0.865 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
24 Jun
Target Price
(S$)
Vard Holdings Buy 1.100 1.34
Nam Cheong Buy 0.400 0.47
Centurion Corporation Buy 0.705 0.86
Source: DBS Bank
Yeo Kee Yan (65) 6682 3706 keeyan@dbs.com / Ling Lee Keng (65) 6682 3703 leekeng@dbs.com
www.dbsvickers.com
Refer to important disclosures at the end of this report
Singapore
Wired Daily
Page 2
LionGold Corp's bid to raise $5m from a proposed share
subscription was off as the remaining four would-be
subscribers backed out of the deal. But the Group
unveiled another subscription agreement with a Malaysian
businessman to raise gross proceeds of $4.23m. Under
the new proposed share subscription deal, Malaysian
businessman Moi Hsien Hur has agreed to buy 52m new
LionGold shares at 8.135 cents each, about 9% discount
to the last volume-weighted average price. LionGold said
that of the estimated net proceeds of $4.2m from this
subscription, 70% will go to its gold mining operations,
while the remaining 30% will be used as working capital.
In property news, another Gambas Crescent industrial
parcel has been launched for sale - the fourth in the area
to be offered in the span of a year. The 30-year lease,
15,665 sq m site, located right next to the latest sold
Parcel 3, was released by the Urban Redevelopment
Authority (URA) yesterday. It has a maximum gross plot
ratio of 2.5 and is zoned for Business-1 development, or
light industrial use. The three earlier adjacent sites were all
bought by Far East Organization in 2013,
Meanwhile, Roxy-Pacific Holdings has had a slow start to
its Trilive condo project in the Kovan area, moving close to
30 units since sales began last Friday. It has released 80
units in the 222-unit freehold project along Tampines
Road at an average price of $1,550 per square foot (after
early-bird discounts).
US markets fell post record levels last week as reports of
escalating violence in the Middle East overshadowed
housing data that boosted optimism in the world’s biggest
economy. Data had showed purchases of new homes in
the U.S. rose in May by the most in 22 years. June
consumer confidence came in better than expected at
85.2 (consensus 83.5, previous 82.2). Federal Reserve
Bank of Philadelphia President said he’s “fairly optimistic”
economic growth will exceed 2.4% for the remainder of
this year and next amid steady growth in jobs. But the
optimism unwound following a report that Syrian
warplanes struck targets in western Iraq unnerved
investors.

Tuesday, June 24, 2014

Daily Summary 24 Jun 14

Dow and Europe were down last night. Dow closed -10 at 16937. Dow's trend is still up. Dow's future is now -11.  Europe are mixed on opening.

Asian bourses were mostly up marginally.  Nikkei +7, ShanghaiC +10, Hangseng +76.  STI closed +8 at 3266.  Volume was 1.7b shares. Gainers were 254 to 183 losers.

Trend of STI is down.

Top volumes were InnoPac +0.2, Adventus +0.8, Transcu +0.1, Vallianz +0.1, APAC +0.1, Artivision +1.2, ChinaGaoxian +0.6, Teledata unchanged, Sunningdale +1.7, KLW +0.1.

Market opened flat but started to turn positive after noon and closed +4, off its high of +12.  Blue chips were seeing more gainers.  Penny stocks were also firmer albeit lower volumes.

Dow and Europe are looking a bit weak at the moment.

Monday, June 23, 2014

OCBC Report 24 Jun 14

KEY IDEA

Singapore Residential Property:  Demand is out there but price-sensitive

We forecast residential prices to dip 10%-20% over 2014 – 2015 but see a price crash in excess of 20% to be unlikely, even after accounting for the anticipated physical over-supply and interest rate uptrend ahead. One key argument against a crash is that we believe there is a high price elasticity of demand in the market largely due to a prolonged period of physical undersupply from 2004 – 2012. Simply put, significantly more buyers will likely come into the market at lower price points, which will slow the rate of decline as prices soften. Several key data-points had previously corroborated our view – firm sales at d’Leedon and Sky Habitat after significant discounts by CapitaLand, and at attractively priced launches such as UOL’s Thomson Three – and we believe the latest set of sale figures in May-14 further supports this. Our top picks in the developer space are CapitaLand [BUY, FV: S$3.79], Keppel Land [BUY, FV: S$4.09] and OUE [BUY, FV: S$2.87]. (Eli Lee)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks ended Mon’s session marginally lower, with the S&P 500 and Dow Jones Industrial Average pausing after six straight days of modest gains.


