Friday, September 28, 2012
Atlantic Navigation: RTO Trading likely to debut on Monday, 1st Oct. Atlantic Navigation is the new entity that has emerged from the reverse takeover of Fastube. The reverse takeover was transacted at $146m, involving an issue of 228.1m new consolidated shares at $0.64 per share, which resulted in the concert parties holding 93.7% of shares outstanding. To meet SGX listing rules, a compliance placement was carried out, involving an additional issue of 17m new shares and sale of 33m vendor shares at $0.64 each. An integrated offshore services provider, incorporated in The Hamriyah Freezone (UAE), the group’s business activities has more than 15 years of operations and has consistently been able to secure charter contracts and ship repair and fabrication projects in the Middle East and India. The group suffered from weaker charter rates in FY11 compared to FY10. However, management has guided for charter rates to remain relatively stable or increase in FY12 in line with the recovery in the level of activities in O&G. Going forward, grp aims to broaden its customer base by intensifying its sales and marketing efforts to secure new customers in other regions such as South-east Asia, Africa and Mexico. The group intends to expand its fleet of vessels to serve customers in the offshore O&G industry and procure more long term chartering contracts and targets to acquire 2 to 3 new vessels in FY12 and FY13. We have done an RTO factsheet on the Co, which could be accessed via the following link or downloaded off the left hand tool bar.
Tiong Woon: +7.0% at $0.305, after trading up as much as 10.5%, in high volume amid a series of large trades. The oil services provider and O&G offshore-platform builder may merely be the latest small-cap O&M play to see a surge of interest, after its peers' recent rallies; as the company also has a tower-crane business, it could be riding on the recent rally in crane provider Tat Hong amid a buoyant infrastructure-spending and construction outlook. A Tiong Woon representative said the co wasn't aware of a reason for the stock's climb. But players punting on the sector likely should exercise caution. Be watchful of profit taking given recent price gains among the small-medium cap O&M stocks as their upside potential to target price narrows,"warned DBS Vickers in a note.
Sky One: resumes from trading halt yday. Co is proposing to acq the entire stake in coal mining co Energy Prima for $400m, via the issue of 1600m new shares at $0.25/sh. In connection with the proposed acq, it will dispose its existing business (excl PT Energy Indonesia Resources) to its controlling sh/h and CEO Mr Dicky Suen Yiu Chung for $6.9m. Stock is the top active today, -1.6% at $0.315.
Tiger Air: will begin flying direct between Singapore and Hyderabad, India, and Phnom Penh, Cambodia. The airline is the first to offer low-cost flights between Singapore and Hyderabad, with the first flight due to arrive in the Indian city slightly after midnight on Sept 28, 2012. It will be the sixth Indian destination by the airline. Technically, Tiger share price continues to trade in an ascending channel.
STX OSV: Citi maintains Conviction Buy on inexpensive FY12-13E P/E 8x a 20-30% peer avg. Expects order activity to pick up into year-end, following the mid-year vacation season. Recent conversation with mgmt reveals that demand for high-value construction vessels remains healthy, with the company actively engaged in negotiations for several units at present. Substantial dividend payouts in FY11 and 1H12 (payout ratio of 51% and 128% respectively), in our view, was largely driven by a ‘cash call’ from STX OSV’s parent. potential for further out-sized dividends down the road should not be ruled out if 51% stake share takes longer to materialize
Ascott REIT: OCBC maintains Buy with $1.30 TP. Note that ART has entered into the agreement for the acquisition of a 166-unit serviced residence for a consideration of EUR37.5m ($59.4m). The property (Madison Hamburg) is strategically located at the junction of three prime areas in the city centre of Hamburg, Germany. Madison Hamburg will continue to be managed under a master lease arrangement by a local operator, who has been managing the property since it opened in 1993. The acquisition is not expected to have any material impact on the NTA, EPU or DPU of ART for FY12.
SingPost: OCBC maintains Buy with $1.20 TP. Note that the steady climb of SingPost stock has continued since the start of the year when we upgraded the stock to BUY. Cautiously improving market sentiment and the flood of liquidity searching for safe havens with respectable yields has supported performance, along with greater expectations of further growth opportunities in SingPost after the issuance of perpetual capital securities in Feb. Though spectacular gains are unlikely to be enjoyed by investors in the stock, SingPost’s total return has been attractive since 2010 in an uncertain environment. The group has launched new initiatives over the years and diversified into other business areas, but the next leg of growth is heavily dependent on management’s astute use of the group’s cash pile.
ST Engineering: OCBC maintains Buy with $3.81 TP. Note that STE has outperformed the STI significantly since the beginning of the year, rising 29.0% versus the 15.6% increase by the index. The stock reached its 52-week high of S$3.55 last Friday. The counter is trading at a historical P/E multiple of 20.1x and should still have room to climb. With the win of S$179m worth of contracts by ST Marine announced in 3Q12 so far, we think that STE’s order book may be greater than S$13b by the end of 3Q12. We note that the order book has been growing faster than annual revenues, implying increasing earnings visibility into the future. Rolling forward our valuation to blended 2H12/1H13 EPS and increasing our P/E multiple from 20.0x to 20.5x.
Europe: Spain update. The Spanish govt announced its 5th austerity package in what may be a move to head off tougher conditions demanded as part of a potential European bailout. PM Rajoy’s Cabinet approved a new tax on lottery winnings and a cut in ministries’ spending as part of a €13 b central govt package to shrink the euro area’s third-biggest budget deficit. The target for 2013, which includes the regions and social security, is 4.5% of economic output compared with a 6.3% goal for this year. The measures reflect Rajoy’s attempt to balance the demands of his EU counterparts with voters demonstrating on the streets of the capital. He’ll raid the pension reserve fund to boost payments for retirees while unveiling a parcel of 43 separate measures that Economy Minister Luis de Guindos said exceed everything the EU has demanded for increasing growth.
CapitaLand: Trading Central notes share price remains supported by a medium term ascending trend line since end May, and is currently bouncing off its rising 20day MA. Adds daily RSI has resumed its bullish dynamic, indicating a further advance. Tips continuation of the rebound to $3.33 and $3.45 in extension. Support at $3.05.
UOB: Credit Suisse maintains Neutral with $20.00 TP. House spoke to UOB Thailand CFO, to get an operational and strategic update. UOB Thailand has been an underperformer among UOB’s regional businesses, intermittent macro issues not helping. Core business now appears to be on a strong recovery path, but the approach remains conservative. While UOB Thailand’s topline performance has been strong over the past few qtrs driven by better loan growth and margin recovery, the bottomline has struggled due to one-off items including flood related provisions and deposit protection charges. Near term earnings growth could remain muted. FY12 loan growth of 8-10%, increased deposit competition pressuring NIMs, but non-interest income is likely to grow strongly. The bank’s core ROEs have recovered from 3% in 2010 to 6% levels in 1H12. UOB Thailand’s recovery could be key to the Group’s growth and ROE profile over the medium term. With the bank’s conservative growth targets, reaching respectable 12% ROEs could take another 3-5 years, potentially boosting Group ROEs.
Wilmar: CLSA maintains Sell with $2.87 TP. House note that while China soy prices are finally starting to react slowly to the global supply failure in soy, global soy prices continue to rocket on, which should see yet another difficult qtr. Furthermore, China’s crushing capacity has grown by +43% over 3 yrs, driving utilization ratio down to a mere 50%. House see this leading to continued losses in oilseeds. A potential short-term trade is on the horizon, where any sharp correction in soy prices could lead to a potential oneoff profit for Wilmar. However, with the event still a while away, maintain SELL call, TP of $2.87.
Grand Banks: Has signed an agreement with Ocean Alexander to represent each other’s brands and boats at sales offices in China and Australia. Grand Banks views this as a strategic fit as its vessels are in the range of 40 to 76 ft, while Ocean Alexander’s vessels are larger, up to 120 ft and beyond. Co has also signed an agreement with Pen-Marine Sdn Bhd to sell Grand Banks yachts in Msia. The placement to Tan Sri Lim and Gerard Lim from Genting has been completed. Co currently trades at a P/B of approx 0.8x
Aussino: Founder and Chairman Anthony Lim has sold 32.4m shares in the open mkt. Co has announced that his intention is to raise funds to buy back the Aussino Grp of business after the reverse takeover to Myanmar grp Max Strategic. The agreed amount for the takeover is approx $9.4m.
Hi-P / Research in Motion: Shares of RIM surged 20% in after hrs trade on indications the co will have plenty of cash to ramp up production of its new BlackBerry 10 devices and mount a robust marketing campaign for the revamped line, due in early 2013. RIM's 2Q qtr brought shareholders additional glimmers of hope, a break from a succession of dreadful qtrly reports. The co not only generated more rev than Wall Street had forecast but it topped expectations on the number of devices shipped in the period. Recall, some houses has been touting investors not to write RIM off yet, citing that RIM’s BlackBerry 10 may yet be able to restore part of its market share. Recently Verizon Wireless has announced that it will carry RIM’s new BB10 smartphone when launched early next year. The largest U.S. wireless carrier is apparently backing RIM’s bet on the BB10 model with an all time favourite keyboard as well as a full touchscreen version. If BB10 takes off, Hi-P who counts RIM as its long-time standing and one of its biggest clients, could be amongst the first to benefit.
UOL: Wee Ee Chao, through KIP has sold 1.5m shares at $5.76 average (1.01 mln at $5.727 and 490K at $5.829), implying that nothing of significance is imminent. Recall that Chairman Wee Cho Yaw, through Wee Investments, bought >6 m UOL shares in late May / early June this yr, at $4.18-4.30 a share.) Recall that markets has of recent discussed the possibility of UOL doing a reit when the stock revisited the 2007 peak of $6.05, the only property stock to have done so. Latest sale by Wee Ee Chao, could mean that the grp is currently not exploring such a possibility at the moment.
