Monday, January 31, 2011


Rotary: unchg at $1, claws back morning session’s losses. Co files for quotation of ADRs on the OTCQX. No new shares will be issued.
Going by DMX’s ADR experience, the Spore counter would likely see a boost in trading interest, but the ADRs itself would be little traded.
Fundamentally, we see limited impact on the company.

Filed registration to quote ADRs on OTCQX. OTCQX is the mkt for non-US co to trade over-the-counter without compliance costs of SEC requirements. Issue will be non dilutive and each ADR will be represented by 20 ordinary shares. Further details will be announced when listing is approved…

This may create some interest in the stock over nxt few days and generally provides accessibility to US investors. Rotary trades at 8.93x P/E close to avg of 8.53x. Development is puzzling due to US not being a key mkt of Rotary though it might generate interest and liquidity.

*Rotary trades at 8.93x P/E close to hist avg of 8.53x.


CPO: Palm oil up 1.4% today, partly due to crude oil rising and possibly due to floods in Msia. Estates in Borneo and southern Johor have been flooded affecting transportation. Situation in Johor could become worse after 3 main rivers which are near oil palm estates burst their banks on Sunday and another 5 more rivers could over flow...

Apart from transportation, heavy rains and floods would affect yield quality of the palm fruits. Generally beneficial to Golden Agri and Indo Agri if prices continue to climb but both counters have been falling in a downward trend despite palm oil prices edging up recently. Golden Agri trades at current P/E of 8.87x and Indofood Agri at 23.20x.


Banks: HSBC upgrades UOB & DBS to O/W from U/W with the UOB its top pick for the sector. Also upgrades OCBC to Neutral from U/W. From an ASEAN banks perspective, Spore remains its preferred market given relatively undemanding headline valuations & lack of macro & political uncertainty. Highlights that having underperformed the domestic market & regional peers in 2010, valuations for Spore banks look relatively undemanding with the sector trading at an average 1.5x 2011 P/B and 13X 2011 P/E.

Coupled with a decent 4% average dividend yield, downside to stock prices is limited. Adds normalising interest rates will be a positive catalyst as it believes rates unlikely to stay low for a protracted period. House raises its sector earnings forecast for 2011 & 2012 by 5-6% to reflect stronger NIMs & credit growth.


Oceanus: Daiwa upgrades to Buy from Hold, raises its target price to $0.375 from $0.315; citing that the key issues that led to the company's disappointing share-price & financial performance in 2010 (a lack of new tanks, above-normal abalone mortality & operating losses at its restaurant business) are now behind it. House revises up its 2012 net profit forecast by 16.1% due to two potential tax benefits granted by the PRC.

Adds it is now an opportune time to invest in Oceanus as the company should benefit financially in 2011 from: 1) more tank capacity from the additional land that it acquired at end 2010, 2) minimising losses at the restaurant division, & 3) potential increases in abalone prices from an industry-wide supply shortage.


Noble: as of last Friday, Noble’s 65% owned Gloucester Coal remains as one of the only coal companies largely unaffected by the recent heavy rainfall, posting a record quarter for coking coal sales. Coking coal sales for Dec was up 49% yoy to 222k tons, while thermal sales receded 8% to 272k tons as Gloucester continued to maximise pdtn and sale of coking coal…

Gloucester has yet to agree on its coking coal pricing for the Jan-Mar 2011 quarter, however a substantial increase in price is expected. In addition, the co has an uncontracted volume of coking coal available for sale to benefit from the surge in spot prices. Mgt said pdtn would ramp up quickly following the approvals received at its Duralie and Stratford operations, as it pushes for the targeted 3.5m tpa output by 2014.


Commodities/Coal: Australia’s Queensland state, recovering from its worst flooding, is facing 2 cyclones that may hit landfall this week. Flooding in Australia’s northeastern state since Nov has shut down coal mines, cut rail links & damaged crops. Queensland is the world’s biggest exporter of coking coal. The 2 weather systems is likely to bring very heavy rainfall, which depending on where it falls could cause further flooding.

Both Hay Point port, the world’s largest export harbor for steelmaking coal, as well Mackay port have been closed in anticipation of the storm. The earlier flooding caused mining companies including BHP Billiton & Rio Tinto to declare force majeure on their contract deliveries. The weather events will offer little respite to the supply disruptions & drive coal prices higher, further depress bulk freight rates, now at a 2-yr low.

Noble’s coal mines are mainly located much further south in NSW & hopefully may be spared. Stock is trading just above 50-day MA support at $2.17.

CH Offshore

CH Offshore: 2Q11 results generally in line with DBS forecasts, house maintains Hold with TP S$0.60 citing limited catalysts and earnings visibility despite undemanding valuations. Co is stable with strong operating cashflow and growing net cash position. Deliveries of AHTS will cap upside on rates and utilization for nxt 12 mths. Co trades relatively cheaply at trailing P/E 6.23x compared to Swiber at 17.29x, Ezion at 12.92x and Falcon Energy at 9.21x.


Rokko: +3.3% at $0.155. The semiconductor eqpt maker said FY10 net profit +142% yoy to $4.3m. Revenue hit $42.6 m, +44.3% as momentum, which had begun in 2H09 from pent-up demand continued. Mgt says demand this year is expected to be sustained underpinned by growth in smart phone shipments and new mobile phone devices...

On Dec 31, the group proposed to buy 100% interest in Jade Precision Engrg, which specialises in lead frame manufacturing for the semiconductor industry, for $8m, subject to sh/h approval. The group will continue to make invmts, particularly in R&D.

Final div of 0.5cts, on top of the 0.5cts interim div paid in Sep ’10. This translates to a historical yield of 6.5%.
Stock trades at 5.6x P/E, vs larger peers UMS at 6.9x, Hisaka at 8x.


SIA: Off 1.1% at $14.88, in line with a broadly weaker market, despite below-consensus 3Q results, with management noting a cloudy outlook. UOB note that grp’s "strong grip on its costs" could support stock near term; house notes passenger unit costs were at 8.6c/ASK, against forecast of 9c/ASK, suggesting grp had hedged substantial portion of fuel requirements. However, note that management warned about airlines' higher capacity injections and higher jet fuel prices…..

House keeps Hold rating and $15.90 TP, saying net profit was 71% above its own expectations of $170m on lower-than-expected unit costs, $45.1m in recognition of liquidated damages and subsidiary SilkAir's surprisingly strong results. Add that an improvement in load factors will likely be the next share price catalyst. The house suggests a $14.30 entry price.

Cosco Corp/Yangzijiang

Cosco Corp/Yangzijiang; Cosco Group, China’s largest shipping company & parent of SGX-listed Cosco Corp does not plan to purchase any more vessels this year because of overcapacity in the global market. Shipping lines around the world are struggling with too many vessels in the market, which have depressed rates & forcedcarriers to slow the speed of vessels to pare fuel usage.

The scrapping of older carriers will also increase in the coming years as shipping companies invest in new, more environmentally friendly vessels. This is pertinent as >50% of Cosco’s orderbook is contributed by its parent. But increased scrappage will benefit YZJ once the environmental license for its ship-breaking business is approved.

Sound Global

Sound Global: announced Friday that it won 18 urban-rural wastewater treatment projects in Changsha County, Hunan, representing its first set of projects in rural China. Nomura says this is in line with SGL’s stated goal to tap into this growth area and is a positive move for the co. Notes share price has fallen by 12-13% ytd, due to recent mgt departures. Views selling overdone, as operations remain sound...

Recommends accumulating at current levels as shares trading near lows reached in Jun 2010, when SGL shelved its HK IPO.
Technically, the key indicators have all hooked up from oversold levels, and suggest the stock could see a decent bounce over the near term. Risk reward for current entry appears favorable given resistance at $0.80 and support at $0.70 (strict cut-loss at $0.695).

Egypt Crisis

Egypt Crisis: UBS note that Global equities and commodities still warrant an overweight allocation despite recent political unrest in Egypt. Barring a widening crisis in the Middle East, or a disruption of energy supply and transportation, house expects improving global economic growth, strong corporate earnings and an increasingly friendly corporate finance environment to drive risk assets higher in 2011….

Nevertheless, UBS says it''s reasonable to expect global investors to remain cautious and pare back risk exposures while the Egyptian crisis is unresolved. Cites investor concern about the possibility of shipping in the Suez Canal being disrupted, political unrest spreading in the Middle East or North Africa, or Egyptian politics becoming radicalized

Friday, January 28, 2011

Sri Trang

Sri Trang: lukewarm response to the IPO, based on the allocation results. 100% of applicants were successful. Moreover, the Placement size was decreased from 266m to 260m shares (of which 23m was taken up by the Joint Underwriters), and the public size raised to 20m shares from 14m...

The lack of an institutional following may point to a disappointing opening when Sri Trang debuts on SGX on 31 Jan, Monday.
However, if the Thai counter continues to hold up at the current THB 33.75 (S$1.42), arbitrageurs may come in to support the Spore counter. Look to enter on dips.
We have updated the IPO note to reflect the final IPO Offer Price.


Kingsmen downgraded by OCBC Sec to Hold from Buy & cuts its target price to $0.65 from $0.82in view of its hazy near-term outlook. Highlights Kingsmen has been growing exponentially since its listing with earnings growth recording double-digit rates btw 2003 & 2008 but believe this trend may reach a plateau in FY10/11 after projecting a mild contraction in FY10 profits followed by flat earnings growth in FY11.

Trims FY10 & FY11 estimates by 14% & 23%, r’pectively to reflect a more cautious stance, adding the group's ambition of doubling its revenue in 5 yrs now appears stretched. Cites potential headwinds in orderbook gap as the bulk of revenues from Universal Studios Spore has already been recognised & arbitration proceedings agst a sub-contractor. However, house remains sanguine over Kingsmen's longer-term prospects; stock is also supported by 6% dividend yield.


Longcheer: Annouced 2Q10 Results which missed analyst expectations. Rev at Rmb1,036m was -3%YoY (Analysts expectations at Rmb1,017m) while net Profit at Rmb16m was -60%YoY (Analyst expectations at Rmb52.3m)…

Revenue declined mainly to decline in average selling prices, despite shipment volume increased 40%. Gross profit margin for 2Q FY11 declined significantly from 10.2% in 2Q FY10 to 4.9%, attributable to severe price competition among the upstream chipset makers, the pace of development of the 3G market in China is slower than expected, lower than expected sales during the festive season in India resulting in excess inventor and increased preference for smartphones has resulted in the weak demand and rapid price margin erosion for feature phones….

Going forward, grp aims to continuing with the process to enhance value add by transitioning product portfolio from low valued feature phones to high valued products including 3G and smartphones. The transition is however expected to take some time to materialize, and most houses are bearish on the near-term prospects of grp.

Genting SP

Genting SP: Credit Suisse reiterate OutPerform call with $2.65 TP, tipping ‘more good things to come’. Highlight that anecdotal evidence suggest that grp had a happy holiday season, with its high exposure th SG tourism’s industry, while key catalysts includes fresh hotel capacity and new attractions through 2011-12, and the potential licensing of junkets in 2011. Add that long-term outlook is attractive, and casino appears relatively cheap vs global peers…..

Similarly, Daiwa while positive on Genting, downgrades TP to $2.78 from $2.93. Note that positive fundamentals remain unchanged and further erosion of grps market share should be kept in check in 2011. Believe more gaming-revenue potential for SG will become visible operators step up their marketing efforts in the region. Note that valuation are no longer the most demanding, trading at an EV/EBITDA multiple of 14x vs 10-16x for the Macau gaming operators.


