Friday, October 29, 2010


OCBC: 3Q net profit likely +21.9% YoY at $548.7m according to consensus estimates. Investors will be eyeing loan growth, especially in SME sector and progress on state of private bank. Net-interest income expected to be weak, so trading and fee income will need to account for mortgage earnings shortfall. Morgan Stanley note corporate and SME loans likely to benefit from pickup in system lending. Results due during midday trading break Monday


Midas: Phillips has maintained Buy at TP $1.16 unchanged after news on the Bombardier contract. Forecasted revenue at $55.2m and net profit at $13.2m on back of higher capacity and strong order book from China rail growth and intl market. Highlights that Midas trading at 17.3x forward P/E on estimates, below Midas 5 yr avg of 27x and industry avg of 21x….

Based on current 2010 estimates from Bloomberg, Midas is trading at 22-23x. Given that the Bombardier contract is worth approx Eur20m (Rmb36m), 17% of full year estimated 2010 revenue, company has potential to grow if margins on aluminum remain stable.

China XLX

China XLX: DBS maintains Buy at TP$0.66, 14x FY11 P/E on stronger urea prices and capacity plan. Q3 FY10 net profit of Rmb28m were in line with expectations meeting 73% of DBS full-year estimate. Positive on longer-term prospects with 4th plant being proposed at end-Sept. Potential upgrade dependent on cost (coal prices) and profit (urea prices) margins...

Profits also were in-line with CIMB expectations and TP$0.71 as well. Currently trading at $0.585, bottom of channel but based on ADX no strong trend shown.

The Edge this week

Key Company feature for The Edge this week:
1)Yangzijiang Shipbuilding: Sails into reality
2) Pan Hong: To spin off Jiangxi business in HK listing in quest for higher valuation
3) Ezra: Expands subsea arm with acquisition, explores new financing strategies
4) Advance SCT: Buys Chinese water-treatment plants, recasts itself as recycling expert
5) China Essence: Makes headway in refinancing talks with DBS
6) Suntec REIT: Acquires stake in MBFC Phase 1; poised for office recovery
7) OKP: Posts record earnings from roadworks; eyes MRT construction deals
Investing idea: Sarasin sees global blue chips as better bet on Asian consumers
9) Oxley: To expand landbank; plans mass-market projects in matured estates
10)Valuetronics: Sees further stake reduction by director

Sound Global

Sound Global: CIMB has Technical Buy Call. Highlights recent breakout run from bullish wedge pattern have stalled and small triangle pattern is taking place, and once pattern ends, uptrend should resume. A breakout above the triangle resistance at S$0.86 would confirm that the uptrend has resumed. Recommends buying now ahead of the breakout with a tight stop placed below the recent swing low of $0.825 or $0.815. Resistance at $0.91 and $0.94.


Olam: CIMB has Technical Buy call. Highlight that prices seem to be trying to close the $2.95-$3.07 gap set on 24th Sept. Notes that MACD is still negative, but starting to flatten out, and RSI is finding some support ard the 40-50 pts mark. Note that huge gap will act as support, however if prices fall below gap, correction could likely continue. Recommends accumulating on weakness with stop loss at $2.95. A break above $3.20 will see prices move to resistance of $3.37, $3.46 & $3.54.

Golden Agri

Golden Agri: +1.5% at $0.675. A grievance panel of the Roundtable on Sustainable Palm Oil (RSPO) has found "acceptable" GGR and its units' response to environmental concerns, after the company submitted detailed plans for compliance with RSPO guidelines. An initial progress report is scheduled to be received Jan 15, 2011…

GGR, which currently is not a member of the RSPO (although its other two operating subsidiaries are), has been asked to submit a full application for membership by Nov 8.

Tiger Air

Tiger Air: agreed with Airbus to advance the deliveries of 2 aircraft originally scheduled for 2015-16 to next year. Recall Tiger currently has 21 planes, and additional deliveries will expand the fleet to 26 aircraft by Mar ‘11, and to 68 aircraft by Dec ‘15. Positive read through, as this will allow Tiger to accelerate its already rapid expansion plans...

Separately, the budget carrier has also secured financing for the 15% down payment for each of its 14 new Airbus A320 aircraft to be delivered by March '13, which should alleviate financing concerns. The structured PDP financing arrangement is SGD-denominated, to mitigate currency risk…

Tiger reports 2QFyMar11 results on 2 Nov after mkt close. Stock now hovering around $1.79-1.80 support, which Morgan Stanley tips as accumulation level. However if a break down occurs, stock may test next support at $1.70.

Eu Yan Sang

Eu Yan Sang: Net profit improves 13% to S$4.1m for the quarter on 9% gain in revenue to $57.6m compared yoy. EPS increased from 1.13 from 1.01, 12% increase yoy. Revenue increased due to strong retail in all 3 markets HK,Msia and Sg. New investment in Australian Co. Healthcare Limited of approx 15%. Future revenues are expected to be impacted by strong SGD.


Yangzijiang has entered into a MOU with Taiwan-listed megaship builder, CSBC Corporation. While details are not publicized, CSBC will provide vessel designs while YZJ will supply the labour and shipyards for execution. The deal is largely beneficial to YZJ, allowing them to get a foot into the large containership market and penetrate the Taiwan mkt...

Deal is strategically beneficial for YZJ moving up the value chain and enhancing R&D. YZJ reported 3Q strong revenues of Rmb3.08b and net profit of Rmb730.4m on Tues.

Stats Chippac

Stats Chippac: 3Q profit down 3.6% to US$24.2m, EPS of US$0.01, as higher costs offset improvement to its top line. 3Q sales climbed 11% to US$432m on stronger demand from communications sector (53.9% of revenue). The PC segment was a drag, sliding to 13% from 18.2% previously ...

For the 1st 9 months of the yr, net profit came in at US$89m compared to a loss of US$23.8m last year. Revenue in 4Q2010 is expected to decline from 3Q. May see tempered interest now that company has limited catalysts after completing its balance sheet optimization and capital reduction exercise.


Swiber: UOB maintains Buy (TP $1.45 lowered from $1.54) but expects lackluster 3Q10 results due to 1)US$3-4 mark-to-mkt loss on bonds. View remains positive on large contracts won from India’s ONGC and potential large contracts in SEA region, India and Middle East. Results are expected to show in 4Q10. TP of $1.45 was lowered due to enlarged share capital by 1.1% at current 641.6m shares…

Based on PE of 13x 2011F earnings, still below Swiber’s historical PE of 25-27x during 2003-09. The PE valued is above the sector long-term mean of 9.0x indicating analyst’s view of outperformance over sector. To note: Potential large contracts are in the US$500m to US$6b range compared to Swiber’s 09 net turnover of US$393.4m.


Oxley: to debut on Catalist board today. The 224m new shares, offered by way of placement, were sold at $0.38 each to a mix of institutional and HNI, total raised of $85.12m. More than 5% of placement, 11.8m shares went to a single person, Lim Siah Mong…

… Plans to use listing proceeds of $85m to partially fund the acquisition of 5 sites already on its books, buy new sites and working capital requirements. Grey price approx $0.42. NAV per share for is at 8 cents and is priced at a high of 4.75x P/NAV compared to indus avg of 0.8 -1.2x.

Cache Logistics

Cache Logistics: Grp reported strong set of earnings which was in line with forecast. Net Property Income at $14.4m brought YTD (12April - 30Sept) NPI to $27m, with DPU at 3.65c, translating to an annualized DPU of 7.75c and yield of 7.8%, on track to beat FY10 average consensus estimates of 7.2c...

Going forward, Grp upbeat on sustaining distributions backed by strong predictable cash flows and resilient earnings, will focus on growing DPU through quality acquisitions in SG and Asia, while maintaining a conservative capital structure....

We note at current price grp trades at 1.07xP/B, with a forecasted yield for FY10-FY11 at 7.7% & 7.8% respectively, with weighted average lease to expiry of 5.8yrs and portfolio 100% leased on long-term, triple-net master lease, with a diversified tenant mix. Net Gearing remains comfortable at 23.4% with Interest coverage at 9.2x.

CDL Hospitality Trust

CDL Hospitality Trust: Posted strong set of results above estimates, with Rev at $31.6m, up 38.4%YoY and 3%QoQ, while Distribution Income at $24.2m was up 42.8%YoY and 10%QoQ. Strong performance attributed to grp’s highest ever quarterly occupancy rate of 91.6%, since its IPO, boosted by growth momentum from record visitor arrivals to SG and increasing hotel rates.....

Results places 9mth10 DPU at 8.26c, translating to a yield of 5.1%, up 27.5%YoY and on track to beat consensus estimates for FY10 DPU of 10.3c. Going forward, grp remains upbeat on SG’s hospitality sector, expecting ongoing draw of IRs and strong asian economy increase tourist arrivals and will capitalize on opportunities to maximize yield and carry out strategic acquisitions...

We note that grp’s balance sheet remain strong with gearting ration at 21.1%, with interest coverage at 7.8x. At current price, grp trades at 1.47x P/B, with an annualized yield of 5.1%, vs peers Ascott Residential Trust of 0.87x and yield of 6.34%.

CapitalMalls Asia

CapitalMalls Asia: Could see some interests after reporting strong 3Q results above expectations. 3Q Net profit at $68m rose 14% YoY, as grp saw 5% YoY increase in revenue under management to $325.6m. Results bring YTD Net Income to $277.9m, up 27.3%YoY, translating to an annualized Net Income of $370.5m, at the higher end of street FY10 estimates....

Strong performance attributed to rising rental, occupancy rates and contributions from Alexandra Technopark, while its 2 Australian properties contributed positively as the AUD strengthened and NPI for Malls in China grew faster than expected....

Going forward, grp will continue to expand portfolio of shopping malls, starting with its recent Bedok Town Centre site, to build an integrated retail cum residential development at an estimated $550.0m. Grp remains confident of achieving target of investing between $800m - $1b in new projects in 2H10....

We note Balance sheet remains strong with a strong cash position of $1.4b and average debt maturity of 4.62yrs. At current prices, grp trades at undemanding valuations at 1.45x P/B, vs peer’s average of 1.69x, with portfolio average occupancy at 89.6%, up 55.5%YoY….

Deutsche maintains Buy, increasing TP to $2.53 from $2.51, based on SOTP valuations, citing a stronger 4Q, due to completion of Orchard Residences and plans to open 3 malls in China in 4Q10. Technically, see support at $2.12 (1-month low) and resistance at $2.20. (30-day moving average)

Indofood Agri

Indofood Agri:
3Q10 net profit +13% qoq, -8.7% yoy, at Rp 360tr, beats expectations of Rp300-340tr.
Revenue +10% qoq to Rp 2.3tr, on the back of higher sales volume of cooking oil and margarine, palm kernel sales, and higher selling prices, but -7% yoy due to lower CPO sales to external parties as IFAR channeled more CPO towards refining. As a result, gross margins continued to expand, to 37.5% in 3Q10, from 30.9% a yr ago. CPO pdtn +19% qoq, to 201MT, due to peak pdtn season…

Mgt expects int’l CPO prices to stay firm, driven by tighter palm oil supply from the major palm producing countries (i.e. Msia, Indon) and potentially tighter-than-expected global veg oil supply & inventories arising from adverse weather conditions. Expects demand outlook to remain positive in 2011 with the improving global economic climate, supported by robust consumption growth from India, China, and coupled with stronger demand for biodiesel driven by govt mandates in EU, Brazil and Argentina.
Stock trades at 24x trailing PE.

SG Market

SG Market: Spore shares likely to continue inch up in cautious trade ahead of next week's US Fed meeting amid mixed regional, US leads. 3Q earnings reported so far very much in line with expectations. Palm stocks also likely to feature following IndoAgri's solid 3Q results. Support today seen at 3120; resistance capped at 3200.