Ezra / Triyards: Triyards, Ezra’s fabrication yard spin-off, will be listed on SGX mainboard on Oct 18. Its listing will be through a dividend-in-specie allotted to existing Ezra shareholders, with every 10 Ezra shares entitled to a Triyards share. Ezra said that at its EGM held yday it received strong support from its shareholders for the Triyards' distribution. Post-listing, Ezra's interest in Triyards will drop from 100% to 67%. Triyards is so named for Ezra’s three fabrication and engineering yards, two of which are in Vietnam and one in Houston. Its order book reached US$613.1m as of Aug 31, 2012. Some of Triyards' notable projects include the Lewek Constellation, a complex ice-class deepwater multi-lay vessel with heavy-lift capabilities, and the world's first 425-foot leg length mobile self-elevating unit (SEU).
FNN / Thai Bev: The Thai consortium bidding for control of FNN highlights it will be a long term strategic investor in FNN and plans to keep the co listed if its $8.88/sh GO succeeds. It has no immediate plans to materially change FNN’s businesses or redeploy its assets, but will undertake a strategic review of FNN. The offer closes 29 Oct. Sh/h will today vote on the sale of APB to Heineken for $5.6b, as well as the proposed 1:3 capital reduction plan to return $4b, or $8.50 per cancelled sh to FNN sh/h. The Thai’s, who control 30.7% stake in FNN, had indicated they would block the capital reduction, which requires 75% sh/h approval to pass. Separately, the Nikkei reported that Kirin is expected to sell its entire 15% stake in FNN, and enjoy capital gains of more than ¥30b (~S$475m). While Kirin has responded that the media report was not based on any company announcement, mkt watchers note, with Thai Bev strengthening its control of FNN, it is becoming more difficult for Kirin to reap the benefits of its partnership with FNN. FNN and APB have requested for their shares to be halted pending the results of FNN’s EGM this morning.
SG Market: S’pore shares are back on the roller-coaster ride as Wall Street's rally on Spain's budget plan and China’s move to add banking-system liquidity has eased eurozone debt concerns and put the risk-on trades back on the market. With the ongoing speculation for Chinese stimulus, we can expect equities, commodities and risk currencies to remain bid, but should remain cautious as the troubles of Europe are never too far away. China's PMI data on Sat will be closely watched. The STI is expected to hug the 3040-3080 range in the immediate term. F&N's EGM to vote on Heineken's offer to buy its APB holdings will likely be a key focus, even as it's widely considered a done deal after the Thai group pledged to vote in favor of the sale, but to reject the capital-reduction plan and Kirin is reportedly looking to exit; F&N shares are halted. Ascott Residence Trust agreed to buy a 166-unit Hamburg property. Myanmar-related stocks will continue to be in play given the lifting of US sanction on Myanmar exports and the positive response to Thein Sein UN address. CPO and commodity stocks may also see interest with the overnight jump in commodity prices.
Thursday, September 27, 2012
52 wk highs: Property - Aspial, Heeton, Wing Tai, Ho Bee, K-Reit, A-Reit, CCT, Cache Others - Jardine Matheson, Tat Hong, Kreuz, Ausgroup, Second Chance, WBL, Interra Resources, Sakae, Health Mgt Int'l, Inno Pacific, Lion Teck Chiang, Eastern 52wk lows: Global Invacom , Foreland Fabric
CWT's CEO, Loi Pok Yen just bought 900,000 shares from the open market yesterday at $1.25/ share. This is a very bullish sign given that this is directly under his own account, and is his biggest open-market purchase to date. The last time he bought was in September 2011, when he bought 300,000 at $0.92/s share.
Civmec appears to be testing its 20 day MA at $1.14. RSI appears to be hooking upwards, although a close above the 20 day MA could confirm further upside ahead. Note however Stochastics does not show any signs of a reversal yet. Near-term resistance can be found at the recent highs of $1.20
UPP: OCBC sees further recovery after the stock initiated strong bullish breaks above both its upper channel boundary and $0.36 key resistance on heavy volume yday. Says MACD is still trending higher steadily at the moment, suggesting that the upside momentum is likely to continue. Tips the counter could potentially head higher towards the next key obstacle at $0.45 (key peak) in the weeks ahead. Immediate support at $0.36, with stop-loss exit slightly below at around $0.34.
Myanmar plays: a sea of green. US lifting import ban on Myanmar goods. The United States is to ease a ban on imports from Myanmar, Secretary of State Hillary Clinton told Myanmar leader Thein Sein, lifting the last major trade sanction on the country. The move, which will have to be carried out in conjunction with Congress, comes just over a week after democracy icon Aung San Suu Kyi started a historic visit to the United States by calling for an end to sanctions. Clinton Wednesday told the Myanmar president that in recognition of the rapid reforms made by Myanmar, once ruled by a military junta, the US is taking the next step in normalizing our commercial relationship. US officials will now have to examine each sector with Congress and decide how best to go about easing the sanctions. Thein Sein met Clinton Wed ahead of his address to the UN General Assembly on Thursday, during a landmark visit to the United States that coincides with a triumphal American tour by Suu Kyi.
Far East H-Trust: Goldman Sachs initiate Coverage with neutral Call and $1.02 TP. House note that expect FEHT to deliver 9.5% DPU CAGR over 2011-2014E (lifted by Oasia Hotel) and 5.2% over 2012E-2014E (vs hospitality SREIT peers: 2.6%). Add that the mid-tier/upscale hospitality segments in SG offer most growth potential, in our view. In the near term, key drivers would be: (1) developing in-house brands, particularly Village and Oasia brands; (2) improving hotel customer mix by expanding the high-yield corporate segment; (3) rolling out AEIs actively to upgrade the assets. Over the medium term, it has a visible acquisition pipeline of 7 properties (which we estimate at S$1.5bn, +70% of asset value) granted by its sponsor to tap into, an upside risk to valuations.
Uni-Asia Finance: Sias initiates at Overweight with TP $24. Highlights the stock trades at only 0.5x P/B, having shed two-thirds of its share price over the past two years. Believes the worst has passed, and expects operating results to improve from 2H12, driven by i) fee income from structured finance, and ii) higher charter income from a new vessel delivery in late Jun ’12. Uni-Asia is a structured finance arrangement and alternative assets direct invmt firm. The co’s main activities are the finance arrangement of transportation related assets and the provision of ship charter arrangements and the direct investing in alternative assets such as ships, distress assets and real estate.
Singtel: Reuters has a article discussing the stake sale. The sale appears to be more symbolic than strategic with Temasek selling off its stake in Singtel repeatedly and currently still owns 52% of Singtel. This sale also brings to the forefront Temasek’s stake in Stanchart. These shares would be hard to offload and dripping the shares into the market would create an overhang that would depress the bank’s value. Likely buyers would be other banks but given that Basel III penalizes minority shareholdings in other financial institutions, it would only make sense if it served as a launchpad for a full takeover.
Cosco : Trading Central notes the stock price recently pulled back and is now approaching its key support at $0.94, which continues to hold since end May ’12. Believes a technical rebound is possible from $0.94, with targets at $1.01 and $1.06 in extension.
Ship Breaking/YangZijiang: The ship breaking industry has witnessed an increase in the supply of ships to be scrapped due to the global shipping downturn coupled with weak macro economic head winds since 2009, ICRA said in a report. Also, the less stringent regulations related to environment and human health hazards has also aided to the growth of this industry. With the outlook on international shipping freight rates being subdued over the near to medium term and large tonnage expected to come on stream post 2012, the ship breaking industry is expected to continue witnessing a steady supply of vessels for demolition over the medium term, the report said. We note that ship breaking rev contributions for Yangzijiang still remains an insigifnicant portion for the grp’s rev, however grp has plans to Gradually increase its production capacity from 200,000 LDT to 600,000 LDT over the next 3 yrs.
Armada Grp: 45% associate China Mobile Satellite Comms Grp has secured a contract to supply 3k satellite phones to China’s Civeil Defence Dept. Co will be working with 2 parties, Suzhou Tai Li Te and the Design Academy of National Defense of the University of the People’s Liberation Army. These phones and serveics will allow civil defence personnel to maintain critical lines of communications which are vital during periods of natural disaster or civil emergency.
Ryobi Kiso: has secured contracts worth ~$24m, bringing ytd order book to over $132m. Its recent contract awarded for foundation and geoservices works include: - Downtown Line Stage 2 – Contracts 913, 915 - EC at Choa Chu Kang Drive - HDB at Bedok N8C20 - Orchard MRT and Tangs Plaza upgrading of underground link - RiverSails @ Upper Serangoon Crescent - The Cristallo - Westwood at Orchard Boulevard - Cottesloe – lot 364 Marine Parade, Australia - Esperance Port Access Corridor, Australia The stock trades at 26 P/E, fwd 14.6x P/E.
Property / Hock Lian Seng / TA Corp / King Wan: seems like another group of Singapore developers has emerged. A consortium comprising Hock Lian Seng, TA Corp, King Wan and Far East Distillers announced that they have been awarded the tender for a 99 yr leasehold private residential site at Dairy Farm Road for $244.3m. A special purpose co, BTG has been set up to undertake devt of this site. Ownership is split as follows -- Hock Lian Seng 50%, TA Corp 22.5%, King Wan 17.5%, Far East Distilliers 10%. The 189k sf land parcel located at Dairy Farm Road has a plot ratio of ~2.1. Based on the max gfa of ~397k sf, the purchase price works out to ~$616 psf ppr. The site has potential to be developed into ~400 units. A DWG consultant estimated breakeven cost at btwn $1050 – 1100 psf, and selling price at btwn $1250-1300 psf. Other prominent property developer consortiums in Spore include the Fragrance / Aspial team up, as well as KSH / Heeton team up. These counters have all recently made 52 wk highs, an indication of positive share price momentum.
