| MARKET PULSE: United Envirotech |
4 Jun 2014
|
| KEY IDEA United Envirotech: Downgrade to HOLD United Envirotech Ltd (UEL) posted a disappointing end to FY14, with net profit falling 31.9% to S$20.1m, and only met 58.2% of our FY14 estimate. Going forward, management continues to maintain a pretty positive outlook for the water industry in China. UEL’s EPC order book of S$230m will also be largely completed in FY15; it is still on the lookout for more waste water treatment plants to add to its portfolio. As we believe that things will improve in FY15 – we bump up our revenue forecast by 7.5%; while we expect core earnings to double to S$41.9m, it is still 13% lower than our previous estimate. However, the recent interest in water treatment plays warrants a higher 28x peg (versus 20x before), and our fair value only eases to S$1.30 (from S$1.36). As the stock looks fairly priced, we downgrade our call to HOLD. (Carey Wong) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - The S&P 500 Index declined by 0.04% to close at 1,924.24 on Tue, 3 Jun 2014. - Euro-area inflation decreased from 0.7% in Apr to 0.5% in May, lower than the economists’ forecast of a decline to 0.6%. - Frasers Centrepoint Limited announced that it has submitted a non-binding all-cash conditional offer of A$4.48 per stapled security for 100% of the issued stapled securities of Australand. - Sembcorp Industries has been awarded by Project Finance International as Asia’s leading private sector developer under the PFI Asia Best Practice 2014 citations. - Global Yellow Pages’ shareholders have approved the proposed acquisition of Gloria Jean’s Coffees and It’s A Grind for a consideration of A$35.6m. - Ley Choon Group has clinched a S$38.2m deal from the Ministry of Local Government and Provincial Councils Sri Lanka for the rehabilitation and assessment of sewer lines. |
Wednesday, June 4, 2014
OCBC Report 4 Jun 14
DBSVickers Report 4 Jun 14
Today’s Focus
Jardine Cycle & Carriage - Initiate coverage with BUY
recommendation and target price of S$49.88.
We initiate coverage on Jardine Cycle & Carriage (JCC) with a
BUY recommendation and target price of S$49.88. JCC is a
near 100% proxy for Jakarta-listed Astra International (Astra),
with exposure to S.E. Asia’s automotive market. The Group
owns 50.1% of Jakarta-listed Astra International (Astra), which
contributes c.94% of the Group’s total underlying profit. We
expect firm double-digit earnings growth in 2015 and 2016,
driven by contribution from Astra. The stock also offers a
decent dividend yield of c.3.5%.
Two Chinese giants - a leading online travel firm and an ecommerce
heavyweight - may be vying for a slice of Singaporelisted
Asiatravel.com, an online travel reservation service
provider, to tap the booming e-ticketing travel space in China.
The potential bidders have yet to put a firm offer. Last month,
after releasing a weak financial scorecard for the second
quarter, Asiatravel said it was in "advance discussions with
various parties to explore all strategic and M&A options".
Ley Choon Group has successfully secured a contract worth
approximately S$38.2m awarded by the Ministry of Local
Government and Provincial Councils Sri Lanka. The contract is
for the rehabilitation of selected 10km of sewer lines and
assessment of 125km of sewer lines within Colombo Municipal
Council Area and the term of the contract is 30 months.
Communication Design International is placing up to 87.2m
new shares at an issue price of S$0.10 each. The estimated net
proceeds of S$8.4m will be used to fund potential acquisitions
and investments, and for general working capital.
Increasing uncertainty in global economic conditions and
weaker than targeted business performances are expected to
contribute to the slight dip in average salary increments for
2014 and 2015. According to the latest pay report by Hay
Group, a global management consultancy firm, salaries are set
to rise at 4.3% for 2014, lower than 4.9% the previous year.
The projected average pay rise for next year is 4.2%. Actual
US Indices Last Close Pts Chg % Chg
Dow Jones 16,722.3 (21.3) (0.1)
S&P 1,924.2 (0.7) (0.0)
NASDAQ 4,234.1 (3.1) (0.1)
Regional Indices
ST Index 3,296.7 (5.6) (0.2)
ST Small Cap 558.0 (0.5) (0.1)
Hang Seng 23,291.0 209.4 0.9
HSCEI 10,368.1 118.4 1.2
HSCCI 4,333.8 68.7 1.6
KLCI 1,872.6 8.3 0.4
SET 1,454.2 13.3 0.9
JCI 4,942.2 30.1 0.6
PCOMP 6,800.8 90.4 1.3
KOSPI 2,008.6 6.6 0.3
TWSE 9,123.5 47.5 0.5
Nikkei 15,034.3 98.3 0.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 1,714
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$)
3 Jun
Target Price
(S$)
ComfortDelgro Buy 2.400 2.50
Global Logistic Properties Buy 2.750 3.42
Mapletree Greater China
Commercial Trust
Buy 0.885 1.02
Thai Beverage Public Buy 0.635 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
3 Jun
Target Price
(S$)
Vard Holdings Buy 1.115 1.21
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
average variable bonuses, on the other hand, are set to
grow. For the 12 months up to March 1, the average
variable bonus was 2.5 months, up 0.3 months from the 2.2
in the corresponding period last year. The projected average
bonus for 2015 is 2.4 months.
Lower inventory and finished goods sub-indices pulled
Singapore’s May's purchasing managers' index (PMI) down
to a reading of 50.8, from April's six-month high of 51.1.