Boustead: 91.7% owned subsi Boustead Projects have been awarded a S$7m contract from XP Power to build a power manufacturing facility in Vietnam. XP Power headquarters' are in Sg and is listed in London, with over 5000 products related to power. The facility's gfa is approx 11.6 sqm and is expected to be completed in 4Q2011. This is co’s 3rd contract win this month, earlier 2 were a $25m demin plant at Tuas and $16m in process systems for Middle East and Msia. Total order book in Aug was $580m.


SATS: Deutsche reinstates Buy with TP $3.80 citing co’s strong position in both aviation and food solutions sectors. House has robust regional aviation outlook (8% air traffic growth) and co is well positioned to take adv of growth coupled with growing food solution biz. Co’s size and ability to offer comprehensive services to support its mkt position against competitors…

TFK acquisition is expected to be value accretive and co has opportunities for further value-accretive acquisition given net cash of S$160m. Risks include falling air traffic, inability to integrate TFK and unfavourable regulations. SATS was valued at 2011e P/E of 12.8x vs aviation peer avg of 19.4x.


Capitaland: Acquires Marine Point for S$100.7m and plans to redevelop site into condo with 150 units of 1-2 bedroom apts. The est cost including a $12.8m dev charge works out to $1,056 per sq ft per plot ratio. Marine Point is located along Marine Parade Rd opp Parkway Parade shopping mall, with 32 apt of current gfa 107.5 sq ft…

The transaction is expected to take place in 3Q 2011. Neighbouring Parc Seabreeze went for S$1256-1430/psf btwn Oct-Nov 2010. Co now trades at 1.15x P/B, average of property counters at approx 1.09x.


GuocoLand: Posts 2Q results, rev of $162.8m -55.0%yoy +32.5%qoq, Gross profit $46.6m -59.0%yoy +28.6%qoq, Net profit $21.6m -64.0%yoy +60.3%. Profit better qoq due to progress of construction of Goodwood, Sophia Residence and Elliot in East Coast but still fell on a yoy basis as China's dev projects had boosted results in same period last yr...

Trade and receivables increased by $483.2m to $724.2m due to land acquistion in China also the cause of the outgoing cashflow from operations which was funded by borrowings. Latest acquisition was $1.71b land parcel at Peck Seah Str nxt to Tanjong Pagar MRT. Co’s P/B is 1.26x vs peer avg 1.09x

BH Global

BH Global: Reported FY10 Rev with weak bottom-line results, despite topline being in-line with expectations. Rev at $103m, +1%YoY, while Net Profit at $11.3m, -23%YoY. Poorer performance was attributed to grp’s Supply Chain Management Division, which experienced slowdown in demand for its products, due to the delayed impact of financial crisis on marine-related supply business….

Contributions from Manufacturing Division (marine switchboards and galvanized steel wire) increased by 17% to $19.0m, particularly from the galvanised steel wire segment that successfully secured more orders from the Middle East. Newly set up since 1QFY10, the Engineering Services Division started off well and produced its maiden revenue amounting to $17.2m….

The strategic change in product mix resulted in a healthy yet lower overall gross margin of 32% (FY09: 35%), due to the increased contribution from Manufacturing and Engineering Services Divisions, which typically yield lower margins. Following the recent listing of grp’s TDRs, the proceeds raised has further strengthened the Group’s financial position, and as at 31 December 2010, BH Global maintains a net cash position of $19.1 million, and at current levels, grp trades at an ex-cash of 6.4x vs its historical PE of 8.1x

Li Heng Chemical

Li Heng Chemical: Warns that it would be hit by China's move to impose anti-dumping duties on caprolactam imports from US and EU. Caprolactam is a major raw material used in the production of polyamide chips that Co needs for its nylon yarn products. Importers will be required to place anti-dumping deposits with the Chinese govt at rates ranging from 4.3-25.5% starting 25th Jan, which could see Co. employ higher cash flows to sustain operationss if such anti-dumping deposits remain….

Technically, see support for the stock at $0.20 (Recent mth lows), followed by $0.185 (yr low)

Cache Logistics

Cache Logistics: Reported its first full year and 4Q10 results, which were in-line with estimates . YTD, NPI at $41.3m was exactly in-line with management’s forecast, while DPU of 5.588c was similarly in-line. Annualized DPU places FY10 yield at an attractive 7.8%, with management noting that Cache unitholders who have held the units since the IPO would have enjoyed a total return of 16%....

Going forward, management expects the demand for logistic properties in SG to remain firm, underpinned by sound economic fundamentals and favorable outlook for the regional economies. And remains confident in delivering forecast DPU for FY11 projected in IPO Prospectus. Cache portfolio comprises of six quality logistics properties located in Singapore...

We note that grp balance sheet remains strong, with a total debt of $178m, representing an aggregate leverage of 23.7%. The conservative gearing provides Cache with a high degree of financial flexibility in its pursuit of acquisition opportunities, while management has hedged its interest rate exposure with a two-year interest rate swap on 90% of the outstanding debt...

At current levels, grp appears failry valued, at 1.08x P/B, vs peers MIT of 1.15x P/B and yield of 6.2%, Ascendas REIT of 1.3x and yield of 6.1% and Cambridge industrial trust of 0.91x P/B and yield of 8.3%.

SG Market

SG Market: Spore shares may open with a weak tone after a tepid finish for the DJIA. The STI closed flat yday, well off its intraday high, suggesting a lack of conviction over the market's near term direction ahead of the Lunar New Year holidays. Near term support is at 3180 & if this level holds firm, the market could resume its upward momentum. GLP could face some knee-jerk reaction to news that rival ProLogis is gearing up to re-enter China.

STATS ChipPac posted 44% decline in 4Q earnings on weaker USD & higher costs. GuocoLand 2Q profit dropped 64% yoy but rose 30% qoq on lower devt rev from China. Li Heng may face selling pressure on warning that Chinese anti-dumping duties will hurt the company. China Fishery has obtained SGX in-principle approval for HK dual-list plan. Armarda to list 119m placement shares priced at 3.6¢, a significant discount to last close at 9¢.

Stock highlights
* Armarda: 114m placement shares issued at $0.036 each (10.6% of shares out) will begin trading from today, 9am. Last closed at $0.09.
* GLP: the potential merger btwn Prologis and AMP Property spells greater competition for GLP in China’s logistics market. Near term, mkt may react on this negative surprise, as GLP previously said the chances of ProLogis re-entering China was remote. Still, JPM, UBS maintain at Buy based on longer term outlook.
* SATS: Deutsche reinstates Buy rating with $3.80 target, underpinned by strong growth, attractive dividends and potentially accretive M&A.
* SingTel: BNP upgrades to Buy from hold, has $3.75 target.
* Genting SP: Daiwa lowers TP to $2.78 from $2.93.
* Stats Chippac: 4Q10 net profit slumps 44% to US$19m, due to a combination of the weakening US dollar and higher costs of materials such as substrate and gold. But still delivers record full yr of net profits of US$108m (up 11-fold yoy).
* Cache Logistics Trust: 4Q10 results in line. Ytd net property income at $41.3m, DPU of 5.59cts gives annualized yield of 7.8%. Macquarie keeps at Outperform with $1.09 target.
* Guocoland: 2Q11 results. Revenue of $162.8m -55.0%yoy +32.5%qoq; net profit $21.6m -64% yoy +60.3%.
* SIA: cancelled two flights to and from Bali to avoid ash. Said more flights would be delayed on Thursday and Friday. Separately, Tiger Air does not offer flights to Bali, based on a check on its website.
* Li Heng: said it would be hit by China's move to impose anti-dumping duties on caprolactam imports from the US and EU. Caprolactam is a major raw material used in the pdtn of polyamide chips that Li Heng needs for its nylon yarn products.
* Capitaland: buys Marine Point for S$100.7m to be developed into a 150unit condo. The total acqn cost works out to $1,056 psf ppr.
* China Fishery: obtained SGX approval for its proposed dual listing in HKEx.

Thursday, January 27, 2011


Capitaland: Announce that its wholly-owned subsidiary Ascott International (AIM) has entered into a joint venture agreement with an affiliate of RMZ Corp to establish a 50:50 joint venture Co, RMZ Infopark (India) to develop a 203-unit serviced residence to be known as “Citadines Galleria Bangalore”….

The land title rights for the serviced residence development must be injected into the JV
Company not later than 41mths from the date of the Agreement. In the event of the failure to inject the land within the Long Stop Date, AIM has the right to require the JV Partner to purchase all of AIM’s shares, or require the JV Company to repurchase all of AIM's shares….

Following the Subscription, the JV Company has become a 50% owned associated company of CapitaLand.. The above transactions are not expected to have any material impact on the NTA or EPS of the CapitaLand Group for FY11.

GMG Global

GMG Global: CIMB has Technical Buy. Note that stock broke out of its bullish flag pattern yesterday on strong volume (Following Merrill Lynch initiation with $0.50 TP), taking out its 50-day SMA in the process. Breakout would likely take prices to new highs in the days or weeks ahead….

MACD has just moved back into positive territory while its RSI saw a sharp hook up above the 50-pts neutral mark. Both indicators suggest that there should be follow through buying. Recommend Traders may opt to buy now with a stop placed below yesterday’s low of $0.285. One can also place a stop below the support trend line at $0.28. Expect prices to take out the old high of $0.345 to test the $0.365 levels next as long as the $0.28 level is not breached. The following resistance is at $0.40.

Keppel Corp

Keppel Corp: +5.1% yday, likely fueled by strong earnings and expectations of new order wins. Momentum may continue today, as Hercules Offshore says it will construct 2 ultra high-spec jackups (KFELS “Super A Class” design) at Keppel FELS Spore. The rigs, scheduled for delivery btwn 2Q-3Q 2013, are est to cost US$208m each and come with 2 options est to cost US$213m and US$215m, r’ptively. We note that Keppel has not yet officially announced this contract…

Also Upstream recently reported that Maersk drilling is in the midst of firming up 2 jackup contracts with Keppel.
Keppel ended FY10 with an order book of $4.6b. Ytd orders would amount to ~$1b, with the inclusion of the Hercules contract. Moreover Keppel has 9 options outstanding, worth ~US$1.7b. The good order pipeline may provide further positive momentum in the counter...

Virtually the whole Street rates at Buy with targets ranging btwn , with UOBK and DnBNOR being the only Sell and Hold calls. Median TP is $13.08.

Creative Tech

Creative Tech: Reported 2Q net loss more than doubled to US$10.9m from a loss of US$5.3mYoY, due to higher research and development expenses and lower rev. Revenue -14% to US$69.3m from US$80.7m, as sales of its personal digital entertainment products continued to slide.


Ramba: Co’s Indonesian subsi RichLand Logistics has secured 2 contracts to transport bulk liquids for leading chemical cos BASF Indonesia and Styrindo Mono Indonesia (SMI). RLI’s annual volume is expected to exceed 160k tonnes with SMI’s contract valued at approx $5.0m. The contract involves co transporting bulk styrene monomer from SMI’s plant to its customers within Java...

The other contract involves transportation from BASF plants in Jakarta and West Java to customers in Java and Sumatra. Ramba deals in exploration of oil and gas but has a logistics arm through RichLand as well. Co has been struggling to make a profit, 120k in FY09 and 130k in FY08, P/E not meaningful due to low earnings.


StarhillGlobal: REIT has reported 4Q rev of $45.6m, +33.0%yoy, +0.9%qoq. Net property income was 36.7m +37.0%yoy, +2.6%qoq. Distributable income correspondingly rose by 22.1% yoy and 3.7%qoq to $23.2m. Rise from prev yr was due to contribution from Msia properties Starhill Gallery and Lot 10 and David Jones building in Australia...