K-Reit: announced agreement with Mirvac to acquire 50% interest in a new office tower, which will be developed on the site of the Old Treasury Building in Perth for an est consideration of A$165m, based on a pre-agreed cap rate of 7.15%. The transaction is expected to be end Mar ’13. The building is currently under construction and targeted for completion in 2H15. The new office tower will comprise a 35 storey premium Grade A building with NLA 331.5k sf. The Govt of Western Australia has committed to lease 98% of the building under a 25 yr lease (option for another 25 yrs) with embedded annual rent escalations. Assuming 100% debt funded, K-Reit’s leverage will increase to 45% (from 43.9%). This will be K-Reit’s 4th asset in Australia (12% portfolio exposure) and its second partnership with Mirvac. While the size of acq is not significant (3% of K-Reit’s portfolio), it helps underpin the Reit’s income stability , supported by a long weight avg lease to expiry (WALE) and blue chip tenant base. Deutsche maintains Hold with TP $1.13 Credit Suisse keeps at Neutral but raises TP to $1.26 from $1.22. Likes K-Reit as the best proxy to Spore Grade A office space with 6.2% yield. CIMB keeps at Neutral, but raises TP to $1.23 from $1.21.
F&N/Thai Bev: THE Thai consortium seeking control over F&N has declared that it will block a proposed capital reduction for F&N. With no other concrete plan on the table for F&N to return proceeds from a proposed disposal of APB, the move could push some F&N minorities toward accepting the Thais' general offer. The proposal by F&N, in which the Thais hold a 30.7% stake, is to pay shareholders $8.50 per cancelled share for culling one out of every three shares held. The capital reduction needed 75% approval to pass. F&N's board said earlier this wk that if the proposed capital reduction is rejected, it will wait until after the Thai offer expires or is completed to consider alternatives. Prior to this, many analysts had speculated that they would block the resolution, if only to gain better control of F&N's cash in light of the takeover bid. They can review the capital needs of F&N, and having the cash on hand allows them to go on an expansionary track through M&As and capex ramp if they see good growth opportunities in the region, DMG says.
SG Market: S’pore shares look set to have entered a corrective phase as the spotlight turns to Europe where protests over austerity measures are flaring up in Spain and Greece and Wall Street is recoiling from the prospects that central bank support may not have the desired effects. Most technical indicators (ADX, Stochastics, RSI, MACD) are exhibiting clear signs of weakness, which may trigger a short term sell-off. For now, the STI is till holding above the 3040 immediate support but if this gives way, we could see a further drop to the psychological 3000 level or below. Very little market moving news to push markets as negative overseas news expected to take charge. Local stocks in focus will include F&N, after ThaiBev announced it will vote against a proposed capital reduction program. K-Reit will also be one to watch, after it announced it is in a deal for a 50% stake in a new office tower in Perth. Meanwhile, Ryobi Kiso secured contracts worth $24m.
Wednesday, September 26, 2012
Temasek related plays : As part of its broader diversification efforts, Temasek sold $15b in assets during FYMar12, including stakes in Indonesian petrochemical maker PT Chandra Asri Petrochemical, HPH Trust, India's ICICI Bank and Chinese real-estate firm Kaisa Group (1638.HK). It also is in the process of selling its 68% stake in Indonesia's Bank Danamon (BDMN.JK) to DBS, which could fetch it US$3.2b. That deal still needs approval from Indonesian regulators. Earlier this wk, media reports suggest Temasek’s US$10.5b 18% stake in Standard Chartered is up for sale, while just today, Temasek completed the $1.28b sale of a 2.5% stake in SingTel. The frequency of share sales has led some market players to wonder if there could be further rationalization of Temasek’s listed portfolio holdings. Excluding key infrastructure / prized national assets, possible Singapore listed plays that could be sold in future are: CapitaLand, SCI, Keppel Corp, SATS, MLT, HPH Trust, MCT, Olam, Stats Chippac, MINT, CitySping Infra, Tiger Air, Cosco, SMM, CCT, CEI Contract Mnftg, Sunningdale Tech, Dynamac, K-Green Trust, Starhub
Going by the sudden surge in price and volume, as well as recent privatisation of companies such as Gul Tech , Meiban, Beyonics, which operate in the broadly similar manufacturing / technology space, do not rule out possibility of Sunning Tech being another privatization candidate .
Far East H-Trust: OCBC Initiates Coverage with Buy and $1.08 TP. House note that Far East H-Trust's portfolio consists of 11 properties in Singapore, including seven hotels and four serviced residences, giving a total of 2,531 rooms/units. The trust has the largest diversified hospitality portfolio in Singapore by asset value, equaling $2.14b. With a mix of hotels and serviced residences, the portfolio is able to ride on the up-cycle in the hotel industry, while the serviced residences would provide downside protection during economic slowdowns. The Sponsor is part of Far East Organization, which is the largest private property developer in Singapore. Three hotels and four serviced residences have been identified by the Sponsor as Sponsor Right of First Refusal (ROFR) properties which could be offered to Far East H-Trust. These properties could significantly increase the number of hotel rooms/serviced residence units in the trust by 1,242 rooms/units, or 49.1%, to 3,773.
Keppel Corp: Ezion indicated that it is planning to use Keppel Verolme in the Netherlands for the refurbishment and upgrading of an old rig. Once complete, the unit would be dismantled and shipped in parts through sea and land to Keppel’s Baku shipyard in the Caspian Sea where it would be re-assembled before deployment. Deutsche highlights not many yards are capable of handling such challenging projects and is a testament to KEP’s expertise. Notes KEP’s strategy to be near its customers and mkts has also benefited it in Brazil, where the group is currently one of the most experienced offshore yards in the country. Sees KEO as wel positioned to benefit from any upgrade, replacement and new build opportunities in the O&M sector. Reiterates Buy with TP $13.70.
Banyan Tree: which develops and operates luxury resorts, hotels, and spas throughout Asia, is making a foray into the residential market with its first development in Chengdu, the capital of Sichuan province. The maiden project would be developed on a 333k sm site in the city's suburbs, some 45 min from downtown Chengdu. The project would comprise luxury homes and affordable condos and would be developed in phases. In China the group manages hotels in Hangzhou, Sanya, and Macau. It also holds equity interests in a hotel and holiday homes in Lijiang, in Yunnan province. China had been identified by the group as a key one into which it planned to expand. Chengdu was chosen as the location for its first new-home devt because Sichuan was one of the country's fastest growing provinces. The group does not intend to compete with local property players, but would attract buyers through a niche marketing strategy. Banyan Tree is also eyeing business opportunities in other cities. Apart from targeting the housing market in China, it plans to market its Banyan Tree brand to the many wealthy Chinese who were active in buying holiday homes. The co trades at 42.9x trailing P/E (only marginally profitable over the past 12 mths), and 0.9x P/B.
OCBC: Trading Central notes the share is holding above its support area and is expected to post a new rebound. Notes the RSI has resumed its bullish dynamic and the short term moving avg is likely to cross above the medium term one in the coming sessions. Believes as long as $9.11 holds, look for further upside to $9.60 and $9.90 in extension.
Ezion: Likely positive sentiment to continue after a series of Price upgrades following latest contract wins: CLSA raises TP to $1.90 from $1.70, with Conviction Buy Call. DMG raises TP to $2.02 from $1.37. CIMB raises TP to $ 1.65 from $1.19. DMG Insti sales in a note firmly believes Ezion remains one of the great structural growth stories, and believe that analysts are behind the curve and will continually be forced to raise their numbers and chase this stock. Add that the stock does not seem to want to pull back and despite the strong performance YTD house still a buyer at these levels. Do miss the boat for the small matter of penny pinching. Bite the bullet and get some on board. Trading on 7x 2013 PE and with an ROE in excess of 20% with huge EPS growth, remain very comfortable with this call. Although not disclosed, suspect the Southeast Asian based NOC to be Petronas could potentially lead to more liftboat deployment opportunities for Ezion in Msia, a mkt that had historically been closed to them because of the local procurement requirement. Believe that Ezion will announce a JV with a local partner in the near future, and thus open up an lucrative mkt to them that had previously been shut. CLSA add that with strong demand and limited competition, house remain confident that Ezion is likely to announce more projects over next two quarters which will provide positive catalysts for the stock. Deployment of proceeds from the perpetual issue may result in another 3-4 liftboat/service rig contracts. S$125m perpetual issue in early September has provided Co. enough balance sheet strength to pursue aggressive capex plans which house believe is important as the coy needs to build up scale before competition comes in. Currently factoring in US$1.1bn in capex over FY12-14 but can accommodate another US$200-250m in capex over FY13 to support its expansion while still maintaining comfortable gearing levels (around 100%).
Singtel: Could see some negative sentiment, after Temasek was reportedly selling 400-500m shares of SingTel ($1.3-1.67m, 2.4-3.1% of shares outstanding) at a 2.4-3.9% discount to close. CLSA sympathies with Temasek’s desire to sell-down and reiterate non-consensus SELL on SingTel with a target price of $3.11. Note that net profit is declining: 1Q13 underlying net profit declined -2.6% YoY and came in at 22% of Consensus 1Q13 and FY13 expectations. Add that SingTel in SG is chasing subs (mkt share up to 46.4%, but SAC up 2.5% and ARPU down -8%) this is to build a base for digital content/services whereas Australia is focusing on QoS as a differentiator rather than price and this is proving to be a painful transition and divergent from SG’s strategy Estimate that Barclays Premier League rights could come in at $600m (vs $400m in 2009) – this would suggest a joint bid from SingTel and StarHub SG$300m each. Although this would be lower than previous round, a lack of exclusivity since cross carriage makes justifying high bids (capex) economically hard and div growth unlikely. Also concerned about SingTel spending $321m on a digital marketing company (Amobee in April), $12m on a food blog (Hungrygowhere in May) and a stake in TheMobileGamer for $1.5m yesterday. Add that associates are a mixed bag. The other concerns house have heard from investors is that if Bharti were to raise equity, SingTel might subscribe.