This also disappointed the market, who had expected that
the index - seen as a barometer of manufacturing activity -
to rise to 51.3 last month. The electronics PMI held steady
at 50.4 in May is an encouraging sign, particularly after
April's manufacturing figures presented a surprise dip due
to a cutback in production at a single semiconductor plant.
In China, the final HSBC/Markit purchasing managers' index
(PMI) rose to 49.4 in May, a four-month high and compared
to April's 48.1. China's factory and services sectors had their
best showings in months in May as demand rebounded.
Though the final reading was still under the 50-point level
that separates growth in activity from contraction, the
improvement nonetheless stirred hopes that the economy is
working its way through its prolonged soft patch. The
buoyancy was mirrored by a similar acceleration in growth
in services, where a government-released PMI climbed to a
six-month high of 55.5, from April's 54.8.
US stocks were little changed as investors awaited an ECB
decision on stimulus measures as well as the release of US
May employment numbers on Friday. Eurozone’s core CPI
for May rose a lesser than expected 0.7% (consensus
0.8%), which ups the pressure on the ECB to deploy
stimulus measures as soon as this week that can include
negative interest rates to conditional liquidity for banks.
Jardine Cycle & Carriage - Initiate coverage with BUY
recommendation and target price of S$49.88.
We initiate coverage on Jardine Cycle & Carriage (JCC) with a
BUY recommendation and target price of S$49.88. JCC is a
near 100% proxy for Jakarta-listed Astra International (Astra),
with exposure to S.E. Asia’s automotive market. The Group
owns 50.1% of Jakarta-listed Astra International (Astra), which
contributes c.94% of the Group’s total underlying profit. We
expect firm double-digit earnings growth in 2015 and 2016,
driven by contribution from Astra. The stock also offers a
decent dividend yield of c.3.5%.
Two Chinese giants - a leading online travel firm and an ecommerce
heavyweight - may be vying for a slice of Singaporelisted
Asiatravel.com, an online travel reservation service
provider, to tap the booming e-ticketing travel space in China.
The potential bidders have yet to put a firm offer. Last month,
after releasing a weak financial scorecard for the second
quarter, Asiatravel said it was in "advance discussions with
various parties to explore all strategic and M&A options".
Ley Choon Group has successfully secured a contract worth
approximately S$38.2m awarded by the Ministry of Local
Government and Provincial Councils Sri Lanka. The contract is
for the rehabilitation of selected 10km of sewer lines and
assessment of 125km of sewer lines within Colombo Municipal
Council Area and the term of the contract is 30 months.
Communication Design International is placing up to 87.2m
new shares at an issue price of S$0.10 each. The estimated net
proceeds of S$8.4m will be used to fund potential acquisitions
and investments, and for general working capital.
Increasing uncertainty in global economic conditions and
weaker than targeted business performances are expected to
contribute to the slight dip in average salary increments for
2014 and 2015. According to the latest pay report by Hay
Group, a global management consultancy firm, salaries are set
to rise at 4.3% for 2014, lower than 4.9% the previous year.
The projected average pay rise for next year is 4.2%. Actual
US Indices Last Close Pts Chg % Chg
Dow Jones 16,722.3 (21.3) (0.1)
S&P 1,924.2 (0.7) (0.0)
NASDAQ 4,234.1 (3.1) (0.1)
Regional Indices
ST Index 3,296.7 (5.6) (0.2)
ST Small Cap 558.0 (0.5) (0.1)
Hang Seng 23,291.0 209.4 0.9
HSCEI 10,368.1 118.4 1.2
HSCCI 4,333.8 68.7 1.6
KLCI 1,872.6 8.3 0.4
SET 1,454.2 13.3 0.9
JCI 4,942.2 30.1 0.6
PCOMP 6,800.8 90.4 1.3
KOSPI 2,008.6 6.6 0.3
TWSE 9,123.5 47.5 0.5
Nikkei 15,034.3 98.3 0.7
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 1,714
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$)
3 Jun
Target Price
(S$)
ComfortDelgro Buy 2.400 2.50
Global Logistic Properties Buy 2.750 3.42
Mapletree Greater China
Commercial Trust
Buy 0.885 1.02
Thai Beverage Public Buy 0.635 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
3 Jun
Target Price
(S$)
Vard Holdings Buy 1.115 1.21
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
average variable bonuses, on the other hand, are set to
grow. For the 12 months up to March 1, the average
variable bonus was 2.5 months, up 0.3 months from the 2.2
in the corresponding period last year. The projected average
bonus for 2015 is 2.4 months.
Lower inventory and finished goods sub-indices pulled
Singapore’s May's purchasing managers' index (PMI) down
to a reading of 50.8, from April's six-month high of 51.1.
This also disappointed the market, who had expected that
the index - seen as a barometer of manufacturing activity -
to rise to 51.3 last month. The electronics PMI held steady
at 50.4 in May is an encouraging sign, particularly after
April's manufacturing figures presented a surprise dip due
to a cutback in production at a single semiconductor plant.
In China, the final HSBC/Markit purchasing managers' index
(PMI) rose to 49.4 in May, a four-month high and compared
to April's 48.1. China's factory and services sectors had their
best showings in months in May as demand rebounded.