DPU for 4Q at 1.04c resulting in full yr DPU at 3.9c, a yield of 6.0%. Macquarie maintains Neutral with TP at $0.67 up from $0.60 remarks that co has stable income profile with mild and steady growth but prefer suburban retail over prime Orchard Rd, key pick was CapitaMall Trust (Outperform, TP$2.25).


FCOT: Revenue for 1Q2011 Dec was at $29.0m -2.0%yoy -1.1%qoq, Net Property Income at $22.9m -2.0%yoy -1.2%qoq but distributable income was $7.9m +7%yoy. DPU rose 4%yoy to 0.25c per unit but fell 19.35% qoq. Fall in revenue and NPI was attributed to expiry of significant tenancy due to tenant facing financial difficulty in Aug 2010 which also increased impairment of receivables…

Cosmo Plaza was divested in 18 Jan 2011, due to its loss-making results but impacted 1Q results negatively. FCOT’s annualized yield is at 5.7% based on 1Q results, dip compared to prev FY10’s DPU of 1.12c, approx 6.4% yield at current price.


Eratat: To lift trading halt at 9am today. Co. announced proposed subscription (Private Placement) of 63m new shares at $0.2135 /share and proposed grant of options to subscribe for additional 18.9 new shares at price of $0.30. Subscription has been taken up by Best Increase Limited (50m shares and 15m options) and individual Khoo Boo Kok (13m shares and 3.9m options)....

Best Increase Limited (BIL) will hold 13.1% and Khoo Boo Kok (KBK) will hold 3.6% of enlarged share capital assuming options fully exercised. Net proceed raised of $13m was to raise working capital….

The new shares priced at $0.2135, represents a discount of 9.99% to the weighted average price of $0.2372 on 25th Jan11. Based on the audited consolidated balance sheet of the Co. as at 31Mar10, assuming that the Subscription Options are not exercised, and 63m New Shares issued, total number of Shares of the Co will increase to 477,912,514 Shares and the NTA/share will be increased by 12.5% from Rmb1.29 to Rmb1.45 / share.....

If Options exercised, NTA will increased by 17.8% to RMB1.52 per Share. We note that Weighted Average of the new addition of discounted shares could see share price new value at $0.2341. (excluding exercise of options)

CDL Hospitailit Trust

CDL Hospitailit Trust: Reported 4Q10 & FY10 Results which were slightly ahead of expectations. 4Q10 DPU came in at 2.78c, +9%qoq, helped partly by the lower retained income vs last qtr and better operating performance. FY10 DPU of 10.2c, was marginally ahead of consensus estimate of 10c and +19%YoY…..

In terms of gross revenue, SG hotels managed to post YoY increases of 13% to18%, led by M Hotel, compared to 15% to 36%YoY increases last qtr. 4Q10 RevPar of $194, +21%YoY, while occupancy was flat at 90%, compared to 89%YoY. Management note that RevPar still below peak of 2008 at $207, despite occupancies hovering close to 90%, largely due to higher weekend
Occupancies which command lower rates compared to weekdays….

Going forward, REIT plans to continue organic growth through upgrading of rooms at Grand Copthorne Waterfront, Orchard Hotel and Novotel Clarke Quay. Of these, REIT will only need to provide capex for Novotel, while the other two will be borne by the operators.We note that at currnet levels, REIT trades at 1.1x FY11E P/B, while Net Gearing remains strong with Net gearing at a low 14%....

Citi (only house with Sell Call so far) expect slower RevPar, as RevPar has posted strong double-digit growth in 2010, partly due to the low base effect from 2009. However, still assuming RevPar growth of 15% in 2011E and 10% in 2012E, which would have surpassed the 2008 peak. House maintain Sell Call with $1.70 TP, believing that expectations for the stock are high at the moment and surprises could be to the downside….

Among other broker ratings on CDL Hospitality Trust, JP Morgan retain Overweight with $2.35 TP, Daiwa maintain OutPerform with $2.30 TP, Macquarie maintain Neutral with $2.05 TP, CS maintain OutPerform with $2.53TP, Morgan Stanley maintain Neutral with $2.03 TP and UBS maintain Buy with $2.40 TP.


OSIM: Reported FY10 results which were in-line with expectations, with Rev at $509m, +7% YoY, while Net Profit at $50m, +117% YoY. Strong growth was due to successful product launches, namely uSoffa Petit, uSoffa, uMama Warm, uPapa Hug IV and uDivine and FY10 results was the highest ever in Co’s history....

Net margins also expanded to 9.8%, +5 B.P. from 4.8% in FY09, due to new product innovation, better operating efficiency and more effective shop & salesman productivity. Going forward, Grp remains confident that OSIM will remain Asia’s No1 brand in well being and healthy lifestyle products and will take position to build and enhance its market leadership position....

In terms of product innovation and competitive positioning, grp expect to create higher consumer demand in the coming year with the launch of one to two major products every qtr and targets to raise productivity per outlet and man to increase profitability. In China grp is in 42 cities, and have 270 OSIM outlets and plan to open another 60 to 80 outlets this yr....

We note that at current price, grp trades at 23.3xFY10 PE vs its historical average of 27.3x, suggesting further slight upside for share price. Macquarie retains Buy Call with $2.06 TP tipping re-rating story to continue with organic expansion in China, while stock is still at a large unwarranted ~35% discount to China consumer plays.

SG Market

SG Market: Spore shares may rise after the FOMC's unanimous decision to maintain the status quo on its ultra-loose monetary policy, though gains may be capped after the STI's sharp 1.2% gain yday & as traders lighten their positions ahead of the extended holidays in Asia next week. Stochastics indicators are exhibiting signs of a market reversal from oversold positions but the index may need to break past 3250 to trigger a strong buy signal.

KepCorp is likely to remain firm on news that it has bagged another 2 high spec jack-ups plus 2 options from Hercules Offshore valued at US$844m, suggesting that the order flow is accelerating. Tin miner & smelter Malaysia Smelting Corp will be in focus on its SGX debut; Osim may see some interest after posting improved 4Q results. Both CDL Hospitality Trusts & Starhill Global reported 4Q results that were slightly ahead of estimates.

Frasers Commercial Trust 4Q NPI was flat but DPU declined 19% qoq.

Stock highlights:
* Keppel Corp: following yday’s FY10 record earnings announcement, stock may see further momentum as Keppel will build 2 ultra high-spec jackups for Hercules estimated to cost US$208m each, with options for 2 more. Keppel has not yet made an announcement regarding this contract.
* Genting SP: HSBC reiterates Underweight call, lowers TP to $1.95 from $2.05; cautions on the negatives arising from possibility of unlicensed junkets. Deutsche lowers TP to $2.43 from $2.60, believes upside surprises unlikely in 4Q10 earnings, with 1H11 to see moderation. But keeps at Buy.
* Osim: FY10 results largely in-line. Net profit came in at $50m, +117% YoY, the highest in the company’s history, driven by strong margin expansion. Mgt remains optimistic on outlook. Trades at 23.3x P/E vs 27.3x historical avg. Macquarie rates at Outperform with $2.06 target.
* CDLH Trust: following yday’s strong Fy10 results, stock may see further interest as analysts expect the Trust to make further accretive acquisitions. In particular CDLH is tipped to acquire the newly opened Studio M Hotel in the Mohamed Sultan area, as early as this year. Street mainly keeps at Hold / Buy, with targets ranging $2.03-2.40.
* Frasers Commercial Trust: 1Q11 net property income at $22.9m -2.0%yoy, -1.2% qoq. DPU at 0.25cts +4%yoy, -19% qoq.
* Starhill Global Reit: 4Q10 results. Net property income at $36.7m +33% yoy, DPU at 1.04cts +7.2% yoy. Trades at 6% FY10 yield.
* Eratat: lifts halt. 63m share placement at $0.2135, plus options for another 18.9m new shares at $0.30 exercise price. Stock last traded at $0.235.
* Ramba Energy: Indonesian subsidiary, RichLand Logistics Indonesia, clinches 2 contracts to manage domestic transportation of bulk liquids for 2 leading chemical companies in Indonesia.

Wednesday, January 26, 2011


Wilmar: CLSA recommends a Strong Sell on Wilmar with $4.95 TP, headlining grp’s operations as ‘Crushed in China’. Note that Cofco’s profit warning cautions against any positive read through that strong numbers for international agriculture producers such as Cargill may have for its peers like Wilmar, which have large exposure to China….

Recap that Cofco issued a profit warning on Fri that 2H10 earnings was expected to decrease by 37%YoY, with full-year earnings down 13%YoY. Decline is due mainly to losses on its oilseeds futures contracts. Margins for Cofco’s branded package rice business was also negatively impacted by higher raw material input costs and significant spending in marketing, sales and distribution, as the company sought to increase market share….

Add that Cofco is Wilmar’s closest peer in China, with Wilmar as China’s largest oilseeds crusher and is actively growing its branded consumer pack rice and flour business, while Cofco is China’s second-largest oilseeds crusher, with businesses in biofuels, rice trading/processing, brewing and wheat processing as well. The price performance of both stocks is closely correlated, with an R-squared of 0.75 in the three years since 2008….

Highlight that weak consumer rice margins underscore the tough competition in branded rice, which has been tipped to be a growth driver for Wilmar. This suggests that it may take longer for the business to meaningfully contribute to earnings and property diversification for Wilmar remains a negative, as it raises concerns on the use of capital in non-core areas, and sets a dangerous precedent for investments that are unrelated to its agri-business…..

Recommend investors switch into Noble or upstream CPO names. Management has been guiding down 4Q earnings in the oilseeds and consumer pack oil business, and do not expect a strong qtr for Wilmar. Wilmar is scheduled to report full-year results on 23rd Feb.

Sri Trang

Sri Trang cancels share offer & IPO listing plans for the 2nd time, citing "unfavourable market conditions"

Shipping/STX Pan Ocean

Shipping/STX Pan Ocean: Korea Line Corp, South Korea’s 2nd largest operator of dry bulk carriers, has filed for receivership after several quarters of losses due to long term contracts for its chartered-in vessels locked in at high costs & exacerbated by plunging bulker rates. Dry-bulk rates have dived 58% in the past year to its lowest level in more than 2 yrs amid an expanding global fleet & slowing demand for commodities in China as rising prices for coking coal & iron ore curbed demand.

The Baltic Dry Index fell to 1,292 yday, the lowest since Feb 09 vs peak of 11,793 achieved in May 08. STX Pan Ocean, South Korea’s largest dry-bulk operator, has turned around from losses in 2009 & is expected to remain profitable. Stock is trading at 22.5x & 15.3x FY10 & FY11 P/Es r’pectively & P/B of 0.9x. STX OSV does not building bulk carriers, only offshore support vessels;

STX Offshore & Shipbuilding has orders for a VLCC & a capsize ship from Korea Line but the yard has not started
work on either vessel.

GMG Global

GMG Global: Merrill Lynch Initiate at Buy with $0.50 TP.based on SOTP, with an implied FY11E PE of 15.5x, and offering a 75% potential upsiside. 2011 and 2012 rubber price assumptions are US$5.5/kg and US$6.5/kg. Note that Rubber is the ‘new black’ and sector is facing a severe supply shortfall post many years of underinvestment….

Note that with the rising demand driven by China and India auto, expect the rubber price rally to last till 2012, especially as we enter the winter season for rubber in 1H11. GMG (51% owned by Sinochem) is one of the world’s only few listed rubber play which has a presence from plantation, processing to distribution…..