SG Market: S’pore shares are likely to correct further with the STI edging down towards 3040 level as euro-zone worries come back into focus and Wall Street suffered its steepest losses in a month. Temasek's announcement that it will sell 400m shares of SingTel will weigh on the market and STI. Other stocks to watch include Genting S’pore, which sold off its entire 4.8% stake in Australian casino operator Echo and Wing Tai, which was in a consortium (incl units of Metro and UE E&C)that won a tender to develop a residential plot in Prince Charles Crescent.
Tuesday, September 25, 2012
52 wk highs: Property - Bukit Semb, Lian Beng, Sim Lian, Koh Bros, Sing Holdings, KSH, Aspial, Popular, Blumont, Hotel Grand Central, Superbowl, Sabana Reit Others - Thai Bev, Ausgroup, SingPost, WBL, Tan Chong Int'l, Technicas Oil & Gas,Noel Gifts 52wk lows: C&G, Amplefield, Rotary, Changjiang Fertilizer
AusGrp: DBSV note that traders may want to hesitate before punting on AusGroup's plan to demerge its subsidiaries into a group headed by wholly owned subsidiary AGC Australia, which will seek a listing on the ASX; AusGroup then plans to enter a reverse takeover and acquire suitable assets. The shares of AGC will be distributed to Ausgroup shareholders. Overall, existing AusGroup shareholders will still own the same business as they will hold 100% of the shares in AGC, and also retain their shares in AusGroup (which will be injected with suitable assets), but their shareholdings in AusGroup will be diluted,. In addition to the change in costructure, AusGroup's filing to the SGX notes the matter is at a preliminary stage and the company hasn't identified any assets for acquisition, adding there is no certainty suitable assets will emerge. The stock is up 12.2% at $0.46.
Tiger Air: DBSV says Tiger's turnaround story is intact. Operations in Australia are turning around as daily sectors rebound to pre-suspension levels. Singapore was already back in the black last quarter but Australia’s financial recovery will be dampened by ongoing price war. While the house expects a larger net loss of $7m in FY13, and lowered FY14F net profit by 7% to $61m, it notes the appointment of new CEO, Mr. Koay is a positive. Mr. Koay highlighted that Tiger should be flexible in exploring new growth avenues, including introducing new products and services and offering enhanced connectivity to improve customer experience. DBSV believes given Tiger’s recent history, fresh ideas could help to spur the Group’s expansion prospects. Maintains Buy on a lowered TP of $0.90 (from $0.92 previously).
Gold / Second Chance: there's been constant news coverage on the influx of cash to be released into financial mkts by the major central banks, leading to asset inflation . Gold has been a beneficiary given its perception as a hedge to inflation. Second Chance is one possible proxy to the recent pick up in gold prices. Although the co owns just one gold retail store, Golden Chance at Tanjong Katong Complex, the store is located at the heart of the key Malay shopping district. Co also commented previously that it has the lion's share of the Malay gold jewelery mkt in Spore. The gold business contributed 35% of 12MFY12 revenue. Second Chance changed its FY12 to end in Aug, from Jun previously, so that it can continue to incorporate revenues from the peak Ramadan season into current year financials. Its FYAug12 / 5QFY12 results will be out next month 18 Oct. The stock has been holding up at $0.415, the 52 wk high, and is just shy of its $0.43 all time high. A break above this level, catalysed by positive results, could lead to extended upward momentum.
New Listing: Jason Parquet makes a solid debut, rising 31.1% to $0.295 from its $0.225 IPO price, accounting for around 2.8% of shares traded on the SGX. The debutante is likely benefiting from the session's flurry of market interest in lower-liners and slightly buoyant overall market sentiment as well as a dearth of recent IPOs. In addition, the regional timber-flooring distributor and service provider may see some benefits from any QE3-fueled real-estate action. But players likely should be wary of the company's relatively small size as interest may in trading the stock may dry up once its novelty wears off. Orderbook quotes suggest the $0.30 intraday high is likely to remain a cap.
IndoAgri: Goldman Sachs has key takeaways from site visit. House maintains Buy Calll. Note that Sugar contribution in full swing in 3Q12, and IFAR has harvested approximately 10,000 ha of sugarcane ytd, from its planted area of 12,323 ha at its Komering estate. Mgt expects Komering’s sugar production to reach over 50,000 MT in FY12 (as of 1H12, 16,000MT), and 3Q selling prices to average Rp9,000/kg. Longer term, IFAR guided for a 2-3 yr target of 18k ha planted area, 80 ton/ha cane yield (from R&D activities) and sugar production of 140,000MT. Indo refining capacity ramp up only by end 2013 – Of IFAR’s 1.42mtons palm refining capacity, Tanjung Priok (TP) houses 420k tons capacity, and specializes in cooking oil, margarine, and shortening. TP has sufficient land for an additional 210kt refinery capacity (9 months to build), but there are no plans to commence construction. Mgt estimates that refining capacity in Indo approximates 16m-17m tons today, and will reach 22m-23m tons only by the end of 2013 due to construction bottlenecks. As per the co, while cooking oil consumption has been growing at 3%-4% p.a, branded cooking oil grew at 6%-8% p.a. Currently, 25% of Indonesia’s cooking oil consumed is branded cooking oil, of which IFAR commands a leading market share within the branded market. Furthermore, there may be upside risks to branded cooking oil market share from bulk should the Indonesian government ban “scoop” cooking oil by 2015 for health reasons.
Triyards Holdings Ltd: OCBC note that with two yards in Vietnam and a fabrication facility in the US, Triyards Holdings Ltd (Triyards) is an engineering and fabrication solutions provider focused on the offshore oil and gas industry. Unlike many shipyards, the group has a strategic focus on the construction of self-elevating units (liftboats), having established a significant track record. Originating from Ezra Holdings which will hold a 67% stake post listing, Triyards may be able to be involved in some of the projects that Ezra undertakes and tap into Ezra’s clientele base. Based on 9x FY13F earnings, house derive a fair value estimate of $0.78 and do not have a rating on Triyards.
Ezra: OCBC maintains Buy but lowers TP to $1.40 from $1.48. As tendering activity in the subsea market continues to be buoyant and the industry outlook is set to remain positive, increase FY13 subsea new order wins estimate for Ezra Holdings to US$900m, . At the same time, positive on the impending listing of Ezra’s engineering and fabrication arm, Triyards, as this will allow the latter to tap the debt and equity capital markets independently from Ezra to pursue future growth opportunities. The move may also allow Ezra and Triyards to leverage on each other for business opportunities. Finally, an equity carve-out increases information transparency, improving investors’ understanding of the parent’s firm value. Assuming Triyards trades at 9x FY13F earnings with a share price of $0.78 and estimate that this would lower fair value estimate for Ezra. Shareholders’ approval still has to be sought at an EGM this week.
Genting SP: RWS will open its oceanarium at Marine Life Park (MLP), the world’s largest, on Dec 7. This will complete RWS’ 5-yr devt. The 8ha MLP, the size of 13 football fields, will open with more than 100k animals from 800 marine species. RWS said that with the resort fully operational, it expects more than 10m-16m visitors a yr. Some 30m visitors have visited it in the first 2yrs of operation.
Sarin: CS has unrated note. House note that as detailed in Sarin’s FY11 annual report, Co. expects growth will be driven by new products and derivatives, as Sarin strategises to leverage its dominance in planning tools to drive further customer adoption of inclusion mapping systems and to gain traction in the polished diamond trade. Note that the earnings outlook looks promising, according to mgt, with growth of the inclusion mapping Galaxy™system accelerating due to greater penetration and usage. Mgt has stated that Galaxy™-related revenues, at 1/3 of 1H12 sales, are set to boost their recurring income (now at 20%) and margin profile. The current valuation is at 9x FY13E P/E, vs historical range of 5-14x, based on consensus estimates. Note that the share price has, since its IPO in 2005, demonstrated a strong correlation with the polished diamond price index, which largely reflects the overall market supply-demand fundamentals.
Myanmar plays: Myanmar’s President Thein Sein has embarked on a landmark visit to the US, the first visit by a Burmese leader in 46yrs, seeking to end sanctions. Mr Thein is scheduled to attend the UN General Assembly in New York and is likely to focus on trade opportunities. It follows a tour by opposition leader Aung San Suu Kyi who made her first trip to the US in 40 years last wk. The US lifted sanctions against Mr Thein and other Burmese officials only last wk and he is scheduled to meet US Secretary of State Hillary Clinton and other senior officials from the US and the UN. A crucial aim of his visit will be the removal of a US ban on imports from the country, which could pave the way for greater foreign investment and create urgently needed jobs. We do not rule out a play up of SG Myanmar related stocks.
Rotary: profit warning for 3Q12. Expects loss for FY12, mainly due to the SATORP project in Saudi Arabia. As mentioned in 1H12, the group exp problems at the tail end of the construction phase, which resulted in the recognition of additional cost that significantly impacted the gross margin. Cost has further escalated in the current quarter. Co will be able to provide more details in its 3Q12 financials in Nov ’12.
Chasen: secures maiden purified water and wastewater treatment Transfer-Operate-Transfer (TOT) projects in Jilin Province, China, with total invmt value incl 30yr concession rights for two plants wroth up to Rmb 300m (~S$58.2m). The design capacity of the Purified Water Treatment plant is 200k cubic m/day and 60k cubic m/day for the Waste Water Treatment plant. Both plants are expected to start operations in stages by 1H13. The transaction will be funded through internal resources and bank borrowings. Chasen trades at 10.4x P/E.