Though the final reading was still under the 50-point level
that separates growth in activity from contraction, the
improvement nonetheless stirred hopes that the economy is
working its way through its prolonged soft patch. The
buoyancy was mirrored by a similar acceleration in growth
in services, where a government-released PMI climbed to a
six-month high of 55.5, from April's 54.8.
US stocks were little changed as investors awaited an ECB
decision on stimulus measures as well as the release of US
May employment numbers on Friday. Eurozone’s core CPI
for May rose a lesser than expected 0.7% (consensus
0.8%), which ups the pressure on the ECB to deploy
stimulus measures as soon as this week that can include
negative interest rates to conditional liquidity for banks.
Tuesday, June 3, 2014
Daily Summary 3 Jun 14
Dow was +26 last night at 16744. Europe
was mixed. Dow's trend is up. Dow's future is now -11. Europe
opened down.
Asian bourses were mostly up. Nikkei +98, ShanghaiC -1, Hangseng +209. STI closed -7 at 3296. Volume was 1.6b shares. Gainers were 201 to 252 losers.
Short term trend of STI is flattening.
Top volumes were WCorp +0.5, Noble +2, Hankore -8.5, Vallianz+0.1, Scintronix unchanged, Rowsley +0.5, HPHTrust -0.5, QTVascular unchanged, Sunvic unchanged, HuAn -0.8.
Market opened down, recovered slightly but fell back to close -6. Blue chips were mixed with more losers. Penny and speculatives were also weaker. Volume was low and trading was quiet.
Europe and Dow are looking slightly weak at the moment.
Asian bourses were mostly up. Nikkei +98, ShanghaiC -1, Hangseng +209. STI closed -7 at 3296. Volume was 1.6b shares. Gainers were 201 to 252 losers.
Short term trend of STI is flattening.
Top volumes were WCorp +0.5, Noble +2, Hankore -8.5, Vallianz+0.1, Scintronix unchanged, Rowsley +0.5, HPHTrust -0.5, QTVascular unchanged, Sunvic unchanged, HuAn -0.8.
Market opened down, recovered slightly but fell back to close -6. Blue chips were mixed with more losers. Penny and speculatives were also weaker. Volume was low and trading was quiet.
Europe and Dow are looking slightly weak at the moment.
DBSVickers Report 3 Jun 14
Today’s Focus
United Envirotech - Solid execution to sustain re-rating.
Maintain HOLD on limited upside to target price of S$1.37
Vard - Signs LOIs for two PSVs. Maintain BUY call with
target price of S$1.21
FY14 earnings for United Envirotech fall short of our
expectations. UENV reported FY net profits of S$21m against
our forecast of S$28m. The company sank into the red with a
S$1.2m loss in 4Q14, weighed down by higher staff and
interest expenses which compressed operating margins. We lift
FY15F earnings by 11% to incorporate Memstar, offset by
lower Treatment, target price raised to S$1.37 (Prev S$ 1.31).
FY15 earnings rebound hinge on effective execution and cost
management. Maintain HOLD on limited upside to target price.
Positive industry newsflow could buoy share price but direct
catalysts or strong results would better sustain re-rating.
Vard has signed letter of intent (LOIs) with Nordic American
Offshore for the design and construction of two Platform
Supply Vessels (PSVs), and an option for a third vessel. This
marks Vard’s third and fourth contract wins since the start of
the 2Q, and its eleventh and twelfth newbuilds since the
beginning of 2014. Delivery is scheduled from Vard Aukra in
Norway in 2Q and 3Q 2015. Upon effective of the LOIs by end
of 2Q, we estimate these could add over NOK1bn to Vard's
orderbook. Order win momentum has been strong this year.
Excluding these LOIs, Vard has secured over NOK7bn new
orders YTD-FY14. We maintain our BUY call with target price
of S$1.21. Improving earnings execution on a sequential basis
hereon will be the key catalyst.
SembCorp Marine has secured a long-term Favoured Customer
Contract (FCC) from GasLog LNG Services to provide shiprepair,
refurbishment, upgrading and related marine services
for its managed fleet of 20 LNG carriers. GasLog LNG Services
is a wholly-owned subsidiary of GasLog, an international
owner, operator and manager of LNG carriers. With the
signing of this long-term contract, Sembawang Shipyard can
anticipate the refit of 3 to 5 GasLog's LNG carriers each year.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,743.6 26.5 0.2
S&P 1,925.0 1.4 0.1
NASDAQ 4,237.2 (5.4) (0.1)
Regional Indices
ST Index 3,302.2 6.4 0.2
ST Small Cap 558.5 0.1 0.0
Hang Seng 23,081.7 71.5 0.3
HSCEI 10,249.7 64.5 0.6
HSCCI 4,265.1 (7.7) (0.2)
KLCI 1,864.3 (9.1) (0.5)
SET 1,440.9 25.2 1.8
JCI 4,912.1 18.2 0.4
PCOMP 6,710.4 62.8 0.9
KOSPI 2,002.0 7.0 0.4
TWSE 9,075.9 (33.1) (0.4)
Nikkei 14,935.9 303.5 2.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 1,464
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$)
2 Jun
Target Price
(S$)
ComfortDelgro Buy 2.330 2.50
Global Logistic Properties Buy 2.770 3.42
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Thai Beverage Public Buy 0.640 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
2 Jun
Target Price
(S$)
Vard Holdings Buy 1.120 1.21
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Sembcorp Industries strengthens its presence in China’s
Jiangsu province with the signing of a joint venture
agreement to acquire and upgrade an existing wastewater
treatment plant in Lianyungang Lingang Chemical Industrial
Park (LCIP). Plans are in place by the Jiangsu Environment
Protection Department to replicate Sembcorp’s model in
other industrial parks in Jiangsu. The upgrading is targeted
to be completed by end 2015 and the enhanced industrial
wastewater treatment plant will have a capacity of 20,000
cubic metres per day. The total project cost of RMB130m
(approximately S$26.1m) will be funded through a mix of
equity and borrowings.