Top on the news:
*IndoAgri reported strong 3Q earnings of Rp360m, topping market estimates of Rp300-340m & 9M10 looks on track to beat FY10 forecasts. Mgmt expects demand outlook for palm oil to remain positive in 2011 with the improving global economic climate, supported by robust consumption growth from India, China & other emerging Asian economies, coupled with stronger demand for biodiesel driven by govt mandates in Europe, Brazil & Argentina.
*CDL HTrust posts strong 45% yoy rise in 3Q distributable income to $26.9m on 38% increase in rev to $31.6m. DPU of 2.54¢ vs 2.04¢ yr ago translates to an annualised yield of 4.7%. B/S has been strengthened with lowered gearing of 21.1%. NAV stands at $1.46. Mgmt confident that outlook for hospitality in S’pore remains robust underpinned by strong demand from record visitor arrivals & improved occupancies
& expects momentum to be sustained by new attractions such as Gardens by the Bay, River Safari & water theme park at RWS.
*CapitaMalls Asia 3Q net earnings came in at $68m, slightly lower than expectations but +14% yoy despite 22% revenue drop to $42.5m. Stock trades at P/B of 1.46x. DB maintains Buy with $2.53 target.
*Oxley debuts today. Grey market transacted at 4¢ above IPO price.
*UOB due to release 3Q results at mid-day, consensus est ~$600m net profit

Thursday, October 28, 2010


OCBC: Seeing a wave of upgrades amg Foreign Houses, notably Morgan Stanley (TP: $10.4 , Duetsche (TP: $10.40), Daiwa ($10.40), Macquarie (TP: $11.30) and JP Morgan maintaining Outperform rating on stock prior to its results release on 1st Nov….

Highlight Great Eastern stellar results to already contribute $83m to grp’s quarter profits, suggesting a much stronger grp outcome for 3Q10, while bank’s exposure to higher-margin Asean markets would help to offset the expected weak profitability of its Core SG markets.

AFP (follow up):

AFP (follow up):
i) to clarify, AFP’s CB status refers to the cum-bonus issue of warrants.
ii) The exercise price is $0.10/sh
iii) The warrants are European-style; the new exercise period has been revised from 5 days to 1 day.
iv) The exercise date is 5 yrs from the date of issue of the warrants.

#AFP Properties: Pls be reminded that the bonus warrants are European style, not Amercian style warrants, ie warrant holders can exercise the warrants only on the expiry date & not before that.

AFP Properties

AFP Properties: +5% at $0.635. CB refers to proposed 1-for-2 issue of 5-yr European-style warrants. Further terms like exercise price yet to be disclosed.
Books closure on 12 Nov, so XB likely 3 days earlier on 9 Nov.

Great Eastern

Great Eastern +2.2% to $16.06 after reporting 5-fold yoy & 127% jump in 3Q net profit to $168.6m. Credit Suisse, which has Outperform rating with $18.30 target price, notes 9-mth core net profit of $422m represents 84% of FY10 est; core net profit growth driven by better underwriting profit & lower mgt expenses. Citigroup notes 3Q result beat house expectations as group benefited from strong equity & bond markets but keeps Sell rating with $15.50 target.


YangziJiang: Announced it has entered into a Business & Technical Cooperation Memorandum of Understanding (MOU) with Taiwan's largest shipbuilder CSBC. It did not give further details, but under the pact both co. would jointly build freighters for Taiwan, Chinese and international clients with CSBC supplying the designs and Yangzijiang providing the manpower and shipyards…

CSBC is Taiwan's largest shipbuilder with two shipyards. It has received enough orders from domestic and foreign shipping lines to keep it busy until 2013. Taiwan media reported that CSBC and Yangzijiang's agreement was aimed at winning international orders.


Silverlake: Intelligentsia, the controlling shareholder of Silverlake has sold $50m shares, approx 2.39% of outstanding shares at $0.32 through a married trade. This reduces Intelligentsia’s stake to 80.93% from 83.32%. The reason of the placement was to increase the free float and improve the trading liquidity of the company’s shares. This is the probable reason for it being in top volume with >50m traded

IPO: Amtek Engrg

IPO: Amtek Engrg is planning to raise US$400-500m via an IPO on SGX end of the yr. The company first listed on SGX in 1987 but was taken private in 2007 by CVC Capital Partners along with a consortium for $552m. Amtek is a metal components & product maker that caters to the automotive, consumer electronics, life sciences & telecommunications sectors. It has 20 mfg plants in 8 countries chalking up revenue of US$638m in FY10. Credit Suisse, Morgan Stanley & Stanchart are advising the deal.


UOB/Banks: CIMB Overweight on Banks with UOB as Top Pick, followed by OCBC but Underweight on DBS. We note that view similar to Goldman Sachs recent note, tipping DBS to be hurt most by a weak Sibor, while UOB would be the least affected given its conservative stance…

Notes that SG banks have lagged the local market due to a persistent low i/r environment and the main investment case for SG banks now lies in their relative attractiveness after being laggards. CIMB has net profit estimates of 4Q results at, DBS: $666m, UOB: $596m and OCBC: $565m, while Goldman Sachs Tips DBS to post earnings of $662m (-8% qoq), OCBC: $495m (-2%) and UOB $554m (-8%)….

Highlights surprise factors for SG banks could stem from greater traction in overseas loans, sustained fee income growth from transactional activities and trading. UOB scheduled to report results tomorrow.

Rotary Engrg

Rotary Engrg: OCBC Sec keeps at Buy, raises target price to $1.22 from $1.16 on 10-18% upward revision to earnings forecasts after it won US$250m contract to build petroleum storage facility in Mid-East. Work expected to commence 1Q11 with completion slated for 4Q12, thereby boosting group's FY11/12 revenue. Tips 27.4% growth in FY11 earnings to $70.6m. With latest win, the group's order book now stands at $1.3b with visibility extending till 2012.

This latest order also represents one of the group's larger contracts, which will boost its presence in the Mid-East. Group's 3Q10 results expected on Nov 4. A breakout of double top resistance at $1.00 would pave the way for next target at $1.07; support at $0.965.


OCBC: Morgan Stanley keeps as Overweight, with $10.48 target. Says Great Eastern’s strong 3Q results supports view of improving earnings momentum at OCBC (due to report 1 Nov). OCBC owns 87% of GEH, and GEH contributes ~20% to OCBC’s total value. Forecasts OCBC net profit of $545m vs $503m in 2Q. Continues to pip OCBC as preferred pick amongst Spore banks.

Genting HK

Genting HK: +2.2% at US$0.46. UOBK follows up on yday's rpt, upgrades target marginally to US$0.40 from US$0.39. Raises 2010-12E net profit forecasts by 1.5-3.5% driven by stronger NCL performance. Says NCL’s IPO positive but gains likely limited as GENHK has no plans to divest its 50% stake. Maintains Hold call.

SembCorp Marine

SembCorp Marine: CIMB has Technical Sell call. Highlights that prices have hit and surpassed targeted area of $4.44-$4.50 and recommends locking in profits. Note that MACD is about to confirm its dead crossover, while the RSI is already supporting a bearish divergence. Prices are now likely to ease to try to close the $4.29-$4.34 gap, following which next support level would be $4.12-$4.24.

Tiger Air

Tiger Air: +2.2% at $1.83, bouncing off $1.80 support. We highlighted previously that Morgan Stanley tips $1.80 as a level to accumulate.
Budget carrier to launch new flights to 4 new destinations and increase flight frequencies to existing destinations from this weekend. Total weekly flights to rise by ~20%, from over 300 flights now, during the period from Nov ‘10 to Mar ‘11. The 4 new destinations include Manila, Trichy, Trivandrum and Taipei…

Tiger Air in Australia, will also introduce of new services from Avalon Airport in Victoria to Gold Coast, Alice Springs, Sydney, Adelaide, Mackay, Rockhampton and Perth starting on Nov 10, and services between Sydney and Brisbane starting on Feb 7

Boost in flights to come as Tiger takes scheduled delivery of another 8 aircraft from now till end FYMar11. Expect Tiger’s FY earnings to be back end loaded.


F&N: Our in-house report maintains a Hold (TP$6.72). Recent acquisition and divestment activity, King’s Creameries for F&B and Bedok Point into Fraser Centrepoint is in line with strategy…

Further acquisitions in F&B or return of surplus capital expected. Highlights possible spin-off on Frasers Hospitality after opening of serviced residences in Osaka, Shanghai and Dubai.

Asia Environment Holdings

Asia Environment Holdings expects a loss for 3Q2010 mainly attributed to decreasing revenue, higher finance cost and provision made for doubtful debts.3Q Sept results expected in mid-November where details will be reported.

Midas Holdings

Midas Holdings Limited has secured a €20.3m (Rmb187m) contract from existing customer Bombardier Transportation, their largest international contract to-date. The contract is to supply aluminum extrusion profiles, including fabricated parts, for 436 train cars to the SBB Double Deck Train Project in Switzerland…

Delivery is expected to take place progressively from 2011 to 2019 and improve Midas’s results during the period. There is an option for Bombardier Transportation to purchase similar parts, for another 724 train cars.

CREATIVE Technology

CREATIVE Technology: Continued its loss making operations as 1Q11 loss of US$3.6m widened three-fold YoY vs 1Q10’s net loss of US$1m due to higher R&D costs and lower sales of grp’s music and video players. R&D expenses rose 13% in Q1 as grp ploughed more investments into new 'strategic' areas….

Grp said mkt for existing stable of products 'remains difficult' and expects to suffer an operating loss in the current quarter.


Broadway: Announced strong set of 3QFY10 results which were broadly in line with expectations. Rev at $144.7m, was up 5.7%YoY and 2.1%QoQ, while Net Income at $12.5m was up 44.8%YoY and 25%QoQ. However grp cautions on 4QFY10 outlook, which could see lower or flat 2H2010 vs1H2010, but remain positive of long-term prospects...

3Q strong performance attributed to improvement in foam plastic and Non-HDD segments, which posted YoY increase in sales of 36.9% and 46.6% respectively, but HDD sales were down 3.7%...

Going forward, Grp expects near-term weakness for HDD business due to slowing global economy, rising labor costs in China and volatile FX rates, while foam plastic division expected to maintain growth momentum, as grp expands production capacity for its packaging and automotive segment, with establishment of a new facility in Chongqing....

We note that at current price, grp trades at an annualized 5.6x FY10E P/E vs industry average of 7.6x, and balance sheet has strengthened, with net gearing improving significantly to 19% from 38%YoY. Grp is tipped to have a conservative 25-30% dividend payout ratio projection over nxt 2 yrs, implying reasonable yields of 5%. NRA Capital has Buy rating on Broadway with $1.95 TP.

China XLX Fertiliser

China XLX Fertiliser: May rise after posting solid 3Q results. Rev at Rmb773.5m was up 16%YoY and 23.4%QoQ, with net profit at Rmn28.3m up 127%YoY and 24%QoQ, while margins remained strong with 3Q gross margins at 10.96% vs 10.03%QoQ….

We note that 9mthFY10 profits consists ard 70% of FY10 forecast. Grp expects 4Q10 performance to exceed 4Q09, due to higher methanol prices, rise in urea prices and international prices. CIMB maintains Outperform rating, with $0.71 TP based on 7x CY12 P/E….

Technically, Stochastics appear oversold and could be due for a correction. Resistance at $0.64 (recent high) and stop loss at $0.565 (50 day MA)

Top Global

Top Global: is among a syndicate of investors, which include Pua Seck Guan's Perennial Real Estate, and Kwee Liong Seen's Chesham Properties, to buy landmark Capitol Site for $250m or $461/sqft ppr...

The consortium expects to invest ~$700m in total to transform the site, with max gfa of 542k sqft, into an iconic 5-star hotel (>200 rooms), theatre (800-1000 seats, the largest in Spore), retail and residential development (80 apts of 1066-2368 sqft each), with underground link to the City Hall MRT Station...

The consortium seems to have gotten a good deal. The other two short-listed bidders were CMA & CapitaLand (with a bid of $238m) and a consortium that included private equity group GAW Capital ($130m). And amongst the initial 14 submissions, the top price offer is believed to have crossed the $400m mark, but was likely not selected as it involved a more substantial residential component…

Top Global is a property developer helmed by Sukmawati Widjaja, sister of tycoon Oei Hong Leong, who also owns hotels in Indonesia and China.
The mother share trades at 1ct.
It has warrants due 150929, with exercise price of 0.5ct, and trades at 0.5ct.
Note that the warrants due 130612 is overvalued relative to the mother share, and W150929, as it also has an exercise price of 0.5ct, but has a shorter life and is priced at 1ct.

