| KEY IDEA Ascott Residence Trust: Acquires rental housing in Fukuoka ART announced last Friday that it has acquired a 389-unit rental housing property in Fukuoka for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to increase FY13 distribution per unit by 2.1%. This is the second property agreement announced after ART’s rights issue in Dec 2013. In Feb, ART entered into a conditional agreement to acquire its first serviced residence in Dalian for RMB571m (~S$118.6m) with an EBITDA yield of 5.5%. On a pro forma basis, that accretive acquisition was expected to increase FY13 DPU by 1.5%. We assume that any remaining acquisition or acquisitions to be announced in 1H14 will total S$153m with a 5.5% EBITDA yield. Incorporating the Fukuoka and Dalian acquisitions, we maintain our FV of S$1.33 and BUY rating on ART. (Sarah Ong) MORE REPORTS Tiger Airways: LT fleet renewal and expansion Tiger Airways Holdings (TR) has entered into an agreement with Airbus and Pratt & Whitney for the order of 37 fuel-efficient Airbus A320neo aircraft. The purchase agreement also gives Tigerair the option to increase its order by up to 13 additional aircraft and convert the A320neos into the larger A321neo model. Consequent to the agreement, the airline’s existing order of nine Airbus A320 aircraft, that were part of a larger 2007 order, will now be cancelled. These aircraft were originally scheduled for delivery in 2014 and 2015. The cancellation of the nine orders, together with the staggered delivery of the new A320neo aircraft over a period of eight years from 2018 to 2025, will better allow Tigerair to manage its capacity going forward and improve its cost efficiency. However, given the continued challenges TR faces in its core markets, we maintain our SELL rating and fair value of S$0.38 on TR. (Sarah Ong) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - US stocks reversed early gains and finished Fri lower but still recorded modest weekly gains. - Announced M&A deals involving Asia-Pacific companies got off to a strong start this year, powered by a property deal in China and the purchase of a Korean brewer. - Banks in Singapore and elsewhere are facing challenges against the backdrop of Basel III, which has made it expensive to own overseas units. - DBS Group expects income growth from its SME segment to outpace last year's growth of over 10%, and is pushing for more income from emerging markets. - Tritech Group has won a S$6.68m contract to provide engineering design services for the construction of Lentor Station on the Thomson Line MRT system. - Hotel Royal Limited is looking to acquire Burasari Resort in Phuket, Thailand for about 1.3b baht (S$51m). |
Sunday, March 23, 2014
OCBC Report
DBS Report
Today’s Focus
Mapletree Industrial Trust – Secured new Build-to-Suit
(BTS) facility. Maintain BUY, target price raised to
S$1.50
The FED’s hawkish statement last week with regards to the
timing and pace of the eventual interest rate hike speaks of
the central bank’s confidence on the US economy. This
coupled with expectations of the Eurozone pulling out from
recession this year should rekindle optimism of a global
recovery. Still, Asian indices are likely to underperform the US
on concerns about China’s bad loans and the influence of a
slowdown in the Chinese economy.
Goodpack is one stock we highlighted as a global recovery
proxy at the start of the year that has done well on news of a
potential takeover. An uptick in recovery optimism should
also underpin the SMC proxies in the O&M sector. Our picks
are Ezion, Kim Heng, Pacific Radiance, Nam Cheong, Vard
and Rex. But sentiment towards interest rate sensitive sectors
such as SREITs and property should be affected with the FED
turning more hawkish.
Our stated STI near-term support range from 3000-3050
stayed unchallenged last week despite the index’s
choppiness. We stick to our ‘bargain hunt on dip’ stance in
the short term, underpinned by possible bargain hunting of
blue chips ahead of their trading “ex dividend”. We look to
stay with this view until the next seasonal trend to “sell in
May and go away” comes.
Data releases this week include 1) Singapore’s February
industrial production (consensus +13.7% y-o-y) and CPI
(consensus +0.8% y-o-y) 2) HSBC China manufacturing PMI
(consensus 48.7) and 3) US consumer confidence (consensus
78.6) and new home sales (-4.9% m-o-m)
Mapletree Industrial Trust (MINT) announced that they have
secured to develop a new Build-to-Suit (BTS) facility for
Hewlett Packard (HP) for a total consideration of S$250m. HP
will, upon completion of this BTS in FY18F, sign a long term
lease of 10.5 years, with two 5-year extension options,
providing strong income visibility for MINT. The proposed
development is estimated to yield 9.0% on total cost and is
positive for MINT in many ways. Upon completion in FY18F,
MINT will benefit from (i) higher property specifications with
the property repositioned as a hi-tech property, (ii) higher
revenues through the maximization of un-utilized plot ratios
(1.3x to 2.5x) resulting in c. 89% increase in GFA, (iii)
stronger income visibility through a longer weighted average
lease expiry (WALE) backed by a strong tenant.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,302.8 (28.3) (0.2)
S&P 1,866.5 (5.5) (0.3)
NASDAQ 4,276.8 (42.5) (1.0)
Regional Indices
ST Index 3,073.4 16.2 0.5
ST Small Cap 535.4 1.4 0.3
Hang Seng 21,436.7 254.5 1.2
HSCEI 9,427.3 224.3 2.4
HSCCI 3,974.0 27.5 0.7
KLCI 1,820.5 2.3 0.1
SET 1,360.5 (1.0) (0.1)
JCI 4,700.2 1.2 0.0
PCOMP 6,339.3 (78.1) (1.2)
KOSPI 1,945.3 10.3 0.5
TWSE 8,577.2 (20.2) (0.2)
Nikkei 14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 1,790
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$)
21 Mar
Target Price
(S$)
ComfortDelgro Buy 1.945 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.580 12.60
Yangzijiang Buy 1.060 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
21 Mar
Target Price
($)
Ezion Holdings Buy 2.170 3.26
Goodpack Buy 2.250 2.60
China Merchants Buy 0.970 1.32
Pacific Radiance Ltd Buy 1.030 1.20
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
At c. 9% yield, this development project is expected to be
yield enhancing to earnings upon completion. Gearing is
estimated to hit c. 41% upon completion in the medium
term. Given the phase investment, we believe that there is
no urge need to raise new equity. Maintain BUY, target
price raised to S$1.50 (Prev S$ 1.44).