Ausgroup: update on ASX listing. Ausgroup says it is considering to split its subsidiaries into a group headed by key subsidiary AGC Australia, and then seek a listing of AGC on ASX. As part of the proposed transactions, Ausgroup proposes to enter into a reverse takeover (RTO) and acquire suitable assets yet to be identified. If the proposed transactions are completed, it is intended that Ausgroup sh/h will receive shares in AGC under the distribution in-specie and still retain their shares in Ausgroup. Ausgroup sh/h will hold 100% of shares in AGC, which will be an Australian resources services co listed on ASX. However Ausgroup sh/h will see their Ausgroup shares heavily diluted following the completion of the RTO. The Board of Directors is of the opinion that this option provides better value to Ausgroup sh/h than the dual listing previously considered. This effectively means that the original Ausgroup business will seek a listing on ASX, with the shares of the new listco to be distributed to Ausgroup sh/h. Meanwhile, Ausgroup will acquire new businesses via an RTO. Overall, the group is expected to grow in size. While plans are still at a very preliminary stage, Ausgroup could see improved sentiment catalysed by expectations of positive corporate action. The stock trades at 6.5x P/E.
Wilmar: likely to be in focus after it said it set up a 50/50 JV with Kellogg to make, sell and distribute cereal and snacks in China. Wilmar will contribute its China infrastructure, supply chain and distribution network, while Kellogg brings a portfolio of globally recognized brands and products. How important the deal will be to Wilmar is "anybody's guess," says OCBC, given no mention of numbers, or when it's going to start. But adds, that could provide some way for Wilmar to monetize their extensive distribution network, but the impact is still unknown. Notes the press release said the China snack food market will hit US$12b by end-year, but it doesn't look like Kellogg is in China in a big way yet. Adds, China would be a pretty competitive market. Wilmar ended Monday down 1.8% at $3.19; amid an expected market downdraft and concerns over CPO prices.
SG Market: S’pore shares are likely to go into consolidation mode following the feeble close on Wall Street amid the stalemate over the European debt crisis and global growth concerns. However, any correction is not expected to be too severe given the anticipated liquidity tide unleashed by the Fed and ECB. Support for the STI is seen at the 3040 level, which also marks the convergence of the 20 and 50-day moving averages with topside resistance at around 3080. No much corporate news to drive markets today with Ausgroup undergoing a corporate reorganization together with a planned ASX listing and Rotary issuing a profit warning due to problems faced by a Mid-East project. Wilmar inked a joint venture with Kellogg to make, sell and distribute cereal and snacks in China, while DBS signed an MOU with the Export Import Bank of Korea to cooperate on infrastructure and project financing. Palm-oil plays may be eyed after CPO touched a 2-year low on rising inventories and lower demand for biofuel. Jason Parquet makes its debut on Catalist after setting its IPO price at $0.225.
Monday, September 24, 2012
Thai Bev: +5.2% at S$0.405 in strong volume of more than 7% of the shares changing hands on the SGX. The key share price driver isn't F&N'sannouncement it will proceed with the capital reduction vote at its upcoming EGM and that TCC Assets would not be required to increase its bid to take the proposed capital reduction into account, says CIMB. Add that house have been highlighting it's cheap, with $0.60 TP. F&N is down 0.6% at S$8.89, just a hair above the Thai group's S$8.88/share bid for the company. In its announcement, F&N noted it would delay implementing the proposed capital-reduction, if approved at the EGM, until after the resolution of the Thai group's offer as shareholders accepting the Thai bid prior to the capital reduction would receive a higher payment.
Diamonds / Sarin: more negative news flow on the diamond industry. Diamond Trading Company, the De Beers subsidiary that distributes rough diamonds notes China's demand for diamonds is growing far more slowly this year, making it the latest co to acknowledge that meteoric growth rates in the sales of luxury goods are petering out in China. China became the world's 2nd-largest diamond consumer last year, buying up 10% of global output, ranked behind only the US, which buys 38% of the world's diamonds. Last year, China demand grew over 20%, while expectations place growth at around 10% this yr. The growing number of luxury-goods companies/ brands that have warned about slowing growth in China this year incl Daimler’s Mercedes-Benz and Porsche divisions, and fashion brand Burberry. Separately, internet news has been talking about Russia having last wkend, declassified the existence of possibly the richest diamond field in existence, located in the depths of of a 62mile diameter asteroid crater known as Popigai Astroblem in Siberia, with potentially “trillions of karats” of impact diamonds. Though impact diamonds are more suited for industrial uses given their extreme hardness, the sheer quantity could be enough to have a serious downward impact on global diamond prices. Nevertheless, the numbers claimed are so fantastic that the news has no doubt attracted its fair share of skeptics. http://news.yahoo.com/blogs/technology-blog/russian-asteroid-crater-revealed-filled-over-1-quadrillion-013025163.html Sarin is -1% at $1.01.
CCT: +2.1% at $1.435 in strong volume, bolstered by a three large married deals in pre-open trade and several large blocks changing hands. The stock could also be getting some support from a Jones Lang LaSalle data showing 3Q12 office rents stabilizing, bringing some optimism to the office market, which has been hit by weak demand since the EU debt crisis returned fear to the global economy a year ago. The data show average gross effective rents for Raffles Place, excluding Marina Bay, Grade-A office declined only 1.1% qoq , similar to 2Q12's rate, pointing to relatively stable market conditions. Orderbook quotes suggest CCT will struggle to retest $1.445, its Aug peak as well as its highest since Jul 2011.
Raffles Edu: latest FYJun12 results weren't good, as the group recorded revenue decline of 10% to $131m, and net loss of $84.8m vs $51.3m net profit a yr earlier. Nevertheless, stock price has been stronger of late , on the back of recent positive news flow. i) in mid Sep, famous investor Oei Hong Leong raised his stakes in Raffles Edu from 6.14% to 7.18% via open mkt purchases. A number of stocks (latest being Intraco), have benefited from his "midas touch". ii) newspapers have been featuring positive commentaries on Msia's Iskandar region, noteably on rising property prices and on the area becoming an education hub. Raffles Edu is well positioned to ride on this trend, with its newly set up Raffles University Iskandar. Raffles Edu last wk acquired even more land in Johor Bahru to further its education business, and plans to develop the Raffles American School catering to students from Kindergarten to Year 12. iii) pending 1-for-5 rights at an issue price of $0.14/sh.
Hai Leck: proposed a renounceable non-underwritten 1-for-4 rights-cum-warrants issue. The warrants have an issue price of $0.05, and an exercise price of $0.13. The Cheng family, with an aggregate 67.8% stake has given irrevocable undertakings to subscribe for the warrants. Net proceeds of ~$3.9m from the grant of the warrants issue will be used to finance the Group’s business expansion and enlarge working capital. Hai Leck shares last traded at $0.178, +4.7%.
First Reit: to acquire two new properties in Indonesia, comprising an integrated hospital and hotel in Manado, and another hospital in Makassar in Sulawesi. They will be purchased from sponsor PT Lippo Karawaci for an aggregate consideration of $142.9m. The acq of Siloam Hospitals Manado & Hotel Aryaduta Manado for $83.6m will be funded by a combination of debt and proceeds from a proposed private placement exercise to be carried out by the Reit mgr. The acq of Siloam Hospitals Makassar for $59.3m will be financed entirely by a drawdown of committed debt. Two independent valuations by units in association with Knight Frank and CBRE value the properties at a discount of 10.8% and 9.8% respectively. The move will boost First Reit’s portfolio to span 12 properties across 3 regions, with a total asset size worth $782.2m. Mgt targets an AUM of $1b in the short to medium term. It will also boost its hospital bed count by 58% to 1748, and double its no. of guest rooms to 397. The acquisitions are expected to be DPU and NAV accretive. The stock is +1.5% at $1.045. Further details on the acq as follows.
Global Premium Hotels: OCBC initiates Coverage with Buy Call and $0.29 TP. HOuse note that GPH develops, owns and operates Economy-tier and Mid-tier hotels, and is the second largest operator of Economy-tier hotels in Singapore. GPH currently operates 23 hotels in Singapore with a total of 1,738 rooms under the well-known "Fragrance" (Economy-tier - 22 hotels) and the "Parc Sovereign" brands (Mid-tier - 1 hotel). Out of the 23 hotels, 22 are wholly owned by the group, and 19 of them are on freehold land. From 2006 to 2011, GPH grew its portfolio of rooms by an impressive CAGR of 10.9% p.a. from 1,034 rooms to 1,738 rooms. GPH will continue its expansion with the development of a ~60-room Parc Sovereign hotel at the Tyrwhitt Road site which it has recently acquired from its parent, Fragrance Group. The hotel will expand the total room count under GPH's management by 15% and based on third party valuers' and management's estimates, could potentially result in a $42m accretion.
Dynamac: secured 3 new fabrication orders for a provisional sum of US$42m. The orders are signed with i) long term customer SBM Offshore, a leading operator of FPSO vessels, ii) a new customer Subsea 7 Australia Contracting, a global leader in seabed-to-surface engineering, construction and services to the offshore energy industry worldwide, and iii) a letter of intent with Keppel O&M. The orders are expected to have a positive contribution to Dynamac’s EPS for FY12. The stock trades at 16.8x P/E, 4x P/B. Recall in mid Sep, JPM initiated coverage at Overweight with PT $0.70, citing the co as a play on rising “Floating Production System” capex. OCBC maintains Buy with TP $0.62 .
Key Macro Data this week With monetary stimulus initiatives streaming from US, Europe and Japan, many are looking towards China these following weeks for additional clues on the country’s economic growth. Below are the dates for key macro data released next week. Mon 24 Sep: Singapore CPI Tue 25 Sep: HK Exports/Imports, US S&P home price index Wed 26 Sep: Singapore industrial production, US new home sales Thu 27 Sep: Eurozone consumer confidence, US GDP, US personal consumption
ARA Asset Mgt (The Edge): Dynasty REIT to be game changer for ARA. CIMB note that success of the Rmb REIT could transform ARA into the likes of Capitaland and Mapletree Investments and boost its earnings significantly. While a successful listing would provide its ADF investors with increased visibility in a divestment route and returns. Assuming as AUM of $1b, listing could allow additional mgt fees of abt $5m each yr, and greater certainty to promote fees from ADFI. Yield for Dynasty REIT is expected to be 6.6-7% and total independent property valuation without income support for the assets is $1.4b.