Genting SP

Genting SP: Las Vegas Sands Corp reported 3Q EPS of US34cts/sh, topping avg analysts’ estimates of US24cts/sh. LVS received a big boost due to outstanding results at Marina Bay Sands in Spore, which cash flow came in at US$242m (~S$314m)…

GENS is assumed to have market share of at least 50%. Street estimates for GENS 3Q10 EBITDA is btwn S$300-385m, hence LVS’ results suggest GENS should not disappoint. However, if GENS does surprise on the upside/ downside, expect a new round of re-rating/ de-rating to kick off...

Stock price likely to remain volatile; following the recent run-up in share price, the Street has reverted to a mix of Buy, Sell and Hold calls, from virtually all Buys just 2 mths ago. Recent target prices range btwn $1.50 - 2.45.

SG Market

SG Market: Spore shares likely to drift with a downward bias with no clear lead from Wall Street following concerns that the highly anticipated quantitative easing by the Fed might fall short of predictions next month. The STI also appears to have fallen through the 3,150 neckline of a head-and-shoulders formation, with the measured objective of 3,080, located at the bottom end of its rising trend channel drawn from May. This is also where the 50-day MA currently sits.

Stocks in focus today:
*Genting Spore may take its cue from LVS’ solid 3Q earnings, which saw strong earnings contributions from Marina Bay Sands.
*China XLX may rise after posting 127% yoy & 24% qoq jump in 3Q net profit to Rmb28.3m.
*OCBC may get a boost from the 5-fold increase in 87% owned insurance arm Great Eastern 3Q net earnings to $168.6m in absence of one-off loss.
*Midas has bagged a €20.3m or $36.6m contract from Bombardier Transportation
*Suntec Reit may face selling pressure as trust is put on review for possible downgrade on its debt by Moody’s
*Tiger Airways plans to boost number of flights in the region as it takes delivery of new planes
*Hiap Hoe puts up >80% of Hougang Green mall in the suburbs for sale
*Raffles Edu associate, Oriental Century is heading for liquidation & delisting

Wednesday, October 27, 2010

Raffles Education

Raffles Education / Oriental Century: Fate of troubled Oriental Century hangs in balance after proposed RTO of school operator ISS Holdings fell through, with issues arising from audit of ISS Holdings. Under the proposed scheme of arrangement, Raffles Edu, which holds 29.9% of Oriental Century, was to take a 50% stake in ISS Holdings before ISS entered into RTO with Oriental Century. Creditors of Oriental Century were to be paid with new ISS shares….

However Raffles Edu noted it was not able to reach an amicable resolution with ISS Holdings in regards to the audit of ISS financial statements and both parties have decided not to proceed with the sale and purchase agreement. It is unclear if SGX will consider a new restructuring proposal from Oriental Century.

Thomson Med

Thomson Med: 4QFYAug10 net profit +18.5% yoy to $4m, bringing total net profit to $15.9m. 4Q revenue +23.3% to $22m on the back of strong performances by both its hospital operations & ancillary svcs (+11%), as well as its specialised and other svcs division (+61%)…

Patient loads increased at Thomson Women's Clinics (TWC) and Thomson Women Cancer Centre (TWCC) as well as new contribution Thomson Paediatric Centre (TPC). In FY10, the group handled 9,268 deliveries in its hospital, +4.1% yoy, while its operating theatres saw 7,482 cases, +3.2% yoy.
Co declares final div of 2cts/sh (2% yield based on last close at $1.01), 1-for-10 bonus issue…

Looking ahead, the group's consultancy and mgt project in Binh Duong Province in Vietnam, the Hanh Phuc International Women and Children Hospital, will begin operations next month. However, over in Spore, group has delayed plans to open another two operating theatres, with work expected to commence in 2Q11 instead.
Stock trades at 19.2x PE, vs closest peer Raffles Med at 27x.

Fraser Centrepoint Trust (FCT)

Fraser Centrepoint Trust (FCT) to buy Bedok point from parent co. Fraser and Neave (F&N) by 2Q next year according to CEO Chew Tuan Chiong. The acquisition is likely to be funded by a mix of debt and issuance of new units. The indicative price range is $120-140m but the final price has not been fixed. The mall has an occupancy ratio of 99% compared to FCT’s current 98.1%...

FCT announced a DPU of 2.16 cent yesterday 6% increase qoq. The increase was attributed to acquisitions Northpoint 2 and YewTee Point and a revamp of older portion of Northpoint.

Starhill Global REIT

Starhill Global REIT: Distributable income rose 5.8% yoy, a total of $19.4m compared $18.3m in 3Q09. DPU was 5.3% higher yoy, at 1.00 cent, over 0.95 in 3Q09 and 9.9% higher qoq over 0.91 cent in 2Q10. Revenue increased by 38.7% coming in at $45.2m for 3Q10. The reason for the increase was attributed to Msia acquisitions of Starhill Gallery and Lot 10 and David Jones Building in Australia. Yield on an annualized basis is at 6.84%....

CEO Mr Ho Sing has remarked that retail now constitutes 87% of Starhill Global’s portfolio up from 84% from previous quarter. Starhill’s geographical breakdown assets including the new acquisitions are Sg 66.3%, Msia 17.2%, Japan 7.4%, Aus 6.0% and China 3.1%. Total assets as of 3Q10 stand at $1.7b

XinRen Aluminum

XinRen Aluminum debuts today and raised $125.4m from its IPO. The China-based aluminum producer was targeted to raise $96.1m initially with 198m shares at 55 cents each. The IPO comprised of 186m for international investors and 12m for the Singapore public. Shares were 4.3 times oversubscribed resulting in an over-allotment option of 30m shares being exercised. A total of 228m shares offered resulting in increase of funds raised to the $125.4m…

This was attributed to interest from institutional investors such as Nomura, Merrill and Value Capital. The plan for proceeds were for capacity increases strategic acquisitions and working capital. XinRen is expected to enjoy strong demand on debut due to institutional support and recent IPO performings.

OKP Holdings

OKP Holdings: Announced $22 million contract from the PUB to raise a part of Orchard Road. Work will start next month and the project is expected to take about seven months to complete. Contract is the 2nd grp has won from PUB this year, and takes the value of public sector projects secured by the co. since Jan to $82m….

We note on Mon, grp reported its best ever 9mFY10 performance, with record profit after tax at $12.3m and rev of $110.3m. Increase in Grp’s rev was boosted largely by a significant 29% growth in the Construction segment, while Gross Margins remained strong, at 18%, up 9% YoY…..

Contract win will increase orderbook to $349.6m, expected to stretch till 2013, with a net-cash position of $85m. At current price, grp trades at an annualized Forward P/E of 8.9x FY10 vs peers average of 8.4x, however grp has an estimated $0.22 net cash/share surplus which warrants a premium for its share price. DBSV has Buy rating on stock with $0.70 TP based on 7x FY11 PE + sum of Net cash surplus.


Yongnam: Continues strong run in securing MRT’s Downtown Line2 contracts, with grp announcing the clinching of 2 contracts worth $56.5m, for the supply, installation and removal of struts and walers. Total contracts grp has secured for DTL 2 projects amounts to $109m. Contract is not expected to have a significant impact on grp’s financial performance ending Dec31…..
We note that Orderwin would place current orderbook at approximately 516.5m, vs FY09 Rev of $346.8m. At current prices, grp trades at an undemanding FY10E P/E of 7.1x, vs industry average of 9.1x Forward P/E.

Suntec REIT

Suntec REIT: 3Q results slightly ahead of consensus, with Rev at $63.2m, up 2.1% YoY, but Distribution income at $46.23m was down 3.2%YoY and up 0.6%QoQ, partly due to 38% increase in financing costs. 3Q DPU amounted to 2.502c, bringing 9mFY10 DPU to 7.543c (annualized DPU of 10.05c vs consensus of 9.7c), representing a 6.4% yield.....

Committed occupancy of grp’s office portfolio remained strong, with overall committed occupancy for office portfolio at 98.5%, while grp’s retail portfolio stood at 97.6%. Grp remains upbeat on SG office sector, expecting high occupancy rate and increased rental rates. Retail sector continues to experience rental pressure, as demand and supply situation in industry still finding its equilibrium…..

Focus will however be on grp’s plans to acquire Cheung Khong’s 1/3 stake in MBFC for $1.4958b or $2,568 psf. Grp is forking out slightly less than what valuers thought MBFC stake was worth. CBRE valued it at $1.496b and Knight Frank at $1.497b….

Citi maintains Buy call and raises TP to $1.69, and is upbeat on the MBFC acquisition. With limited info, grp assumes acquisition to contribute a pre-tax rental yield of 4.5%, which will be funded by 2/3 debt and 1/3 equity, increasing gearing ratio to 40% from 32.9%. Expects acquisition to increase Suntec REIT’s office portfolio of NLA to 2.4m sqft frm 1.9m sqft….

Broker raises FY11-12 DPU by 6-9% to reflect higher than expected office rental rates in FY10, lower than expected space due for renewal in FY11 and lower recent interest cost following recent financing…..

We note that grp’s recent $700m term loan facility should improve REIT’s overall financing cost and strengthen its debt maturity profile, with majority of grp’s debt maturity only due by 2012. At current prices, grp trades at 0.85x P/B and yield of 6.4% vs CCT of 1.36x P/B and yield of 5.17% and K-REIT of 0.9x P/b and yield of 5.19%.

Genting HK

Genting HK: 50% owned NCL Cruise files registration for IPO in the US. NCL plans to raise some US$250m to pare down outstanding loans, fund capex and for general corp purposes. In particular, NCL has ordered 2 new Freestyle Cruising ships for delivery 2013 and 2014, worth a combined EUR1.2b. Move likely viewed positively, as this would allow better price discovery of Genting HK’s key unit, and reflects improving prospects at NCL…

Separately, NCL reports a good set of 3Q10 results. Revenue +15.1% yoy, +33% qoq at US$634m, boosted by the addition of Norwegian Epic to the fleet, which drove improvement in Net Yield of 9.5%. Net profit +8.6% yoy at US$93m, reversing 2Q’s US$15m loss, as previous large FX losses were not repeated in this qtr. 9M10 net profit stands at US62m, vs US$106m last yr. If NCL is able to repeat this qtr’s performance in 4Q, NCL could be on track for an excellent yr...

Stock has been consolidating in the US$0.42-0.48 range for the past month. Positive news from NCL may give reason for Genting HK to test the higher end of the trading range, vs last close at US$0.44.

SG Market

SG Market: Spore stocks likely to open mixed with interest centred round events driven stocks. Top on the list is Genting HK, which announced that it has plans to list its 50% owned cruise operator NCL to raise US$250m. Separately, Royal Caribbean Cruises surged some 13% overnight on the back of positive earnings guidance with pax bookings recovering & new vessels performing exceptionally well. XinRen Aluminium will make debt today with likely opening price ~$0.65 vs $0.55 IPO price.

Other news:
* Suntec Reit reported 2.502¢ DPU for 3Q, buying 1/3 stake in Phase 1 of MBFC for $1.5b or $2,400 psf excl income support. Acqn will boost DPU by 2-3%, gives Suntec foothold in Marina Bay corridor & increases office portfolio to 2.4m sf from 1.9m sf. Citigroup keeps Buy rating & raises target price to 1.69 to $1.56
* Frasers Centrepoint Trust reports 4Q DPU of 2.16¢, up 6% yr ago, taking total DPU for FY10 to 8.2¢ (+9%). This translates to 5.5% yield. Acquiring Bedok Point mall by 2Q11
* Thomson Medical: 4Q net profit $4.04m +18.5% yoy
* Mercator Lines: flat 2Q net profit US$10.3m despite revenue jump as costs spike
* Yongnam secures MRT Downtown Line 2 contracts valued at $56.5m
* OKP secures $22m from PUB to raise a part of Orchard Rd
* Oriental Century proposed reverse takeover in restructuring falls through

Tuesday, October 26, 2010


Bakertech: Announced completion of disposal of entire Issued and Paid-up capital of PPL Holdings, however grp mentioned that shareholders will be kept updated of any material developments relating to its law suit with SembMarine. Recall earlier that grp has in a revised agreement agreed to sell a 50.1% stake in its PPL Holdings unit to QD Asia Pacific, a wholly-owned by Qatari sovereign wealth fund, while Yangzijiang will take a smaller 45% stake in PPL….