Tigerair has entered into an agreement with Airbus and
Pratt & Whitney (P&W) for the order of 37 fuel-efficient
Airbus A320neo aircraft powered by Pratt & Whitney
PW1100G-JM engines. The purchase agreement also gives
Tigerair the option to increase its order by up to 13
additional aircraft and convert the A320neos into the larger
A321neo model. Consequent to the agreement, the airline’s
existing order of nine Airbus A320 aircraft, that were part of
a larger 2007 order, will now be cancelled. These aircraft
were originally scheduled for delivery in 2014 and 2015.
K-Green Trust will be proposing an expansion of its
investment mandate and a change of the Trust’s name to
Keppel Infrastructure Trust. In alignment with the wider
business activities of KI, K-Green Trust is proposing
expanding its current focus on “green” infrastructure assets
to cover a wider range of infrastructure assets.
F&N has signed an agreement to acquire a 70% stake in
Yoke Food Industries (YFI), a Malaysia-based company with
an annual turnover of more than RM85m (S$32m). YFI
manufactures, markets and distributes beverages in
Malaysia, as well as exports to Singapore, Indonesia and
Indochina, under brands such as Day Day, SoSoy and Juice
Secret.
Hotel Royal is looking to acquire Burasari Resort in Phuket,
Thailand for about 1.3 billion baht (S$51m) via the
acquisition of the entire issued and paid-up share capital of
Panali Company. The resort is situated at Ruamjai Road, and
is less than three minutes' walk from Patong beach. The
four-star property has 186 rooms and sits on freehold land
area of about 6,722 sq m with an approximate gross floor
area of about 11,441 sq m. According to Hotel Royal, the
acquisition is an opportunity for the group to expand its
hotel operations in the region.
Enviro-Hub Holdings has been awarded a piling contract
with a contract value of approximately S$19.2m. The
contract is expected to contribute positively to the Group’s
financial performance for the current financial year ending
31 Dec 14.
Announced merger and acquisition (M&A) deals involving
Asia-Pacific companies got off to a strong start this year,
powered by a property deal in China and the purchase of a
Korean brewer. The total value of such deals in Asia-Pacific
excluding-Japan was up 22% y-o-y at US$112.7 bn in the
first three months of 2014, according to a preliminary
report by Thomson Reuters. China companies continued to
be choice targets, with US$39.1 bn of announced deals
involving them. Singapore companies attracted some
US$12bn of the Asia-Pacific M&A volumes.
China’s economy slowed this quarter, with industries
including retail and mining showing weaker revenue growth
while loans through non-traditional channels became more
expensive, according to the China Beige Book survey. Even
with the moderation, the labour market and wage growth
were little changed from the previous quarter, the private
survey showed
Mapletree Industrial Trust – Secured new Build-to-Suit
(BTS) facility. Maintain BUY, target price raised to
S$1.50
The FED’s hawkish statement last week with regards to the
timing and pace of the eventual interest rate hike speaks of
the central bank’s confidence on the US economy. This
coupled with expectations of the Eurozone pulling out from
recession this year should rekindle optimism of a global
recovery. Still, Asian indices are likely to underperform the US
on concerns about China’s bad loans and the influence of a
slowdown in the Chinese economy.
Goodpack is one stock we highlighted as a global recovery
proxy at the start of the year that has done well on news of a
potential takeover. An uptick in recovery optimism should
also underpin the SMC proxies in the O&M sector. Our picks
are Ezion, Kim Heng, Pacific Radiance, Nam Cheong, Vard
and Rex. But sentiment towards interest rate sensitive sectors
such as SREITs and property should be affected with the FED
turning more hawkish.
Our stated STI near-term support range from 3000-3050
stayed unchallenged last week despite the index’s
choppiness. We stick to our ‘bargain hunt on dip’ stance in
the short term, underpinned by possible bargain hunting of
blue chips ahead of their trading “ex dividend”. We look to
stay with this view until the next seasonal trend to “sell in
May and go away” comes.