- Frasers Hospitality Trust is slated to raise S$365.2m from its initial public offering and from cornerstone investors.


- Nam Cheong has sold two accommodation work barges worth a total of US$84m to Perdana Petroleum Bhd.


- Olam International announced on Mon a partnership with Mitsubishi Corporation of Japan (MC) to grow its Australian grains business.

- Changi Airport saw the number of passengers edge up 2% YoY to 4.37m in May, although travel demand for certain South-east Asian routes such as Bangkok and Phuket remains weak.


- Consumer price inflation in Singapore picked up a little more than expected to 2.7% in May.


- The number of properties up for auction by mortgagees (or lenders) as well as their share of the number of properties going under the hammer has hit a quarterly high in 2Q14.


- The Ascott Limited, CapitaLand's wholly owned serviced-residence unit, has secured contracts to manage four more properties in China.

- Tiger Airways is considering all its options regarding the four aircraft set to return to the group, with associate Tigerair Mandala being grounded permanently from next month.

DBSVickers Report 24 Jun 14

Today’s Focus
 Frasers Centrepoint Trust - Overhang cleared; time to buy.
Target price maintained at S$2.13
Frasers Centrepoint Trust’s (FCT) recent share placement was
well taken. The fund raised was to partially fund its S$305m
acquisition of Changi City Point (CCP). As CCP is still in its first
rent cycle and c.60% of leases are up for renewal in FY14/15,
the Manager is uniquely poised to deliver earnings growth by
refreshing the mall’s tenant mix to better cater to its growing
catchment population. We forecast that FCT to deliver 2-year
earnings CAGR of 6% for FY15-16. At current levels, FCT
offers an attractive FY14-16F yield of 6.0-6.8%, which is higher
when compared to Singapore-focused retail S-REITs, which are
trading at yields ranging 5.5-6.6%. Maintain BUY, target price
S$2.13.
Yoma Strategic Holdings said it has received a written notice
from Myanmar's Serge Pun & Associates offering the right to
acquire the economic benefit of 70% of the land in Pun Hlaing
Golf Estate (PHGE). The 250 acres (10.8 million sq ft) land
comprises 9.6 million sq ft of a golf course and country club
and 1.2 million sq ft of land development rights, alongside
some related businesses infrastructure and facilities. Yoma
estimates the land value of 100% of PHGE and the related
businesses, infrastructure and facilities to be about US$100m. If
it accepts the offer, the group intends to undertake a rights
issue to fund the transaction. This is likely to result in a revision
of the terms of the recently announced rights issue from one
rights share for every eight existing shares to one rights share
for every three existing shares. But the issue price of the rights
share will remain at S$0.38 per rights share, said Yoma.
Nam Cheong has sold 2 accommodation work barges (AWBs)
worth US$84m to repeat Malaysian customer Perdana
Petroleum Berhad. Perdana also has an option to purchase
another two vessels. The vessels, each of 123m length and with
accommodation capacity for 500 men, are the largest
accommodation vessels built by Nam Cheong to date and will
be the first-of-its-kind in Malaysia when delivered, according to
Nam Cheong. These vessels will be constructed on a build-toorder
basis in one of the Group's subcontracted yards in China
for delivery in 2016. This brings the Group's orderbook to
about RM1.5bn, including other built-to-order contracts and
built-to-stock vessels that have been sold already. We expect
Nam Cheong to continue riding the cycle well in the offshore
services space and register over 20% CAGR in earnings over
FY13-15. Maintain BUY with unchanged target price of S$0.47.
Further catalysts from vessel sale contracts and gross margin
outperformance are likely in the rest of FY14.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,937.3 (9.8) (0.1)
S&P  1,962.6 (0.3) (0.0)
NASDAQ  4,368.7 0.6 0.0
Regional Indices
ST Index  3,257.4 (1.4) (0.0)
ST Small Cap  557.7 (1.9) (0.3)
Hang Seng  22,804.8 (389.3) (1.7)
HSCEI  10,198.1 (197.4) (1.9)
HSCCI  4,264.1 (62.7) (1.4)
KLCI  1,884.0 (1.8) (0.1)
SET  1,468.7 1.4 0.1
JCI  4,842.1 (5.6) (0.1)
PCOMP  6,762.0 31.0 0.5
KOSPI  1,977.2 2.2 0.1
TWSE  9,228.4 (45.4) (0.5)
Nikkei  15,369.3 19.9 0.1

