DBS Vickers Report 17 Apr 14

Today’s Focus
 Ezion - Tan Sri Quek Leng Chan’s presence would aid
Ezion’s foray into Malaysia. Reiterate BUY; TP adjusted to
S$3.03
 Keppel Corp - 1Q14 results in line. Reiterate BUY and
target price of S$12.60
STI touched and slightly exceeded the upper limit of our
anticipated near-term upside cap for it. No change in our view
for the 3250 level to be a near-term limit as valuation has
reached 13.9x (ave) 12-mth forward PE and it is still too early in
the 1Q results season to determine if the earnings downward
revision trend can end. The rally in US equities in the past 3
days following a brief sell-down is typical of the choppiness
seen during the initial part of the results season – some days,
results beat expectations while on others, they come below.
After the bell in US trade, IBM and Google reported results that
disappointed.
Expect a pullback in the STI for the current session, retreated
off the c.3250 level as the long-weekend approaches.
Tan Sri Quek Leng Chan is extending his O&G acquisition spree
to Singapore through the subscription of a 7.6% stake (100m
new shares @ S$1.94/share) in Ezion via Hong Leong
Company’s indirect subsidiaries. We view this development
positively as it underscores Ezion’s differentiating capabilities in
the niche liftboat market, while potentially benefitting from
Tan Sri Quek’s extensive network of resources and political
connection. This will accelerate Ezion’s market penetration in
Malaysia, which has strong potential to be the first in Asia to
endorse the use of liftboats.
Concerns on Ezion pouring money into E&P are unfounded.
Management has alleviated concerns over their recent move
into E&P. JK Tech will likely acquire small producing oilfield
assets and not greenfields from Ezion’s existing clientele. More
importantly, Ezion would not be required to fork out more
capital for JK Tech in the foreseeable future, eliminating our
concern of stretching its balance sheet into a non-core
business.
Post-placement, net gearing is expected to improve from 1.3x
to 1.0x. We estimate that the US$150m will enable Ezion to
US Indices Last Close Pts Chg % Chg
Dow Jones  16,424.9 162.3 1.0
S&P  1,862.3 19.3 1.0
NASDAQ  4,086.2 52.1 1.3
Regional Indices
ST Index  3,253.2 6.9 0.2
ST Small Cap  548.5 2.1 0.4
Hang Seng  22,696.0 24.8 0.1
HSCEI  10,036.0 7.2 0.1
HSCCI  4,240.3 (13.4) (0.3)
KLCI  1,845.4 (8.5) (0.5)
SET  1,401.8 12.7 0.9
JCI  4,873.0 2.8 0.1
PCOMP  6,671.2 49.5 0.7
KOSPI  1,992.2 (0.1) (0.0)
TWSE  8,923.8 7.1 0.1
Nikkei  14,417.7 420.9 3.0

STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn)
Total Daily Vol (m shrs)
12m ST Index High
12m ST Index Low
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
16 Apr
Target Price
(S$)
ComfortDelgro Buy 2.020 2.19
Global Logistic Properties Buy 2.700 3.31
Keppel Corp Buy 11.190 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
16 Apr
Target Price
(S$)
Goodpack Buy 2.290 2.60
China Merchants Buy 0.955 1.32
Pacific Radiance Ltd Buy 1.070 1.20
Nam Cheong Buy 0.355 0.46
Centurion Corporation Buy 0.765 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
take on 7-8 additional service rig projects and will eventually
be accretive to EPS. Meanwhile, we are factoring in the
enlarged share cap and lowering our target price to S$3.03
(Prev: S$3.26), out of prudence. Valuations are compelling
at 9x 12M rolling forward PE and 2.2x P/BV, despite a
promising 2-year EPS CAGR of 44% that is backed by firm
charter contracts of US$1.9bn (4x revenue coverage), and
an astounding ROE of 24%. Maintain BUY.
1Q14 results for Keppel Corp in line. Core net profit of
S$339m was flat y-o-y if we exclude exceptional items in
1Q13. It makes up c.22% of our and consensus’ full year
estimates. Operating margin of O&M held up at 14.2%. The
S$1.9b new order wins in the quarter is impressive and
account for 32% of our full year forecast of S$6b. Group
order book reached a new high of S$14.4b, providing
revenue visibility up to 2019. Reiterate BUY and target price
of S$12.60.
Cambridge Industrial Trust’s 1Q14 results in line. Recently
completed acquisitions are expected to contribute to
earnings from 2Q14, while its organic growth outlook
remains stable. Maintain HOLD, given limited upside to
target price of S$0.74.
1Q14 CPO output for First Resources (FR) grew 14% y-o-y (-
24% q-o-q) to 131,474 MT. Assuming 1Q14 ASP is
US$797/MT, earnings would be US$49m – US$52m for the
quarter. We expect output growth to decelerate in
subsequent quarters, following a severe drought in
February. Reiterate HOLD call and target price of S$ 2.22.
We are reviewing our CPO price forecasts for upside bias
but believe FR’s share price has more than priced this in.
CapitaLand is acquiring another 80% interest in CapitaLand
(Beijing) Kai Heng Holdings (CBKH) that it does not already
own from a group-managed China fund for RMB220.2m.
CBKH, which will become a fully owned subsidiary of
CapitaLand post-transaction, has 100% economic interest
in Beaufort, a residential development site in Chaoyang
District in Beijing.
Global Logistic Properties has leased 34,000 sqm (366,000
sq ft) to a leading smartphone manufacturer. The customer
signs six leases to meet strong increase in online
smartphone sales throughout China.
StarHub has become the first telco to bite the 4G bullet,
saying that it will start charging mobile subscribers $2.14
per month for using its 4G service in June this year.
Currently, all three telcos - StarHub, SingTel and M1 - offer
4G access as a free value-added service (VAS) to their
mobile subscribers. A higher "usual price" of $10.70 per
month also looms, as the monthly $2.14 fee is pegged as a
"promotional rate" on StarHub's website. SingTel and M1
also cite a monthly subscription of $10.70 as their usual
price.
Natural Cool Holdings has entered into an agreement for
the sale of the Group’s property located at 20 Benoi
Crescent for S$26.5m. The group is expected to book a net
gain of S$6.15m from the sale.
Singapore's non oil domestic exports fell 6.6% y-o-y in
March, after rising a revised 8.9% in February, because of a
decline in shipments of both electronics and non-electronics
goods. The figure is below market expectations for exports
to be unchanged. On a m-o-m basis, exports fell 8.9% in
seasonally adjusted terms after expanding 7.0% in February.
The market projected a 3.4% contraction. Shipments to
China, the biggest export destination, rose 16.1% y-o-y
compared with a 35.5% rise in February. Exports to the
European Union, however, fell 27.8% after rising 3.4% in
February and shipments to the US fell 1.8% after a 22.3%
increase. Electronics exports declined 16.1% compared with
a 3.7% decline in February while non-electronics shipments
fell 2.4% compared with a 15.0% rise. Pharmaceutical
exports fell 44.6% after growing 21.7% in February.
In property news, cooling measures hit Prince Charles
Crescent tender. Bids for the 99-year residential site were
much lower than those for its neighbour, sold two years
ago. Parcel B got a highest bid of $463.1m or $820.65 psf
ppr, a sharp drop from the $516.3m or $960.28 psf ppr
that its adjacent Parcel A site received two years ago. The
highest bidder for the Parcel B site was a partnership
between UOL Venture Investments and Kheng Leong, which
plans to develop a 24-storey project with about 750 units.
China’s economy grew 7.4% y-o-y in the first quarter, the
slowest pace of expansion since the third quarter of 2012.
Officials at the statistics bureau attributed the slower firstquarter
growth data to weak external demand - affected in
part by the severe US winter, a struggling real estate market
and structural changes.
U.S. stocks rose as earnings for Yahoo! Inc. topped
estimates and March industrial production gained more
than forecast (actual +0.7% m-o-m, consensus +0.5%).
Meanwhile, FED Chair Janet Yellen told investors to pay
attention to shortfalls in both inflation and the jobless rate
for signals on the FOMC’s decisions on the policy rate. She
added that the Fed has a “continuing commitment” to
support the economic recovery. Yahoo posted 1Q earnings
of 38cts/share, beating consensus by 1ct. Sales also beat
projections. Bank of America swung to a quarterly loss after
settling claims on mortgage bonds. After the bell, Google’s
Class C shares sank 5.7% reporting sales that fell short of
estimates as advertising prices declined. IBM shares lost
3.5% in after-hours trade after it reporting a decline in
Singapore