Data releases this week include 1) Singapore’s February
industrial production (consensus +13.7% y-o-y) and CPI
(consensus +0.8% y-o-y) 2) HSBC China manufacturing PMI
(consensus 48.7) and 3) US consumer confidence (consensus
78.6) and new home sales (-4.9% m-o-m)
Mapletree Industrial Trust (MINT) announced that they have
secured to develop a new Build-to-Suit (BTS) facility for
Hewlett Packard (HP) for a total consideration of S$250m. HP
will, upon completion of this BTS in FY18F, sign a long term
lease of 10.5 years, with two 5-year extension options,
providing strong income visibility for MINT. The proposed
development is estimated to yield 9.0% on total cost and is
positive for MINT in many ways. Upon completion in FY18F,
MINT will benefit from (i) higher property specifications with
the property repositioned as a hi-tech property, (ii) higher
revenues through the maximization of un-utilized plot ratios
(1.3x to 2.5x) resulting in c. 89% increase in GFA, (iii)
stronger income visibility through a longer weighted average
lease expiry (WALE) backed by a strong tenant.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,302.8 (28.3) (0.2)
S&P 1,866.5 (5.5) (0.3)
NASDAQ 4,276.8 (42.5) (1.0)
Regional Indices
ST Index 3,073.4 16.2 0.5
ST Small Cap 535.4 1.4 0.3
Hang Seng 21,436.7 254.5 1.2
HSCEI 9,427.3 224.3 2.4
HSCCI 3,974.0 27.5 0.7
KLCI 1,820.5 2.3 0.1
SET 1,360.5 (1.0) (0.1)
JCI 4,700.2 1.2 0.0
PCOMP 6,339.3 (78.1) (1.2)
KOSPI 1,945.3 10.3 0.5
TWSE 8,577.2 (20.2) (0.2)
Nikkei 14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 566
Total Daily Vol (m shrs) 1,790
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$)
21 Mar
Target Price
(S$)
ComfortDelgro Buy 1.945 2.19
Global Logistic Properties Buy 2.620 3.31
Keppel Corp Buy 10.580 12.60
Yangzijiang Buy 1.060 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
21 Mar
Target Price
($)
Ezion Holdings Buy 2.170 3.26
Goodpack Buy 2.250 2.60
China Merchants Buy 0.970 1.32
Pacific Radiance Ltd Buy 1.030 1.20
Nam Cheong Buy 0.320 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 3
At c. 9% yield, this development project is expected to be
yield enhancing to earnings upon completion. Gearing is
estimated to hit c. 41% upon completion in the medium
term. Given the phase investment, we believe that there is
no urge need to raise new equity. Maintain BUY, target
price raised to S$1.50 (Prev S$ 1.44).
Tigerair has entered into an agreement with Airbus and
Pratt & Whitney (P&W) for the order of 37 fuel-efficient
Airbus A320neo aircraft powered by Pratt & Whitney
PW1100G-JM engines. The purchase agreement also gives
Tigerair the option to increase its order by up to 13
additional aircraft and convert the A320neos into the larger
A321neo model. Consequent to the agreement, the airline’s
existing order of nine Airbus A320 aircraft, that were part of
a larger 2007 order, will now be cancelled. These aircraft
were originally scheduled for delivery in 2014 and 2015.
K-Green Trust will be proposing an expansion of its
investment mandate and a change of the Trust’s name to
Keppel Infrastructure Trust. In alignment with the wider
business activities of KI, K-Green Trust is proposing
expanding its current focus on “green” infrastructure assets
to cover a wider range of infrastructure assets.
F&N has signed an agreement to acquire a 70% stake in
Yoke Food Industries (YFI), a Malaysia-based company with
an annual turnover of more than RM85m (S$32m). YFI
manufactures, markets and distributes beverages in
Malaysia, as well as exports to Singapore, Indonesia and
Indochina, under brands such as Day Day, SoSoy and Juice
Secret.
Hotel Royal is looking to acquire Burasari Resort in Phuket,
Thailand for about 1.3 billion baht (S$51m) via the
acquisition of the entire issued and paid-up share capital of
Panali Company. The resort is situated at Ruamjai Road, and
is less than three minutes' walk from Patong beach. The
four-star property has 186 rooms and sits on freehold land
area of about 6,722 sq m with an approximate gross floor
area of about 11,441 sq m. According to Hotel Royal, the
acquisition is an opportunity for the group to expand its
hotel operations in the region.
Enviro-Hub Holdings has been awarded a piling contract
with a contract value of approximately S$19.2m. The
contract is expected to contribute positively to the Group’s
financial performance for the current financial year ending
31 Dec 14.
Announced merger and acquisition (M&A) deals involving
Asia-Pacific companies got off to a strong start this year,
powered by a property deal in China and the purchase of a
Korean brewer. The total value of such deals in Asia-Pacific
excluding-Japan was up 22% y-o-y at US$112.7 bn in the
first three months of 2014, according to a preliminary
report by Thomson Reuters. China companies continued to
be choice targets, with US$39.1 bn of announced deals
involving them. Singapore companies attracted some
US$12bn of the Asia-Pacific M&A volumes.
China’s economy slowed this quarter, with industries
including retail and mining showing weaker revenue growth
while loans through non-traditional channels became more
expensive, according to the China Beige Book survey. Even
with the moderation, the labour market and wage growth
were little changed from the previous quarter, the private
survey showed
Friday, March 21, 2014
Daily Summary 21 Mar 14
Europe were mixed last night but Dow
+109 closing at 16331. Dow's trend is trying to find a direction.
Dow's future is now +40. Europe opened up.
Asian bourses were mixed. Nikkei -238, ShanghaiC +54 and Hangseng +255. STI closed +12 at 3070. Volume was 1.6b shares. Gainers were 271 against 172 losers.
Trend of STI is still down but steady.
Top volumes were HanKore +0.4, AdvSCT unchanged, Digiland -0.1, Globa +0.8, CharismaEner +0.1, WEHldg unchanged, GoldenAgr -1, CCM unchanged, LionGold +1.1, Vibrant +0.2.
Market opened up, ran to a high of 3090 but closed at 3070. There were more gainers across the board after the last few days of weaknesses. Volume was still very low.
Europe and Dow are looking firm for tonight.
Asian bourses were mixed. Nikkei -238, ShanghaiC +54 and Hangseng +255. STI closed +12 at 3070. Volume was 1.6b shares. Gainers were 271 against 172 losers.
Trend of STI is still down but steady.
Top volumes were HanKore +0.4, AdvSCT unchanged, Digiland -0.1, Globa +0.8, CharismaEner +0.1, WEHldg unchanged, GoldenAgr -1, CCM unchanged, LionGold +1.1, Vibrant +0.2.
Market opened up, ran to a high of 3090 but closed at 3070. There were more gainers across the board after the last few days of weaknesses. Volume was still very low.