Grand Banks Yacht (The Edge): Following placement of new shares to the genting grp and its consortium, the new stakeholders will own a combined 16.7% of grp’s share capital, while Co’s founders the Livingstone family will hold abt 28.5%. Grandbanks is also hitting at the possibility of working with the Genting Grp to expand its business and haul itself back into the black, where grp see synergy and opportunity in enhancing its business operations. However substantial stakeholder Peter Cheng (18.3% stake) is unconvinced by Grand Banks claims that a turnard is underway and said that the placement to the Genting consortium was done in bad faith.
Tiger Airways: Credit Suisse maintains UnderPerform with $0.74 TP. House had meeting with new CEO and note that new CEO Mr Koay Peng Yen's key focus is Tiger's return to profitability. There will also be an emphasis on improving customer satisfaction and brand building. Under CEO Koay, Tiger will not slavishly follow the 'pure' LCC model. Initiatives to maximise shareholder return include expanding 'Flight Combo' sales of multiple flights on a single ticket (i.e., Colombo-SIN, SIN-Perth) to cross sell with Tiger's overseas units and eventually to third parties, including Scoot. Tiger said its ancillary/revenue ratio flatter to deceive, given its artificially low fares. Thus, Tiger will no longer price its fares close to its seat cost to spur demand and launch new initiatives (prebooked meals, etc.) to improve ancillary income. A $1 increase in the fare/ancillary spend raises FY13-14 NPAT by 12%-22%. The share price more than reflects Tiger's recovery prospects, which have been darkened by intensifying price competition in Aus. Moreover, the new initiatives will only start to have a meaningful impact from FY14.
Tuan Sing: clarifies that the offer made by Greenwich to acquire the shares of Gul Tech is not extended to the shares held by Tuan Sing. Says it has been and remains the intention of Tuan Sing to maintain its stake in Gul Tech. While the news is less positive (vs an outright sale and monetization of its stake in Gul Tech), the proposed exit offer price values Gul Tech at 1.88x P/B, more than twice what the shares were traded a month ago. At $0.162/sh, Tuan Sing’s 43.3% stake in Gul Tech is worth $65.3m, vs its carrying value of $27.4m in its books. Such a sale would help validate Tuan Sing’s book value, considering that Tuan Sing trades at just 0.61x P/B currently.
Gul Tech: will lift trading halt at 8.30am this morning. Following Gul Tech’s announcement two wks back on possible corporate actions and an offer for the company, Greenwich Pacific (the Offeror) has proposed a voluntary delisting of Gul Tech. The Offeror will make an unconditional exit offer to acquire all remaining shares at $0.162/sh (par with Friday’s closing price). Greenwich concert parties comprise Nuri Pacific, Tuan Sing, Mr Tan Kim Leong (Tuan Sing Chairman), Dr Tan Enk Ee and Mr Khoo Chin Inn, collectively hold 86.44% of Gul Tech. The delisting needs a majority of at least 75% of approval by shares, and must not be voted against by 10% or more of the total shares at an EGM. As Nuri Pacific and Tuan Sing (who collectively hold ~86.3% of shares out) are not related corporations, there will be no compulsory acquisition of shares by the offeror if the delisting goes through. Shareholders who did not initially accept the exit offer will also not have the right to require the offeror to acquire their shares.
SG Market: S’pore shares may stumble at the start of the week with the market technicals showing some signs of fatigue. Trading may also be influenced by fund managers reshuffling their portfolios on month and 3Q end closing this week, macro news on the Spanish front as well as the ongoing China-Japan tensions. Watch out also for S’pore's industrial production figures due Wed for any signs of weakness, which could impact 3Q corporate earnings. The STI is facing some topside resistance at around 3080 level with 3058 level offering support. Among stocks likely in focus, IHH Healthcare joins the STI at the expnse of NOL. First Reit plans to acquire a Manado integrated hospital and hotel, and a Makassar hospital for a total $143m. Dyna-Mac landed new fabrication orders for a provisional US$42m with long-term customer SBM Offshore. Tuan Sing and concerted parties offered to delist Gul Technologies at $0.162/share, equivalent to its last-traded share price.
Friday, September 21, 2012
UIC / Sing Land / UOL: the stable of Wee companies (incl Haw Par) has been rising in tandem over the past mths. There has long been speculation about possible organizational restructuring amongst the Wee family holdings, however it has always been impossible to guess the Wee's exact intentions. In any case, UIC shareholder changes do hint at possible changes in the horizon, with significant sh/h UOL having increased its stake via the open mkt in Aug , and Mr Wee Cho Yaw maneuvering his own personal stakes in UIC amongst his private vehicles. Recall Mr Wee and John Gokongwei (via JG Summit) have been in a tussle over this company for many yrs now. For Sing Land, Fraser earlier this wk reiterated its Buy rating with TP $9.71 , following the release of Aug new home sales.
Genting SP: Phillip Securities upgrade Genting SP to Neutral from Reduce after the casino operator sold its 4.8% Echo stake; it notes the stake was sold at an around S$16 million loss. "Echo does not provide a good return on investment. Hence, despite the loss, we view the disposal of Echo in a favorable light as its sale removed all doubts and worries that GENS will be engaged in multi-parties fight for Echo." It says GENS' strategy is now clearer as the company's cash hoard is still available for North Asia investments and isn't intended for investments Down Under. But it adds, it still has reservations on the company as management hasn't disclosed further information on GENS' S$1 billion in quoted and non-quoted securities, meaning they can't be assessed for risk. The China slowdown also has reduced gross gaming volume, it notes. The stock is down 0.4%, or a half-cent, at $1.395.
United Engineers: stock is +1.2% at $2.50, extending its 52wk high run, partially driven by positive news that one of its units is part of a JV which submitted the top bid for the Prince Charles Crescent residential site (see our 9.03am post for details). The $516.3m bid was jointly submited by Wingstar Investment, Metro Australia and Maxin. Wingstar is a wholly owned subsidiary of Wing Tai. Maxdin is a wholly owned subsidiary of UE E&C (also up 0.8% at $0.67 today), which is a 68.2% unit of United Engineers.
Starhub: stock is -1.1% today at $3.71. Newspapers note that Starhub is the only Spore telco not offering 4G services for the latest iPhone 5 due to certification woes. The telco expects 4G network connection by yr end. So in the meantime, Starhub customers will have to use their new iPhone 5 on the existing 3G network. This could mean Starhub would be off to a slower start, leaving M1 and SingTel to gain mkt share, in the race to convert customers to the higher premium 4G plans.
KSH: OCBC upgrade to BUY with $0.50 TP. Note that due to a rapid sales pickup at a key project, Cityscape@Farrer Park, e now forecast for FY13 (ending Mar 13) earnings to surge 68%. Similarly, expect FY14 earnings to increase 73% and see sustained earnings growth as a key price catalyst ahead, particularly as continued market liquidity seeks out deep value laggards like KSH (0.6x trailing PB, 3x FY13E PE). Also note KSH has been actively buying back shares near current levels –which mgt views as severely undervalued –and has a mandate to purchase up to a quarter of its free float, with ample cash (S$53m) to do so. Finally, see a major re-rating as likely imminent given KSH’s transition, over the last two yrs, from a cash-hoarding contractor to an property player actively managing shareholders’ capital – deploying capital into accretive site acquisitions and returning excess cash via dividends and share buy-backs. Upgrade KSH to BUY as key small-cap conviction idea.
Noble: DMG hosted Noble for OSK’s HK corporate day on 18 Sep 12. Some of the insights that were shared include: 1) a better outlook for its Agriculture segment in 2H12: extension of sugar mill operations for two nths and Argentina crush margins to benefit from tighter market conditions are a positive. 2) Noble sees shale gas (from the US) as one of the key markets going forward. 3) Thermal coal remains a key product for Noble, accounting for 15% of imports into China. 4) Management of freight rates crucial for bulk commodities managers such as Noble as products such as coal and iron ore (that Noble transports) are relatively lower priced on a per tonne basis. Overall, house continue to like Noble for being a proxy to market recovery and believe earnings growth will drive an upward re-rating. Maintain BUY with TP of $1.60, based on 14.7x core FY12 EPS.
TA Corp: will preview its second and latest residential devt, Gambir Ridge, today. The 77 unit freehold devt at 16 & 18 Gambir Walk is located near the Bartley MRT station. Comprising 2 blocks of 5 storey residential units and a basement carpark, the devt will house 1-4 bedroom units with sizes ranging from 614 sf to 1938 sf. Est TOP is by Dec ’15. The stock trades at 3.8x P/E, 0.8x P/B.
Indofood Agri: CIMB Maintains OutPerform with $1.82 TP. House note that tour of Indofood Agri’s sugar operations left it impressed with its experienced mgt team, strong breeding programme, its estates’ improving cane yields and the better extraction rate achieved by its sugar mills. The group appears on track to achieve its production target and benefit from the strong domestic sugar prices. The only setback is the difficulty it is facing in reaching its 18k ha planting target due to compensation and weather issues.
Dairy Farm: CIMB maintains OutPerform with US$12 TP. Note Reuters has reported that Aeon is in talks to buy Carrefour's Msian hypermarket business for US$300m. Carrefour's Msian business generated US$525m sales in 2011 (vs. Dairy Farm’s estimated US$1.6b Msian sales and Aeon Group’s US$1b). Aeon is a department-store operator in Jap which also runs Jusco supermarkets in Msia. It does not operate hypermarkets. Data gleaned from Nielsen suggests that Jusco does not have a wide network of stores in Msia. Reports also suggest that Carrefour could withdraw from Indonesia. Overall, house view that the news is positive for Dairy Farm. While Carrefour Msia could be replaced by Aeon, a new entrant, note that running hypermarkets is not Aeon's forte. Think Dairy Farm's competitive positioning could be strengthened by the withdrawal of an incumbent. Crucially, Dairy Farm's apparent non-interest towards Carrefour Msia could signal that it is saving ammunition to bid for Carrefour’s Indo business. Having the largest network, Carrefour is the leading hypermarket retailer in Indo. The other two are Giant (under Dairy Farm) and Hypermart (under Matahari). House believe only Dairy Farm has the war chest to acquire Carrefour Indonesia.