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$bn) 612
Total Daily Vol (m shrs) 2,003
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
23 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.670 3.42
Mapletree Greater China
Commercial Trust
Buy 0.865 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
23 Jun
Target Price
(S$)
Vard Holdings Buy 1.095 1.34
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.720 0.86
Source: DBS Bank
Yeo Kee Yan (65) 6682 3706 keeyan@dbs.com / Ling Lee Keng (65) 6682 3703
leekeng@dbs.com
www.dbsvickers.com
Refer to important disclosures at the end of this report
Singapore
Wired Daily
Page 2
Olam announced a partnership with Mitsubishi
Corporation of Japan (MC), in which MC will invest
US$64m for 80% equity interest in wholly owned
subsidiary - Olam Grains Australia (OGA), while Olam will
continue to hold the remaining 20% stake. OGA’s
business comprises mainly origination, trading, logistics
and marketing activities as well as a 32.5% stake in
Newcastle Agri Terminal, which commenced operations in
February 2014. MC, a Japanese conglomerate, develops
and operates businesses globally across diverse fields
including environment and infrastructure, industrial
finance and logistics, energy, metals, machinery,
chemicals, living essentials and business services. We view
the development positively. The partnership lays a strong
foundation to build a profitable and sustainable grains
business in Australia, leveraging on the growing Asian
demand for grains and competing effectively in the
Australian grain industry as they plan to invest in
upcountry procurement and logistics to scale up the local
presence.
Pacific Radiance has incorporated a Mexican JV company,
CR Offshore (CRO). CRO will be principally engaged in
management and operation of offshore support vessels
for the offshore oil and gas sector in Mexico.
KS Energy has entered into a contract with Shanghai
Zhenhua Heavy for the construction and delivery of one
(1) new build jack-up drilling rig, with an option granted
to KS Energy for the construction and delivery of a second
rig of the same design.
United Envirotech was awarded a RM 45m engineering
procurement and construction (EPC) project in Johor
Bahru, Johor, Malaysia. The project will commence
immediately and is expected to be completed by end
2015.
Soilbuild Construction Group has been awarded with a
S$38.6m contract by Pepperl+Fuchs to construct a Global
Distribution Center for the member of the German
Pepperl+Fuchs Group. Located at Pioneer Turn, the
proposed building will be a five-storey fully automated
high-tech warehouse, logistics and office building. This
construction project will commence in June 2014 and is
expected to complete by the third quarter of 2015. This
updates the Group’s order book to S$531.5m to-date.
Karin Technology has secured the distributorship in Hong
Kong for Infrastructure Management, Application
Performance Management, Security and Application
Delivery solutions by CA Technologies.
The four parties eyeing the Wearnes group's automotive
business are likely to submit their bids this week. The
interested bidders are said to be Swire Pacific, OUE, a
Malaysian car distributor and Al-Futtaim Group. United
Engineers, which bought Wearnes for a total of almost $1
billion last May, is understood to be seeking as much as
$450m for the automotive division, which represents 12
brands in six Asian countries. The amount includes the
stocks, infrastructure and land that are held by Wearnes
Automotive.
Activity in China's factory sector expanded in June for the
first time in six months as new orders surged, a
preliminary HSBC survey showed yesterday. The
HSBC/Markit Flash China Manufacturing Purchasing
Managers' Index (PMI) rose more than expected to 50.8 in
June from May's final reading of 49.4, beating a Reuters
poll forecast of 49.7 and creeping above the 50-point
level that separates growth in activity from contraction. It
was the first time since December that the PMI was in
growth territory, and the highest reading since November,
when it was also 50.8.
US and European equities fell after data showed weakness
in euro-area manufacturing and services. The euro-area
PMI composite gauge slipped to 52.8 in June, below
consensus expectation of 53.4 amid a slowdown in the
French economy. Oil slumped the most in more than a
month as Iraq’s army recaptured territory from militants.
Iraqi government forces took back the Al Waleed border
crossing into Syria and the Traibil passageway near Jordan.
Brent crude is currently traded at USD113.6pbl, off the
highest point at USD115pbl a last week.