Highlight that although GMG is blessed with supply security, it is still diligently seeking growth, both upstream and midstream. Its recent acquisition of Teck Bee Hang (Thai processor) has doubled its processing capacity. Coupled by the rising rubber price, FY11E profit is poised to grow by 127% YoY…..

Tip every 1% change in rubber price (ORA Comdty) to lift earnings by 4.1%, while solid parentage offers direct access to China market. Sinochem is China’s biggest rubber trader and China consumes a third of the world’s rubber production. Thus GMG has secured distribution into one of the most dynamic rubber markets. The relationship will also lower GMG’s distribution costs as third party marketing contracts cease.


EMS: +18% at $0.065 on above avg volume. To issue 84m shares (14% of enlarged share base) for total of $4.3m, at ~$0.05/sh through a private placement to various individual investors. Of the proceeds, $3m will be used to finance the pipelay system contract announced on 13 Dec ’10, and the remainder will be for working capital.


SpiceI2I: Lifts trading halt today 9am. Co will acquire Indonesian based Affinity Group which owns Selular and is engaged in distribution of mobile phones. Affinity owns the local brand “Nexian” and has approx 22%-25% mkt share with rev of approx US$680m. Funding will come through a 1 for 1 rights issue to raise gross proceeds of approx S$151m. The rights issue will be placed 5.5 cents per subscription share, a 52.2% discount to the closing price of 11.5 cents.

CDL Hospitaility Trust

CDL Hospitaility Trust: Reported FY10 results this morning, which were in-line with forecasts. 4Q DPU of 2.78c, +29.3% and FY10 DPU of 10.2c, +32.7%, in line with forecast. As expected 4Q average room rate dipped marginallyQoQ to $215 vs $217 in 3Q, due to seasonally higher leisure travelers vs corporate travelers…

Occupancy has also dipped marginally to 90% vs 92% in 3Q due to Youth Olympic Game and F1 held in 3Q. DMG’s Current forecast is 11% earnings growth in FY11 driven by 10% RevPar. Most houses are currently reviewing REIT’s performance now.

Mapletree Industrial Trust

Mapletree Industrial Trust: Reported 3Q11 results, which were above expectations. DPU of 1.52c, +13.4% vs forecasted DPU of 1.34c. The better than expected DPU was due to higher than expected rental rev as well as lower than expected utility cost and tariff. Distributable income for the period also included a one-off item amounting to approximately $0.8m. If excluded, DPU would be1.46c, still above grp’s orignal forecast….

Grp appears on track to fulfil organic growth plans, registering rental renewal increases, averaging 21.9% and maintained retention of 81% in 3Q11, while average rental at business parks saw a 50% jump in average rental to $3.23 psf. Average rental at its flatted factories and its stack-up/ramp-up segment increased by 13%. Overall 99.3% of leases were renewed at the maximum cap….

Portfolio occupancy rose to 92.3% from 91.2% in 2Q11, while passing rental was $1.45psf vs $1.44 in 2Q11 and $1.40psf in 1Q11. Currently, grp has announced a $2.9m asset enhancement initiative (AEI) in its Redhill property to convert 35,000 sq ft of flatted factory space for e-business usage….

Portfolio occupancy rose to 92.3% from 91.2% in 2Q11, while passing rental was $1.45psf vs $1.44 in 2Q11 and $1.40psf in 1Q11. Currently, grp has announced a $2.9m asset enhancement initiative (AEI) in its Redhill property to convert 35,000 sq ft of flatted factory space for e-business usage….

We note that grp’s balance sheet remains strong, with Net gearing at 53.2% and an interest coverage of 6.1x, while at current price, grp trades at 1.1x FY11E P/B, with a forecasted FY11 dividend yield of 6.6%, vs Ascendas REIT of 1.6x FY11E P/B & yield of 6.4% and Mapletree Logistics Trusts of 1.1x P/B & yield of 6.6%. Citi has Buy Call with $1.25 TP.

SIA Engineering

SIA Engineering: Reported 3Q11 results, with rev at $269.5m, +11.6%YoY and flat QoQ, in line with consensus estimates, while Net Profit at $60.3m, +7.7% YoY and flat QoQ. For 9M10, rev rose 13.8% to $834.9m and Net Profit was at $197.6m, on track to hit FY11 Net Profit consensus estimates of $267.3m...

Strong performance was mainly due to an increase in contribution from MRO work, as well as fleet management programme. Line Maintenance rev also increased as more flights were handled. Overall Net Margins remained flat YoY at 23%, attesting to grp’s continued operating efficiency. ...

Share of profits from associated and joint venture companies grew 9.5% to $110.9m, representing a contribution of 48.6% to the Group’s pre-tax profits. We note that result brings 9M11 EPS to 18.18c, +20%YoY, with a net cash position of $458.6m ($0.42). Ex cash, grp trades at 15.7x FY11E PE, vs its historical average of 15.5x, suggesting that counters appear fairly valued at current price…

Kim Eng maintains Hold position, but reduces TP to $4.50 from $4.70, while BNP Paribas similarly maintains Hold Call with $4.69 TP.


XMH: Co debuts on SGX today, to start trading at 9am. Offer of 101.0m shares at $0.25 each was 3x oversubscribed, comprising of 85.0m new shares and 16.0m vendor shares. Public offer of 1.5m shares received oversubscription for 237.8m shares. Net proceeds of $18.9m were raised from the IPO.


KepCorp: Net income rose 12% yoy to $1.4b generally beating estimates. Improved contributions came from continued growth in O&M margins from 12% in FY09 to 20% in FY10 and property arm which was up 31%yoy at $625m. Infrastructure was down 38% due to $136m in provisions made for Qatar projects which have met cost overruns and delays...

Co ended FY10 with new rig orders of $3.2b with order book at est $4.6b.Going forward, O&M margins may not be as profitable due to relatively lower price of newbuilds and increased steel costs. Demand for rigs likely to remain strong due to replacement of current low spec rigs est at 80% of rig fleet though Gulf of Mexico rig utilization rates are waning on safety concerns…

Dividend of $0.26/sh and bonus issue of 1 share for 10 existing share to be paid out. Houses which are positive, maintaining Buy calls are CS, ups TP to $14.00 from $13.50, Deutsche TP $14.20, JPM TP $14.10, Daiwa TP $12.70, DMG ups TP to $13.00 from $12.00. Citi maintains Buy as well.

SG Market

SG Market: Spore shares may trade with a negative bias after mixed US earnings reports produced a flattish session on Wall Street while domestic market indicators & price action appears weak. The benchmark STI slipped 0.1% yday masking a poorer market breadth with decliners trumping gainers 3 to 1. The policy risk of higher interest rates in China & recent correlation of the commodity market could continue to hamper Asian markets today.

There are signs that funds may be flowing out of Asia back to the US. Having pierced beneath the 3193 50-day MA, momentum for the STI seems to be on the downside with base support seen at 3120. Resistance is at the 3200 psychological level.

KepCorp will be in focus after its 4Q blowout earnings beat estimates with most houses remaining bullish about its improving offshore prospects. SIA Engrg is unlikely to react to its 4Q results, which is in line to slightly below expectations. Spice i2i should draw some attention after acquiring Indonesia's Affinity Group for US$175m. New listing XMH makes debut today; IPO is 3.3x oversubscribed, stock expected to open at a small premium (grey: +4¢) to IPO price of $0.25.

Stock highlights:
* Keppel Corp: record FY10 results beat Street expectations, with net profit +12% yoy to $1.4b. Market likely to react positively, as the Street reiterates the Buy ratings, lift target prices. Deutsche (TP: $13.50 to $14.20). Citi (TP $12.88 ). KE (TP $12.30 to $13.05).
* Mapletree Industrial Trust: FY10 results beat expectations, with DPU (for period 21 Oct - 31 Dec ’10) of 1.52cts vs 1.34cts guidance. Citi raises target to $1.25 from $1.21. Stock trades at 6.5% FY11E yield.
* SIA Engrg: 3QFY11 results below expectations, due to higher costs. This marks the 3rd consecutive quarter of sequential earnings decline. Upside may remain capped due to lower growth. BNP, KE rate at Hold with $4.69, $4.50 targets r’ptively.
* CDL Hospitality Trust: FY10 results generally in line. 4Q DPU of 2.78cts and FY 10.2cts. DMG has a Buy rating with $2.39 target (under review).
* CapitaRetail China Trust: FY10 results relatively stable. Net property income Rmb 382m +5.8%, DPU S8.36cts +2.7%. Stock trades at 6.7% yield.
* Fortune Reit: FY10 results. 2H10 DPU of HK12.08 cts slightly disappointing, ~5% below consensus. However occupancy and rentals continued to register improvement. Macquarie keeps Outperform rating with HK$4.36 target, 6.5% FY11E yield estimate. Both JPM, Daiwa reiterate O/P with HK$4.90 target.
* Orchard Parade Hotel / City Dev: OPH may see trading interest, as City Dev’s bid for Tanglin Shopping Centre's (TSC) collective sale tender revives hopes of revaluation gains in OPH. Our back-of-envelope RNAV/sh estimate is $4.20 vs 3Q10 NAV/sh of $2.56.
* Spice i2i: Launches S$151m Rights Issue @ 5.5cts/sh, acquires Affinity Group's cellular business For US$175m.
* Mun Siong: fined $100k by MOM for failing to ensure the safety of 3 workers who died from injuries sustained in a fire at the ExxonMobil oil refinery on Jurong Island in 2007.

* IPO debuts:
XMH (3.3x oversubscribed, Offer Price $0.25),
Harrys (placement only, Offer Price $0.22)

Tuesday, January 25, 2011

Q&M Dental

Q&M Dental: +5.9%, in top volume. After CIMB initiated coverage on Q&M Dental Group yesterday. Note that Dentistry remains one of the most lucrative revenue intensity in healthcare business and Dental expenditure is necessary, and charges are not the lowest of all healthcare consumption….

Add that premium valuations in this sector common and over the past six months, two healthcare groups (Parkway and Thomson Medical) have been taken over at high premiums. Like Q&M, they have strong brand equities, solid patient volumes, revenue & cash flows, and overseas ventures….

Highlight that Q&M is under-researched and undervalued, reflecting market’s lack of appreciation for its strong dentistry franchise and overseas expansion plans. China network chain could be separately listed, when the group achieves a sizeable network in 2-3 years’ time. This could unlock asset value for shareholders…..

Its Chinese ventures also make Q&M an attractive partner for strategic investors. Reiterate Buy recommendation and TP of $0.83

Rotary / OKP

Rotary / OKP: start up of ExxonMobil's mega US$5-6 b petrochemical complex on Jurong Island, having been previously re-scheduled for 2H11, may be delayed for a second time to early 2012.
This may delay revenue bookings for Rotary, which has won ~$200m subcontracts for the construction of the ethylene cracker.
OKP, which has a strong relationship with one of the key contractors FWP JV, could also see delay in the possible award of subcontracts.

RH Energy

RH Energy: Been awarded contract worth US$7.9m to provide an emergency shutdown valve system along Changqing Gas Field in China from Inner Mongolia West Gas Corp. To impact earnings in 2011 and beyond. This is the 2nd contract won from this project, the 1st in Oct 2010 also for the same shutdown valve system.


HiapSeng: 87% owned subsi HS Compression & Process has been awarded 2 contracts approx US$9.4m (S$12.0m) for provision of Gas Compressor Skids. The contracts have commenced in Sg, and are due for completion and delivery to China in Apr 2011 and Middle East in Sept 2010…

Order book as of Nov 2010 is approx $132.0m and this will bring it to $144.0m. Note that co’s order book is on the decline from $207.0 in May and $166.0m in Aug 2010 and reported contract wins for prev half of year has been this one contract.