FNN: nomura says the TCC group's offer for FNN looks too low, compared with the Singapore conglomerate's intrinsic value. After updating its valuations for F&N's property business, it estimates a sum-of-the-parts valuation of $10.73/sh after ascribing a 5% conglomerate discount, raises TP to $10.19 from $9.86. Notes, if TCC is happy just to retain influence on F&N without majority control, then it will not raise its offer, but adds, with F&N's current share price still significantly undervalued, it makes sense for the group to once and for all secure majority control and raise its offer price to ensure success. Unlocking further value will also benefit the Thai group, as well as offering it regional and global exposure for its F&B and property activities. Nomura keeps a Buy call. F&N ended Thursday up 0.1% at $8.89, vs the Thai group's $8.88/sh bid price.
Zhongmin Baihui: Has opened its maiden store outside of Fujian. The four-storey Nanjing Nanzhan Store is the largest store of Zhongmin Baihui, which operates and manages retail malls in Fujian. This will raise total GFA of the grp by 30% to 1.6m sf. The grp expects to open three new stores - Xiamen Zhongshan Store, Quanzhou Qiaonan Store and Zhangzhou Longwen Store - by end-2013 in Fujian. Co is trading at 99.8x P/E and 23.1 P/B
United Envirotech: 70% owned subsi has signed a contract for the acquisition, upgrading and expansion of a wastewater treatment plant in China. The design capacity of the plant is 10k cubic m per day for Phase I. The capacity will be expanded to 20k cubic m per day for Phase II and 50k cubic m for Phase III. The total invt for Phase I will be approx Rmb120m. Subsi will be granted a 30-year concession to operate the plant starting from the date of the completion of upgrading of Phase I
Wing Tai: its 1/3 JV with Metro Australia and UE have submitted the top bid of $516.3m ($960 psf) for a site at Prince Charles Crescent, 1.5% above the next higher bidder City Dev. The acq is Wing Tai’s first since Oct ’10. The site saw firm demand with 8 bidders in total, incl larger developers such as UOL, Keppel Land, Wheelock and FNN. As a comparison, City Dev paid $754 psf in Dec ’11 for a site next to Ascentia Sky nearby. The top bid came in above mkt expectations of $600-900 psf, likely reflecting rising competition for sites located near MRT stations. The 537.7k sf gfa site is located near the Tanglin residential estate, Redhill MRT station, and within a 10 min drive to Orchard Road and the CBD. It can be developed into 590 unit condo with a breakeven cost of $1400psf. Deutsche estimates a slim gross margin of 12% at an ASP of $1600 psf (in line with Sky Habitat at Bishan MRT, vs recent sales at Wing Tai’s nearby Ascentia Sky transacted at $1500+ psf). Deutsche pencils a 3ct/sh accretion to Wing Tai’s RNAV of $2.35. Maintains its Hold rating with TP $1.41, noting that the developer has one of the lightest landbank (at 0.9m sf) amongst the larger developers.
SG Market: S’pore shares may continue to see profit-taking amid the lacklustre performance of Wall Street and following the recent 90-point rally on the STI. But the undertone remains firm that that over the long term, central bank intervention would bolster markets. With little news to move the market, the STI appears unlikely to break out of recent trading ranges and likely to hold in a 3050-3088 band. Trade is likely to be quiet, with players keeping positions light ahead of the weekend. Genting S’pore and Genting HK may remain in focus after the former sold its entire 4.8% stake in Australian casino operator Echo with the latter remainin committed to raising its Echo stake. Wing Tai back in the news after putting in the top bid for the Prince Charles Crescent site. F&N may again be in the spotlight after Nomura advisest that TCC’s offer of $8.88 is too low relative to its valuation of $10.73, after ascribing a 5% discount.
Thursday, September 20, 2012
YZJ: Counter looks to be coming off. MACD and Stochastic appear to be peaking. Stochastics briefly entered into overbought territory and is now sliding. RSI is also below 50 and pointing lower. See support at $0.95 with resistance at $1.03. No strong trend in recent months.
Tiger Airways: OCBC downgrade to Hold with $0.81 TP. House note that while new Tiger Airways’ CEO, Mr. Koay Peng Yen, outlined a new initiative to focus on customer satisfaction and TGR’s passenger data for Aug revealed MOM increases of 4% and 5% for the number of passengers carried on its Singapore and Australian operations respectively, a full recovery for TGR remains an optimistic proposition. Tiger Aus currently faces a challenging environment with an influx of excess capacity in the market following Qantas’s plans to increase capacity in response to Virgin’s additions. With profitability for Tiger Australia negatively impacted and fuel prices creeping upwards, house lower projections accordingly.
CapitaLand: Trading Central says validation of the bullish symmetrical triangle has sparked a new bullish ride. Notes the 20day MA is above the 50day MA, with both rising, signaling an upward trend. Adds, the widening of the Bollinger bands indicates an increase in the intensity of the short term trend. Expects a rise to $3.28 and $3.35 in extension, with support at $3.05.
Raffles Edu: To buy 45.68 acres of land in EduCity, Nusajaya from subsi of Iskandar Invt Bhd. Co will build the Raffles American School and focus on offering an American curriculum for students to matriculate to colleges and universities in the USA. No price was given. RAS, with an initial investment of approx RM75m, commenced classes in Aug 2012 for grades 1 through 8 at a temporary location in Nusajaya. Co now trades at 0.7x P/B and recorded a loss in most recent FY 9:07:22 AM: Low Xu Yang: #Kitchen Culture: Proposing to diversify to include property dev, invt and trading business. Has on 11 September 2012 entered into a non-binding MOU with a third party to establish a JV. Co will own a 20% interest in the JV and 5 other unrelated parties will hold the remaining 80%. The JV will be engaged in an en bloc sale and high-end residential redev project at price of approx $92.2m. Sh/h approval will be sought.
Ezion: Maybank KE maintains Buy and Raises TP to $1.66. House note that momentum has accelerated since last Buy call and believe that the mkt is starting to realise its earnings growth potential. Upgrade TP ahead of potential contract wins which house believe would be positive stock price catalysts. Ezion’s contract announcements were often preceded by some fund-raising exercises. House believe that its recent issuance of $125m worth of perpetual securities could be a sign for new contracts ahead and are not concerned about the 7.8% cost of the perpetuals as Ezion’s projects typically generates ROEs in excess of 30%. House raise TP to $1.66, pegged to 9.5x PER on diluted FY13F earnings and believe that with rising confidence in the company and strong expected earnings CAGR of 36%, the co deserves to trade at a premium to peers.
Osim: DMG maintains Buy with $1.75 TP. House We hosted OSIM for its ASEAN & Hong Kong Corporate Day early this wk and the Co. received good interest from HK based fund managers. Key highlights during one of the Group meetings include: 1) OSIM has not seen a slowdown in its sales growth in current environment, noting that its 2Q12 sales grew by 12% yoy to $155m; 2) In fact, management commented that sales of massage chair were surprisingly resilient during 2008-09 downturn, which was the contrary to investors’ perceptions. Mgt explained that consumer demand stayed relatively stable for purchases between $5,000-S$6,000 per item during the period, while smaller items of around $200 per unit were more affected; 3) Looking into 2013, mgt is excited about the launch of its two new massage chairs, which are priced for mid-high end segments. The first will be launched in 1Q13, with the other in 2H13. In addition, mgnt expects to make bigger inroads in US; 4) For TWG, the co will continue to entrench its premium tea positioning through retail outlets at selected prime locations in Asia, as well as luxury hotels that are at least 5-stars and above and on first-business class flights. In 2013, around 2-4 stores will be opened in China and Taiwan each, and around 1-2 new stores in Hong Kong.
Thai Beverage: CIMB maintains O/p with $0.60 TP. House note that the issue now is whether Thai Bev/TCC will become a controlling shareholder of F&N for Thai Bev to reap the benefits of an extended beverage distribution network. Do not discount the possibility of a competing bid for F&N even though Heineken is no longer in the picture. Despite 15% appreciation MTD, the share price is still 42% below house TP of $0.60 SOP. Maintain Outperform with lower estimates as it is now highly probable that APB will be sold to Heineken. House also lower dividend payout assumptions. House add that despite APB being F&N’s prized asset, its loss is not a negative. Argue that the beverage business is equally valuable and complements Thai Bev’s fast growing, but domestic, non-alcoholic beverage business. Conclude that the rally should not be one to sell into. The stock remains attractively valued at 15x CY13 P/E. The spirits business alone is worth more than the current share price. As a guide, APB was taken out at 35x P/E.
OUE: CS note that a sale could be in the offing for Mandarin Orchard Singapore (MOS) and adjoining Mandarin Gallery (MG) mall, which were collectively valued at $1.7 bn. House raised RNAV from $3.80 to $4.47 and subsequently raised TP from $2.85 to $3.35 (based on a 25% discount to RNAV) and factor in the latest market valuation of these two assets, it appears that there are potential buyers willing to pay at least market rates. House estimate that MOS accounts for 40% of group EBIT, while MG accounts for 10–15%. As such, this divestment could significantly impact profits. So why would OUE consider selling them? The risk is that these assets, which sit on a remaining lease term of about 44 years, could start to devalue over time. Potentially a special dividend of 8%, if we assume 10% of proceeds are paid out as divs (assuming divestment at 20% premium to book). In house view, mgt could look to reinvest the proceeds, although it may be challenging given the compressing cap rates. Separately, CIMB take a positive view of OUE’s potential sale of Mandarin Orchard (MO) and Mandarin Gallery (MG). Add that industry room rates and asset prices are at elevated levels, making it an opportune time for OUE to recycle assets. OUE’s timing of the market has so far been very good.