Longcheer Holdings wishes to inform shareholders that the
Company has been approached by interested persons in
relation to the potential acquisition of certain subsidiaries
within the Group. Discussions are on-going and there is no
certainty whatsoever that these discussions will result in any
transaction.
DeClout is looking to acquire the entire issued and paid-up
share capital of Netipay for a purchase consideration of
approximately $4.72m. Netipay will eventually evolve into a
mobile cloud platform and proprietary payment processing
service provider comprising Indonesia-based PT Max
Interactive Technologies (Maxitech) and Matrix Treasure.
Chip Eng Seng has secured a $165m contract from the
Housing & Development Board (HDB) for construction works
at Sembawang Neighbourhood 1 Contract 10. As at 31
March 2014, the Group’s order book stood at $453m.
Factoring in this latest contract win, the Group’s order book
rises above the half a billion mark once again to hit $618m.
W Corporation announced that it has obtained the
Approval-in-principle (AIP) from SGX for its proposed
S$490.9m acquisition of YuuZoo Corporation. YuuZoo is
one of the world’s leading targeted e-commerce social
networking platform. The proposed acquisition would be
satisfied with the issuance and allotment of approximately
490.9m W Corp shares to existing YuuZoo shareholders,
resulting in a reverse takeover of W Corp (RTO). As part of
the proposed RTO exercise, W Corp will also be undertaking
a proposed share consolidation exercise pursuant to which
10 existing W Corp shares will be consolidated into 1 new
W Corp share.
The International Air Transport Association (Iata) has
trimmed its industry forecast for the second time this year,
projecting a combined net profit of US$18 bn for global
carriers, owing to slowing trade and weaker business
confidence linked to China's economy. This is on the back
of revenues of US$746 bn, which translates to a thin profit
margin of 2.4%. Iata last cut its forecast by US$1 bn to
US$18.7 bn in March, citing higher fuel costs, from an
earlier estimate of US$19.7 bn. However, profitability has
been on an upward trend overall, gaining momentum from
US$6.1 bn in 2012 to US$10.6 bn in 2013 - no small feat
for an industry which has clocked profits in only half the
years since 1945.
US markets finished higher with May ISM manufacturing
showing continued expansion (actual 55.4, consensus 55.5,
previous 54.9). Broadcom Corp. shares rose after saying it
will explore options for its cellular base band business.
General Electric Co. expects about US$10bil of orders from
Latin America this year driven by infrastructure spending
from electricity and clean water to transportation. Attention
is on Europe later this week on expectations that the ECB
will unleash an array of measures to jump start the economy
and ignite prices to confront deflation threat. These include
negative interest rates and conditional liquidity for banks.
United Envirotech - Solid execution to sustain re-rating.
Maintain HOLD on limited upside to target price of S$1.37
Vard - Signs LOIs for two PSVs. Maintain BUY call with
target price of S$1.21
FY14 earnings for United Envirotech fall short of our
expectations. UENV reported FY net profits of S$21m against
our forecast of S$28m. The company sank into the red with a
S$1.2m loss in 4Q14, weighed down by higher staff and
interest expenses which compressed operating margins. We lift
FY15F earnings by 11% to incorporate Memstar, offset by
lower Treatment, target price raised to S$1.37 (Prev S$ 1.31).
FY15 earnings rebound hinge on effective execution and cost
management. Maintain HOLD on limited upside to target price.
Positive industry newsflow could buoy share price but direct
catalysts or strong results would better sustain re-rating.
Vard has signed letter of intent (LOIs) with Nordic American
Offshore for the design and construction of two Platform
Supply Vessels (PSVs), and an option for a third vessel. This
marks Vard’s third and fourth contract wins since the start of
the 2Q, and its eleventh and twelfth newbuilds since the
beginning of 2014. Delivery is scheduled from Vard Aukra in
Norway in 2Q and 3Q 2015. Upon effective of the LOIs by end
of 2Q, we estimate these could add over NOK1bn to Vard's
orderbook. Order win momentum has been strong this year.
Excluding these LOIs, Vard has secured over NOK7bn new
orders YTD-FY14. We maintain our BUY call with target price
of S$1.21. Improving earnings execution on a sequential basis
hereon will be the key catalyst.