Technics O&G

Technics O&G: Co has been awarded its first contract in Russia worth S$1.7m to provide O&G process equipment to Dragon Oil. Expected to contribute positively to group's performance in FY2011. Co is looking to expand to Russia, Indonesia and Australia. This small step may be an indication of possible future wins.


Boustead: Co’s water division awarded a S$25m contract to design and construct a demineralisation plant for pure water for industrial use at Tembusu Multi-Utilities Complex owned by TP Utilities…

The plant is capable of producing up to 17,280 cubic m/day of water. Co’s real estate solutions division will handle the civil works component as well, including electrical and fire fighting systems. This is the 2nd project related to the Tembusu Complex, the first being a raw water treament facility and condensate treatment facility in Oct 2010.


ComfortDelGro:Awarded 800 new taxi licenses for RMB10k annually each by Chengdu govt, making co the 2nd largest taxi operator in Chengdu with 1050 taxis. China’s business is co’s most profitable with EBIT margins of approx 31%, and new fleet is expected to add around 1.5% to earnings...

Capex is small at $1.2m annually compared to existing annual outlay of S$450m. Macquarie maintains Outperform at TP S$2.00, highlighting co trades at 13x fwd P/E compared to SMRT at 19x and the discount is unwarranted with co adding new drivers of growth while SMRT will see pressure from the Circle Line due to difficulty of breaking even...

Co owns worldwide fleet size of 44.8k vehicles of which 36.0k are taxis and aims to derive 70% of total revenue outside Singapore in 4-6 yrs.


PLife REIT: Released 4Q results which were within expectations, with 4Q10 DPU at 2.38c, +16%YoY and +6%QoQ was within our expectations. Gross revenue +21%YoY to $21.5m, driven largely by additional contributions from a total of 19 nursing homes acquired (Nov09-Jul10) and higher rev from SG properties….

NPI margin moderated slightly to 91.5% arising from expenses related to the 19 new nursing homes. REIT recognized a fair value gain of $18.7m on its investment properties, equating to a 1.45% gain on total portfolio value…

Interest savings from lower effective borrowing costs of 1.94%. As part of actively managing its debt, REIT successfully re-priced an existing JPY5.3bn ($84m) loan, lowering overall cost of debt further to 1.94%, from 2.13% previously. Debt weighted term to maturity is 3.95 years, with $50m (10.7%) debt due in 2013. Gearing at 34.6% provides headroom of S$122m and S$256m before reaching 40% and 45% gearing,,,

Going forward management will still continue to deliver on inorganic growth, though this could also come from other countries, such as Malaysia and Australia. DBSV maintain Buy with $1.90 TP. Likes REIT for its stable and defensive portfolio and believe REIT will continue to provide organic growth, while exploring portfolio expansion opportunities going forward….

Assumes $200m worth of acquisitions in 2011, funded 70%/30% by equity/debt to maintain
its existing gearing ratio of 35%.

Keppel Land

Keppel Land: Reported a strong FY10 performance with a record net profit $1.05b in 2010, lifted mainly by a $363.8m gain from the sale of Grp’s 1/3 interest in MBFC as well as higher fair value gain on investment properties. Excluding fair value gains, net profit grew to $640.8 million, +145.2%YoY, while rev was at $792m, -14.2%YoY....

Property trading recorded stronger contribution from Reflections at Keppel Bay and Marina Bay Suites in Singapore, together with residential projects in China namely The Arcadia in Tianjin, Villa Riviera and The Springdale in Shanghai as well as Central Park City in Wuxi. In addition, a larger share of profit from K‐REIT Asia as well as higher fee income from fund management due to an enlarged asset under management also contributed to the improved performance....

Grp has announced a distribution of 18c/share, comprising a special dividend of 9c and an ordinary dividend of 9c, bringing FY10 yield to 4.6%. Going forward, grp expects continued growth projected for 2011, with prime office space continuing to attract demand with the growth of Finance and Business services...

We note that grp’s balance sheet remains strong, with more than $1.5b cash and a net debt-equity ratio of 0.2, which will enable grp to grow further with acquisitions in both SG and overseas and trades at 1.5x P/B . Deutsche has buy Call with $5.08 TP, HSBC upgrades to Overweight, with TP of $5.16 (RNAV), while Macquarie and Citi remains neutral on stock with $4.81 and $5.20 TP.

SG Market

SG Market: Spore shares are expected to open higher, taking cues from upbeat US stock rally overnight but upside could be short-lived as price action on the benchmark STI continues to be bearish with support at 3165 & 3120 & resistance is pegged at 3200 before 3280. Keppel Land will be watched after reporting record $1.05b earnings last yr boosted by fair value & divestment gains & special dividend payout. PLife 4Q results were slightly ahead of expectations.

Stock highlights:
* Keppel Land: posted a record $1.05b net profit for FY10, but results unlikely to surprise the mkt. As expected, the bulk of earnings came from divestment of MBFC. Still, after correcting 11% since the recent high in Nov ’10, the stock may get a slight lift on special dividends of 9cts (in addition to 9cts final div). Post-results, Street ratings remain at Buy/Neutral, with targets ranging $4.73-5.82.
* Comfort Delgro: award of 800 new taxi licenses in Chengdu boosts China taxi fleet by 8%. Move viewed positively by Street. Macquarie, KE reiterate their Buy recommendations, with $2, $2.08 targets r’ptively.
* Frasers Centrepoint Trust: 1Q net property income S$18.6m, +17% yoy. DPU 1.95ct, +2.1% yoy.
* Parkway Life Reit: 4Q net property income S$19.68m, +19.5% yoy. DPU 2.38ct, +16% yoy.
* Boustead: awarded $25m contract to build a demineralisation plant at the Tembusu Multi-Utilities Complex.
* Rotary, OKP: delayed start up of ExxonMobil's mega US$5-6 b petrochemical complex on Jurong Island, may impact negatively.

Monday, January 24, 2011

Malaysian Smelting Corporation IPO (MSC)

Malaysian Smelting Corporation IPO (MSC): One of the largest supplier of tin metal globally, MSC offers exposure to the rapidly growing tin industry, driven by strong demand from Asia. To capitalize on this trend, MSC plans to further expand on its mining and smelting capabilities, to take advantage of rising tin prices, expected to peak in 2013….

With smelting operations dating back to 1887, successful listing on KLSE in 1994 and its ability to weather through the recent global crunch, grp has proven its resilience and its share price in Malaysia has reaped a 35.4% return over the past year. We would like to point out that earnings have largely been negative over the past 2 years, due largely to impairments (Non-cash) items, as group has been divesting away its non-tin assets…

Stripping out impairment losses, the stock trades at an undemanding FY10E P/E of 4.6x vs its 7-year KLSE historical mean of 10.5x and relative to regional peer average of 21.8x. IPO Application closes tomorrow at 12 p.m and starts trading on 27th Jan.

Genting SP

Genting SP: is a favorite trading counter due to its share price volatility. Most technical indicators are pointing downward, which suggests negative near term momentum. Still the stock has been in a trading range btwn $2.00 - 2.35 for the most part of 4Q10, and a pullback closer to $2 may provide an opportunity to accumulate...

Today’s decline may also be partially due to news flow regarding the “unprecedented” regulatory standards which the Spore govt has set in junket licensing. This may spark concerns that the audit of junket operators will continue to drag, delaying the award of the licenses. The introduction of junkets in Spore are viewed as a catalyst which will help casinos to expand market share especially into countries such as China and Indonesia, where collection of gaming debt is unenforceable.

First REIT

First REIT: Gross revenue at $7.6m -0.2%yoy and Net property income at $7.5 -0.3%yoy, relatively flat yoy. Distributable income increased by 2.8% to $5.4m, full yr at 21.2m +1.0%. On a qoq basis, all revenue and profit figures were stable, deviating less than 1%...

Higher rentals from Indonesian properties was offset by rental deferment from Pacific Cancer Centre DPU adjusted for 31 Dec rights issue increased 2.1%yoy to 1.96c, bringing full yr adjusted DPU to 7.72c +1.3% from prev yr 7.62c. Approx yield is 10.2%.based on last price of $0.76.


Capitaland: JP Morgan retains OverWeigh rating, but reduces TP from $4.60 from $5.30, tipping stock as a marker for the next decade. Retains rating, but removes stock from Asia Analyst Focus List.

Keppel Corp

Keppel Corp: Could see some interests after Co. announced its first contract for the year, worth US$360m, to build two premium jack-up rigs for Clearwater, with options for two more units, which if exercised would bring the total contract value to above US$730m.The new contracts are not expected to impact Keppel''s NTA or EPS for the current FY but are likely to add to already-elevated confidence over demand for high spec jack-ups…..

In separately news, grp announced that Noble Corp. have terminated a US$152m contract to upgrade a drill ship, however grp notes that cancellation is unlikely to weigh on Keppel shares as partnership with Noble "remains steadfast" and grp will now be able to take on more jobs in an improving market….

We note that market is tipping for KepCorp to clinch an estimated $4.5b contracts worth this yr (Excluding Petrobas) and new order places Kep’s orderbook to an approximately $5b (including options). At current price, grp trades at a forward PE of 13.79x vs its weighted of 14.2x and all time high of 22.1x. Grp is scheduled to report results tomorrow. Resistance for today tipped at year-to-date high at $11.70.


NOL: Nomura forecast overall earnings decline in sector for in 2011F, but note that value still exists if investors are selective. Within the Pan-Asia shipping sector, Nippon Yusen is top pick (below book and a play on BDI recovery) and NOL (lack of capacity growth and higher trans-Pacific exposure),


GMG: cocoa exporters in Ivory Coast have been ordered to suspend all cocoa and coffee shipments for a month, wef tmrw to Feb 23, as the political uncertainty in the country continues. GMG may be affected, if the restrictions were to extend to other major export commodities such as rubber…

Separately, investor interest may shift to Thai rubber player, Sri Trang, which will make its dual-listing debut on Friday this wk, given its lower valuations. Sri Trang currently trades at 12.1x trailing P/E in Thailand, vs GMG’s 29.4x.

Friday, January 21, 2011


RenewableEnergyAsia to sell Genstar Holdings, its fastening business for $4.5m. This was initially proposed on the 31 Dec 2010. While not a substantial amt, transaction frees up capital for development of wind farms and allows co to focus on core part of business. Co has recently turned a profit and has embarked on 2 wind farm JVs with China Datang.

Raffles Edu

Raffles Edu +4.7% to $0.335, taking its ytd rise to 31.4% with 34m shares traded. BNP analyst reckons recent rally has come on the back of potential positive news flow from the Oriental University City (OUC) devt after RLS indicated that it had identified a property developer to co-develop the OUC land to monetise its $394m investment. The group could reap substantial returns if it is able to successfully develop the 280k sqm residential site within OUC.

Sabana REIT

Sabana REIT: HSBC starts at Overweight with $1.12 TP. Note that house likes REIT for its steady income profile and current pricing. While project flattish DPU over the next 3yrs (distribution yield: 8.2%), note that Sabana is trading at a 10% discount to diluted FY11 NAV of $1.11 and at a 12% discount to DDM valuation of $1.14, suggesting valuations are attractive….

The price target implies a 12-month potential return of 20% including distributions. Highlight that risks are master lessees defaulting on their lease obligations, REITbeing unable to exercise options to renew land leases and compliance-related risks.