Europe and Dow are looking firm for tonight.
Thursday, March 20, 2014
OCBC Report
| KEY IDEA Consumer Sector: Looking for resilience of growth We see three trends among our coverage’s 4QCY13 and CY13 earnings: 1) strong revenue growth, 2) stable margins, and 3) USD-denominated results being hurt by weaker regional currencies. Though the street expects FTSE Consumer Services Index’s EPS to increase by 10.6% to 44.3 in CY14, we maintain UNDERWEIGHT on the sector. We think the trading premium of 1 s.d. above its 2-year historical average could be eroded readily with downturn in market sentiments as seen in Feb-14. Other than strong expected corporate earnings, we are looking for resilience to headwinds in this jittery market. We continue to like Sheng Siong Group [BUY; S$0.68 FV] and Petra Foods [BUY; S$4.08 FV] but not BreadTalk Group [SELL; S$0.85 FV]. (Yap Kim Leng) MORE REPORTS Ascott Residence Trust: Acquires Japan rental housing property ART has acquired a rental housing property in Fukuoka named Infini Garden for JPY6.3b (~S$78.4m) and with an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to have increased FY13 distribution per unit by 2.1% from 8.40 S cents to 8.58 S cents. ART acquired the 389-unit Infini Garden from The Ascott Limited (Ascott) and ArcResidential Japan Investments Limited. We maintain our BUY rating on ART but place our fair value of S$1.33 under review. (Sarah Ong) |
| For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - US stocks reversed post-Fed meeting losses and finished Thu with modest gains. Upbeat data from Philadelphia Fed, showing a rebound in manufacturing in Mar, boosted confidence. - The US Federal Reserve will probably end its massive bond-buying programme this autumn, and could start raising interest rates around six months later, Fed chair Janet Yellen said. - SGX enjoyed a 70% surge last year in the volume of OTC and exchange-traded commodity derivatives, outpacing the global commodity derivatives growth of 23%. - Singapore banks are expected to issue more Basel III compliant securities, with about 25% of their Basel II securities callable, or reaching maturity, this year, Moody's said. - Mapletree Industrial Trust has signed an agreement with Hewlett-Packard to develop and lease a new S$250m build-to-suit facility at its existing Telok Blangah Cluster. - Sim Lian Group will launch the first phase of its integrated development, Vision Exchange, for sale tomorrow. - CCM Group said that its wholly owned subsidiary, CCM Industrial Pte Ltd, had on Mon received a notice of termination of a Shenton Way contract. |
DBS Vickers Report
Today’s Focus
CWT - Undervalued logistics play. Initiate coverage with
BUY recommendation and target price of S$1.82
We initiate coverage on CWT with a BUY recommendation
and target price of S$1.82. CWT is a leading logistics player in
Singapore with global presence in commodity logistics and
marketing. We forecast a 13% EPS CAGR over FY13-15F,
driven by logistics and commodity marketing segments. CWT
is undervalued at just 7.2x FY14 PE and 1x FY14 P/BV vis-a-vis
peers and historical trading bands.
Goodpack is in talks for potential takeover offer. Discussions
are ongoing and it is premature to speculate on the likelihood
of a takeover offer, price, and consequences to Goodpack at
this stage. While Goodpack’s founder, Mr David Lam, who
has a controlling stake of 32%, is open to a takeover offer,
we believe current low valuations could be a hurdle, given
that the autopart business could be an X factor for further rerating
of the stock. We like Goodpack’s resilience during
downturns and ability to leverage the upcycle with
continuous market share gains. Reiterate BUY with higher
target price of S$2.60 (Prev S$ 2.25) as we roll over our
valuation to FY15 (FYE Jun).
Mapletree Industrial Trust has signed an agreement with
Hewlett-Packard Singapore (HP) to develop and lease a new
build-to-suit (BTS) facility at its existing Telok Blangah Cluster.
HP has committed to lease the BTS Facility for an initial tenure
of 10.5 years. The Property will be redeveloped and
repositioned as a high-tech industrial cluster at an estimated
total cost of S$250m.
Rex International announced that North Energy, in which the
Group holds an approximate stake of 5.35%, will commence
drilling campaigns at two of its licences in the third and
fourth quarters of 2014. North Energy is using Rex Virtual
Drilling in high grading possible drilling targets in its portfolio.
Ascott Residence Trust has acquired a rental housing property
in Fukuoka named Infini Garden for JPY6.3 billion (about
S$78.4m) at an EBITDA yield of 6.6%. On a pro forma basis,
the accretive acquisition is expected to increase FY 2013
distribution per unit by 2.1% to 8.58 cents. Ascott REIT
US Indices Last Close Pts Chg % Chg
Dow Jones 16,331.1 108.9 0.7
S&P 1,872.0 11.2 0.6
NASDAQ 4,319.3 11.7 0.3
Regional Indices
ST Index 3,057.2 (23.6) (0.8)
ST Small Cap 534.0 (2.2) (0.4)
Hang Seng 21,182.2 (386.5) (1.8)
HSCEI 9,203.1 (157.6) (1.7)
HSCCI 3,946.5 (58.8) (1.5)
KLCI 1,818.2 0.7 0.0
SET 1,361.5 (2.8) (0.2)
JCI 4,699.0 (122.5) (2.5)
PCOMP 6,417.4 (45.1) (0.7)
KOSPI 1,919.5 (18.2) (0.9)
TWSE 8,597.3 (92.1) (1.1)
Nikkei 14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
Total Market cap (US$bn) 570
Total Daily Vol (m shrs) 1,869
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$)
20 Mar
Target Price
(S$)
ComfortDelgro Buy 1.915 2.19
Global Logistic Properties Buy 2.580 3.31
Keppel Corp Buy 10.430 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
20 Mar
Target Price
($)
Ezion Holdings Buy 2.080 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.985 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
has acquired the 389-unit Infini Garden from The Ascott
Limited (Ascott) and ArcResidential Japan Investments
Limited.