Overall sale price for PPL was lowered to US$116.3 million from US$155.0 million. Revised agreement also protects buyers from any fallout from SembMarine's legal action to block initial sale, with new deal structured in such a way that lawsuit by Sembmarine will no longer hinder the sale….

Post disposal, Baker Tech NTA/sh would rise to $0.37, vs $0.14 currently. We note however that the news has been ongoing for quite a while and current price could have already factored in the sale. Technically, see support at $0.41, with near term resistance at recent high of $0.44

Mun Siong Engrg

Mun Siong Engrg down 10.2% to $0.22, likely due to profit-taking after stock surged 25% vs $0.20 IPO price on debut last Friday. Masnet filing shows substantial s/holder Goh Heng Chew dumped 21.3m shares in series of transactions in open market, paring his stake down to 3.6% from 5.1%. About half of new listings this year trading below IPO price.

Raffles Medical Grp

Raffles Medical Grp: Nomura maintains Buy with $2.52 TP, following grp’s 3Q10 which was inline with expectations, albeit on the lower end of consensus estimates. Notes that continued demand for private healthcare in the region will support long-term prospects for SG healthcare service operators….

Highlights further room for upside in terms of average inpatient bill size, with Raffles showing a mark growth of 40% from 2007-09, nothing that there is still a gap between the Parkway hospitals and Raffles for surgical specialties, implying that there is room for the later to improve its surgery offerings….

Other potential catalysts includes regional expansion via M&A or Greenfield activities and grp’s Net Cash position of $72m, with Nomura citing that grp’s 30% premium over peers valuation is justified give grp’s visible growth profile. Similarly, CIMB maintains Outperform rating on stock….

We note however that Deutsche and CS are less upbeat on the stock, downgrading grp to Sell and Neutral rating respectively with TP of $1.76 & $2.10

Offshore and Marine Sector

Offshore and Marine Sector: Credit Suisse maintains Overweight on sector, maintains top picks on Keppel (TP $12.10) and Sembcorp (TP $5.40). CS notes that offshore drillers 3Q10 results are generally as expected with positive developments on the shallow water market…

There have been comments on strong tendering activity for jackups and likely orders on high-spec new builds after Atwood and Seadrill ordered 2 jack ups each with Sembcorp Marine. Contracts suggests returns could be bumped up to 12.3% over 10.9% on these jackups.

Property Strategy

Property Strategy: Credit Suisse initiates sector report, highlighting that Office and industrial growth accelerated on a YoY and QoQ basis, while retail and private home prices growth slowed. Expect office rents to continue recovering, driven by GDP growth and increasing demand for office space….

Top picks are CityDev and OUE, which CS believes should rerate on their attractive commercial portfolios, while noting that recent correction in volumes and price growth in the residential sector should alleviate fears of further policy risks. Among REITS, top picks are CCT, KREIT and CDL Hospitality.


Noble: Nomura maintains Buy, raises target price to $2.36 from $2.10; citing it as the best proxy play in the commodity sector by virtue of its upstream presence & exposure to bulk commodities. Moreover, with its amassed war-chest of US$3.4b, house expects Noble to get more aggressive in pursuing M&A opportunities, which will be a key catalyst going forward.

Hu An Cable Holdings

Hu An Cable Holdings: 120m Taiwan Depository Receipts was approximately 11 times over-subscribed with estimated of proceeds of NT$816m. Of it, 75m were new shares, a total of S$34.5m were allotted and issued to the Central Depository in Singapore. The number of issued and paid-up shares has increased from 587.7m shares to 662.7m after the issue of new shares. The TDRs are to be listed and quoted on TSE on 28 Oct 2010

Wing Tai

Wing Tai: DB maintains Hold rating at TP $1.81. Earnings were lower than expected but noted that it was mainly due to profit recognized by Helios Residences sale. The sale contributed $37.2m in operating profit…

… Factors highlighted were 1) moderation in sales, with the Belle Vue launch selling only 3 units in Sep, and 2) a replenishment of land, Wing Tai acquiring Petir Road for S$177m (345psf GFA) its 1st land purchase since end 07. DB maintains FY11 forecast of profit at $199m, but notes that while valuation at 31% NAV is undemanding, subdued sales continue to keep ratings at Hold.

Sino Techfibre

Sino Techfibre: -4.3% at $0.11. Profit warning. Company expects to incur loss in 3Q10 mainly due to resignation of staff, including engineers, since Aug 10 which affected pdtn of the higher grades of PU and microfiber synthetic leather pdts.

FJ Benjamin

FJ Benjamin: CIMB has Technical Buy Call, notes that stock appears to be forming a bullish flag pattern after breaking out of ascending triangle in Sept. Both MACD and RSI now testing their respective support levels and a reversal in price could happen. Recommends traders to accumulate now or wait for the breakout of its flag pattern resistance of $0.44 before jumping in. Stop loss at $0.42 and resistance at $0.52, based on the height of the triangle

Aluminum Corp of China ADR

Aluminum Corp of China ADR: May see some negative sentiments after posting 3Q net loss of Rmb117.8m vs net profit of Rmb21.3m YoY, due to supply glut and higher costs. Its weak profitability indicates weak aluminum demand, rising production costs, however grp is confident of recording a FY10 profit as more construction projects coming in, but relatively high production costs for grp will continue to cap profitability.

Pan Hong

Pan Hong: +3.5% at $0.445. Plans to spin-off its residential and commercial property dev businesses in Jiangxi province, and list the unit on the main board of the HKEX, given prospect of valuation. The developer has exposure mainly to Jiangxi and Zhejiang provinces…

Details still sketchy, and deal is subject to approval from the relevant authorities. Recall Li Heng Chemical, which tried to do the same last year, was eventually unsuccessful in getting the required approvals.

Raffles Medical

Raffles Medical: Deutsche downgrades to Sell with TP of $1.76 based on DCF, notes that despite grp’s 3Q10 earnings growing by 13% YoY, it was still 5% below expectations. Highlights concerns of a slowdown in healthcare demand and increasing competition which could drive up healthcare costs, with latests MOH figures showing a slowdown in healthcare demand….

Adds that stocks valuations are rich, trading at a 27x P/E, a 30% premium to its peers and above its historical P/E of 20x, with scope for disappointment and downsides risks to earning expectations….

Technically prices are sitting just above its support trend line as well as its 50-day SMA and prices need to hold above the $2.16 level for any chance to retest high of $2.37. Break below $2.16 could see prices fall towards $2.00.

OKP Holdings

OKP Holdings: Could see trading interest after posting another strong set of results with 3Q Rev up 4% YoY at $36.6m and Net profit at $4.5m, up 13%YoY and 4.9%QoQ. Co. highlighted that 9mthFY10 was its best ever performance, with record profit after tax at $12.3m and rev of $110.3m. Increase in Grp’s rev was boosted largely by a significant 29% growth in the Construction segment, while Gross Margins remained strong, at 18%, up 9% YoY…..

Grp remains confident abt the construction sector’s long term prospects with the SG govt committed to spend $60b to double existing rail network and grp’s continued strong progress in clinching contract wins, backed by a healthy order book of $327.6m, expected to stretch till 2013...

We note that at current price, grp trades at an annualized Forward P/E of 8.9x FY10 vs peers average of 8.4x, however grp has an estimated $0.22 net cash/share surplus which warrants a premium for its share price. DBSV has Buy rating on stock with $0.70 TP based on 7x FY11 PE + sum of Net cash surplus.

GMG Global

GMG Global: Posted strong set of results for 3QFY10, with Rev at $110.4m up 115% YoY & 37% QoQ, while Net Income at $16.4m was a turnaround from the $371,696 loss YoY & up 37.8% QoQ. Strong performance attributed to a 23% YoY & 40% QoQ jump in rubber sales volume to 26,651ton and a 74.7% surge in ASP to $4,141/ton YoY, raising gross profit margins by 5.8% to 28.5%. Grp expects ASP for rubber to remain within the band of $3555-$4385/ton seen in 1H10, backed by strong global demand....

We note that current rubber prices already trades above grp’s targeted band at $5110/ton, which would contribute positively to its stellar rev and margins. 9mFY10 EPS currently at 0.84c, of which 50% was attributed by 3Q EPS of 0.43c. Annualizing 3Q’s EPS would see GMG trade at a compelling forward P/E of 18x, which is undemanding vs grp’s average of 30x.

Palm Oil

Palm Oil: UOBK maintains market weight with Trading Buy opportunity. Notes CPO prices breached RM 3000/ton, driven by rush buying from China, India and Europe as these markets capitalize on the continued widening of price gap btwn CPO and soybean to stock up. Tips La Nina to become a strong episode in Nov 10/Jan 11 before it begins to weaken, which could lead to supply weakness…

Upgrades PEs for palm oil stocks based on the past upcycle to capture the rising liquidity into commodities on the imbalanced supply-demand outlook and hedging against a weakening USD...

Rates Buy for Indofood (upgrade TP $3.70 from $2.60), Wilmar (upgrade TP to $7.30 from $7).
Rates Hold for Kencana (upgrade TP $0.45 from $0.43 ), First Resources (upgrade TP$1.40 from $1.13 ).
Rates Sell for Golden Agri (upgrade TP $0.7 from $0.53).


Yangzijiang: 3Q10 net profit 12% above consensus est. Net profit was Rmb 730m, +32% yoy, -9% qoq. Revenue was Rmb 3.1bn, +19% yoy, flat qoq, as the Group delivered 14 vessels vs 7 in 3Q09. Net margins improved yoy to 23.7% from 21.4%, as Group continued to work on the higher margin shipbuilding contracts secured prior to the financial crisis, but fell from 26% in 2Q, due to higher operating expense from the new Changbo yard and increased pdt dev expenditures...

Mgt remains confident of continued growth and profitability for FY2010, underpinned by healthy order book of 128 vessels amounting to US$5.3bn, to stretch till late 2012. Group intends to enhance pdtn capacity by 40% in the year 2012 and is looking into building bigger and newer generation vessels to increase its product range. Expects further improvement in cost control through more vertical integration…

Stock trades at 13.7x trailing PE, vs Cosco’s 30.5x.
Nevertheless Morgan Stanley keeps Equal Weight call, says at 3.4x 2011e P/B, YZJ valuation is no longer cheap and likely already reflects the fundamental strength.
Rest of Street likely to keep their Buy, Hold ratings on YZJ as well.

SG Market

SG Market: Spore shares likely to get a bit of lift from Wall Street's advance with DJIA closing near 6-month high on Mon. STI still trading within upward trend channel drawn from May 2010 with 20-day MA proving near term support at 3,62. China market’s performance to also influence sentiment today.

*SGX to remain top story following news of ASX bid as market still tries to get sense of deal but bourse facing increasing opposition from lawmakers in Aust as well as a host of downgrades by foreign houses, citing inflated pricing, absence of clear revenue synergies, integration risks as well as significantly higher financial leverage, which may impair future dividend payout ratio. Stock may continue to be pressured by arbitrage trades betw SGX & ASX, with the latter offering a cheaper entry
*GMG Global likely to draw attention after doubling 3Q rev to $110m & posting record net profit of $16.2m on higher rubber sales volumes (+23%) & ASP (+75%) of $4,141/ton vs >$5,000/ton currently.
*YZJ 3Q results came in above expectations with net earnings +32% to Rmb730.4m & revenue +19% to Rmb3.1b. Gross profit margin expanded to 23.5% vs 20.2% last period. Total orderbook stands at 128 vessels worth US$5.3b, which will keep the yard busy till late 2012.
*Wing Tai posts 35% drop in 3Q net profit to $30.2m on weaker sales & slower than expected profit recognition. Trading at 30% discount to RNAV.
*OCBC says low interest rates putting severe strain in banks margins
*MCL Land 3Q net profit -91% to US$8.8m, revenue -83% to US$46.6m
*Pan Hong plans to spin off & list its Jiangxi unit on HKSE; no details provided. This is not a done deal as the proposal requires regulatory approvals as in the failed Li Heng case.
*Fasers Centrepoint Trust ay see some interest after 4Q results slightly lower than consensus. DPU for quarter at 2.16¢, +4.3% qoq, bringing total FY10 DPU to 8.2¢ (+9%).