SembCorp Marine has secured a long-term Favoured Customer
Contract (FCC) from GasLog LNG Services to provide shiprepair,
refurbishment, upgrading and related marine services
for its managed fleet of 20 LNG carriers. GasLog LNG Services
is a wholly-owned subsidiary of GasLog, an international
owner, operator and manager of LNG carriers. With the
signing of this long-term contract, Sembawang Shipyard can
anticipate the refit of 3 to 5 GasLog's LNG carriers each year.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,743.6 26.5 0.2
S&P 1,925.0 1.4 0.1
NASDAQ 4,237.2 (5.4) (0.1)
Regional Indices
ST Index 3,302.2 6.4 0.2
ST Small Cap 558.5 0.1 0.0
Hang Seng 23,081.7 71.5 0.3
HSCEI 10,249.7 64.5 0.6
HSCCI 4,265.1 (7.7) (0.2)
KLCI 1,864.3 (9.1) (0.5)
SET 1,440.9 25.2 1.8
JCI 4,912.1 18.2 0.4
PCOMP 6,710.4 62.8 0.9
KOSPI 2,002.0 7.0 0.4
TWSE 9,075.9 (33.1) (0.4)
Nikkei 14,935.9 303.5 2.1
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 1,464
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$)
2 Jun
Target Price
(S$)
ComfortDelgro Buy 2.330 2.50
Global Logistic Properties Buy 2.770 3.42
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Thai Beverage Public Buy 0.640 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
2 Jun
Target Price
(S$)
Vard Holdings Buy 1.120 1.21
Nam Cheong Buy 0.390 0.47
Centurion Corporation Buy 0.725 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 2
Sembcorp Industries strengthens its presence in China’s
Jiangsu province with the signing of a joint venture
agreement to acquire and upgrade an existing wastewater
treatment plant in Lianyungang Lingang Chemical Industrial
Park (LCIP). Plans are in place by the Jiangsu Environment
Protection Department to replicate Sembcorp’s model in
other industrial parks in Jiangsu. The upgrading is targeted
to be completed by end 2015 and the enhanced industrial
wastewater treatment plant will have a capacity of 20,000
cubic metres per day. The total project cost of RMB130m
(approximately S$26.1m) will be funded through a mix of
equity and borrowings.
Longcheer Holdings wishes to inform shareholders that the
Company has been approached by interested persons in
relation to the potential acquisition of certain subsidiaries
within the Group. Discussions are on-going and there is no
certainty whatsoever that these discussions will result in any
transaction.
DeClout is looking to acquire the entire issued and paid-up
share capital of Netipay for a purchase consideration of
approximately $4.72m. Netipay will eventually evolve into a
mobile cloud platform and proprietary payment processing
service provider comprising Indonesia-based PT Max
Interactive Technologies (Maxitech) and Matrix Treasure.
Chip Eng Seng has secured a $165m contract from the
Housing & Development Board (HDB) for construction works
at Sembawang Neighbourhood 1 Contract 10. As at 31
March 2014, the Group’s order book stood at $453m.
Factoring in this latest contract win, the Group’s order book
rises above the half a billion mark once again to hit $618m.
W Corporation announced that it has obtained the
Approval-in-principle (AIP) from SGX for its proposed
S$490.9m acquisition of YuuZoo Corporation. YuuZoo is
one of the world’s leading targeted e-commerce social
networking platform. The proposed acquisition would be
satisfied with the issuance and allotment of approximately
490.9m W Corp shares to existing YuuZoo shareholders,
resulting in a reverse takeover of W Corp (RTO). As part of
the proposed RTO exercise, W Corp will also be undertaking
a proposed share consolidation exercise pursuant to which
10 existing W Corp shares will be consolidated into 1 new
W Corp share.
The International Air Transport Association (Iata) has
trimmed its industry forecast for the second time this year,
projecting a combined net profit of US$18 bn for global
carriers, owing to slowing trade and weaker business
confidence linked to China's economy. This is on the back
of revenues of US$746 bn, which translates to a thin profit
margin of 2.4%. Iata last cut its forecast by US$1 bn to
US$18.7 bn in March, citing higher fuel costs, from an
earlier estimate of US$19.7 bn. However, profitability has
been on an upward trend overall, gaining momentum from
US$6.1 bn in 2012 to US$10.6 bn in 2013 - no small feat
for an industry which has clocked profits in only half the
years since 1945.
US markets finished higher with May ISM manufacturing
showing continued expansion (actual 55.4, consensus 55.5,
previous 54.9). Broadcom Corp. shares rose after saying it
will explore options for its cellular base band business.
General Electric Co. expects about US$10bil of orders from
Latin America this year driven by infrastructure spending
from electricity and clean water to transportation. Attention
is on Europe later this week on expectations that the ECB
will unleash an array of measures to jump start the economy
and ignite prices to confront deflation threat. These include
negative interest rates and conditional liquidity for banks.
Monday, June 2, 2014
Daily Summary 2 Jun 14
Dow closed +18 on Friday at 16717. Europe
were flat. Dow's trend is up. Dow's future is now +18. Europe
opened mixed.
Asian bourses were mixed. Nikkei +304, ShanghaiC -1, Hangseng +72. STI closed +5 at 3301. Volume was 1.4b shares. Gainers were 210 to 254 losers.
Trend of STI is slightly up.
Top volumes were Amplefield unchanged, QTVascular +5.5, FarEastHTrust -4, SwingMedia +0.5, Charisma -0.1, YZJ +3, Elektromotive +0.3, KLW +0.2, Federal +0.4, Scintronix -0.5.
Market opened up and traded in a very small range. It slipped to negative but recovered to closed +6. Blue chips were more ups. Speculatives and penny stocks were mixed. Big gainer in percentage terms was QT Vascular from 40c to 45.5c.
Europe and Dow are looking mixed at the moment.
Asian bourses were mixed. Nikkei +304, ShanghaiC -1, Hangseng +72. STI closed +5 at 3301. Volume was 1.4b shares. Gainers were 210 to 254 losers.
