Today’s Focus
Yangzijiang
- Raising global profile in very large/mega
ships segment; reiterate BUY with
S$1.55 target price
Yangzijiang shattered Korean yards’
monopoly in mega
containerships back in 2011, as
it clinched an order for seven
10k TEU containerships from top
tier shipowner, Seaspan at
decent prices and payment terms.
Yesterday’s announcement
of contracts for four Very Large
Ore Carriers (VLOCs) further
underlines Yangzijiang’s growing
presence in the very large /
mega ships segment, which currently
makes up 25% of its
orderbook by units and 40% by
value. Chairman & CEO Mr
Ren Yuanlin also took the opportunity
to reaffirm Yangzijiang’s
vision of staying focused on shipbuilding
related businesses
and, for the first time, disclosing
publicly that the company
would eventually divest non-core
businesses. This serves as a
sentiment and confidence booster
amid jitters of shadow
banking and property bubbles.
Reiterate BUY with target price
unchanged at S$1.55. Valuations
remain undemanding at <7x
PE and 1.0x P/BV.
Tigerair has decided, together
with its co-investors, to cease
funding its Indonesian associate
Tigerair Mandala, and as a
result, the airline will cease
operations from 1 July 2014.
Tigerair has about 36% shareholding
in the airline, which has
consistently racked up heavy operating
losses since inception in
2012. Thus, Tigerair will be again
left with minimal exposure to
one of the biggest aviation markets
in the region. We reckon
this is a disappointing end to
another of Tigerair's investments,
following the exit from Philippines
and the partial exit from
Australia. The remaining 4 aircraft
in Tigerair Mandala have to
be grounded as well, or sublet
or returned to lessors, which will
require additional one-off provisions
and impairments in
upcoming results. The airline
will have to bear winding down
costs as well. While sentiment
for the stock had improved
following privatisation rumours
in the market in the recent
past, we believe the stock remains
fundamentally overvalued at
close to 2x P/NTA and maintain
our FULLY VALUED call.
Global Logistic Properties has
signed new lease agreements
totaling 47,000 sqm (506,000 sq
ft) with three leading
companies in the retail industry
in China, including Walmart,
JD.com and one of the world’s
largest health and beauty retail
chains. All three companies are
existing GLP multi-location
customers.
US Indices Last Close Pts Chg
% Chg
Dow Jones
16,906.6 98.1 0.6
S&P
1,957.0 15.0 0.8
NASDAQ
4,362.8 25.6 0.6
Regional Indices
ST Index
3,276.8 2.4 0.1
ST Small Cap
557.6 1.4 0.2
Hang Seng
23,181.7 (21.9) (0.1)
HSCEI
10,444.4 (22.2) (0.2)
HSCCI
4,343.2 (5.9) (0.1)
KLCI
1,876.6 2.0 0.1
SET
1,451.4 (19.7) (1.3)
JCI
4,887.9 (21.7) (0.4)
PCOMP
6,703.1 (1.8) (0.0)
KOSPI
1,989.5 (12.1) (0.6)
TWSE
9,279.9 39.3 0.4
Nikkei
15,115.8 139.8 0.9
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011
2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 610
Total Daily Vol (m shrs) 2,056
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$)
18 Jun
Target Price
(S$)
Global Logistic Properties Buy
2.670 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$)
18 Jun
Target Price
(S$)
Vard Holdings Buy 1.140 1.34
Nam Cheong Buy 0.380 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
Geo Energy Resources has entered
into an agreement to
acquire a company with interest
in coal concession for
US$55m. The proposed acquisition
is in line with the
company’s business strategy to
expand its business
operations and increase coal production
levels. The
proposed acquisition will allow
the company access to and
control over the coal deposits
located in Kalimantan
Province, Indonesia.
CNA Group is placing 16.74m new
shares at the issue
price of S$0.0754 per share. The
issue price represents a
discount of approximately 10%
to the last volume
weighted average price. The estimated
net proceeds of
about S$1.2m shall be used for
general working capital.
Singapore-listed rubber firm Halcyon
Agri Corp is in talks
to buy rubber processing plants
in Indonesia from Lee
Rubber for S$400m to S$500m, according
to press report.
Halcyon, which owns and operates
three natural rubber
processing factories in Indonesia
and two plants in
Malaysia, has been seeking to
acquire rubber processing
assets to fuel its expansion,
taking advantage of a weak
rubber market.
The government will continue to
supply shorter-tenure
industrial sites in the second
half of the year, reiterating
that this will keep prices affordable
for industrialists.
Among the 15 sites with a combined
area of 18.87 ha to
be released for industrial use
between next month and
December, three are 20-year leasehold
plots - the shortest
leases ever offered for industrial
land. Before this, the
shortest had been 21 years, offered
mostly for small plots
in Tuas South. Of the 15 sites
to be released in H2, nine
are confirmed-list sites, which
are launched according to a
schedule, regardless of demand;
these sites will yield
12.06 ha of land.
US stocks rose after the FED said
growth is bouncing back
and repeated that interest rates
will remain low for a
“considerable time.” The FED
trimmed bond-buying by
US$10bil to $35 billion, keeping
it on pace to end the
program late this year. The committee
added that it is
likely to “reduce the pace of
asset purchases in further
measured steps”. Fed officials
predicted their target
interest rate will be 1.13% by
end of next year and 2.5%
by end 2016, higher than previously
forecast. Central
bank participants estimated long-term
growth for the U.S.
economy of 2.1-2.3%, compared
with 2.2- 2.3% in
March. Yellen said stock prices
and valuations aren’t
outside of historical norms and
the Fed isn’t trying to
gauge the right level for equities.
Bond yields fell
following the FED statement. The
10-year treasury yield
dipped to 2.584% from 2.65% while
the 2-year yield
retreated to0.4435% from 0.48%.
FedEx Corp. shares
rose after the company predicted
a pickup in domestic
and global economic growth. Adobe
Systems Inc. shares
rallied after posting revenue
and profit that beat analysts’
estimates.
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