Osim is holding steady despite FT report that China's Bright Food has walked away from talks to acquire US-based vitamin retailer GNC Holdings, underlining the difficulties of sealing deals with emerging market buyers. The news on Bright Food, which in Dec was said to be close to buying GNC In a transaction worth US$2.5-3b, came shortly after the Chinese dairy group ended discussions with the private equity owners of UK-based Biscuits.

To recap, Osim owns 82.8% of Global Active, the sole GNC franchisee for Spore, M’sia & Australia operating a total of 146 outlets. While this failed bid may dash hopes of some possible M&A between Osim & Bright Food given their complimentary distribution network in SE Asia & Greater China, the stock has been riding high over the past mths on its attractive expansion strategy & approval for TDR listing.


Contel: Co is the object of a reverse takeover (RTO) which will result in co acquiring and taking on the business of Solar Silicon Resources Group (SSRG). SSRG owns Lighthouse Quartz mine, one of world's largest high-purity silica mine, in Queensland and has been operational for several months with stockpile of over 30 tons and has started delivering to customers this quarter...

Estimated reserves of 1.83m tons with mkt value of US$1,500 per ton. Co expects to extract 150k tons of silica in 2011 from mine. Co owns another mine, Mourilyan Sands with est 6.739m tons in Queensland as well. The silica is used in the solar energy industry for photovoltaic solar manufacturing and other high-tech industries. Co's mining operations are materially unaffected by floods due to mining areas being 1000km north of Brisbane...

As of now, SSRG is not revenue generating and will likely come under Catalist board with the new rulings. The RTO will result in parent of SSRG, AuzMinerals being the substantial shareholder of Contel with approx more than 79% of shares outstanding

First Resources

First Resources: DBSV maintain Hold, but reduces TP to $1.55 from $1.77. Note that grp attended House “Pulse of Asia” Conference last week, during which the group provided updates on growth prospects, costs, capex plans and strategies going forward. Based on capex plans given, houses included RBD olein, PFAD, RBD stearin, PKO and PK meal in forecasts, alongside higher capex outlay for the construction of 2 additional CPO mills and a PK crusher….

Given these changes, FY10F-12F earnings were revised by -1%-+9%, with imputed additional shares from full conversion of US$100m CB resulting in fully diluted TP of $1.55/share (post CB conversion share capital: 1,584.5m)….

Given a coupon rate of 5.625%, estimate that conversion of CB should be triggered when FR’s share price reaches $1.53 (fully diluted basis, discounted using 3% risk-free rate). Strong 3-year earnings CAGR expected….

Expect grp to achieve a strong 22.5% earnings CAGR between FY10 and FY13 - mainly boosted by incremental mature hectareage and increasing yields from its relatively young age profile. However, believe the counter may underperform its peers in the near-term given the looming 116.1m shares overhang from the CB conversion.

Tiger Airways

Tiger Airways: Macquarie downgrades to Underperform from Neutral with $1.50 TP from $1.80. Note that higher jet fuel prices were the main reason for downgrade, with hedging at similar levels; fuel surcharge unlikely to differentiate. Pilot retention also an unlikely risk; however, at 12x CY11E EV/EBITDAR vs the Asia-ex average of 5.9x, think Tiger is looking fully valued vs its peers.


GoldenAgri: Daiwa downgrades to Outperform from Buy with $0.85, an amber-light
warning for the cycle. Prefer Wilmar, which has less exposure to the direction of CPO prices than plantation companies such as GGR .

Rig Builders

Rig Builders: Deutsche has a sector report, with an overweight call. Highlight recent boost in activity and raises earnings and TP. Note that customer confidence up and new orders should follow soon. Expect an active 1H11 for jackups, with Kepcorp and SembMarine well positioned to benefit…

Believe SG rigbuilders should benefit from any upgrade and/or replacement opportunities with increased scrutiny of aged offshore assets. There should also be greater demand for high specification offshore rigs as drill conditions become more challenging. Rate Kepcorp at Buy with $13.50 TP from $12.50, SembMarine at Buy with $6.90 TP from S$6.30 and SCI at $7.00 from $6.60.

Sabana REIT

Sabana REIT: HSCB initiates on co with Overweight at TP$1.12 citing robust cashflow and attractive valuations. HSBC highlights good location of all 15 industrial assets with high quality tenant profile with sponsorship by Freight Links and an experienced mgmt team. Furthermore co has alternative funding sources in the Islamic mkts where other firms are unable to tap on, once a credit rating is secured…

Even projecting flattish DPU over nxt 3 yrs, Sabana trades at 10-12% discount to valuations. Downside risks include lease defaults by master lessees, difficulty in compliance to Shari’ah regulations and interest rate risks. At current price of $1.00, Sabana’s projected yield is approx 8.6%.


Dukang: Lifts trading halt this morning. Co has obtained approval to list 130m TDRs on TSE by Taiwan authorities. Pricing is yet to be concluded, subject to discussions with the underwriter and mkt demand. TDR listing of 130m comprises of 65m new shares and 65m vendor shares. Co is a China-based distiller, producing baijiu or Chinese wine for consumption in the Chinese market.


K-REIT: Uninspiring 4Q results out with DPU of 1.7c +1%qoq, full yr DPU at 6.37c resulting in yield of 4.5% compared to FY09 yield at 4.8%. Revenue came in at $21.3m +25.5%yoy -1.8%qoq and distributable income was $23.1m +19.4%yoy +2.1%qoq...

Results improved yoy due to contributions from both Prudential Tower and its 50% stake in Australia’s 275 George Str. Occupancy rates felt slightly to 97% from 99.2% a quarter ago due to inclusion of office tower at 77 King Str which was 76.7% leased and asset swap for MBFC...

Yield of 4.5% was based on closing price of $1.41 on 31 Dec 2010. At current $1.44, translates to yield of 4.4%. Peer Suntec REIT’s est yield is approx 4.4%. Citi maintains Sell with TP$1.18 citing low yields at current lvls though portfolio will to be less hit by negative reversions due to 63% of rentals being long-term. CS maintains Outperform with TP$1.75.

Keppel Tele&Tran

Keppel Tele&Tran: Reported a steady set of FY10 results, despite Grp rev decreasing $107.8m, -5% YoY due mainly to the winding down of non-core businesses and lower logistics rev in Singapore partly offset by rev from data centre business. Operating profit improved significantly by 49% to $12.4m due to additional contribution from the data centre business and better operating margins as a result of cost control measures…

Over all Net Profit at 60.7m, +27.4%Yoy, contributed by higher operating profit and share of profits from associated companies…

Going forward, Grp expects stable warehouse occupancy and growing demand for 3PL services and is pursuing opportunities to expand into new customer segments and warehouse locations. Group is actively looking to grow overseas, especially in China, where its port in the Pearl River Delta continues to operate at full capacity, as well as Vietnam….

We note that at current levels, valuation appears undemanding, with grp trading at 13.7x trailing PE vs its historical average of 24.1x. Grp has further announced a first and finanl dividend of 3.5c/share (2.5%) yield for the FY10.

MapleTree Logistics

MapleTree Logistics: Announced FY10 results, which were in line with expectations. FY10 Rev at $218.9m was up 6% YoY and 12% QoQ and within FY10 consensus estimates of $225m, while DPU for FY10 grew 3% to 6.09c vs 5.9c if FY09, suggesting the stability of the REIT’s performance....

Rev and income growth reflected was attributed to the contribution of acquisitions completed during FY010 as well as contribution from the 5 properties acquired during this qtr. 4Q10 also saw a further increase in the occupancy rate of Malaysia from approximately 95% to 99% with an improvement in rental rates reported across the portfolio.During FY10, Trust compled 14 acquisitions in SG, Japan, South Korea and Vietnam with NPI yields ranging from 7% to 10%....

At current levels, grp trades at 1.15x P/B and yield of 6.2%, vs Ascendas REIT of 1.3x and yield of 6.1% and Cambridge industrial trust of 0.91x P/B and yield of 8.3%. Grp’s balance sheet remains strong, with aggregate leverage ratio declining to just below 38% from last qtr, with average debt duration increased to 2.2yrs. Approximately $172m or about 13% of its total debt is due for refinancing in FY11 and 53% due in 2012....

Going forward grp will deepen, strengthen and enhance its footprints in Asia, invest and expand customer relationship, and capitalise on growth potential of Mid-East, India and Indonesia through acquisitions and working with Sponsor in greenfield developments. Areas of include cold storage, chemical goods, pharmaceutical warehouses and retail/wholesale distribution centres….

OCBC maintains its Buy rating and raises its RNAV-derived fair value to $1.03 from $1, while RBS also maintains Buy call with $1.11 TP, tipping trust to continue riding on Asia's recovery cycle and benefit from positive rental reversions in FY11-FY12. Technically,see resistance at $0.99.

SG Market

SG Market: Spore shares may rebound slightly at the open after yday’s sharp selloff & the midday reversal in US markets to a smaller loss at the close but gains could be short lived amid renewed fears of further tightening measures in China. Traders will be watching the key 3200 support level on the STI today. If that breaks, we may see the STI pull back to the triple bottom base at 3120.

4Q results from K-Reit, ART & MLT all in line & offer no catalyst for re-rating. ST Engineering may see some interest altho aero contract wins of $320m in 4Q vs $370m in 3Q not a surprise & is quite routine biz. CPO stocks may come under a little pressure on news that Indon may move to raise export tariffs for the 2nd time this yr. Dukang may gain after obtaining regulatory approval for its 130m TDR listing.

Stock highlights:
* Ascott Residence Trust: 4Q10 results generally in line.
* Mapletree Logistics Trust: 4Q10 results generally in line. Deutsche, Morgan Stanley maintain at Buy/ Overweight with $1.06, $0.97 targets r’ptively.
* K-Reit Asia: 4Q10 results slightly below consensus estimates. Citi maintains Sell rating and $1.18 target. Credit Suisse however, maintains at Outperform with $1.75 target.
* Keppel T&T: FY10 net profit at $57.6m +29.1% yoy, revenue at $107.8m -4.9% yoy. Declared first and final div of 3.5cts.
* Sabana Reit: HSBC initiates at Overweight with $1.12 target. Says the Shariah-compliant Reit is low risk and offers high yield at 8.2% pa.
* Comfort Delgro: Nomura upgrades to Buy from neutral, raises target to $1.98 from $1.70.
* Tiger Air: Macquarie downgrades to Underperform from neutral, lowers target to $1.50 from $1.80 on higher fuel jet prices.
* Rig builders: Deutsche the latest addition to the Street in upgrading the sector. Sees consumer confidence rising with new orders to follow.
Keppel Corp TP raised to $13.50 from $12.50.
SMM TP raised to $6.90 from $6.30.
SCI TP raised to $7.00 from $6.60.
All 3 counters maintained at Buy.
* ST Engrg: said its aerospace unit secured $320m worth of contracts in 4Q10.
* Dukang Distillers: to lift trading halt at 9am. Has obtained approval from the Taiwan authorities for the dual listing of 130m TDRs on the TSE. Pricing of the TDRs has yet to be fixed.

Thursday, January 20, 2011


Capitaland: 60% owned subsi Australand provides summary on Queensland flooding with regards to its operations. Brisbane office remains closed due to damage to local infrastructure. 2 industrial assets are damaged but extent is yet to be determined, costs to be borne by insurance...

Residential project at Kangaroo Point impacted but extent to be determined, project will be delayed to complete by 1H12 vs earlier 2H11. With only 2 out of 9 Brisbane industrial properties damaged, flood is not likely to impact NAV significantly given insurance coverage as well.

Golden Agri

Recall that crude oil has been declined for a third day in New York after builders began work on fewer US homes than projected in Dec, signaling the economic recovery may be slowing in the biggest crude-consuming nation….