Daily summary 16 Apr 14

Europe were down but Dow +89 at 16263.  Dow's trend is turning up.  Dow's future is now +88. Europe opened firmly up.

Asian bourses were mostly up.  Nikkei +421, ShanghaiC +3, Hangseng +25.  STI closed +8 at 3254.  Volume was 1.99b shares.  Gainers were 264 to 211 losers.

Trend of STI is up.

Top volumes were Albedo -0.2, CharismaEner -0.2, HanKore -0.6, Sunmoon +0.1, Noble +2, CapitaMallAsia unchanged, GoldenAgr +1.5, LionGold +1.4, CompactMetal +0.4, Biosnsors +0.6.

Market opened up and stayed up the whole session but with small gains.  Blue chips were mostly up.  Penny and speculatives were also firmer but gains were small.

Europe and Dow are looking firm tonight.

OCBC Report 16 Apr 14

MARKET PULSE: KepLand, Ezion

16 Apr 2014

KEY IDEA Keppel Land: Chinese home sales still healthy KPLD reported 1Q14 PATMI of S$87.7m, decreasing 9.2% YoY mostly due to the absence of a tax write-back recognized in the same period last year. We judge this set of results to be mostly in line with expectations and YTD PATMI now constitutes 19.7% of our full year forecast. The group sold 54 homes in Singapore over 1Q14, mostly from The Glades which is now 23% sold (~170 out of 726 units). The run rate over 1Q14 so far represents 14.5% of the 370 total units sold in FY13, in line with expectations for a fairly muted FY14 in terms of SG home sales given the weak outlook. In China, 570 home units were sold over the quarter, down 33% YoY versus the 850 units sold in 1Q13, though management highlights that the achieved sales value was actually 5.9% higher to a change in mix to higher-end projects. Maintain BUY with an unchanged fair value estimate of S$4.09 (30% discount to RNAV). (Eli Lee) MORE REPORTS Ezion Holdings: New contracts worth US$78.7m secured Ezion Holdings Limited announced two contract wins last evening with an aggregate value of US$78.7m. The first is a charter contract worth ~US$35m for the provision of a service rig to a Middle-Eastern state-linked company over a three year period in the Arabian Gulf. This service rig is expected to be deployed by 1H15 after its refurbishment and upgrading works. The second order entails a charter contract with a value of US$43.7m over a three year period, in which Ezion will provide a service rig to support a South Asian based national oil company in the Arabian Sea. This service rig is also expected to be deployed in 1H15. YTD, Ezion has already secured US$260.3m of contracts, which underscores its dominant position in the service rigs market, especially in the Asia-Pacific region. Ezion has currently called for a trading halt with immediate effect this morning. We will be attending an analyst briefing held later in the afternoon and will provide more details thereafter. Maintain BUY and S$2.57 fair value estimate for now, pegged to 12x FY14F core EPS. (Low Pei Han and Andy Wong)

