Wednesday, June 18, 2014

DBSVickers Report 18 Jun 14

Today’s Focus
 Del Monte Pacific - Turnaround expected only in FY16F.
Downgrade to HOLD as we await better clarity, target
price revised to S$0.62
Post-Del Monte Pacific (DMPL) reporting of its results for the
transition period from Jan – Apr 2014 and change of its FYE to
Apr, we revised our forecasts and the consolidation of recently
acquired Del Monte Food, Inc. (DMFI). We project that FY15F
will still register losses (c.US$40m, including pref share
dividends) from the US$43m loss registered for Jan-Apr’14,
before jumping to a net profit of US$50m in FY16F, as DMFI
targets a reversion to its historical performance trend (sales
revenue of c.US$1.8bn). DMPL is looking to issue preference
shares (to raise US$350m) within the next six months, to
refinance bridging loans. While we see the longer-term stability
and potential of the enlarged entity, we expect to see a
meaningful turnaround only in FY16F. Downgrade to HOLD as
we await better clarity, target price revised to S$0.62 (Prev S$
0.82).
Yangzijiang has secured a shipbuilding contract for four
260,000DWT very large ore carriers (VLOC). The shipbuilding
contract was secured from an Australia based ore company
listed on the Australian Securities Exchange and is the first of its
kind in Yangzijiang’s orderbook. Yangzijiang expects to deliver
the VLOCs from 2016 to 2017.
Global Logistic Properties (GLP) has signed a new build-to-suit
agreement to lease an upcoming 62,000 square metre facility
in Greater Tokyo to Japan Logistic Systems Corp (Logitem). The
four-storey facility, GLP Yoshimi, is scheduled to commence
construction in September and is targeted for completion in
August 2015.
Ace Achieve Infocom, a telecom network and ICT (Information
& Communication Technologies) solutions provider in China,
has clinched a new IT project worth RMB48m from China
Unicom, one of the three largest telecom operators in China.
The Group will supply and install IBM storage devices and
servers to China Unicom (Beijing), China Unicom (Anhui) and
China Unicom (Xinjiang). This RMB48m IT infrastructure project
will be progressively delivered and is expected to be completed
within 18 months.
US Indices Last Close Pts Chg % Chg
Dow Jones  16,808.5 27.5 0.2
S&P  1,942.0 4.2 0.2
NASDAQ  4,337.2 16.1 0.4
Regional Indices
ST Index  3,274.4 (15.8) (0.5)
ST Small Cap  556.2 0.7 0.1
Hang Seng  23,203.6 (97.1) (0.4)
HSCEI  10,466.7 (55.5) (0.5)
HSCCI  4,349.1 (5.8) (0.1)
KLCI  1,874.6 3.0 0.2
SET  1,471.0 (0.8) (0.1)
JCI  4,909.5 24.1 0.5
PCOMP  6,704.9 (53.5) (0.8)
KOSPI  2,001.6 8.0 0.4
TWSE  9,240.6 37.7 0.4
Nikkei  14,976.0 42.7 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$bn) 614
Total Daily Vol (m shrs) 1,614
12m ST Index High 3,305
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
17 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.650 3.42
Mapletree Greater China
Commercial Trust
Buy 0.870 1.02
Thai Beverage Public Buy 0.620 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
17 Jun
Target Price
(S$)
Vard Holdings Buy 1.155 1.34
Nam Cheong Buy 0.385 0.47
Centurion Corporation Buy 0.695 0.86
Source: DBS Bank
Yeo Kee Yan (65) 6682 3706 keeyan@dbs.com
www.dbsvickers.com
Refer to important disclosures at the end of this report
Singapore
Wired Daily
Page 2
The amount of new foreign investment that China
attracted in May shrank by the most in 16 months, hurt
partly by its cooling economy. The Ministry of Commerce
said that China attracted US$8.6 bn in foreign direct
investment (FDI) in May, down 6.7% from a year ago and
the weakest performance since January 2013.
Cumulatively, China drew US$49 bn of FDI in the first five
months of 2014, up 2.8% from a year earlier, also the
worst showing in a year.
U.S. stocks rose with shares of smaller companies rising
ahead of the FED’s monetary policy decision tonight.
E*Trade Financial Corp and Charles Schwab Corp shares
rose amid a Senate hearing on broker incentives.
Consensus expects the FOMC to reduce the pace of
monthly asset purchases by US$10bil to US$35bil with
some 62% of 58 economists predicting the Fed will halt
bond buying at its October meeting. The FED will likely
release a new set of quarterly forecasts for
unemployment, inflation, economic growth and the
benchmark FED funds rate tonight. In March, officials had
predicted that their target rate, now close to zero, would
be 1% at the end of 2015 and 2.25% a year later

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