TEHO International has entered into an agreement with
TIEC to acquire the entire issued and paid-up share capital
of TIEC for S$12.3m. TIEC has ongoing property
development projects worth S$60.8m. The diversification
would reduce any over-reliance on the Group’s existing
businesses and contribute an additional stream of revenue
and earnings. The acquisition will be funded by S$7.3m
cash and the remaining to be paid by the issuance of new
shares.
Viva Industrial Trust announced that Standard & Poor's has
reaffirmed Viva Industrial Real Estate Investment Trust's
credit rating of BB+ with a stable outlook.
Tritech Group has been awarded a RMB24.4m waste water
treatment contract in Henan, China. The duration of the
contract is 400 days from the signing of the contact.
US stocks rose as better-than-expected Mar Philadelphia
FED business outlook (actual 9, consensus 3.2) and initial
jobless claims (actual 320k, consensus 322k) overshadowed
concerns that interest rates may rise by 2Q 2015. Investors
also watched the situation in Ukraine, where the
government of Kiev said it plans to reinforce its
eastern border with Russia and withdraw troops from
Crimea. President Obama said the US will impose financial
sanctions on a wider swath of Russian officials and a
Russian bank. Microsoft rose to the highest since July 2000
as CEO Satya Nadella is expected to debut a version of
Office for the iPad at an event next week. AT&T Inc. rose to
lead a rally in phone stocks. Guess? Inc fell after its FY
earnings projection trailed analysts’ predictions
CWT - Undervalued logistics play. Initiate coverage with
BUY recommendation and target price of S$1.82
We initiate coverage on CWT with a BUY recommendation
and target price of S$1.82. CWT is a leading logistics player in
Singapore with global presence in commodity logistics and
marketing. We forecast a 13% EPS CAGR over FY13-15F,
driven by logistics and commodity marketing segments. CWT
is undervalued at just 7.2x FY14 PE and 1x FY14 P/BV vis-a-vis
peers and historical trading bands.
Goodpack is in talks for potential takeover offer. Discussions
are ongoing and it is premature to speculate on the likelihood
of a takeover offer, price, and consequences to Goodpack at
this stage. While Goodpack’s founder, Mr David Lam, who
has a controlling stake of 32%, is open to a takeover offer,
we believe current low valuations could be a hurdle, given
that the autopart business could be an X factor for further rerating
of the stock. We like Goodpack’s resilience during
downturns and ability to leverage the upcycle with
continuous market share gains. Reiterate BUY with higher
target price of S$2.60 (Prev S$ 2.25) as we roll over our
valuation to FY15 (FYE Jun).
Mapletree Industrial Trust has signed an agreement with
Hewlett-Packard Singapore (HP) to develop and lease a new
build-to-suit (BTS) facility at its existing Telok Blangah Cluster.
HP has committed to lease the BTS Facility for an initial tenure
of 10.5 years. The Property will be redeveloped and
repositioned as a high-tech industrial cluster at an estimated
total cost of S$250m.
Rex International announced that North Energy, in which the
Group holds an approximate stake of 5.35%, will commence
drilling campaigns at two of its licences in the third and
fourth quarters of 2014. North Energy is using Rex Virtual
Drilling in high grading possible drilling targets in its portfolio.
Ascott Residence Trust has acquired a rental housing property
in Fukuoka named Infini Garden for JPY6.3 billion (about
S$78.4m) at an EBITDA yield of 6.6%. On a pro forma basis,
the accretive acquisition is expected to increase FY 2013
distribution per unit by 2.1% to 8.58 cents. Ascott REIT
US Indices Last Close Pts Chg % Chg
Dow Jones 16,331.1 108.9 0.7
S&P 1,872.0 11.2 0.6
NASDAQ 4,319.3 11.7 0.3
Regional Indices
ST Index 3,057.2 (23.6) (0.8)
ST Small Cap 534.0 (2.2) (0.4)
Hang Seng 21,182.2 (386.5) (1.8)
HSCEI 9,203.1 (157.6) (1.7)
HSCCI 3,946.5 (58.8) (1.5)
KLCI 1,818.2 0.7 0.0
SET 1,361.5 (2.8) (0.2)
JCI 4,699.0 (122.5) (2.5)
PCOMP 6,417.4 (45.1) (0.7)
KOSPI 1,919.5 (18.2) (0.9)
TWSE 8,597.3 (92.1) (1.1)
Nikkei 14,224.2 (238.3) (1.6)
STI Index Performance
Singapore
Total Market cap (US$bn) 570
Total Daily Vol (m shrs) 1,869
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$)
20 Mar
Target Price
(S$)
ComfortDelgro Buy 1.915 2.19
Global Logistic Properties Buy 2.580 3.31
Keppel Corp Buy 10.430 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
20 Mar
Target Price
($)
Ezion Holdings Buy 2.080 3.26
Goodpack Buy 2.230 2.60
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.985 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
has acquired the 389-unit Infini Garden from The Ascott
Limited (Ascott) and ArcResidential Japan Investments
Limited.
TEHO International has entered into an agreement with
TIEC to acquire the entire issued and paid-up share capital
of TIEC for S$12.3m. TIEC has ongoing property
development projects worth S$60.8m. The diversification
would reduce any over-reliance on the Group’s existing
businesses and contribute an additional stream of revenue
and earnings. The acquisition will be funded by S$7.3m
cash and the remaining to be paid by the issuance of new
shares.