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

NEWS HEADLINES - US stocks ended a volatile session higher, lifted by gains in blue-chip names though persistent weakness in momentum names limited the Nasdaq's advance. - Retail sales in Feb slumped 9.5% YoY, distorted by base effects from the Chinese New Year holidays which took place in Feb last year. - Developers sold 480 private homes in March, down from 739 units in February and 2,793 units in Mar last year. - Keppel Telecommunications and Transportation posted a 2.9% YoY increase in net profit to S$15.4m for 1Q14. - Continued recovery in dragon fish revenue boosted ornamental fish seller Qian Hu Corporation's 1Q14 results with net profit up 86% YoY at S$115,000. - Capitaland‘s subsidiary, The Ascott, has signed a master lease agreement with Mitsubishi Estate Company to provide serviced apartments in the Japanese capital. - Yanlord Land Group has acquired a prime residential development site in China's district of Suzhou Gao Xin for about CNY1.35b (S$271.6m). - The next growth areas in Asia might be in healthcare, tourism, insurance and the environment, said Peter Sartori, head of Asian equity at fund manager Nikko AM.

DBS Vickers Report 16 Apr 14

Today’s Focus
 Keppel Land – 1Q14 results in line; rental and recurring
income made up 60% of earnings. Retain BUY call and
target price S$4.65.
1Q14 results for Keppel Land in line. Net profit dropped 9.2%
to S$87.7m despite 38% higher revenues. Earnings were hurt
by higher effective tax rate and lower associate contribution.
Rental and recurring income made up 60% of earnings. The
group will continue to focus on Singapore, China, Indonesia
and Vietnam, grow their overseas commercial property
portfolio, and proactively recycle capital for higher returns.
Highline Residences in Singapore is ready for launch in 2Q14
while China offers another 607 homes in in 2H14. Retain Buy
call and target price of S$4.65. Kepland is currently trading at
steep 40% discount to RNAV of S$5.81.
Ezion has secured two 3-year charter contracts to provide
service rigs to support:
1) A South Asian based national oil company in the Arabian
Sea in South Asia. The contract valued US$43.7m; and
2) A Middle Eastern State-Linked company in the Arabian
Gulf. The contract worth US$35m.
Both service rigs are expected to commence work in 1H15 after
refurbishment and upgrading. Our forecasts should be largely
intact as we have factored in nine new contract wins this year.
With these, Ezion has secured four contracts YTD (one new
liftboat and three refurbished jackups).
Yanlord acquires a 171,200 sqm gross floor area (GFA) prime
residential development site in Suzhou Gao Xin District for
RMB1.35bn. The site is ideally situated for the development of
a prime residential development. The project benefits from a
comprehensive suite of business and lifestyle amenities and is
well connected via the city’s key thoroughfares and the No. 1
metro line.
Singapore Airlines (SIA) passenger load factor fell 4.3
percentage points to 75% last month, as passenger carriage
declined and capacity remained flat. SIA's systemwide
passenger carriage (measured in revenue passenger kilometres)
was down 5.4% y-o-y, while the number of passengers carried
decreased by 3.8% to 1.5 million. Passenger load factors (PLF)
declined across all route regions. The weaker passenger
carriage was attributed to a combination of the Easter demand
shift from March last year to April this year, and soft demand
US Indices Last Close Pts Chg % Chg
Dow Jones  16,262.6 89.3 0.6
S&P  1,843.0 12.4 0.7
NASDAQ  4,034.2 11.5 0.3
Regional Indices
ST Index  3,246.3 31.5 1.0
ST Small Cap  546.4 1.4 0.3
Hang Seng  22,671.3 (367.5) (1.6)
HSCEI  10,028.7 (215.3) (2.1)
HSCCI  4,253.8 (93.8) (2.2)
KLCI  1,853.9 2.4 0.1
SET  1,389.2 (0.4) (0.0)
JCI  4,870.2 5.3 0.1
PCOMP  6,621.7 32.1 0.5
KOSPI  1,992.3 (4.8) (0.2)
TWSE  8,916.7 59.3 0.7
Nikkei  13,996.8 86.6 0.6

STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 597
Total Daily Vol (m shrs) 2,889
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
15 Apr
Target Price
(S$)
ComfortDelgro Buy 2.030 2.19
Global Logistic Properties Buy 2.660 3.31
Keppel Corp Buy 11.140 12.60
Stock Picks – Small Cap
Rec’n Price (S$)
15 Apr
Target Price
(S$)
Goodpack Buy 2.340 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 1.050 1.20
Nam Cheong Buy 0.355 0.46
Centurion Corporation Buy 0.775 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
to Bangkok. Meanwhile, SIA Cargo's load factor inched up
0.8 percentage point to 68% as the 2% decline in cargo
traffic (measured in freight-tonne-kilometres) was not as
sharp as the 3.1% contraction in capacity.
Singapore Airlines (SIA) is swooping in as title sponsor for
the Singapore Grand Prix - taking over from telco group
SingTel. The two-year partnership between SIA and the local
leg of the Formula 1 (F1) championship is expected to reap
benefits for both, in addition to the local tourism scene.
While SIA declined to comment on the price-tag that will
come with being the headline sponsor, it is said to be close
to what SingTel forked out during its six-year run as title
sponsor. Official figures were never disclosed, but it is
believed that the telco paid in the region of $10m-$15m per
year.
Developers sold 480 private homes in March, down from
739 units in February and 2,793 units in March last year.
This brings the first quarter's tally to 1,791 private homes
sold, down from 2,568 units in Q4 2013 and 5,412 units in
Q1 2013, Urban Redevelopment Authority (URA) data
shows. The muted sales were partly due to the low launch
volume in the first quarter. Only two new projects were
launched in March: The Santorini in Tampines and
Ascent@456 at Balestier Road - 724 units in all.
Retail sales in February slumped 9.5% y-o-y, distorted by
base effects from the Chinese New Year holidays which
took place in February last year. This year, Chinese New
Year fell at the end of January. Stripping out the sales of
motor vehicles, retail sales were down 9.2%. Retailers of
food & beverages, supermarkets, wearing apparel &
footwear, department stores, motor vehicles and provision
& sundry shops reported double-digit declines in sales
ranging from 10.5% to 33.7%. Other categories which
recorded lower sales in February included medical goods &
toiletries (-7.4%) and sales of recreational goods (-6.4%).
However, retail sales of optical goods and books grew 7%.
On a month-on-month, seasonally adjusted basis, retail sales
rose 3% in February from the previous month. Excluding
the sale of motor vehicles, retail sales edged up one per
cent.
U.S. stocks rebounded as earnings from Coca-Cola Co. and
Johnson & Johnson underpinned stocks even as concerns
that the tension in Ukraine worsened. Johnson & Johnson
said 1Q profit rose 34% on demand for the company’s
newest drugs and raised its 2014 forecast. Ukraine launched
an offensive to dislodge militants from towns in its eastern
Donetsk region as authorities in Kiev said elements of
Russian Special Forces were identified among the antigovernment
forces. Intel Corp. forecasts 2Q sales may
exceed some analysts’ estimates as improving corporate
orders help stabilize the declining personal-computer
market. IBM is scheduled to report quarterly earnings later
today.

Daily Summary 15 Apr 14

Yesterday computer down unable to file report.

Last night Europe and Dow were positive. Dow +146 closing at 16173. Dow's trend is flat. Dow's future is now -11. Europe opened down.

Asian bourses were mixed. Nikkei +87, ShanghaiC -30, Hangseng -368. STI +31 at 3246. Volume was 2.9b shares. Gainers were 280 to 222 losers.

Trend of STI is turning up.

Top volumes were HanKore +0.1, CapitaMallAsia +39, Memstar -0.2, CCM +0.2, Charismaener -0.3, Armarda +0.2, LottVision +0.2, Cacola -0.3, Addvalue -0.2, PNE -0.3.