Futures dropped as much as 0.5% after a report showed housing starts slipped to the lowest since Oct09, while US crude inventories increased 3.53m barrels last week, the biggest gain in eight weeks, negating concerns over supply. Given CPO’s high correlation with oil future, it would be likely to see CPO link stocks take a drop….

Similarly, yesterday JP Morgan in their CPO sector report yesterday downgraded Golden Agri to underweight, on valuations basis, noting that with limited upside to CPO price, believe that upside to Golden Agri’s share price may also be limited. Share price has performed strongly in the last 6 months and is now trading at 14x FY11E P/E - 25% above historical mean P/E…..

House instead favours First resources, citing that Stock currently trades at 12x FY11E P/E against sector average of 16x.


Cosco may gain if parent Cosco Group transfers its stake in 2 shipbuilding operations to the Spore-listed entity. According to DBSV, the injection of 19% of Cosco Shipyard Group & 100% of Cosco Shipbuilding Industry, which owns 2 yards in Nantong & Dalian could add 20% to Cosco's bottomline. Talk of Cosco Group restructuring surfaced after a govt panel's proposal to push forward listing of major SOEs in 2011 as part of 12th 5-Year Plan.

House keeps stock rating at Buy with a raised target price of $3.03, up from $2.76. Adds Cosco is poised for further re-rating if the parent injects strategic stakes, contract flow strengthens or shipbuilding improves.

First Shipping Lease Trust

First Shipping Lease Trust: Repored FY10 reslts, with Full year Net Distributable Amount at US$28.5m, -43% YoY with grp recording a 36.7% dive from 1.5 US cents YoY. For the full year, total DPU for grp was 4.35 US cents, down from 7.90 US cents….

Grp sank into the red for 4Q, with a loss of US$928,000, from profits of US$1.8m YoY and also recorded Net Profit losses of US$5.69m for the full year, as compared with profit of US$8.42 a year ago. Affecting grp's bottom line was the arrest and re-delivery of two of its vessels, FSL Hamburg and FSL Singapore mid-last yr.The overall financial impact of their arrest and re-delivery was at a cost of US$11.2m to grp….

We note that at current levels, grp trades at 0.74x P/b, while Net gearing is at 113%, with a yield of 9.1%.

Pacific Shipping Trust

Pacific Shipping Trust: Reported FY10 results which were broadly in-line with expectations. FY10 Rev was at US$61.3m, flat YoY while Net Profit at US$27.1m, also flat YoY, suggesting the stability of grp’s business. DPU for 4Q was at 0.809c, representing a full yr DPU of 3.227c and an annual yield of 8.7%, which was slightly lower than FY09 3.615c DPU (9%) yield, due to higher income retention since 3QFY09

Going forward, management has guidance for higher gross rev from Sept11 when the 10-yr time charters to Shagang for two 180,000 DWT Capesize Bulk Carriers come on-stream. This will rise further in 3Q12 as the 10-yr time charters to Cosco Xiamen for two 24,000 DWT Vessels come on-stream and the 8 and 10-yr time charters of five 57,000 Bulk Carriers to Glovis will impact positively on gross revenue from 4Q12....

The transactions in FY10 will more than triple the trusts total contracted revenue from US$250m to about US$800m up to the year 2023, and almost double its portfolio of vessels from 12 to 21 vessels. ...

We note that at current levels, grp appears fairly valued at 0.925x P/b, while Net gearing is at 102% , with the trust securing financing commitments for a total of US$150m from three banks for funding its acquisition grp’s financial position remains strong as all vessels have been financed ona long-term basis, supported by the fact that grp’s loan terms do not have any loan to-value ratios and top-up provisions.

We note that at current levels, grp appears fairly valued at 0.925x P/b, while Net gearing is at 102% , with the trust securing financing commitments for a total of US$150m from three banks for funding its acquisition grp’s financial position remains strong as all vessels have been financed ona long-term basis, supported by the fact that grp’s loan terms do not have any loan to-value ratios and top-up provisions.

First Resources

First Resources: 75m vendor shares and 15m treasury shares (total 6.1% of shares out), have been placed out at $1.48/sh, at 8% discount to last close at $1.61. The vendor shares are owned by majority sh/h Eight Capital, which stake will fall to 68% post-placement. Rationale for deal is to improve the free float and trading liquidity of the stock. Citi is the sole bookrunner.
Expect near term weakness, though share price could find support at $1.48 (50MA).

Rotary & PEC

Rotary & PEC: Secured $14.6m EPC contract to add facilities to existing plant on Jurong Island for chemical co Stepan Asia. The facilities to be built include a 4 storey 50k ton annual capacity methyl ester plant and upgrading of an existing plant...

Work has commenced and is scheduled to be completed by Feb 2012. Rotary's order book was a substantial $1.1b as of Nov 2010 compared to FY09 rev at $551.9m and 9M10 rev at $544.7m. News follows PEC’s $78m EPC contract from Tuas Power Utilities also in Jurong Island, slated for completion by May 2012. PEC trades at trailing P/E 7.4x and Rotary at 9.3x, peer Mun Siong at 7.7x.


Midas: IIFL retains Buy with $1.20 TP from $1.15. Note that Midas is well-positioned to deliver 37% earnings CAGR during FY10-12, driven by expansion in extrusion and fabrication capacities and higher profit contribution from JVs. Tip that Co. is in a favourable position to to play the rapid expansion in China’s railway sector. We note that grp currently trades at 15.2xE FY11 PE and 11.3xE FY12 PE. IIFL continues to value grp at 18x 1-year forward earnings.


LongCheer: DBSV downgrades Co. to Sell from Buy with $0.49 TP, a sharp downgrade from previous $1.11 TP. Note that weak demand and severe margin compression in India continues with the India handset market plagued with a severe stock pile in the feature phone segment…

As a result, handset makers aggressively cut ASP to clear stock. As there is still inventory in the channel, expect this trend of low volume and low margin will last for three more qtrs. As India accounts for 40% of group sales and almost 50% of shipments, house expect a significant adverse impact on Longcheer’s performance in the qtrs ahead…..

Add that Longcheer’s 3G volume is still small and will not offset the weakness from feature phones. Meanwhile, house have not seen signs of mobile lottery contributing in 1Q11 and believe it will take a much longer time to create user awareness and become a significant contributor….

House Downgrades to Sell following a 16%/20% cut in shipment volume for FY11F/12F, 10% drop in ASP and a 4-4.7% decline in gross margins. Forecast a loss of $12m in FY11 and $12.7m profit in FY12. Re-peg TP to historical mean P/B of 1.3x FY11, thus yielding a revised TP of $0.49.

CapitaMall Trust

CapitaMall Trust: 4Q10 results generally in line with Street estimates. Net property income at $101.5m, (+5.7% yoy, flat qoq), benefiting from positive rental renewals (+6.5% yoy) and strong occupancy at 99.3%.
Net income at $63.1m, (-1.1% yoy, -4.5% qoq) mainly due to higher financing cost.
DPU at 2.36cts, (-1.6% yoy, flat qoq). Full yr DPU at 9.24cts (+4.6% yoy), translates to 4.9% yield.
Debt profile remains healthy with gearing of 35.9%...

Mgt expects continued stability and sustainability of the malls’ occupancy rates and rental revenues, driven by increased tourist arrivals and improved consumer confidence, but notes that significant borrowings are due for refinancing in 2011 that could affect its financing costs. Notes the completion of asset enhancement initiatives (AEI) at Raffles City should boost NPI by $1.2m in 2011, while other AEI at JCube, TheAtrium@Orchard are progressing well. prior to results, Street has mix of Buy and Hold ratings, with targets ranging $2-2.39.


M1: Operating revenue at $261.4m +20.9%yoy +6.4%qoq generally beat expectations. Though net profit at $39.5m +15.5%yoy, +5.3%qoq was positive, EBITDA at $77.4m was a 2.4% decrease yoy and -2.3%qoq and FY10 EBITDA margins slipped 7.6%yoy mainly due to handset sales attributed to smartphone segment. The dividend of 3.5c resulted in a better than expected FY10 payment of 17.5c share, a 7% implied yield, co expects to maintain 80% minimum payout policy beyond GY10…

ARPU was up for post-paid at $65.0 +6.2%yoy and 1.5%qoq and data plan $22.0, +2.4%yoy, +1.7%qoq. However, prepaid segment fell slightly in both market share 0.2% pt decrease and ARPU -2.1% for both yoy and qoq. Guidance for capex was $100m aimed at 4G network upgrade and setting up operating co for wholesale of NBN…

Houses reporting on M1 results maintaining Overweight/Buy ratings are MS (TP $3.00), Nomura (TP $2.95), Citi (TP $2.64), Daiwa upgrades TP $2.67 from $2.57 due to healthy 7.2% dividend for 2011. Both Deutsche (TP $2.00) and HSBC (TP $2.47) maintain Neutral ratings. CS downgrades to Neutral from Outperform, citing disappointing dividends though believing M1 is largest potential beneficiary.

SembCorp Industries

SembCorp Industries: Daiwa maintains Outperform and increases TP to $5.42 from $5.12, based on an improving offshore/marine outlook. Believe grp is likely to be a beneficiary of an industry upcycle for offshore projects. Note that key share-price catalyst for grp tends to be new contract announcements, either for SembMarine or its utilities business. Believe grp and its offshore subsidiary has similar upside potential over the next six months, and like both of them equally.

SembCorp Marine

SembCorp Marine: Announced that it has secured a turnkey contract to build a jack-up rig with Atwood Oceanics, as part of the three options granted to Atwood in Oct10. The newbuild is priced at around US$182m with delivery scheduled for end-Jun13. The new Pacific Class 400 rig will have similar specifications to the other two rigs ordered earlier, and are the latest generations of high spec jack-up drilling rigs with greater capacities and capabilities than current units….

We note that order wins brings total number of orders secured by grp this yr to an approximate S$448m, and grp has a current orderbook of approximately $5b. Analysts are tipping for grp to clinch approximately $4.5b worth of orders for 2011 (excluding petrobas)….

At current levels, grp trades at 14.4xE FY11 PE vs its historical average of 21.7x, suggesting that valuations are still compelling. Kim Eng remains positive on stock in view of the strong likelihood of even more new orders and is currently reviewing our target price (Current TP $5.40)….

Technically, multi-year high of $5.47 hit 3rd Jan will act as resistance.

SG Market

SG Market: Spore shares are likely to open lower, taking the bearish cues from Wall Street overnight, giving traders more excuses to take profit. The STI may test its support at 3220. All eyes will be on China's 4Q GDP (expected to be 10.3%) & inflation data for clues on Beijing's likely monetary tightening course. CMT (in line) & M1 (lower qoq earnings but higher divd payout) will be in focus after both reported 4Q results while

SembMarine may fare well & test recent high of $5.47 after announcing its first jack up rig contract win of the year, worth US$182m, which will bring its ytd orders to $448m. Trading of Cosco is halted on possible asset injection by parent. First Resources may face some pressure from vendor placement of 90m shares at $1.48-1.55. Both Rotary & PEC announce new EPC contracts.

Wednesday, January 19, 2011


Sinopipe: SIAS initiates with an Increase Exposure rating based on an intrinsic value of $0.40. Likes Sinopipe for its favorable industry trends and unique business strategies. Note that Co. is currently trading at an attractive discount of 4.7x FY2010F P/E and 0.51x FY2010F P/B compared to its peers' average of 27x P/E and 9.2x P/B….