Daily Summary 23 Jun 14

Europe closed mixed on Friday. Dow closed +26 at 16947.  Dow's trend is up.  Dow's future at the moment is -6.  europe opened down.

Asian bourses were mixed but Hangseng fell sharply, -389. Nikkei +20 and ShanghaiC -2.  STI  closed -3 at 3255.  Volume was 2b shares.  Gainers were 186 to 259 losers.

Trend of STI is down.

Top volumes were APAC +0.1, WCorp +0.2, Teledata unchanged, Advance SCT unchanged, Mirach +0.5, HLH +0.2, Charisma unchanged, Blumont unchanged, Artivision +0.5, RHPetroGas -14.5.

Market opened slightly up and stayed that way till late afternoon when it started to slip down and closed at day low. Volume was at 2b shares.  Blue chips were mixed. Penny and speculatives were also mixed.

Dow is looking steady at the moment while European bourses were down.

OCBC Report 23 Jun 14

KEY IDEA

CWT Ltd: Expect limited impact from Qingdao commodity scandal

Recently Dagang bonded warehouse at Qingdao Port was being investigated for the fraudulent practice of pledging single batches of metals as collateral for multiple loans. CWT’s revenue exposure to Qingdao port comes from collateral management service under its Logistics segment, which we understand from management is negligible. Thus, we do not expect Logistics earnings to be adversely affected. The incident’s indirect effects, through tighter credit and moving stocks offshore, will lower liquidity and commodity trade flows. We examined a similar steel-for-loan fraud in 2012 and found that the shock factor to market and impact on physical trade flows lasted only a few months. We think it would be similar this time round unless the probe widens significantly. Moreover, given that CWT’s Logistics revenue exposure to China is less than 3%, we think the segment will be little affected by the systemic impact. Maintain BUY with S$1.92 fair value estimate.(Yap Kim Leng)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks saw modest gains Fri, pushing the S&P 500 and Dow industrials to the latest in a string of record closes and lifting the Nasdaq Composite to its strongest finish in 14 years.


- Sunningdale Tech said that its chairman, Koh Boon Hwee, has roped in two new investors to raise almost S$25m in gross proceeds for the company.

- SMJ International Holdings launched its Catalist IPO, offering 20.24m placement shares - comprising 14 million new shares and 6.24 million vendor shares - at 28 S cents apiece.


- SHC Capital Asia Limited said Germany's ERGO International AG offer to buy SHC Insurance Pte Ltd for S$112m in cash offers the company an exit from an increasingly competitive industry.


- Halcyon Agri said the proposed S$450m acquisition of the Anson group will propel it to become Indonesia's second largest producer and exporter of natural rubber.


- An associate company of HLH Group has acquired a piece of land in Cambodia, with plans for office tower and luxury condominium developments and F&B and retail buildings on the site.


- ISDN Holdings' hydropower business is expected to benefit from an increase in electricity tariff rates paid by the Indonesian government to mini-hydropower developers.

DBSVickers Report 23 Jun 14

STI – 3270 failure points to risk of further decline to next
immediate support at 3220
QT Vascular - An emerging balloon catheter producer
STI has fallen below the important near-term support of 3270.
Technically, unless the STI is able to recover above 3283 soon,
last week’s fall ups the risk of a further decline to the next
immediate support at 3220.
The price of Brent crude rose to USD115pbl last week, the
highest in 11 months as the fighting in Northern Iraq
continued. Iraq’s oil production as a percentage of the world’s
total is 3.6% and out of this, about ¾ is in the south that has
been spared of the current unrests. While the current unrests
are unlikely will not have a significant impact on global oil
production, the concern is that the situation deteriorates, civil
war breaks out within the country and Middle East unity is
undermined. Over the weekend, gunmen seized more territory
along Iraq’s borders with Jordan and Syria. ISIL militants and
Sunni supporters now control territory in Iraq from Mosul in the
north to Rutba in the west.
Beyond Iraq’s country specific supply risk, on the demand side,
our chief economist believes that rising incomes means Asia’s
energy demand over the long term can only continue to soar.
China’s current per-capita energy consumption is only 1/8th of
US while that for India’s is just 1/12th. These developments
should underpin O&G stocks.
For Singapore, our analyst’s picks for the offshore O&G services
space are Ezion, POSH, Vard, Pacific Radiance and Nam
Cheong
China June preliminary HSBC Manufacturing PMI will be
released this morning. Consensus expects a reading of 49.7,
still in contraction territory but with a tat improvement over the
prior month’s 49.4. Singapore’s May CPI will be released this
afternoon. Consensus expects 2.6% y-o-y increase.
We issue a NON-RATED Equity Explorer report on QT Vascular
(QTVC), an emerging balloon catheter producer. Its flagship
product is the Chocolate PTA, a percutaneous transluminal
angioplasty (PTA) Balloon approved for the treatment of
Peripheral Artery Diseases (PAD). Its products are distributed
US Indices Last Close Pts Chg % Chg
Dow Jones  16,947.1 25.6 0.2
S&P  1,962.9 3.4 0.2
NASDAQ  4,368.0 8.7 0.2
Regional Indices
ST Index  3,258.8 (10.2) (0.3)
ST Small Cap  559.6 0.3 0.1
Hang Seng  23,194.1 26.3 0.1
HSCEI  10,395.5 41.4 0.4
HSCCI  4,326.8 (5.1) (0.1)
KLCI  1,885.7 4.2 0.2
SET  1,467.3 5.4 0.4
JCI  4,847.7 (16.6) (0.3)
PCOMP  6,731.0 31.6 0.5
KOSPI  1,968.1 (24.0) (1.2)
TWSE  9,273.8 (43.0) (0.5)
Nikkei  15,349.4 (11.7) (0.1)