Monday, October 25, 2010


DBS: DBS has relocated its Taiwan headquarters to Taiwan’s financial district Shin Kong Xinyi Financial Center as an indication of its commitment of building its presence there. It is expected that DBS Taiwan which has approx 40 branches will be locally incorporated by Sep 2011, providing consumer, corporate and wealth management services. DBS plans to increase the capital in DBS Taiwan to NTD22b from NTD7b this year…

… DBS Taiwan reported pre-tax profits of NTD317m in 2009 and as at end of July 2010, pre-tax profit was already at NTD421m. Mr Piyush Gupta has also expressed interest in acquiring stakes in Indonesia banks to boost DBS’s presence in SEA. He remarked that DBS would not acquire any Chinese banks until regulations change and allow for majority stakes. 1 SGD: 23.7 Taiwan Dollar approx as of today.

Raffles Medical

Raffles Medical: Grp announced results which was inline with consensus, posting 3Q10 rev of $60.9m up 9.8% YoY while PATMI was at $10.7m, up 12.9% YoY. Record revenue was reached in 3Q10 as all divisions posted healthy increase in rev as demand for healthcare services rose and operating efficiency increased, with EBIT margins up 21.5% YoY…

CIMB has Outperform rating on stock and Technical Buy Call, noting that prices are sitting just above its support trend line as well as its 50-day SMA, and there is a chance that prices might rebound if prices continue to hold above these support levels, however note that prices need to hold above the $2.16 level for any chance to retest high of $2.37. Break below $2.16 would see prices fall towards $2.00…


SMRT: PhillipsCapital maintains Hold, TP at $2.18, representing forward P/E of 19.6x on estimated earnings. Ridership for Aug 10 was higher than Phillips’ expectation, rail 11.8% for first 8 mths (forecast 10%). Revenues are expected to increase in 2Q10 on back of higher ridership and mega events although higher maintenance costs are expected…

Economic environment is expected to be inflationary but SMRT is unlikely to be able to raise costs due to regulatory requirements. Recommends Comfort Delgro (14.7x current P/E for exposure to transport sector). Breakdown of costs are different from Deutsche but view remains bearish on stock.

Spice i2i

Spice i2i: The telephony based firm is increasing its operations in Singapore, and the firm intends to aggressively enter the region. Formerly MediaRing, it was renamed Spicei2i after Indian conglomerate (the Spice Group) bought a $60m stake in it. It will move into a 120,000sq ft complex in Ubi to serve as its global headquarters. Previously the firm was mainly a mobile phone software developer, and now Spice i2i has handset production connections in both India and Malaysia…

Berlian Laju

Berlian Laju: Continues to extend recent rally, with global GDP growth forecasted to grow at 3.9% this year and 4.3% in 2011, grp expects demand growth for chemical freight to outstrip net global fleet growth the next two years...

CIMB, who has been bullish on stock highlights grp can post Ebitda of between US$272m and US$325m annually over the 2010-2012 period. In 1H10, grp’s of US$127.2m vs interest expense of US$64.5 million translated into interest cover of 1.97 times….

Grp’s diversified fleet mix has achieved earnings stability and capitalise on expansion of the global energy market, maintaining a balance between spot contracts, time charters and contracts of affreightment, and an Ebitda compound annual growth rate of over 22% since 1990. Demand growth for chemical tanker charters has generally been twice the GDP growth rate, due to a pick-up in industrial production and global demand for plastics….

In presentations to investors, co. said that implementation of Indonesian cabotage rules could translate into an IRR of up to 50%, providing Ebitda margin of 80%. Grp could be poised to ride one huge tidal surge amid a sharp recovery in the Indonesian shipping sector.

CapitaMall Trust (CMT)

CapitaMall Trust (CMT): UOB maintains a Sell rating of TP $1.85 on CMT compared to $2.02 closing price. DPU of 6.88 cents was in line with expectations of annual DPU of 9.30 cents in 2010. UOB listed several factors impacting rating,
1) dilutive impact of convertible bonds,
2) Narrowing of rental spread in prime Orchard Rd. Rents in Orchard are expected to fall 5-10% in 2H10 due to supply…
3) Relative flat consumer retail spending. CMT’s ytd gross turnover increased 5.6% but dipped on consumer goods. 4) High relative valuation for CMT. UOB noted that CMT has gained 12.2% ytd compared to 9.7% for the Property REITs index and 8.7% for STI. Dividend yield for CMT is at the lowest at 4.5% as compared to all S-REITs.

Fraser Commercial Trust

Fraser Commercial Trust: Grp reported a strong set of earnings with Q4 NPI rising 16% YoY while Distributable Income at $14.2m was up 78% YoY and 14.5% QoQ. For the full year, NPI was up 25% YoY at $93 million, while DPU is at 1.12c, up 29% YoY and translating to a yield of 7%....

Strong performance attributed to rising rental rates, occupancy rates and by contributions from Alexandra Technopark, which grp bought in Aug last year. Contributions from its 2 Australian properties also grew partly as the AUD strengthened....

Grp has a forecasted DPU of 1.30c for FY11, translating to a yield of 8.13%. At current price grp trades at a huge discount to NAV at 0.42xP/B vs other office REITs. (K-Reit trades at 0.92x P/B with yield of 5% and CCT at 1.04xP/B and yield of 5.43%).

Ascott Residential Trust

Ascott Residential Trust: Announced 3Q10 results slightly below median consensus but still in-line with expectations, with rev at 46.5m, up 4.6% QoQ and 5% YoY, however DPU for 3Q10 at 1.85c was down 4% YoY and 1% QoQ, attributed to recent private placement tranche of 419.66m new units to fund acquisition of 28 properties.....

REIT noted that RevPau increased 7% in 3Q10 YoY led mainly by the 37% RevPau growth amg its SG properties due to the successful launch of refurbished units of Somerset Grandhill and Liang Court. Highlights that with addition of Europeans properties, grp’s income stability is enhanced through diversification and that deal would be abt 3% accretive to unitholders.....

Latest results brings 9mth DPU to 5.38c, with management forecasting a DPU of 1.84c for 4Q10 bringing FY10DPU to 7.22c representing a yield of 5.92% and FY11 DPU at 7.74c (6.4% yield). At current levels, grp trades at 0.91x P/B vs CDL hospitality Trust of 1.43x and yield of 4.7x. CLSA had earlier noted that it expects 3Q10 results to be below consensus and full year estimates, but anticipates a ramp-up in earnings as the acquisitions start kicking in from 4Q10.


Ezra’s US$250m acqn of Aker Marine Contractors also viewed as positive as it would elevate Ezra to become a top-tier global subsea player. But short term earnings impact may be negative as AMC Is loss-making & share issue is dilutive. Reported disappointing 19% drop in 4Q earnings to US$21.6m although FY10 net profit of US$76m was up +9%.

FYAug10 results in line with Street estimates, which had already accounted for slower growth. FY10 revenue +7.3% yoy at US$354m, net profit +8.5% yoy at US$76m. For 4Q10, revenue +17% yoy at US$109m, net profit -19.5% yoy at US$21.6m. 4Q results were strongly aided by one-offs, and fair value gains on derivatives amounting to $

Separately, Ezra announced 2 acquisitions from Norway-listed Aker Solutions (AKS), i) Aker Marine Contractors (AMC), AKS’ subsea construction business, ii) 50% stake in a deepwater construction vessel, the AMC Connector….

AMC’s price tag of US$250m will be satisfied through mix of cash, convertible bonds and new shares, while the max consideration for the AMC Connector JV is US$75m. The acquisition of AMC is expected to be completed by Jan/Feb ‘11, while delivery for AMC Connector is scheduled in mid-‘11. Aker Solutions will hold 8.4% of Ezra on completion…

The marriage of Ezra’s construction vessel asset base and AMC’s existing market share and technical expertise will create the fourth-largest global subsea contractor, pitting Ezra alongside heavyweights such as Subsea 7/Acergy, Technip and Saipem. While AMC is currently loss making (US$22m loss in FY10), mgt believes margin rehabilitation is possible given synergies with Ezra’s own construction vessels, and expects to achieve EBITDA margins in line with the industry’s 20+% going forward…

M&A generally viewed positively. Deutsche, UOBK DBSV all maintain Buys, with targets ranging $2.10-2.80.

SG Market

SG Market: Spore stocks likely to open mixed following Wall Street’s softer close on Fri with all eyes focused on SGX’s US$8.2b offer for ASX, which will create the 3rd largest exchange in Asia with a US$1.9tr market & pose a serious threat to HKSE in luring bigger new listings, high freq trading & bring in cost synergies. However, the deal will have to clear significant regulatory hurdles plus a potential political backlash in Aust.

Another concern is the high valuation premium SGX is paying for ASX with the govt poised to allow foreign competitors to operate share exchanges in Aust, ending ASX's long-held monopoly. SGX to issue statement at 9am & resume trading at 10am Support at $9.46 followed by $9.22.

Friday, October 22, 2010


Ezra: Norwegian oil svcs & engrg company Aker Solutions is selling its Aker Marine Contractors unit and a 50% stake in its Aker Connector installation vessel to Ezra for US$250m. Ezra will pay US$50m in cash, US$100m in Ezra shares & US$50m in a 3-yr convertible bond. The final US$50m plus interest will be settled in cash upon delivery of Aker Connector. Based on current price, Aker Solutions will become the 2nd largest shareholder in Ezra with a 8.3% stake in the enlarged share base.

The group currently has net debt of US$314m; post deal gearing will rise to 70%.


Hisaka: +2.6% at $0.39 on strong volume. Sias maintains Buy, raises target to $0.52 from $0.44. Notes previous forecast for automations provider too conservative, after the US semiconductor eqpt industry reported 63% hoh growth over Apr-Sep ’10. Ups FYSep10E revenue, net profit by 7.5%, 9.1% to $78.6m, $8.7m respectively, as still optimistic of company’s prospects. Sees value in stock which trades at 7.5x FY10E P/E. Says TDR listing as catalyst for share price rerating.


SGX: Sky News reported Australian Stock Exchange & Singapore Exchange in merger talks. At same time, also signs MoU with Jiangsu govt to promote listings of Jiangsu companies on SGX. Separately, SGX disposing industiral building located at 18 New Industrial Rd to Lian Beng for $23.6m vs book value of $21.7m. Trading halted at noon.

First REIT

First REIT: 3Q2010 results reported. Distributable income rose 2.5% to S$5.4 million, and will issue a DPU of 1.94 cents for this period, a 2.1% increase compared to 3Q09. Based on its annualised DPU of 7.70 Singapore cents and the closing price of S$0.95 on 20 October 2010, First REIT achieved a distribution yield of 8.1%...

..Gross revenue increased 4.6% to S$7.9 million while net property income rose by 3.7% to S$7.8 million. The reason for increase was due to higher rental income from Indonesian properties. The closing date for distribution is on 1 Nov and the actual distribution date will be on 29 Nov.

China Mobile ADR

China Mobile ADR: CIMB maintains Neutral Call on grp with TP of US$50.59, highlights that recent 3Q10 results was bellowing estimated forecast, with only a 3% YoY growth in Net profit. Notes that a second round of handset subsidies could depress margins as net terminal kick-offs struggle for market shares. Grp currently trades at EV/Ebitda of 4x CY11, vs Asian peers average of 5.8x….