Add that fundamental drivers include booming plastic consumption. Highlight positive industry factors such as rapid urbanization of China and superior properties of plastics over other materials are impelling the demand for plastic pipes. Project plastic usage to grow at a CAGR of 18% from FY2009 to FY2013F…

Note that Sinopipe is benefiting from industry consolidation in China, support from its business associates, and its unique strategies in securing more clients with its dispersed production facilities.

Bright World

Bright World: Sias technical analyst says investors should sell into strength now, after the stock’s staggering 384% surge over the past 12 months. Notes the stock has hit its historical high of $0.615, and likely faces heavy selling pressure. Eyes critical support at $0.60, as a break below that level could point to a minimum downside target of $0.555, followed by $0.50. Adds the 200-day RSI at 62 is overbought, and confirms the bearish outlook for the longer-term.


Starhub: Earnings is est to be out on 11th Feb but not confirmed. There have been recent general reports on telcos. Most houses are touting M1 due to potential broadband growth. This is ascribed to expected NBN launch and lack of cannabilisation for M1...

Singtel is expected to gain pay TV subscribers at expense of Starhub. No recent forecast on ARPU or revenue for Starhub as of yet. Starhub trades at trailing P/E 17.1x to Singtel’s 12.7x and M1 14.3x but counter has been lackluster compared to M1 since mid-Dec.

CapitaCommercial Trust

CapitaCommercial Trust: 4Q10 results weaker yoy and sequentially, but seems within Street expectations. Net property income at $70.9m, -11.4% yoy, -7.1% qoq. Net income at $45m, -18.4% yoy, -10% qoq. This was mainly due to loss in rental income following completion of sales of StarHub Centre and Robinson Point.
DPU at 1.94cts/sh, +3.2% yoy, -2.6% qoq...

On outlook, mgt cautions that in 2011, the sheer volume of new supply (3m sf) may temporarily exceed take-up, leading to higher vacancy rates and moderating rental growth. Says also that negative rental reversions (prime rentals still 48% below peak levels in 2008 ) may negatively impact operating revenue in 2011. Expects prospects to pick up again from 2012 when new supply drops.
Stock trades at 5.1% annualized yield...

Pre-results, the Street had a mix of Buy, Sell and Hold calls, with targets ranging $1.35-1.81.

First Resources

First Resources: JP Morgan remains OverWeight on grp, tipping stock as its top plantation pick in SG. Note that recent CPO conference highlight that CPO production recovery will continue in 2011.Tip other catalysts as New plantings and construction of palm oil mills and Potential crop diversification. Stock currently trades at 12x FY11E P/E against sector average of 16x.


SGX is interested in pursuing Japanese listing on its bourse particularly in O&M and property sectors. Only a handful of Japanese firms are listed here, Nomura Holdings, Isetan and others with Japanese assets Saizen REIT…

The recent GLP’s $3.9b IPO has stirred interest in Japanese firms listing on the SGX particularly the real estate sector. Obstacles which remain include adherence and familiarity with reporting standards and language barriers. Statement comes on back with SGX move to scrap its lunch break in line with world bourses operating standards and expects a 6-12% increase in volume…

In separate news, SGX is expected to launch the world’s fastest trading engine on Aug 15 to compete with rivals. Co will invest $250m on the infrastructure, to boost capacity by 100x, which will enable overseas customers to trade with lower costs as well. Co reported net profit of $74.2m and was up 7c higher at $8.50 at yday’s close.


K-Green: Revenue for full year at $65.8m with net profit at $9.5m. Quarterly revenue at $22.8m -12.6% qoq and net profit at $4.1m -5.7% qoq. DPU of 4.31 cents was 10.2% than co’s forecast of 3.91c for 2H10. Annualised yield is at 7.9% based on 31 Dec 2010 closing price of $1.07…

Book closure date for distribution on 25 Feb 2011. While rev was 22.1% lower than forecasted due to delay in works for co’s Senoko Waste-to-Energy plant, DPU was higher than expected. Co is looking to add more assets to its portfolio of 3 plants, Senoko WTE, Tuas WTE and its Ulu Pandan NEWater plants, from Asia, Europe and Middle East. Given a yield of 7.9%, co may find it difficult to acquire utility assets which are accretive.

Roxy Pacfic

Roxy Pacfic: Reproted that it has sold 75% of the total 251 units at an avg price of $2,000psf, ranging for its launch of Spottiswoode 18, in the 1st major launch following the 4th round of property coolong measures. There was a large turnout at the showflat with buyers mainly local investors. Roxy was reportedly aiming to launch at prices 10% higher prior to the measures…

The headline pricing is 8% higher than UOL's Spottiswoode Residences (avg $1,850psf). In absolute terms, prices range from $700k implying a min down‐payment of $280k for a 2nd time buyer….

Detusche Bank note that demand was stronger than expected, especially coming so soon after the latest measures and believe this reflects the relative affordability of small format units & excessive liquidity. With the increase in down payment to 40% for 2nd time buyers, larger unit sizes with higher overall pricing are disproportionately affected & this could perpetuate the downsizing trend....

While the firm response could boost sentiment in the near term, this could stoke concerns of a further round of measures should sales remain exuberant…..

We note that at current price. Grp valuations are not cheap, with group trading at 1.4x FY11E P/B vs peers average of 1.1x, while Gearing is high at 180.4% vs peers average of 33.9%.


UOL: Could see some positive interest after it announced it has bagged the freehold 147,909 sqft Lion City Hotel and adjoining former Hollywood Theatre site for sgd313m. Price works out to $799/psf of potential gfa inclusive of $77.8m estimated development charge…

Grp noted site is near the existing Paya Lebar MRT station for the East-West and Circle lines. Highlight that based on the current allowable development options, the property may be redeveloped as a commercial-cum-residential development and Co. will cont to assess the current allowable development options to determine the final development scheme for the property….

We note that in light of the recent government property cooling measures, UOL has been tipped by various houses as one of the most resilient players in the sector, citing that the developer offers the best risk-reward proposition in its sector, given it currently has no SG land bank left and is in a ‘good position to reflate its RNAV by acquiring land in a softer environment.’ DBSV and OCBC has a Buy Call on grp with TP at $5.30 and $5.42 respecitvely.

Stock Highlights

Stock highlights:
* OUE: mkt talk that Credit Suisse is looking to sell up to 42.6m shares (4.3% of shares out) at $3.35-3.50/sh. The offering is likely linked to a placement on behalf of the controlling Riady family. Stock may feature today.
* SGX: Post-results, Deutsche maintains at Buy with $10.50 target, HSBC upgrades to Neutral but maintains $8.60 target. Separately, the counter may see interest on plan to pursue Japanese listings in Spore.
* K-Green Trust: 4Q10 results better than initial guidance, but lower q-o-q. Limited growth prospects may cap upside, but share price should remain supported by the 7.8% annualized yield.
* CapitaCommercial Trust: 4Q10 net income -18% yoy, although DPU +3.2% to 1.94cts/sh, which translates to 5.1% annualized yield. Mgt expects further negative rental reversions in 2011, before picking up in 2012.
* Roxy Pacific: may rebound after yday’s large turnout at its Spottiswoode 18 showflat. ~75% of total units were sold, at ASP of $2000 psf. Absolute prices started from $700k/ unit, which may dispel concerns about steep discounts being offered.
* UOL: wins Lion City Hotel and adjoining Hollywood Theatre Site tender for $313m. The property may be redeveloped as a commercial-cum-residential dev.
* Banyan Tree: has raised Rmb 1.1b for its first Rmb-denominated private equity fundBanyan Tree China Hospitality Fund.
*Foreland Fabrictech: positive profit guidance. To report higher revenue for 4QFY10 and higher net profit compared to 4Q09.

SG Market

SG Market: Spore shares are likely to open flat with a slight upward bias following the modest rise in the US markets overnight. The STI index should continue to consolidate in the 3220-3280 range in the absence of fresh catalysts. Most Reis are releasing 4Q & 2010 earnings reports this week. Early indications from K-Green & CCT are largely in line on flat to softer qoq net property income and possible negative rental revisions, the results are unlikely to move prices.

Rotary is in the news with a glowing BT article on its overseas forays in Mid-East & Europe. OUE may also be in focus on newswire report of a 42.6m share placement by Credit Suisse at $3.35-3.50.

Tuesday, January 18, 2011

Dividend Screen

There have been a number of requests for the higher yielding stocks.
Attached is a list of stocks that provide a yield of at least 5%.
We have run a filter for a minimum average trading liquidity of $50k/ day.

Sound Global

Sound Global: Nomura completed its mktg trip in Europe. Says investors were upbeat on the China water sector given strong govt policy support and an expected doubling in invmt in wastewater treatment (to Rmb 700b) and waste-to-energy during 2011-15F. Notes govt officials continue to study plans to raise water tariffs to Rmb 1.20/ton from the currently guided Rmb 0.80/ton…

While European investors are more familiar with the likes of Beijing Enterprises Water (371 HK) and China Everbright Int’l (257 HK), Nomura also notes this counter is closely watched by those looking for higher upside potential. Rates at Buy with HK$6.40 target (S$1.06).


IPO: Hutchison Whampoa plans to spin off its ports assets in a Spore listing in late Feb or early Mar, which may raise at least US$3b. DBS, Deutsche Bank & Goldman Sachs are the joint bookrunners & issue managers for the global offering of Hutchison Port Holdings Mgt, whose principal assets include deep-water container port operations in HK & Guangdong province. The ports business accounts for 24% of the conglo’s net asset value.

If successful, Hutchison Whampoa's IPO of its port assets would be the biggest ever public offering in Spore, topping the IPO of SingTel, which raised around $4b in 1993. The IPO would also dwarf GLP' US$2.9b IPO in 2010.

Tat Hong

Tat Hong: DBSV says Tat Hong’s Australian subsidiary, Tutt Bryant Group (TBG) has only 1 branch out of 7 in total, that is impacted by the recent widespread and extraordinary flooding. TBG’s operations at Rocklea, Brisbane in Queensland, is temporarily affected. Insurance assessors are currently conducting an assessment of the damage to PPE, and the final cost impact is not known at this stage...

Believes in the longer run, a significant recovery and reconstruction efforts will be required in Queensland, which may lead to more demand of cranes. Maintains Hold and $1.08 target.


Contel: Update on co's affairs. SSRG Group owns Lighthouse Quartz mine, one of world's largest high-purity silica mine, in Queensland and has been operational for several months with stockpile of over 30 tons and has started delivering to customers this quarter. Estimated reserves of 1.83m tons with mkt value of US$1,500 per ton. Co expects to extract 150k tons of silica in 2011 from mine…

Co owns another mine, Mourilyan Sands with est 6.739m tons in Queensland as well. Co's mining operations are materially unaffected by floods due to areas being 1000km north of Brisbane. Welcomes sg-based substantial shareholder Patrick Tan Choon Hock (8.67%), who has known stakes of slightly under 5% in Qian Feng and China Enersave through TS Marine. Possible further stakes but unconfirmed in China Enersave under Tan Choon Hock and other co Renewable Energy.


Yangzijiang: OCBC upgrades to Buy from Hold & raises target price to $2.36 from $2.04. Notes the company continues to secure new orders with the recent win of 15 shipbuilding contracts in 4Q10 totalling US$415.3m. This brings full year new order intake to about US$1.5b, excluding options worth another US$300m. Cites data released by China’s Ministry of Industry & IT also paint a relatively healthy picture of China's shipbuilding industry.

Adds, unlike many Chinese shipyards, YZJ emerged stronger from the 2008 crisis, evident from its acqns, improved execution abilities & increased exposure from its TDR listing. The house now pegs YZJ at 15x FY11F core earnings (from 13X), in line with industry average.