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.
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