Technically counter could see some Buying interests with indicators still positive but facing the risk of losing momentum. With longer term trend still intact, resistance tipped at US$54.70 and US$57.00, with support at US$52 and US$49.90.

CapitaMall Trust

CapitaMall Trust has reported 3Q2010 results. Estimated DPU for this quarter is at 2.36 cents. CMT has had a DPU of 6.88 cents from 1 Jan to 30 Sep 2010, 6.8% higher than the same period in 09. Gross revenue grew 6.3% yoy to S$148.2 million in 3Q 2010 while net property income was higher by 7.1% over that of 3Q 2009…

…CMT registered strong occupancy rates of 99.6% as at 30 Sep. DPU on an annualized basis is 9.36 cents and yield is approx 4.66% based on closing price of $2.01. NAV per unit is 1.50 excluding current distribution.


UMS provided an update on its dual listing intentions of Korean Depository Receipts on KOSDAQ yesterday, with SIAS Research and CIMB upbeat about the dual listing potential, tipping a KDR listing to be listed at a premium given Korea’s strong semi-con industry. Highlights that Korean semi-con peers trades at an average of 1.96x P/B vs UMS 0.95x P/B…

Highlights optimism over UMS’s 3Q FY10 results which will be released within the next 3 weeks, due to strong reporting earnings from the North American semi-con industry which saw average bookings in the industry grow 45.1% vs 6 mths ago. CIMB has TP of $0.58, while SIAS has TP of $0.75.

Longcheer Holdings

Longcheer Holdings: CIMB has technical Buy call, note that share price has been consolidating in a minor consolidation triangle in the past mth, and prices above the 50-day SMA should keep the medium term uptrend intact. Highlights that RSI and MACD are now at its neutral levels and prices should be ready for the next move. Resistance tipped at $0.835 and $0.88-0.90 with stop loss at $0.76 (50-day SMA)


Oxley plans to launch five more projects with a total of 338 residential units and 28 shops. The projects will be at Devonshire Road, Holland Road, Kovan Road, Stevens Road and Telok Kurau Road. Including the five new developments, Oxley has a potential 517 residential units and 35 shops….

…Other properties include a 60-year industrial plot at Ubi and 21-storey freehold office building at Robinson road. Oxley launched its IPO on the SGX Catalist Board yesterday, 224m new shares at $0.38 to raise a net total of $81.2m Proceeds will be used to fund the developments

Mun Siong

Mun Siong: opened at S$0.295 on its debut, vs IPO price of $0.20.
The mechanical and electrical engineering firm offered 107m shares in its IPO vs 132m total shares issued. The offer was subscribed 6.1 times.

Allied Technologies Ltd

Allied Technologies Ltd: Group will record a net loss for 3Q2010 based on a review of unaudited financial results. The losses were due to foreign exchange losses from inter-company balances. Losses are unrealized and arose from an appreciation of Sgd. 3Q2010 financial results will be disclosed on or before 10 Nov 2010


F&N: Deutsche maintains a Buy with a price target of $6.75. F&N has plans to acquire King’s Creameries for $20.8m, approximately an NTA of 1.4x. Given its size, the acquisition is not expected to affect profitability. 2010 forecasts remain unaffected with net profit of $580.1m and EPS of 0.42. King’s is a significant ice cream player in Malaysia and Singapore and F&N is in line with its current strategy to scale up its existing ice cream business.

China Interest rate

China Interest rate hikes: DMG note surprise rate hikes could hit SGX listed companies, pointing out CapitaLand, China Minzhong and Yangzijiang to be possible casualties…..

Highlights that CapitaLand risks a bigger fall-out compared to peers with 35% of RNAV from China, but noted that that earnings should be less affected, given its resilient retail portfolio. By comparison, impact on Keppel Land which has a 25% RNAV exposure to China should be negated by its large exposure to the rebounding office sector in SG…..

Earnings of vegetable producer China Minzhong could notch lower as a stronger yuan puts pressure on its export sales with export sales making up 68% of the group's rev, while Yangzijiang, could be hit by a stronger Yuan as it takes in shipbuilding contracts that are typically in US dollar terms, but stomachs most of its costs in Yuan terms…..

Sees some positive impact for China Essence and C&O Pharmaceutical, with China Essence's higher borrowing costs likely to be more than offset by savings from USD and HKD denominated debts, while C&O Pharmaceutical could expand gross margins since cost of purchase are made with USD.

MapletreeLogistics Trust

MapletreeLogistics Trust: 3Q results generally within expectations with DPU rising 4.1% to 1.54c and NPI up 8.1% to $47.6m YoY. Enhanced yield was attributed to acquisitions this yr, where grp bought 10 properties in SG and Asia to grow book value of portfolio by 16% to $3.4 billion vs $2.9 billion YoY, tipping more acquisitions to come……

Occupancy rate for grp’s portfolio remained steady at 98%, up 1% QoQ, with aggregate leverage ratio at 39.9%. Following results, grp will declare a distribution for the period Jul 1 to Oct 14 - which was the day immediately before the date on which its new units were issued and listed and will announce the cumulative DPU for the period later……

DPU for 9mths FY10 currently at 4.54c, on tract to exceed FY09 DPU of 5.91c. We note that at current levels grp currently trades at 1.05x P/B with an annualized yield of 6.7% for FY10. Peers Cambridge Industrial trades at 0.95x P/B and yield of 8.93%, while Ascendas trades at 1.32x P/B with annualized yield of 6.48%

Keppel Corp

Keppel Corp: 3Q10 results ahead of expectations. Turnover fell 19% to $2.5bn, but net profit +8% yoy, flat qoq, at $346m vs avg mkt est of $284m. Margins rose for the O&M segment, on higher bookings as more projects reached completion, and for the property segment, driven by contributions from Keppel Land and the Keppel Bay projects…

Mgt remains upbeat on outlook, sees higher enquiries, more orders on the O&M side. Near term, market likely to react positively to results, mgt outlook. Expect further boost to sentiment on letter of intent from Mermaid Maritime for 2 jackup rigs worth US$360m, with options for another 2 rigs. Keppel has also awarded a $900m capex contract to Alstom, to expand its natural gas fired Keppel Merlimau Cogen plant on Jurong Island...

Further ahead however, we flag Keppel’s declining order book, which has dropped to $4.1b at end 3Q10, from $4.8b at 2Q, $5.6b at end FY09. FCF has reversed from +$1b to -$1b, which may be a sign of slower order uptake as well. Mkt watchers tip further delays in award of the Petrobras contracts. Infrastructure also likely to remain a drag, given cost overruns, delays in its Qatar project…

Still Deutsche maintains Buy with $11.45 target.
UOBK maintains Hold, but raises target to $9.20 from $8.85 to reflect better than expected 3Q numbers.

SG Market

SG Market: Spore stocks likely to edge higher in the wake of modest gains on Wall Street but all eyes would be on SGX as trading in 19 ADRs of China A-list companies begins. SGX also announced plans to extend its cooperation with NASDAQ OMX to include cross-listings & dual listings for new IPOs. Impact of ADRs trading difficult to guage, most investors expected to take a wait-and-see attitude but interest may pick up next few months as SGX offers advantage of trading on Asian time-zone & no capital gains tax. Other stocks in focus:

*One notable ADR play could ba Baidu, which reported 3Q10 results at high end of consensus range. Search advertising continues to drive 95% of revenue. Market share increased to 73% in 3Q vs 71% in 2Q. This trend should continue as recent disputes in China Google should detract Google’s focus in China. Street estimates put target price at US$85 per US ADR. Note ADR to share conversion ratio for US ADR & S-ADR are different. Stock was +2.5% in regular hrs but rose another 2.2% aft-hrs.

* Keppel Corp 3Q10 net earnings of $346m (+8.4% yoy) is ahead of expectations despite revenue drop & shrinking orderbook. Share may be lifted by more positive outlook on the O&M front & latest US$360m order for 2 jack-ups by Mermaid
* Mun Siong to debut this morning. IPP price is $0.20, this petrochem-related enrgr company trades at ~8.5x P/E vs industry peers of 7.5-10x.
* Allied Technologies issues 3Q10 PROFIT WARNING.
* KS Energy Services unit secures US$50m contract.
* Capitaland faces a lawsuit in Macau
* Oxley to launch another 5 residential & commercial projects
* MapleTree Log Q3 DPU rises 4.1%; income up 8.1% to $47.6m.

Thursday, October 21, 2010

Mun Siong

Mun Siong valuation translates to ~8.5x FY11 P/E, which is within 7-10x average for the plant engrg industry. Close competitors include Hai Leck (6.7x), Hiap Seng (7.1x), PEC (8.5x) & Rotary (9.9x). Valuation is fair with limited upside, but stock may see strong trading interest when it debuts given small 2m share allocation to public, vs 132m total shares issued.


BioSensors: Announced the acquisition of certain assets of Devax (A maker of specialty Stent) for US$5.7m. Purchase consideration would come from existing cash resource and internally generated funds and the acquisition is not expected to have a material impact on grp’s EPS or NTA for FY11 Mar…..

On a separate note, DBSV notes that its Chairman made a princely sum of $174m after his share sales, and quoted chairman’s wish to be ‘Part of Biosensors - without an accompanying financial burden’. Highlight that the divestment does not change grp’s strategy and intent to take a more aggressive position in China. In fact, Hony Capital was chosen by the Chairman for its expertise in the Chinese pharmaceutical sector and ability to beef up grp’s financial muscles.

Cambridge Industrial Trust (CIT)

Cambridge Industrial Trust (CIT): Reported results for 3Q2010. Achieved net income of $10.8m with a DPU of 1.187 cents, lower 3.6% as compared to previous year. Revenue was at $18.2m , down 2.6%, primarily due to lower rental income resulting from the sale of several properties since last year. Book value has decreased from $874.2 million at Dec 31, 2009 to $838.5 million. Occupancy rate remains high at 99.97%....

…The company has secured new financing of $70m for the next 3-year period for funding purposes. Following the $40.0m private placement in Aug 2010, new assets worth $37.1m were acquired. Unitholders will receive the balance of 0.507 cent per unit on 30 Nov after the initial 0.680 cents paid out on 16 Sept.

Keppel Land

Keppel Land: CIMB and OCBC maintain Buy call, with CIMB’s TP at $5.13. Highlight that on-year decline in rev and net-profit due to completion of major Singapore residential project in 2009. Note that coming quarter likely to see strong sales in resilient mass-mid tier homes in China. With 39% of GAV still in prime office assets, grp should remain a key beneficiary of asset re-pricing in the sector…….

Adds that MBFC sale and further accretive re-investments likely to drive share price in the near-mid term, and grp is currently trading at 21% discount to RNAV. Any pull back would represent a good opportunity to accumulate. Similarly Kim Eng has Buy Call with $5.60 TP.

Mapletree Industrial Trust

Mapletree Industrial Trust likely to surge on debut as stellar performance of GLP on Mon, +9.7% vs IPO price, shows huge appetite for listings with backing of Spore govt. MIT could fare better today with offer 37.9X subscribed (vs GLP's 12X), priced at yield of 8%, well above peer Ascendas 6.5%. Apart from attractive yield, catalyst could come from conversion of 22 flatted factory clusters into business parks, which command much better rentals.

Secondly, MIT is backed by Mapletree Investments, a pedigree brand name. Offer could raise up to $1.19b if overallotment option exercised; proceeds to buy 6 properties in Spore, repay debt. Note sister coy Mapletree Logistics +4% to $0.92 this morning, riding on the positive vibes of MIT’s IPO.

Keppel Land

Keppel Land: 3Q10 results, in line with expectations. Net profit to sh/h came in at $70m, +10.7% yoy. Residential sales accounted for 70% of earnings, mainly due to higher contributions from Reflections and Caribbean at Keppel Bay, Marina Bay Suites and Marina Bay Residences in Singapore, as well as stronger than expected demand for The Arcadia, Villa Riveria, Springdale in China, in spite of policy concerns plaguing the China mkt…

Looking ahead, the asset swap deal with K-Reit is expected to contribute net gain of $321m in 4Q10. Next quarter will also see a strong launch pipeline, comprising the Lakeside plot in Singapore, Rivera Point in Vietna,mand possible launch of 8 Park Avenue and Seasons Park in China.
Street estimates for RNAV range btwn $5.00 - 5.20.
UOBK, Deutsche, KE all maintain Buys, with targets ranging btwn $5.00-5.60, pegged to btwn 1.0 - 1.1x Price/RNAV.


