Today’s Focus
Offshore Oil & Gas Services Sector - Fundamentals intact;
growth in global drilling fleet underpins positive prospects.
Our top picks: Ezion, POSH, Vard, Nam Cheong and
Pacific Radiance.
We maintain our view that there’s limited upside left for the STI
in the short-term as valuation is no longer cheap at 14.1x
(+0.25 SD) 12-mth forward PE. This comes at a time when the
earnings downward revision trend has yet to end. Further gains
should be capped at c.3350 in the short-term. Furthermore, the
start of the month-long FIFA World Cup tournament this Friday
morning (local time) could take a toll on the already sub-par
market trading activity YTD.
Still, index pullback has been defiantly shallow in recent weeks.
One reason is because dovish global central bankers have
remained supportive of easing monetary policies as economic
recovery and inflation stayed tame. The US is on a steady and
gradual recovery path while the latest easing measures by the
ECB will buy the Eurozone more time with investors. May’s
non-farm payrolls delivered a 217k figure. It marked the 4th
consecutive month employment increased of more than 200k,
the first time that has happened since early 2000 and pushed
payrolls past their pre-recession peak.
Interest could rotate to small caps under the current backdrop.
Our small caps picks are mainly in the O&M space - POSH, Vard
and Nam Cheong. Meanwhile, interest around the
M&A/privatization theme is likely to remain active.
Fundamentals for Offshore Oil & Gas Services Sector are intact;
growth in global drilling fleet underpins positive prospects for
offshore services players. Players with exposure to niche
segments/ protected markets/ offshore support vessel recovery
and subsea services have better growth potential. For SGX
listed companies, our top picks are: Ezion (TP: S$ 2.95), POSH
(TP: S$ 1.36), Vard (TP: S$ 1.34), Nam Cheong (S$ 0.47) and
Pacific Radiance (TP: S$ 1.50 (Prev S$ 1.20)).
Popular Holdings has entered into collaboration agreements
with BBC Worldwide (BBCW) to license some of BBCW’s
brands and intellectual property to operate English language
Learning Centers in Mainland China and Hong Kong.
KLW Holdings has secured four new contracts worth a total of
about S$10.2m for the supply and installation of doors, three
for private residential developments and one for a commercial
project.It has also signed a supply agreement for exports to UK
valued at about US$34m.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,924.3 88.2 0.5
S&P 1,949.4 9.0 0.5
NASDAQ 4,321.4 25.2 0.6
Regional Indices
ST Index 3,299.4 19.8 0.6
ST Small Cap 559.8 1.3 0.2
Hang Seng 22,951.0 (158.7) (0.7)
HSCEI 10,341.0 (23.6) (0.2)
HSCCI 4,248.6 (24.6) (0.6)
KLCI 1,862.7 (6.3) (0.3)
SET 1,458.0 4.9 0.3
JCI 4,937.2 1.6 0.0
PCOMP 6,762.6 (9.8) (0.1)
KOSPI 1,995.5 (13.1) (0.7)
TWSE 9,134.5 (6.3) (0.1)
Nikkei 15,077.2 (2.1) (0.0)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 2,039
12m ST Index High 3,302
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
6 Jun
Target Price
(S$)
Global Logistic Properties Buy 2.730 3.42
Mapletree Greater China
Commercial Trust
Buy 0.870 1.02
Thai Beverage Public Buy 0.640 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
6 Jun
Target Price
(S$)
Vard Holdings Buy 1.125 1.34
Nam Cheong Buy 0.385 0.47
Centurion Corporation Buy 0.705 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 3
China's exports rose more than what the market had
expected. Overseas shipments gained 7% from a year
earlier. Imports fell 1.6%. The trade surplus widened to
US$35.92 bn. The increase in exports last month followed
an unexpected gain of 0.9% in April after two months of
declines. The government has announced a series of
targeted policies to support the economy after growth
slowed to 7.4% in the first quarter from a year earlier, the
weakest pace since 2012 and below the government's fullyear
goal of about 7.5%. Measures have included help for
exporters, tax cuts, speeding up investment in public
housing and infrastructure, faster fiscal spending and a
reduction in reserve requirements for some banks to spur
lending to targeted sectors.
China’s economic growth is expected to ease slightly to
7.6% this year from 7.7% in 2013 and to moderate further
to 7.5% next year, according to the World Bank. The World
Bank report came a day after the International Monetary
Fund published the results of a regular economic
consultation with Chinese authorities in which the IMF
forecast that China's growth should be around 7.5% this
year, but could slip to 7% in 2015.
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