Viva Industrial Trust announced that Standard & Poor's has
reaffirmed Viva Industrial Real Estate Investment Trust's
credit rating of BB+ with a stable outlook.
Tritech Group has been awarded a RMB24.4m waste water
treatment contract in Henan, China. The duration of the
contract is 400 days from the signing of the contact.
US stocks rose as better-than-expected Mar Philadelphia
FED business outlook (actual 9, consensus 3.2) and initial
jobless claims (actual 320k, consensus 322k) overshadowed
concerns that interest rates may rise by 2Q 2015. Investors
also watched the situation in Ukraine, where the
government of Kiev said it plans to reinforce its
eastern border with Russia and withdraw troops from
Crimea. President Obama said the US will impose financial
sanctions on a wider swath of Russian officials and a
Russian bank. Microsoft rose to the highest since July 2000
as CEO Satya Nadella is expected to debut a version of
Office for the iPad at an event next week. AT&T Inc. rose to
lead a rally in phone stocks. Guess? Inc fell after its FY
earnings projection trailed analysts’ predictions
Daily Summary
Dow and Europe were down last night.
Dow -114 at 16222. Dow's trend is weakenging a bit. Dow's future
is -10 at the moment. Europe opened down.
Asian bourses were mostly down. Nikkei -238, ShanghaiC -28, Hangseng -387. STI closed -24 at 3057. Volume was 1.8b shares. Gainers were 152 and losers were 281.
STI's trend is going down.
Top volumes were HanKore +0.1, Equation -0.3, Digiland +0.1, OceanSky +0.8, Vallianz +0.3, Federal +0.3, LifeBrandz unchanged, CharismaEner -0.1, WEHldg unchanged, GoldenAgr -1.5.
Market opened down and remained down the whole day to close at day low. Volume fell to below 2b shares again. Blue chips were mostly down. Penny and speculatives were firmer. Market has been drifting sideways for several days.
Europe and Dow are looking a bit weak at the moment.
Asian bourses were mostly down. Nikkei -238, ShanghaiC -28, Hangseng -387. STI closed -24 at 3057. Volume was 1.8b shares. Gainers were 152 and losers were 281.
STI's trend is going down.
Top volumes were HanKore +0.1, Equation -0.3, Digiland +0.1, OceanSky +0.8, Vallianz +0.3, Federal +0.3, LifeBrandz unchanged, CharismaEner -0.1, WEHldg unchanged, GoldenAgr -1.5.
Market opened down and remained down the whole day to close at day low. Volume fell to below 2b shares again. Blue chips were mostly down. Penny and speculatives were firmer. Market has been drifting sideways for several days.
Europe and Dow are looking a bit weak at the moment.
Wednesday, March 19, 2014
DBS Report 20 Mar 14
Today’s Focus
OSIM - Buy for 3-pronged growth, target price raised to
S$3.08.
STI’s rebound thus far this week has been capped at the 3100
level. Sentiment is likely to stay muted today after the FED
said QE3 could end by this fall and benchmark interest rates
could rise 6 months later from that. US 10-year treasury yields
rebounded while the USD strengthened against major
currencies. Last week’s low point for the STI was at 3060. We
do not rule out the index heading to 3050 followed by 3020
that is still within the 3000-3050 support range we
highlighted earlier, should the 3060 level fail to hold.
We find OSIM’s current business model to be robust and
capable of supporting growth into the future. OSIM’s threepronged
growth model comprises: i) Massage chairs driving
growth through new products; ii) TWG supplementing
growth with rapid store network expansion; and iii) GNC
providing resilient earnings and cashflows to the Group.
These factors, complemented by the scaling up of OSIM’s
presence in China, is more than capable of supporting
sustainable earnings growth going forward. OSIM’s soon-tobe
launched new version of the uAngel chair is set to build on
preceding model’s success while TWG’s rapid expansion is
expected to positively impact earnings growth. We expect
minimal EPS dilution of 1%/6% for FY14F/FY15F from
convertible bonds (CB) conversion. Maintain BUY, target price
raised to S$3.08 (Prev S$ 2.64) as we raise our PE multiple to
18x on stronger business model.
Goodpack announced that it has been approached by parties
for a possible transaction, which may or may not trigger a
general offer. Discussions are still on-going. The Company
has appointed Rippledot Capital Advisers Pte Ltd as its
financial advisor. Company decided to make public about the
development in view of the outperfomance of share price
lately. The last time company received such offer was back in
2008/2009 though eventually the deal was called off as both
parties could not come to an agreement on the offer price.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,222.2 (114.0) (0.7)
S&P 1,860.8 (11.5) (0.6)
NASDAQ 4,307.6 (25.7) (0.6)
Regional Indices
ST Index 3,080.8 (13.1) (0.4)
ST Small Cap 536.2 (2.6) (0.5)
Hang Seng 21,568.7 (14.8) (0.1)
HSCEI 9,360.7 18.4 0.2
HSCCI 4,005.3 12.3 0.3
KLCI 1,817.4 (3.3) (0.2)
SET 1,364.3 (8.8) (0.6)
JCI 4,821.5 15.8 0.3
PCOMP 6,462.5 (4.1) (0.1)
KOSPI 1,937.7 (2.5) (0.1)
TWSE 8,689.5 (42.5) (0.5)
Nikkei 14,462.5 51.3 0.4
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$bn) 576
Total Daily Vol (m shrs) 2,506
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
19 Mar
Target Price
(S$)
ComfortDelgro Buy 1.925 2.19
Global Logistic Properties Buy 2.64 3.31
Keppel Corp Buy 10.52 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
19 Mar
Target Price
($)
Ezion Holdings Buy 2.13 3.26
Goodpack Buy 2.23 2.25
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.995 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Stahill Global REIT announced that it has divested one
Japanese retail asset, Holon L Property, for JPY1.03bn
(S$12.8m), a 6% premium to the Dec-13 independent
valuation of JPY 0.97bn. This translates to an exit yield of
4.03% (or 4.27% over valuation). This property represents
11.5% of SGREIT's Japanese portfolio, or 0.4% of the
REIT's total asset value. The proceeds from this transaction
will be used to fully pay down its JPY1.5bn bond due
2016. Total JPY loans post divestment will be c.7.5bn, and
SGREIT's gearing will fall marginally to 28.7% from 30%.