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$bn) 612
Total Daily Vol (m shrs) 2,151
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
20 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.680 3.42
Mapletree Greater China
Commercial Trust
Buy 0.870 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
20 Jun
Target Price
(S$)
Vard Holdings Buy 1.130 1.34
Nam Cheong Buy 0.385 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 3
through Japan’s Century Medial, China’s Weihai Weigao
and Johnson & Johnson. Market penetration and
adoption of its balloon catheters will drive growth going
forward. QTVC is awaiting approvals for some of its
products in Japan and China. If approved for sale, these
products could positively impact its future earnings and
stock price. Factors that may cause the company’s
earnings to underperform include competition from stents
and other balloons, failure to attain product approvals,
poor take-up rates from commercialisation of products,
adverse clinical trial data on QTVC’s products, and loss of
distributorship.
Repi Soap and Detergent (Repi) and Wilmar International
have signed a joint investment agreement for the
upgrading of an existing manufacturing facility in Ethiopia
that will house an edible oil refinery and packing plant,
production plants for specialty fats, soft oils, soaps and
detergents, as well as a facility for sesame seed
processing. Repi and Wilmar will each have a 50%
participation in the joint investment.
Innopac Holdings is proposing a renounceable nonunderwritten
rights issue of up to 6,930.4m new shares at
an issue price of S$0.01 for each rights share and up to
3,465.2m free detachable warrants on the basis of two (2)
rights shares and one (1) free detachable warrant for every
one (1) issued share. Each warrant carries the right to
subscribe for one (1) new share at an exercise price of
S$0.012 for each warrant share. The rights issue price of
S$0.01 represents a discount of approximately 45% to the
last closing price. The net proceeds of approximately
S$68.9m will be used to fund the expansion and growth
of existing businesses, acquisitions and new investments;
and for general working capital purposes.
Sunningdale Tech is issuing 153.0m new shares at an
issue price of S$0.1633 per subscription share,
representing gross proceeds of approximately S$25m. The
investors are Yarwood Engineering & Trading and Mr.
Sam Goi Seng Hui. The issue price represents a discount of
approximately 10% to the last weighted average price.
The gross proceeds will be used as working capital to fund
the growth and expansion of the company’s business, and
to increase the company’s capacity for any acquisitions in
the future.
With more consumers letting their fingers do the
shopping, transport firms Singapore Airlines (SIA) and
SMRT Corp have launched e-commerce sites for their
customers. SIA announced a retail site for its KrisFlyer and
PPS Club members, enabling them to rack up air miles
when they use the KrisFlyer Spree website
(www.krisflyerspree.com) to shop at over 2,000 retailers
such as Bloomingdale's and Marks & Spencer. Meanwhile,
SMRT has launched I'm On Board, or iMOB, at
www.iMOB.sg, which offers a variety of lifestyle and
consumer products, along with special deals and
promotions.
RH Petrogas, which a month ago disclosed that an
investor had approached its controlling shareholders for a
potential takeover of the company, said that there have
been no further discussions or progress on the matter
since then.
MoneyMax Financial Services is investing RM15.63m to
hold a 51% stake in a network of Malaysian pawnshops
in its first overseas investment.
HLH Group plans to acquire 13,541sqm of freehold land
in Cambodia for US$14.9m. The land is situated in Phnom
Penh, Cambodia, in the heart of Phnom Penh City Centre.
The group plans to develop office tower, luxury
condominiums, and F&B and retail buildings on the land.
Ipco International is expected to report a loss before tax
for the full financial year ended 30 April 2014.
The loss is mainly attributable to:
1) Unrealised fair value loss on financial assets at fair value
through profit or loss; and
2) Allowance for impairment loss on available-for-sale
financial assets.
ISDN Holdings, an integrated engineering solutions
provider for diverse industries, hydropower business is
expected to benefit from a recent upward revision of
electricity tariff rates to be paid to mini-hydropower
developers by the Indonesian Government. In early May
this year, the Indonesian energy authority announced an
increase in the amount that it will pay electricity producers
with capacity of 10MW or less from the current base rate
of Rp 656 (USD 0.06) to Rp 1,075 (USD .09) per Kwh.
Yamada Green Resources is proposing to acquire19%
equity interest in Zhangzhou Meisei Foods Co. for
RMB36.4m. Meisei is principally engaged in the
manufacturing and supply of a wide variety of agricultural
processed food products including different types of
processed bamboo shoots, pickled vegetables and other
processed vegetables. Meisei is recognized as one of the
leading processed bamboo shoots suppliers in Fujian
Province.