Market opened up and stayed up the whole day, closing near day high. Blue chips were mostly up. Penny and speculatives were mixed. Capitaland and CapitaMall Asia were big gainers +19c and 39c respectively due to the announcement of takeover of CapitaMall Asia.

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

OCBC Report 14 Apr 14

KEY IDEA Telco Sector – M1 may offer cross carriage soon Summary: Business Times reported yesterday that M1 could be close to being able to cross carry the coveted BPL and other exclusive content on its fledging MiBox. However, we do not expect the latest development to have much of an impact on the Pay TV market here in the near term. For one, its market share (10k) is hardly significant compared to StarHub’s 533k and SingTel’s 418k subscribers (as of end 2013). Secondly, any revenue from cross carriage will flow back to the exclusive content owner. In the case of both BPL and the 2014 World Cup, that would be SingTel. Last but not least, the main hurdle may be the steep pricing of the sports content itself, which may put it out of reach for the “casual” sports viewer. We continue to maintain our NEUTRAL rating on the sector and choose SingTel (BUY, S$3.74 FV) as our top pick. (Carey Wong) MORE REPORTS Ezra Holdings: Expect a better 2H Ezra Holdings reported a 22% YoY rise in revenue to US$300.4m and a 34% fall in net profit to US$19.6m in 2QFY14, such that 1HFY14 revenue and net profit formed 48% and 59% of our estimates, respectively. However, we note that earnings in 2QFY14 were boosted by a US$16.6m gain on disposal from one of its associated companies EOC. Adjusting for this, we estimate core net profit to be about US$3m in the quarter and US$9.7m in 1HFY14, with the latter forming 28% of our FY14 core estimates. Nevertheless, we expect 2HFY14 to improve sequentially, in line with management’s guidance. This would be driven by a recovery in its Offshore Support Services Division and continued traction in its Subsea Services Division. Hence, we are keeping our forecasts intact. Rolling forward our valuations to 0.9x blended FY14/15F P/NTA, we derive a slightly higher fair value estimate of S$1.05 (prev. S$1.03). Upgrade Ezra to HOLD.  (Low Pei Han and Andy Wong) Singapore Press Holdings: Decline in ad revenue accelerates 2QFY14 operating income came in at S$53.5m, down 36.8% YoY, mostly due to lower ad contributions, staff costs rising 18.2% (S$15.6m) and a S$9.9m impairment charge. The latter two were related to the cost-saving initiatives implemented last year as management restructured the framework for staff compensation and also optimized printing capacity with the removal of a press line. For the quarter, the group also recognized a S$52.9m one-time gain for the partial divestment of 701Search to Telenor, which resulted in PATMI increasing 7.5% YoY to S$81.3m. Overall, we judge 2Q numbers to be a miss; ad contributions was below expectations and we revise our FY14 operating income forecast down by 16.5% to S$322.7m, after incorporating 2Q’s one-time items as well. Management declared an interim dividend of 7 S-cents. We update our valuation model for weaker print assumptions and latest valuations for listing holdings, and our fair value dips marginally to S$4.13 from S$4.14 previously. Maintain HOLD. (Eli Lee)

Daily Report 11 Apr 14

Europe were mixed last night but Dow fell 267 to close 16170.  Dow's trend is looking down.  Dow's future is now +10.  Europe opened down.  

Asian bourses were mostly down.  Nikkei -340, ShanghaiC -4, Hangseng -183. STI -8 at 3196.  Volume was 2.1b shares.  Gainers were 180 to 282 losers.

Trend of STI is breaking down.

With Dow's sharp fall last night, STI gapped down on opening down 15 pts. It then recovered some grounds to close -8. Blue chips were mixed so were penny and speculatives. Market was steady given the weak closing at Dow and a Friday.

Europe is weak on opening but Dow's future is slightly positive at the moment.