CapitaLand has sold its remaining 39.1% stake in
Australand Property Group, reaping an expected net gain
of about $35.7m. CapitaLand sold its remaining 226.2m
shares through a secondary placement yesterday at an
average price of A$3.75 each, 3.6% below Australand's
Tuesday closing price but 5.3% above its last reported net
tangible asset. CapitaLand said it will receive about
$970.1m from the sale, which it will deploy towards its key
markets of Singapore and China, and for general working
purposes, including the repayment of debt.
Global Logistic Properties has signed a lease agreement of
approximately 53,000 sqm (570,000 sq ft) with a leading
FMCG company at GLP Park Hefei Hi-Tech in Hefei, Anhui
Province, Midwestern China. With this agreement, GLP
Park Hefei Hi-Tech is 100% leased.
Otto Marine has secured charter contracts for its Multiple
Purposes offshore Supply Vessel (MPSV), Go Explorer, for a
total of US$21m. Go Explorer will initially be deployed to
work in Vietnam follow by Australia working on a major
offshore construction project based on the various
contractual arrangements.
HG Metal Manufacturing announced that Mr Goh Kian
Sin, the Managing Director and Chief Executive Officer of
the Company, has entered into agreement for the sale of
284.05m shares to purchasers including, Mr Yap Xi Ming,
the Chairman of the Company.
Forecasters polled by Singapore's central bank expect the
economy to expand by 3.8% in 2014 - a less optimistic
outlook compared to 3.9% growth three months ago. The
slip was due to softer growth expectations for all sectors
within the economy, except for the manufacturing sector.
Our economist is expecting 4% GDP growth for 2014.
Premium and Grade A office rents in Raffles Place and New
Downtown continue to climb in the first quarter, according
to Colliers International. The quarter also saw office
vacancies shrinking and firms taking a proactive approach
to review expansion and relocation options to lock in rents
before they rise further. Colliers International said that the
average monthly gross rent for Premium Grade offices in
the Raffles Place/New Downtown area rose 3.6% quarter
on quarter to $10.67 psf in the first quarter of this year,
hot on the heels of a 3.8% hike in the fourth quarter of
last year. The property consultancy group forecasts a fullyear
2014 increase of up to 15%. As for Grade A space in
the same Raffles Place/New Downtown micro-market, the
average monthly rent rose 5% quarter on quarter to $9.73
psf in Q1 - a much bigger increase than the 1.4% increase
in Q4 2013. Suburban Grade A rents rose 5.7% to $4.85
psf in Q1, after inching up 0.4% in Q4.
U.S. stocks fell after Federal Reserve Chair Janet Yellen said
the central bank’s stimulus program could end this fall and
benchmark interest rates could rise 6 months later. As
expected, the FED trimmed its monthly bond purchases by
US$10bil to US$55bil. The central bank said it will look at a
wide range of data in determining when to raise its rate,
dropping a pledge tying borrowing costs to a 6.5 percent
unemployment rate.
But investors’ attention turned to the following FED
statement that said officials predicted their target interest
rate would be 1% at the end of 2015 and 2.25% a year
later, as they upgraded projections for gains in the labour
market. The rates are higher than previously forecasted.
Financial markets reacted with the US 10-year treasury
yields rebounding to 2.7725%. The USD strengthened
against major currencies with the USD Index rising to 80
from 79.4. Equities sold off with Walt Disney Co., General
Electric Co. and Boeing Co. losing at least 1.4% each to
lead the Dow lower.
OSIM - Buy for 3-pronged growth, target price raised to
S$3.08.
STI’s rebound thus far this week has been capped at the 3100
level. Sentiment is likely to stay muted today after the FED
said QE3 could end by this fall and benchmark interest rates
could rise 6 months later from that. US 10-year treasury yields
rebounded while the USD strengthened against major
currencies. Last week’s low point for the STI was at 3060. We
do not rule out the index heading to 3050 followed by 3020
that is still within the 3000-3050 support range we
highlighted earlier, should the 3060 level fail to hold.
We find OSIM’s current business model to be robust and
capable of supporting growth into the future. OSIM’s threepronged
growth model comprises: i) Massage chairs driving
growth through new products; ii) TWG supplementing
growth with rapid store network expansion; and iii) GNC
providing resilient earnings and cashflows to the Group.
These factors, complemented by the scaling up of OSIM’s
presence in China, is more than capable of supporting
sustainable earnings growth going forward. OSIM’s soon-tobe
launched new version of the uAngel chair is set to build on
preceding model’s success while TWG’s rapid expansion is
expected to positively impact earnings growth. We expect
minimal EPS dilution of 1%/6% for FY14F/FY15F from
convertible bonds (CB) conversion. Maintain BUY, target price
raised to S$3.08 (Prev S$ 2.64) as we raise our PE multiple to
18x on stronger business model.