Trend of STI is slightly up.
Top volumes were Amplefield unchanged, QTVascular +5.5, FarEastHTrust -4, SwingMedia +0.5, Charisma -0.1, YZJ +3, Elektromotive +0.3, KLW +0.2, Federal +0.4, Scintronix -0.5.
Market opened up and traded in a very small range. It slipped to negative but recovered to closed +6. Blue chips were more ups. Speculatives and penny stocks were mixed. Big gainer in percentage terms was QT Vascular from 40c to 45.5c.
Europe and Dow are looking mixed at the moment.
Sunday, June 1, 2014
OCBC Report 2 Jun 14
| KEY IDEA Oil and Gas: Going to where the customers are We looked at individual capex guidance figures by various companies and found that while international oil companies (IOCs) are reining in their capex plans, national oil companies (NOCs) in general are still keen to sustain their spending. With increasing protectionism, companies that are able to operate in foreign markets by satisfying local content requirements should be in a better position to grow over the longer term. As such, we favour companies with good market positioning and strong balance sheets – KEP’s [BUY, FV: S$12.25] “Near market, near customer” strategy puts it in good stead to secure more orders, while Nam Cheong’s [BUY, FV:S$0.445] significant exposure to the Malaysian market and established relationships with its customers positions it well to obtain more orders too. Pacific Radiance [NOT RATED], which has considerable exposure to the Indonesian market, has also posted results that were above the street’s expectations since its IPO last year. Meanwhile, we also favour companies operating in niched areas with a positive outlook such as Ezion Holdings [BUY, FV: S$2.70]. (Low Pei Han, Andy Wong) MORE REPORTS United Envirotech: Disappointing end to FY14 United Envirotech Ltd (UEL) posted a disappointing end to FY14. Revenue of S$202.3m, up 9.3%, was about 3.8% above our forecast; the boost came mainly from the increase in treatment business from S$40.6m to S$62.6m. However, net profit fell 31.9% to S$20.1m, and only met 58.2% of our FY14 estimate. According to management, the main drag came from higher finance costs from the MTN bond of S$100m and additional bank borrowings; the weaker RMB against the USD also resulted in a forex loss of S$1.4m versus a gain of S$2.1m in FY13. UEL declared a final dividend of 0.3 S cent versus 0.5 S cent a year ago. While management has maintained a pretty positive outlook for FY15, we place our Buy rating and S$1.36 fair value under review, pending further discussion with management. (Carey Wong) |
For more information on the above, visit www.ocbcresearch.comfor the detailed report. |
NEWS HEADLINES - The S&P 500 Index rose 0.2% to close at 1,923.57 on Fri, 31 May 2014. - China’s official PMI reading of 50.8 for the month of May was its third monthly consecutive increase and also a five-month high. - TriTech Group announced a net loss of S$8.7m in FY14, versus a net loss of S$3.6m in FY13, despite a 9.3% increase in revenue to S$55.7m. - According to an interview with The Business Times, Kim Heng Offshore & Marine’s CEO said it is exploring M&A opportunities to expand its business. - Global Tech (Holdings) reported that its net loss for 1H14 widened slightly by 0.9% to HK$8.2m as revenue slipped 18.0% to HK$47.7m. - Swiber announced that it has clinched an EPIC contract for subsea development work in Latin America worth US$80m. |
DBSVickers Report 2 Jun 14
Today’s Focus
Yangzijiang - Selldown seems overdone; BUY on
weakness, TP unchanged at S$1.55
STI’s upward bias since the mid-May low of 3221 has lifted it
above the April high of 3286. Technically, this points to the
likelihood of further upside in coming week(s) towards 3340
while not exceeding 3365. But the 50pt or so upside is not
something that we will rave about as a correction off these
higher levels is even more likely since such a move will position
the STI at its +0.25SD 12-mth forward PE level, which is rather
stretch given that the downward earnings revision trend has
yet to end.
Dovish global central bankers and the accompanying decline in
bond yields YTD has enabled emerging equity indices this
region to outperform YTD. Yields plays and SREITs have
benefited. This will be a crucial week for bonds. Expectations
for the ECB to announce a package of measures at its June 5th
policy meeting have built up in recent weeks. Investors await
the details. Any wide reaction in the bond market will impact
equities. This will also be a heavy week for US economic data
releases that end with May’s job numbers this Friday.
During this period, our strategy remains selective on undervalue
defensive names. Following the slew of privatization and M&A
activities in recent months, trading interest remains active in
this area.
Share price of Yangzijiang fell 11% on headlines that CEO Mr.
Ren is under investigation for misconduct relating to his
personal investment in China-listed Tianjin Guoheng Railway
Holding (Guoheng). Yangzijiang has released announcement to
clarify that the allegations are against Mr Ren and not
Yangzijiang. In addition, Mr. Ren has also reassured
shareholders that the accusations are unfounded and he is
taking necessary actions to set matters straight. We believe that
the selldown on Yangzijiang seems overdone. Valuation has
fallen to an attractive 6x FY14F PE and 1.0x P/BV following the
knee-jerk reaction to the news last Friday, presenting buying
opportunities for investors who remain positive on
Yangzijiang’s fundamentals. Maintain BUY, target price S$1.55.