NOL: CIMB maintains Technical Buy call, following grp’s stellar results yesterday. Note that prices have broken out of its consolidation triangle and the $2.16 resistance. If $2.16 is taken out, prices could easily retest the $2.35 levels, followed by $2.50….

Other indicators look fairy positive with MACD and RSI hooking upwards from a neutral standpoint. Stop loss at $2.02 and $1.99.

CapitaCommercial Trust

CapitaCommercial Trust likely to gain after reporting 7.6% yoy rise in 3Q DPU to 1.99¢, +1.0% qoq (2Q: 1.97¢). Results are ahead of expectations, occupancy rates show improvement qoq. DPU gains largely due to lower property tax, interest savings on lower borrowings with net property income down 1.0% yoy to $76.3m but +2.8% qoq. CCT notes demand for office space increased in 3Q10 reflecting improved business & market sentiment. Grade A office occupancy rates up to 97.2% vs 93.6% in 2Q.

Expects positive demand growth to continue into 2011. Reit +0.7% at $1.44 yday; recent peak at $1.49, highest since Sep 2008. Current yield ~5.5%.

Wednesday, October 20, 2010

*** IPO education ***

IPO education: SGX has a section on its website that provides video coverage on the new IPOs. They provide company description and analyst opinions. Saves your time from going through the prospectus.


Singapore Airlines (SIA): UOB Kay Hian maintains a Buy at S$16.04 upon expectations on net profit rising 46% qoq for 2QFY11. SIA is expected to achieve S$369m in net profit for 2QFY11 compared to S$253m in 1QFY11. Key factors are:
a) higher pax load factor of 80.3% vs 78.4%
(+1.9ppt qoq, +0.7ppt yoy),
b) lower fuel cost and efficiency from the A380s and
c) higher passenger yields…

UOB analysts expects SIA to benefit from the 2% qoq appreciation of the Sgd and lower jet fuel prices -3.4%. SIA expected to post operating profits in passenger and cargo operations of S$285m (+110% qoq) and S$53m (-11% qoq). The Sgd is expected to appreciate more and SIA to benefit from lower fuel costs….

…Yields are expected to rise on increased fares, which are typically raised in 4QFY10. A 1.7% qoq rise in yields for 2QFY11 have been priced in on this assumption. Higher traffic growth is slated to come from increased flight frequencies by 40% to US and Seoul in Oct and to Japan and Middle East in Nov…

…Downside risks include high jet prices and increased competition from Middle Eastern and low cost carriers


DBS Group Holdings (DBS): UOB Kay Hian maintains Buy at $19.55, expects loan growth to moderate and valuation to remain attractive for 3Q10 results. Overseas loans expected to slow after growing at 11.8% in 1H10 due to strongappreciation in the Sgd. Negative impact on interest margins due to low SIBOR of 0.46%. ..

…Fee income from capital mkt activities grew in 3Q10 but both fee income from credit cards and loans were moderated. Expected after the Great Singapore Sale and slow growth in loan approvals and syndication. The cost/income ratio to increase from 39.5% in the 2nd quarter to 43.8% in 3Q10 due to increased installation of ATMs and IT systems weighing on cost. DBS changed key performance indicators in 1H10 for its corporate bankers to improve cross-selling of treasury products...

Net trading income is expected to remain at current high levels. Asset quality is expected to improve and general provisions to decrease upon slower loan growth. Dubai World received approval on a restructuring plan for US$24.9b worth of debt. Non-performing loans (NPLs) related to Dubai World projected to upgrade in 6-12 mths if obligations under those terms are met.


SMRT: Deutsche maintains Sell at target price 2.05. Valuation unattractive at P/E 20x and 3yr EPS CAGR of 3%. SMRT to report earnings on 29 Oct. Analysts expect earnings to decline 21% YoY even though revenue is expected to increase 5% due to costs from CCL. Mgmt projects continuing losses from CCL ops and increased costs as well…

CCL and bus ridership in August grew 13% and 7% YoY respectively, in line with Deutsche’s expectations. Downside risks include shortfall in Circle Line (CCL) ridership and higher start-up costs of operation.


Goodland: trading halt lifted at 9am this morning. Proposed placement of up to 31.9m new shares at issue price of $0.14/sh, approximately a 20% discount to last traded at $0.175. The total proceeds will be $4.3m, $3.3m will be used to purchase land banks and $1m for working capital and corporate uses. NAV/sh to drop to 6.3cts from 7.8cts, EPS to drop to 0.54cts from 0.86cts, based on FYSep09 numbers. Kim Eng is the placement agent.

Sky China Petroleum

Sky China Petroleum: halt lifted at 9am this morning. Private placement of 60.3m new shares at issue price of $0.1768/sh, representing 16% discount to last close at $0.21. The new issue makes up 17.67% of existing total issued and paid up capital and 15.02% of the enlarged new share base…

The proceeds of $10.61m, in conjunction with existing company resources, are to be used to fund the acquisition of a vessel for expansion into the oil transportation segment. The NAV/sh will drop to $0.295 from $0.353, and EPS to drop to 1.37cs from 1.64cts, based on 1H10 figures.

CapitaRetail China Trust (CRCT)

CapitaRetail China Trust (CRCT) reported net property income of RMB94.2 million for 3Q 2010, 9.1% higher than the 3Q 2009. Gross revenue was up 4.5% at RMB 147.2m during the same period. The amount available for distribution is S$13.0 million….

Distribution per unit (DPU) for the quarter ended 30 September 2010 is 2.08
Singapore cents, a 3.0% yoy increase compared to 3Q 2009. Based on 19 Oct 2010 closing price of $1.24, this results in a distribution yield of 6.7%....

The Chairman of CRCTML, Mr Victor Liew commented that China’s retail sales of consumer products grew 18.2% yoy in the initial 8 months and the economy is expected to grow about 10.5% in 2010.CRCT has also secured the refinancing of S$200.5m of loans due in November 2010, extending the maturity period to 2013 and 2014 and will expect no refinancing needs in 2011.


Healthway: Peter Lim sold down his stake from 7.2% to 4.9% on 14 Oct. Now you know the real reason for the share price weakness. We have strongly hinted earlier that a key sh/h does not see eye to eye with the company's expansion plans in China.


Osim: 3Q10 results. Net profit +86% yoy, +7% qoq to $13m, as margins improved due to better pdt mix, lower other operating costs. However sales fell -5% yoy, -11% qoq to $117m, as mgt converted its GNC Australia into franchised outlets, albeit with better profitability...

Co continues to grow its distribution network, with no. of Osim outlets expanding from 566 to 584, RichLife outlets increasing from 196 to 217, in 3Q. Plans to open 20-30 more Osim outlets, 30 more RichLife outlets by year end, to achieve its target of 50-80 new Osim outlets, 60-100 new Richlife outlets in China per annum…

Despite the higher store count, we flag that China sales declined from $79m to $66m in 3Q, apparently as lower avg selling price more than offset higher volume sales. We would find this worrying if the trend continues into the next quarter.
Still, OCBC maintains Buy with $1.52 target. Stock trades at 17.5x consensus FY10E PE.


NOL: 3Q10 net profit of US$282m, reversing US$139m net loss last yr, and nearly triple 2Q10’s US$100m net profit. Results handily beat analyst estimates of btwn US$157-233m. Revenue surged 55% yoy to US$2.4bn, driven by strong demand and an improved rate environment…

Volume was up 12% to 655k FEU, underpinned by improvement on the Trans-Pacific and Asia-Europe routes. While avg revenue per FEU shot up 41% to US$3120 on the back of improved rates on most major routes and the implementation of peak season surcharges. Mgt expects to remain profitable for full FY10...

Stock trades at 1.35x PBm, 13.2x consensus FY10E PE.
Goldman yesterday raised target to $3.20 from $3 previously, keeps Buy.
Morgan Stanley keeps Overweight with $2.35 target. Notes any dip in share price arising from seasonal 4Q weakness would provide a good opportunity to accumulate.
Other houses may follow with upgrades as well this morning, in view of the positive earnings surprise.

SG Market

SG Market: Spore shares esp commodity sector likely to be weighed down by Wall Street’s steep slide & China’s surprise rate hike. O&M stocks may also be hit despite sector upgrade by Credit Suisse. NOL likely to see another round of broker upgrades after reporting 3Q results that blew out market estimates. GLP will enjoy insti interest ahead of inclusion in MSCI indices come 1 Nov. Genting Spore also seeing renewed interest as it comes close to breaking $2.18 peak.

Resistance tipped at May 2008 peak of 3,268, support at 3,136.
* NOL extends run into 3Q10 with net earnings of US$282m vs US$99m in 2Q
* STX Group to list unit on SGX.
* Osim 3Q10 earnings +86% yoy, +7% qoq
* Sunpower Group secures contracts worth Rmb54m.
* Chemoil to expand its storage capacity in the Middle East
* China-based aluminium producer XinRen Aluminum IPO opens today

Tuesday, October 19, 2010

Mapletree Industrial Trust IPO details

Mapletree Industrial Trust IPO details: Received overwhelming response esp from insti investors. Placement tranche of 488.8m units was 39.8x subscribed while public offer of 80.7m (excl reserved units) was 27.7x subscribed. Overall, the IPO was 37.9x subscribed. Balloting outcome of the public offer will be released on 20 Oct.

Tiger Airways

Tiger Airways: More body blows for the budget carrier following recent bad publicity over flight cancellations & pilot shortage. The launch of Thai Tiger Airways could be delayed by up to 2 months from its scheduled Mar 2011 takeoff. According to Bangkok Post, joint partners, Thai flag carrier, Thai Aiways & Tiger Airways require additional time to complete negotiations for the JV.

Thai Airways also faces possible legal opposition from the Transport Ministry on whether the creation of its 51:49 JV with Tiger Airways is legitimate. A breach of the $1.87 would take the stock on further descent to $1.80 level.

Indofood Agri

Indofood Agri: Nomura upgrades to Buy from neutral, raises target to $3.20 from $2 previously. Likes IndoAgri’s increasingly diversified exposure to rubber and sugar upstream earnings from its growing non-palm plantations.

Golden Agri

Golden Agri: Nomura upgrades to Buy from neutral, raises target to $0.85 target from $0.55 previously. Expects company’s battle with environmentalists (ie Greenpeace) to wane as long as GGR meets the demands recently issued by the RSPO, which could lead to re-rating for stock.


K-Green: Posted net-profit of $4.4 million, 26.5% higher than grp’s forecast of $3.61m with EPS for 3Q at $.70. Underlying performance of assets is expected to remain stable with assets having long-term concession agreements with Singapore statutory bodies. Grp distributions are carried out semi-annually and DPU or FY10 is expected to be on track to meet its annualized div yield for FY10 at 6.82%. Group current trades at 0.95x P/B

STX Pan Ocean

STX Pan Ocean has obtained a 25 yr contract from Fibria Celulose SA of Brazil to move wood pulp. This is expected to net them $5 billion in revenue in the 2012. The company is dual-listed is Seoul and is currently up 4%...

The LT plan of STX PO is to penetrate into the transportation market for wood pulp and establish a source of sustainable profits. Fibria Celulose SA is the largest supplier of wood pulp, estimated at 30% of global wood pulp market share.

Straits Trading

Straits Trading: Straits Trading’s subsidiary (73.12% owned) Malaysia Smelting Corp is planning to issue 12.5m - 25m shares for its secondary listing on SGX. The listing is to happen by 1Q11 and could raise about RM100m based on the expected issue share price of RM4. This listing has been submitted by the Singapore Branch of CIMB Bank.

Keppel Land

Keppel Land: 2 acquisitions by its subsidiary, Keppel Land China Ltd in Chengdu, at Jinjiang District and Xinjin County for RMB 1.2bn and RMB 617m. The first site located in Jinjiang is close to Chengdu’s financial district, and is slated to provide 1630 high-rise apts. The second site is made up of 2 parcels of land. One near Tianfu New City, the future software town and the other near the future CBD….