Friday, June 20, 2014

Daily Summary 20 Jun 14

Europe were down last night while Dow +5 at 16781.  Dow's short term trend is down but levelling.  Dow's future is now +5.  Europe opened up.

Asian bourses were mixed.  Nikkei +43, ShanghaiC -19, Hangseng -97.  STI closed -17 at 3273.  Volume was 1.6b shares.  Gainers were 162 to 281 losers.


Short term trend of STI is down.

Market opened marginally up but fell quickly to negative. It continue to fall and stayed negative to close near day low, -16 pts. Volume was lower than yesterday. Blue chips continued to flal and were mostly in the red. Penny and speculatives were mixed with selective interest in the top volume stocks.


Europe and Dow are looking steady tonight.

Thursday, June 19, 2014

OCBC Report 20 Jun 14

KEY IDEA

Strategy: Impact of Iraq conflict on companies

Oil prices have been more volatile of late due to the conflict in Iraq, with WTI crude rising close to about US$107/bbl and Brent US$113/bbl last week to hit a nine-month high. It is everyone’s hope that the crisis will be contained soon, but should an escalation occur, we may see more interest in certain sectors whose earnings may be affected by high oil prices. In a sustained high oil price environment, the “winners” are upstream oil and gas players [Overweight], and coal miners, and the “losers” are refiners, utilities (those without cost pass-through mechanisms) and fuel-intensive industries such as transportation. We have an Underweight rating on the Air Transport sector, but are Overweight Land Transport. Companies with extensive operations in Iraq and neighbouring countries could also be at risk should the conflict spread. (Low Pei Han, Yap Kim Leng, Carey Wong, Andy Wong)

For more information on the above, visit
www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- US stocks ended Thu’s choppy session modestly higher, as the S&P 500 eked out a gain, finishing at a record level for the 21st time this year.

- Genting Singapore's plans to build a casino in South Korea have been stalled, Channel NewsAsia reported, citing a statement from the casino operator.

- I Reit Global Management, backed by office buildings in Germany, is preparing an IPO in Singapore that may raise about US$300m, sources with knowledge of the matter said.

- Darco Water Technologies announced late on Thu night that two former employees of its subsidiary have been sentenced to jail by Taiwan's Taipei District Court.

- A unit of KS Energy's 80%-owned KS Drilling has sold the rights for the construction of a jack-up rig for US$84.88m.

- Geo Energy Resources plans to buy a stake in a company with mining licences for two coal concessions in South Kalimantan, in a move which could boost its coal production dramatically.

- Following a spike in global crude prices, Singapore oil product prices have risen by 3-5% on the back of a "fear premium" stemming from the latest flare-up in Iraq.

- Vibrant Group announced that its subsidiary has acquired a 51% equity interest in Shentoncil, which in turn is looking to buy Cecil House.