Singapore Airlines will spend $400m buying stock in budget
carrier Scoot, boosting the capital of its subsidiary which plans
to buy Boeing 787s. The airline bought 400m shares in Scoot at
$1 apiece. The investment will be funded through the
company's internal sources.
Swiber Holdings has clinched an Engineering, Procurement,
Installation and Construction (EPIC) contract in Latin America
for subsea development work including pipeline tie-in work,
with an aggregate value of US$80m. The project will
commence immediately and is expected to complete in 2015.
This contract brings total contract wins year-to-date to
US$315m, as of June 2, 2014.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,717.2 18.4 0.1
S&P 1,923.6 3.5 0.2
NASDAQ 4,242.6 (5.3) (0.1)
Regional Indices
ST Index 3,295.9 (4.9) (0.1)
ST Small Cap 558.3 (0.5) (0.1)
Hang Seng 23,081.7 71.5 0.3
HSCEI 10,249.7 64.5 0.6
HSCCI 4,265.1 (7.7) (0.2)
KLCI 1,873.4 (3.2) (0.2)
SET 1,415.7 7.2 0.5
JCI 4,893.9 (91.7) (1.8)
PCOMP 6,647.7 (29.0) (0.4)
KOSPI 1,995.0 (17.3) (0.9)
TWSE 9,075.9 (33.1) (0.4)
Nikkei 14,632.4 (49.3) (0.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 2,012
12m ST Index High 3,336
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
30 May
Target Price
(S$)
ComfortDelgro Buy 2.350 2.50
Global Logistic Properties Buy 2.830 3.42
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Thai Beverage Public Buy 0.635 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
30 May
Target Price
(S$)
Vard Holdings Buy 1.060 1.21
Nam Cheong Buy 0.385 0.47
Centurion Corporation Buy 0.730 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 3
Kim Heng Offshore & Marine is exploring some merger and
acquisition (M&A) deals to expand its business, particularly
to grow its supply-chain services to the offshore sector.
Thomas Tan, the company's executive chairman and CEO,
tells The Business Times that the company has a "couple of
M&A (deals) in the pipeline", which would strengthen and
also increase its market share in the supply-chain
(segment), both locally and overseas. Kim Heng's core
business lies in the offshore rig services, but according to Mr
Tan it is also looking to grow its profitable supply-chain
management segment to ride on the growth of offshore
services.
ES Group and Heatec Jietong– both listed on the SGX
Catalist– announced that they will team up with a heat
transfer expert to develop a new heating and cooling
system for marine and other industries.
CSC Holdings has recently been awarded a S$21.6m
contract for foundation and sub-structure works for the
New State Courts Complex at Havelock Square. Together
with the award of this contract, CSC has secured more than
$100m worth of foundation and geotechnical engineering
contracts in Singapore and Malaysia since the start of 2014.
Singapore’s bank lending growth in April held steady
compared to March - though this was nearly flat at 0.6% -
with both business and consumer loans in April growing at
the same pace as they did in March.
Singapore-dollar loans stood at $591 bn in April. Bank
lending growth has been particularly tepid since February,
when this stood at 0.4% on a monthly comparison against
a 1.4% growth in January. The sluggishness reflects weaker
growth in the business loan segment, with growth falling
from about 2% in January, to under one per cent
thereafter. Total business loans in April stood at $363 bn,
which grew 0.7% over the month - as they did in March.
Meanwhile, growth in consumer loans has slipped under
one per cent for all but two months since end-2012. On a
yearly comparison, total loan growth stood at 13.2%, which
is weaker than the 13.5% growth posted in March on a
year-on-year basis.
China's factory activity expanded at the fastest pace in five
months in May due to rising new orders. The official
Purchasing Managers' Index rose to 50.8 in May from
April's 50.4, beating market expectations of 50.6. The
official survey showed a broad-based recovery in
manufacturing activity in May, with nine out of the 13 subindicies
pointing to improvement from the previous month.
A sub-index for new orders, a measure of foreign and
domestic demand edged up to 52.3 in May from 51.2 in
April, marking the highest level since last November. The
PMI data also showed export orders inched higher to 49.3
in May from 49.1 in April, though the indicator remained
below the 50-level threshold that separates growth from
contraction.
Yangzijiang - Selldown seems overdone; BUY on
weakness, TP unchanged at S$1.55
STI’s upward bias since the mid-May low of 3221 has lifted it
above the April high of 3286. Technically, this points to the
likelihood of further upside in coming week(s) towards 3340
while not exceeding 3365. But the 50pt or so upside is not
something that we will rave about as a correction off these
higher levels is even more likely since such a move will position
the STI at its +0.25SD 12-mth forward PE level, which is rather
stretch given that the downward earnings revision trend has
yet to end.
Dovish global central bankers and the accompanying decline in
bond yields YTD has enabled emerging equity indices this
region to outperform YTD. Yields plays and SREITs have
benefited. This will be a crucial week for bonds. Expectations
for the ECB to announce a package of measures at its June 5th
policy meeting have built up in recent weeks. Investors await
the details. Any wide reaction in the bond market will impact
equities. This will also be a heavy week for US economic data
releases that end with May’s job numbers this Friday.
During this period, our strategy remains selective on undervalue
defensive names. Following the slew of privatization and M&A
activities in recent months, trading interest remains active in
this area.
Share price of Yangzijiang fell 11% on headlines that CEO Mr.