Goodpack announced that it has been approached by parties
for a possible transaction, which may or may not trigger a
general offer. Discussions are still on-going. The Company
has appointed Rippledot Capital Advisers Pte Ltd as its
financial advisor. Company decided to make public about the
development in view of the outperfomance of share price
lately. The last time company received such offer was back in
2008/2009 though eventually the deal was called off as both
parties could not come to an agreement on the offer price.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,222.2 (114.0) (0.7)
S&P 1,860.8 (11.5) (0.6)
NASDAQ 4,307.6 (25.7) (0.6)
Regional Indices
ST Index 3,080.8 (13.1) (0.4)
ST Small Cap 536.2 (2.6) (0.5)
Hang Seng 21,568.7 (14.8) (0.1)
HSCEI 9,360.7 18.4 0.2
HSCCI 4,005.3 12.3 0.3
KLCI 1,817.4 (3.3) (0.2)
SET 1,364.3 (8.8) (0.6)
JCI 4,821.5 15.8 0.3
PCOMP 6,462.5 (4.1) (0.1)
KOSPI 1,937.7 (2.5) (0.1)
TWSE 8,689.5 (42.5) (0.5)
Nikkei 14,462.5 51.3 0.4
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$bn) 576
Total Daily Vol (m shrs) 2,506
12m ST Index High 3,454
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
19 Mar
Target Price
(S$)
ComfortDelgro Buy 1.925 2.19
Global Logistic Properties Buy 2.64 3.31
Keppel Corp Buy 10.52 12.60
Yangzijiang Buy 1.065 1.45
Stock Picks – Small /Mid Cap
Rec’n Price (S$)
19 Mar
Target Price
($)
Ezion Holdings Buy 2.13 3.26
Goodpack Buy 2.23 2.25
China Merchants Buy 0.965 1.32
Pacific Radiance Ltd Buy 0.995 1.20
Nam Cheong Buy 0.315 0.43
Source: Bloomberg Finance L.P., DBS Bank
Singapore
Wired Daily
Page 2
Stahill Global REIT announced that it has divested one
Japanese retail asset, Holon L Property, for JPY1.03bn
(S$12.8m), a 6% premium to the Dec-13 independent
valuation of JPY 0.97bn. This translates to an exit yield of
4.03% (or 4.27% over valuation). This property represents
11.5% of SGREIT's Japanese portfolio, or 0.4% of the
REIT's total asset value. The proceeds from this transaction
will be used to fully pay down its JPY1.5bn bond due
2016. Total JPY loans post divestment will be c.7.5bn, and
SGREIT's gearing will fall marginally to 28.7% from 30%.
CapitaLand has sold its remaining 39.1% stake in
Australand Property Group, reaping an expected net gain
of about $35.7m. CapitaLand sold its remaining 226.2m
shares through a secondary placement yesterday at an
average price of A$3.75 each, 3.6% below Australand's
Tuesday closing price but 5.3% above its last reported net
tangible asset. CapitaLand said it will receive about
$970.1m from the sale, which it will deploy towards its key
markets of Singapore and China, and for general working
purposes, including the repayment of debt.
Global Logistic Properties has signed a lease agreement of
approximately 53,000 sqm (570,000 sq ft) with a leading
FMCG company at GLP Park Hefei Hi-Tech in Hefei, Anhui
Province, Midwestern China. With this agreement, GLP
Park Hefei Hi-Tech is 100% leased.
Otto Marine has secured charter contracts for its Multiple
Purposes offshore Supply Vessel (MPSV), Go Explorer, for a
total of US$21m. Go Explorer will initially be deployed to
work in Vietnam follow by Australia working on a major
offshore construction project based on the various
contractual arrangements.
HG Metal Manufacturing announced that Mr Goh Kian
Sin, the Managing Director and Chief Executive Officer of
the Company, has entered into agreement for the sale of
284.05m shares to purchasers including, Mr Yap Xi Ming,
the Chairman of the Company.
Forecasters polled by Singapore's central bank expect the
economy to expand by 3.8% in 2014 - a less optimistic
outlook compared to 3.9% growth three months ago. The
slip was due to softer growth expectations for all sectors
within the economy, except for the manufacturing sector.
Our economist is expecting 4% GDP growth for 2014.
Premium and Grade A office rents in Raffles Place and New
Downtown continue to climb in the first quarter, according
to Colliers International. The quarter also saw office
vacancies shrinking and firms taking a proactive approach
to review expansion and relocation options to lock in rents
before they rise further. Colliers International said that the
average monthly gross rent for Premium Grade offices in
the Raffles Place/New Downtown area rose 3.6% quarter
on quarter to $10.67 psf in the first quarter of this year,
hot on the heels of a 3.8% hike in the fourth quarter of
last year. The property consultancy group forecasts a fullyear
2014 increase of up to 15%. As for Grade A space in
the same Raffles Place/New Downtown micro-market, the
average monthly rent rose 5% quarter on quarter to $9.73
psf in Q1 - a much bigger increase than the 1.4% increase
in Q4 2013. Suburban Grade A rents rose 5.7% to $4.85
psf in Q1, after inching up 0.4% in Q4.
U.S. stocks fell after Federal Reserve Chair Janet Yellen said
the central bank’s stimulus program could end this fall and
benchmark interest rates could rise 6 months later. As
expected, the FED trimmed its monthly bond purchases by
US$10bil to US$55bil. The central bank said it will look at a
wide range of data in determining when to raise its rate,
dropping a pledge tying borrowing costs to a 6.5 percent
unemployment rate.
But investors’ attention turned to the following FED
statement that said officials predicted their target interest
rate would be 1% at the end of 2015 and 2.25% a year
later, as they upgraded projections for gains in the labour
market. The rates are higher than previously forecasted.
Financial markets reacted with the US 10-year treasury
yields rebounding to 2.7725%. The USD strengthened
against major currencies with the USD Index rising to 80
from 79.4. Equities sold off with Walt Disney Co., General
Electric Co. and Boeing Co. losing at least 1.4% each to
lead the Dow lower.
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