Both are targeted at the upper-middle income segment and should be launched in the 1st half next year. At 1H10, over 18% or $1.2bn of KLand’s total assets is invested in China and 28% of net profit derived from there.


Noble: proposes to issue USD-denominated perpetual capital securities, with in-principal approval to list on the SGX. Size of fund raising not mentioned, but follows nearly US$1.3bn of debt raised via loans, bonds since Jun this year. Net proceeds to be used for general corporate purposes, which could include significant future M&A in our view. JPM, RBS are the joint structuring advisors. Both banks and StanChart are the joint bookrunners and lead mgrs…

Separately, Noble also proposed to acquire up to 34.5% of East Energy Resources (EER), via exercise of free options at A$0.20/sh for aggregate A$6m. EER is an ASX listed coal explorer with key asset being an Exploration Permit for Coal, EPC 1149, which covers an area of ~900 sqkm in Eromanga Basin in Queensland. It has a JORC Inferred Resource of 1.2bn tons of coal. EER has book value of A$2.3m, NTA of A$0.2m, which compares with its open mkt valuation of A$6.1m.

K-Reit Asia

K-Reit Asia: Grp reported 3Q results which were within expectations on back of higher office occupancy and rental rates. 3Q10 Net Property Income rose 42.4% YoY, while Net distributable Income increased 26.3% YoY, with occupancy rate at 99.1%. DPU for 9mthSept currently at 4.65c, translating to an annualized yield of 6.22c and a distribution yield of 4.8% vs YTD09 of 4.3%, however we note that QoQ, annualized distribution yield fell 10.3%....

Management expects positive economic growth in region to sustain office sector recovery and aims to pursue opportunities for acquisitions in SG and Pan-Asia. With proposed acquisition of 1/3 stake in MBFC, management expects enlarge asset size to reduce cost of borrowing and expects it to add on to its forecasted DPU of 6.68c (+10.2%) for FY11. Grp currently trades at 0.91P/B vs peers Suntec REIT of 0.86X and Capital Commercial Trust of 1.39x P/B.

Ascendas REIT

Ascendas REIT: Results came in slightly below forecast caused by higher retained income, softer occupancy and higher operating costs. However signs of a bottoming out in occupancy rates and rentals indicate a stronger 2H11 performance….

2Q Rev and Net Property Income rose 8.5% and 3.5% YoY respectively, but declined 2.2% and 3.9% QoQ. Combined DPU for 1H11 now currently at 6.67c, translating to an annualized yield of 6.3%, on track to meet FY11 estimates of 13.7c DPU……

Deutsche Bank has Buy call with $2.33 TP based on DDM. Expect management plans to undertake $97m of Asset Enhancement Initiatives to boost yield (est +8.5%) and medium term growth. Grp currently trades at 1.34x P/B vs peers Cambridge Industrial of 0.95x and MIT of 1.19x P/B.


M1: 3Q10 results. $40m net profit in line with expectations, but underlying performance not particularly impressive. Revenue +30% yoy to $246m, mainly driven by subsidized handset sales rather than service revenue, resulting in some margin compression...

New mobile customer adds were +43k qoq (vs +53k in 2Q10). Post-paid ARPU remained flat due to higher handset subsidies. Stripping out subscriber acquisition costs however, ARPU rose by more than $4 per user to $64.10, driven by more smartphone users which now account for 40% of the subscriber base…

Going forward, capex to rise by additional $10-20m, in view of the additional 3G spectrum. But of more concern is mgt’s plan to build its own OpCo network to target corporate customers, which raises some uncertainty around its future capex requirements and reduces the potential for near-term capital mgt. On these grounds, Deutsche has a Hold rating with $2 target.
This compares with KE’s Buy rating with $2.62 target, on view that capital mgt remains a potential catalyst for the stock.

Monday, October 18, 2010

* Mapletree Industrial Trust *

Mapletree Industrial Trust: market watchers tip to rise to as much as $0.99 on the first day of trading on Thursday, Oct 21. CIMB notes MIT could fare better than GLP, given strong demand for assets with higher yields in the market. Says MIT’s story is easier to understand as it is a Reit with a visible cash flow and distribution. Says current environment is favorable, given plenty of liquidity looking for high-yield products. MIT touts a prospective yield of 7.6%.


M1: +0.9% at $2.26, outperforms vs peers with SingTel flat at $3.07, StarHub -0.4% at $2.61.
Interest in M1 likely due to expectations for good 3Q earnings, due after market close, also on belief Spore's smallest telco has most to gain from rollout of Next Generation National Broadband Network (NGNBN)…

CIMB rates M1 as top pick, with Outperform call. Raises target to $2.70 from $2.60, tips core net profit of $42-43m, +3-6% qoq, +24-27% yoy. Says growth to come from rising data usage from growing smartphone usage, better roaming revenue from soaring inbound visitors, higher voice usage and growth in wireless broadband.
Keeps Underperform on StarHub, SingTel, with $2.24, $3.09 targets respectively.

Tiger Air

Tiger Air: -3.1% at $1.89. Credit Suisse last Friday, initiated at Underperform with $1.85 target. We note that the market continues to be concerned about i) recent flight cancellations, ii) potentially higher operating costs associated with pilot shortages experienced by the budget carrier, iii) lack of updates regarding the JV with Thai Airways, which appears to be under much scrutiny from the Thai Ministry of Transport…

UOBK has a negative near term technical outlook, given the recent break of uptrend line. Advises investors to watch for the $1.87 support level, which if broken could indicate further downside to $1.69.
Nevertheless we note Morgan Stanley’s recommendation for longer-term investors to accumulate near $1.80 levels.

Viking Offshore

Viking Offshore: Announced purchase of 100% stake in Marshal Systems, a leading integrator of marine communication, fire and safety equipment and control and instrumentation systems for $17m as part of strategy to transform into a leading offshore and marine integrated services provider. Acquisition will be funded by $12m cash and $5m worth of Viking shares. For 6 mths ending, Marshal Systems recorded an operating profit of $3m, with gross profit margin of approximately 50%......

Proforma financial effects of the proposed acquisition would result in NTA/Share increasing by 27.1% to 13.6c/Share and an EPS of 3.1c/share, placing FY10 PE at 6.29x. Technically, current resistance at $0.205 and support at $0.19.

Mun Siong

Mun Siong trading at 8.5x FY11 P/E, which is within 7-10x average for the plant engrg industry. Close competitors include Hai Leck (7.1x), Hiap Seng (7.3x), PEC (8.6x) & Rotary (10x). Valuation is fair with limited upside.


SembMarine likely to get a lift this aftn on news that subsidiary Jurong Shipyard has secured US$384 million orders for 2 turnkey jack-up rigs with options for another 4 jack-ups from Seadrill. If options exercised, the total contract value could be worth over US$1b. This contract will be its largest rig order to-date, reflecting the growing market segment for quality premium high spec jack-up rigs.

Indeed, SMM recently announced another rig deal less than 2 weeks ago, with 2 turnkey contracts worth up to US$364m to build 2 jack-up rigs for Atwood Oceanics with options for another 3 rigs. The latest contract is scheduled for delivery in 4Q12 & 1Q13. Industry sources tell us that some ex staff of KepCorp have become free agents & are swinging contracts to SMM.

UBS, which has Buy rating with $5.00 target believes the stock is poised for a near-term share price rally with abundant liquidity & positive order momentum. With 92% of 2011 earnings backed by order book, this could provide further avenues for consensus earnings upgrades. Raises 2011 net profit estimates by 10%. Stock is grossly overbought but a breakout above $2.50 could see it test Feb 2008 peak of $4.73.

Hu An Cable

Hu An Cable: Secures RMB 11m contract from Guodian Hefeng Wind Power Dev Co to provide wind power cables for their Daqingbei Wind Power Project Phase 1 in Heilongjiang province, with installed capacity of 50MW pa.
This brings Hu An’s order book to RMB 500m, expected to be fulfilled within next 3-6mths. This compares with FY09 revenue of RMB 1.4bn. Both Philip, CIMB have Buy ratings with $0.53, $0.64 targets respectively.

First Resources

First Resources: Stock Alert, counter trading at its 1 yr high of $1.26. CIMB has technical Buy call with TP of $1.31 and $1.43. Note that prices broke out of its flag resistance few days ago, and expect prices to re-rate towards $1.31 and $1.43 once the longer term uptrend resumes……

Note that Technical landscape is improving with MACD histogram bars continue to gain strength while RSI is rising towards the upper band of the neutral zone. Recommend investors start to nibble. Tip critical support at $1.16 (resistance-turned support level)…..

We note that GoldenAgri made a new year high today at $0.70, which could lead to some 'catch-up' play among its peers.

Serial Systems

Serial Systems: -3.1% at $0.155, among top actives. Sias maintains Overweight with $0.20 target. Says company’s past capex investments in China paying off, with China contributing to bulk of growth in 3Q10 results. The distributor of electrical and electronics components counts Haier, Changhong amongst its major customers, and continues to gain mkt share as it acquires new customers such as Tyco Electronics Sees successful TDR listing as catalyst, which will help company raise new funds to support business expansion, and improve the co’s visibility in Taiwan.


SIA: Credit Suisse keeps Outperform with $18.50 target after carrier's Sep operating numbers shows pax demand virtually flat yoy & mom given that Sep is usually one of the weakest in 2H. On the positive side, pax load factor rebounded 2% vs Aug & remained high by historical standard, implying a favourable pricing environment. Adds cargo demand +9.2% yoy, +2% mom on view the Asian air cargo market is stabilizing & could see further improvement as we head into the seasonally stronger 4Q.

Notes, forward P/B of 1.3x, EV/EBITDAR of 5.0x at or below historical averages. Target price implies 1.5x forward P/B. Support at $15.94.

Changtian Plastics & Chemical

Changtian Plastics & Chemical - Thinly traded counter, however Net Profit for the plastic and chemical manufacturer for 1H10 was at $17.78m vs FY09 $27.2m, with EPS at $0.03. Annualizing EPS would place FY10 PE at 3.16x vs historical average of 3.51x. Pegging current estimated valuations to its P/E average would represent a TP of $0.21. Co. is seeking opportunities to expand manufacturing capacity…..

Technically, stock looks weak with RSI moving downwards to the Oversold region, near-term support level at $0.18, followed by $0.17.

Sound Global

Sound Global: CIMB has technical Buy call, highlights that counter broke out of its wedge resistance few days ago. Notes that prices could consolidate sideways in the near term, but once consolidation is over, expect prices to test $0.91 and $0.97…..

MACD histograms are bout to turn positive while RSI is also above the 50 pts mark. Tips near term support at $0.78.


GuocoLeisure: +3% at $0.695, among top actives. Hotel and invmt group with businesses in the UK, US and Asia reported decent 1QFYJun11 results. Revenue +21% yoy to US$102.2m, on better hotel operations and higher gaming wins, boosting net profit by +39% to US$16.7m. Mgt says group still well positioned to meet any uncertainties over the next 12 mths. Stock trades at 0.7x PB, 12.7x PE.


1 ) China New Town: +5.9% at $0.18. Confirms it will dual-list in HK by way of introduction. To commence trading on SEHK on Oct 22. Stock to be traded in board lots of 2,500 shares, under stock code 1278…

2 ) United Envirotech: to list 32m TDRs at NT$15.6/TDR, translates to S$0.53/sh, based on 1 TDR = 1.25 shares. Price is ~8% premium to last traded at S$0.49. TDR to commence trading Oct 22. Group expects to raise NT$500m (~S$21m), to expand operations in Taiwan, and provide additional source of funding to pursue water invmt projects.

3 ) BH Global: TDR to list on TSE on Oct 20. Recall 30m TDRs to be issued (equal to 60m shares) at issue price of NT$17/TDR, or S$0.36/sh, which is similar to last traded price.

4 ) China Gaoxian: lifted trading halt at 9am. Submits prelim listing application to KRX.