Ren is under investigation for misconduct relating to his
personal investment in China-listed Tianjin Guoheng Railway
Holding (Guoheng). Yangzijiang has released announcement to
clarify that the allegations are against Mr Ren and not
Yangzijiang. In addition, Mr. Ren has also reassured
shareholders that the accusations are unfounded and he is
taking necessary actions to set matters straight. We believe that
the selldown on Yangzijiang seems overdone. Valuation has
fallen to an attractive 6x FY14F PE and 1.0x P/BV following the
knee-jerk reaction to the news last Friday, presenting buying
opportunities for investors who remain positive on
Yangzijiang’s fundamentals. Maintain BUY, target price S$1.55.
Singapore Airlines will spend $400m buying stock in budget
carrier Scoot, boosting the capital of its subsidiary which plans
to buy Boeing 787s. The airline bought 400m shares in Scoot at
$1 apiece. The investment will be funded through the
company's internal sources.
Swiber Holdings has clinched an Engineering, Procurement,
Installation and Construction (EPIC) contract in Latin America
for subsea development work including pipeline tie-in work,
with an aggregate value of US$80m. The project will
commence immediately and is expected to complete in 2015.
This contract brings total contract wins year-to-date to
US$315m, as of June 2, 2014.
US Indices Last Close Pts Chg % Chg
Dow Jones 16,717.2 18.4 0.1
S&P 1,923.6 3.5 0.2
NASDAQ 4,242.6 (5.3) (0.1)
Regional Indices
ST Index 3,295.9 (4.9) (0.1)
ST Small Cap 558.3 (0.5) (0.1)
Hang Seng 23,081.7 71.5 0.3
HSCEI 10,249.7 64.5 0.6
HSCCI 4,265.1 (7.7) (0.2)
KLCI 1,873.4 (3.2) (0.2)
SET 1,415.7 7.2 0.5
JCI 4,893.9 (91.7) (1.8)
PCOMP 6,647.7 (29.0) (0.4)
KOSPI 1,995.0 (17.3) (0.9)
TWSE 9,075.9 (33.1) (0.4)
Nikkei 14,632.4 (49.3) (0.3)
STI Index Performance
Singapore
1,000
2,000
3,000
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
100-Day MA
Index
STI
Total Market cap (US$bn) 616
Total Daily Vol (m shrs) 2,012
12m ST Index High 3,336
12m ST Index Low 2,960
Source: Bloomberg Finance L.P.
Stock Picks – Large Cap
Rec’n Price (S$)
30 May
Target Price
(S$)
ComfortDelgro Buy 2.350 2.50
Global Logistic Properties Buy 2.830 3.42
Mapletree Greater China
Commercial Trust
Buy 0.895 1.02
Thai Beverage Public Buy 0.635 0.68
Stock Picks – Small Cap
Rec’n Price (S$)
30 May
Target Price
(S$)
Vard Holdings Buy 1.060 1.21
Nam Cheong Buy 0.385 0.47
Centurion Corporation Buy 0.730 0.86
Source: DBS Bank
Singapore
Wired Daily
Page 3
Kim Heng Offshore & Marine is exploring some merger and
acquisition (M&A) deals to expand its business, particularly
to grow its supply-chain services to the offshore sector.
Thomas Tan, the company's executive chairman and CEO,
tells The Business Times that the company has a "couple of
M&A (deals) in the pipeline", which would strengthen and
also increase its market share in the supply-chain
(segment), both locally and overseas. Kim Heng's core
business lies in the offshore rig services, but according to Mr
Tan it is also looking to grow its profitable supply-chain
management segment to ride on the growth of offshore
services.
ES Group and Heatec Jietong– both listed on the SGX
Catalist– announced that they will team up with a heat
transfer expert to develop a new heating and cooling
system for marine and other industries.
CSC Holdings has recently been awarded a S$21.6m
contract for foundation and sub-structure works for the
New State Courts Complex at Havelock Square. Together
with the award of this contract, CSC has secured more than
$100m worth of foundation and geotechnical engineering
contracts in Singapore and Malaysia since the start of 2014.
Singapore’s bank lending growth in April held steady
compared to March - though this was nearly flat at 0.6% -
with both business and consumer loans in April growing at
the same pace as they did in March.
Singapore-dollar loans stood at $591 bn in April. Bank
lending growth has been particularly tepid since February,
when this stood at 0.4% on a monthly comparison against
a 1.4% growth in January. The sluggishness reflects weaker
growth in the business loan segment, with growth falling
from about 2% in January, to under one per cent
thereafter. Total business loans in April stood at $363 bn,
which grew 0.7% over the month - as they did in March.
Meanwhile, growth in consumer loans has slipped under
one per cent for all but two months since end-2012. On a
yearly comparison, total loan growth stood at 13.2%, which
is weaker than the 13.5% growth posted in March on a
year-on-year basis.
China's factory activity expanded at the fastest pace in five
months in May due to rising new orders. The official
Purchasing Managers' Index rose to 50.8 in May from
April's 50.4, beating market expectations of 50.6. The
official survey showed a broad-based recovery in
manufacturing activity in May, with nine out of the 13 subindicies
pointing to improvement from the previous month.
A sub-index for new orders, a measure of foreign and
domestic demand edged up to 52.3 in May from 51.2 in
April, marking the highest level since last November. The
PMI data also showed export orders inched higher to 49.3
in May from 49.1 in April, though the indicator remained
below the 50-level threshold that separates growth from
contraction.
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