Genting SP: CLSA note Genting SP had originally acquired its Echo Entertainment stakes at 433m shares at $4.37, and participated in 1 for 5 rights issue at A$3.30 giving a total investment of $166m for 39.6m shares at an average price of A$4.19. Stake sale at A$3.99, delivering A$158m/S$202m in cash for an estimated loss of A$7.9m or $10.15m, although A$ appreciation will likely result in an FX gain. House note mgt has always said Echo is a portfolio investment and having reviewed it within the portfolio they thought the merits no longer stacked up. Clearly with Genting HK (GENHK) holding 5.1% and applying to go to 20%, the holding is far more strategic. It raises questions about the group intention for Echo, but removes an option for GENS. Questions remain however if GENHK still interested given they applied for probity checks to increase stake to 20% along with Crown, if so why wasn’t the stake transferred to the sister company? Or why not then sell to Crown when its achieves probity approval if GENHK is too hard as a related party. One possible answer is the probity process in NSW was more complicated than Genting thought and to do probity checks on 3 Genting co’s was handicapping GENHK process and giving Crown a headstart. Following the completion of the West Zone, Capex will drop materially, and reduced forecasts from S$250m to S$160m in 2013. As a result house DCF increases to $1.67 and our blended Target from $1.49 to $1.54. However, this whole episode highlights the danger of companies holding too much cash and making inappropriate investments.
FNN / APB: update. Heineken said yday that it will buy the 8.6% stake (22.2m sh) that Kindest Place has in APB. Heineken will pay $53/sh, the same amount as its current offer for all outstanding APB shares it doesn't already own. Heineken already owns 13.9% in APB directly and 32.4% indirectly via a holdco together with its JV partner FNN. FNN owns 7.3% directly in APB and 32.4% indirectly. The deal follows an agreement announced Tuesday under which F&N's shareholder Thai Bev, to which Kindest Place is connected, will support Heineken's offer for APB and will vote in favor of it at F&N's upcoming sh/h meeting of F&N on Sep 28.
Innotek: Reuters reported that Innotek’s key customers such as Panasonic (14% of sales in 2Q 12) has temporarily closed plants in Qingdao, Suzhou, Zhuhai and are currently checking on damages sustained at their facilities as a result of the protests by Chinese nationals in China over heightened tensions between Japan and China in the South China Sea. Another of Innotek’s customer Canon which accounts for 9% of sales was also reported to have closed 2 plants in Guangdong and one plant in Jiangsu while another smaller customer Honda has reported damage to their dealership from fire set-off by protesters and have also closed several of their plants in the past few days. Innotek’s other major Japanese customers include Ricoh (22%), Sharp (4%), Konica (8%), Kyocera (4%), Toshiba (3%), Faurecia (3%) and Imasen (4%) may also have been negatively impacted although the actual impact may not be known for a while. Innotek was negatively impacted last year by the Japanese earthquake and supply chain disruptions by the flooding in Thailand and swung into a loss of $1m from profit of $14.5m. And this year its key Japanese customers have been losing market share to competitors from US, China, and Korea partly on the back of the strong JapaneseYen as well as losing competitiveness. The latest tensions between China and Japan will add to problems for Innotek.
Otto Marine: has sold Oranda 1, a 75m Work Maintenance Vessel, to an unrelated party for US$38m. After accounting for US$21.1m of net carrying value of Oranda 1, Otto will book an est realized gain of US$16.8m in the upcoming 3QFY12. Oranda 1 is an ABS classed 4200 bhp work maintenance vessel that has completed 4 projects in SE Asia since May ’10. However, contemporaneous with the sale trxn, Otto’s subsidiary, Karp Marine, has bareboat chartered back Oranda 1 for a period of 5 yrs. Oranda 1 is currently executing general topside platform maintenance works in the Gulf of Mexico under a 450 day time charter contract worth US$14.9m (prev announced 19 Mar ’12). This is effectively a sales and leaseback transaction which will help Otto improve its liquidity and working capital structure, as the proceeds from the sale trxn will be utilized towards repayment of bank loans.
SingTel: its Group Digital Life unit will acquire 100% of Pixable Inc. for US$26.5m. Pixable is known for its smartphone app that prioritises photos on social networks for consumers. It provides social web users with a personalised photo experience, using next generation predictive analytics and artificial intelligence to analyse users’ interactions and consumption habits to prioritise photos from close friends and family. Users are presented with the most interesting photos through feeds such as “Top of the Day” and “New Profile Pics”. This has led to Pixable winning multiple awards and significant recognition. More than 4 m users have installed Pixable's "mobile photo inbox" service via the web, and handset devices. SingTel Group Digital Life has been conducting acquisitions to enhance its digital content offering, in an effort to continue engaging its 462m mobile customers in Asia, Australia and Africa.
Stats ChipPac: Co. not aware of any news that could explain its surge in share price. Grp lowers expected Q3 net revenue and said it expects its 3Q net rev to decline 3-5% from 2Q, after it had said in Jul that it expected its 3Q net rev eto remain unchanged from 2Q. Co. cited ‘weakness in the PC end market and delay in supply of advanced silicon node wafers for high end smartphones’ for its dimmer outlook. The outlook is subject to a number of risks and uncertainties that could cause actual events or results to differ materially from those disclosed in the outlook statements, it added.
Aussino: Zaw Zaw, one of Myanmar's most powerful businessmen, said in a recent interview in his Yangon office, that his planned $70m RTO of Singapore bed linen maker Aussino Group, was moving forward and he expects Singapore regulators to complete a review of his books in 3-6 months, clearing the way for Aussino's transformation into a Myanmar- backed company harnessed to Mr Zaw Zaw's energy division, in particular, to operate petrol kiosks in Myanmar. Zaw Zaw’s holdings range from timber, gems and rubber plantations to construction, luxury resorts, petrol stations and banking. Annual revenues of US$500 m make his Max Myanmar Group a domestic leviathan. However, his past friendship with former dictator Than Shwe has had him blacklisted by the US Treasury Dept under targeted sanctions three years ago. That leaves Zaw Zaw at the mercy of regulators in Singapore, where his reverse merger is being watched closely as a potential model for other sanctions-crippled companies in Myanmar. Still, investors appear optimistic. Aussino's stock has risen almost 268% this year, outperforming a 16% gain of the STI. Zaw Zaw says times have changed since the military ceded power last year to a semi-civilian government. Many of Myanmar's former military cronies, like himself, are cultivating a new image, promoting charitable work, building ties with Ms Suu Kyi and recalibrating business empires that once depended on a system that reserved lucrative contracts - often in jade mining, timber and tourism - to favoured businessmen. Aussino is amongst the top volume today, +5.2% at $0.142.
SG Market: S’pore shares may stumble on technical grounds despite small gains on Wall Street but any fall may be limited as investor risk appetite has expanded following concerted stimulus moves by the ECB, Fed and BoJ. Players will likely be watching for HSBC's flash China manufacturing PMI data for Sep. The convergence of the 20 and 50-day moving averages at 3030-3040 zone is likely to offer support, while the 3088 year-to-date high will likely remain as resistance. Among stocks likely in focus, Genting Group plans to continue seeking Australian regulatory approval to increase its Echo stake even though Genting S’pore sold its entire 4.8% stake; while Genting HK retains its 5.1% stake. Raffles Edu buys 18.5 ha site in Nusajaya, Johor for RM75m to build its Raffles American school. SingTel acquired photo-sharing app-maker Pixable for US$26.5m. Otto Marine sold a work maintenance vessel for US$38.0m in a leaseback deal.
Wednesday, September 19, 2012
Yoma: OCBC had a technical alert earlier this wk. Pattern still looks valid. The house notes the sharp bullish break above the $0.42 key resistance on heavy volume. Believes price could trend higher towards the next key obstacle around $0.52 in the weeks ahead. Says, with MACD still steadily climbing after a recent bullish cross over, this implies that the upside momentum is building up. Sees $0.42 as a newly established vital resistance-turned support level. OCBC has a fundamental Buy rating with TP $0.45.
UOB: Counter has posted a good run and may be completing a top although indicators have yet to reverse. MACD has yet to come off and Stochastic remains at overbought region. However, counter might remain elevated. See initial support at $19.50 with low of $18.80. Still too early to call a top. Counter has been trading in a uptrend channel since Oct last yr.
OCBC: Trading Central notes share price is bouncing back above the 20day and 50day MA. Furthermore, the validation of a bullish flag pattern calls for further gains in the coming days. Adds, RSI is bouncing off a significant horizontal support level at 41. Tips targets at $9.60 and $9.90 in extension, as long as support at $9.11 holds.
OUE: Grp clarifies that while it has been approached by potential buyers and has offered a potential buyer to conduct preliminary due diligence on Mandarin Orchard, no firm decision has been taken and at this stage it is uncertain if any transaction will be concluded. Shareholders are advised to exercise caution when dealing with the Co's shares. Trading halt will be lifted at 1.45 p.m
Thai Beverage: Religare note that ThaiBev and TCC Assets now look like winners, after the two said they would be voting in favor of Heineken's bid for F&N's holdings in APB. Houseestimates after the APB deal, ThaiBev could make around $2b net-net, a whopping 46% cash return on its investments, helping its balance sheet. TCC now needs to come up with around $8.8b to take over F&N and will receive around $5.4b from the APB sale. House won't be surprised if several mths later ThaiBev and Heineken come up with another distribution agreement for ThaiBev products. The "worst-case" scenario for the Thai group is to remain majority F&N stakeholders without being able to delist F&N, if the SG co's board rejects its bid. ThaiBev holding 29.99%, TCC about 1% and Kirin owning 14% is "still a messy structure, but ThaiBev and TCC could get control of F&N with ThaiBev focusing on FNH and TCC on property without having to bring S$8.8b. With Thailand to join the Asean trading link next mth in Oct, Thai retail investors may finally get the opportunity to own Thai Bev -- their own local consumer play. Thai Bev is currently only listed in Singapore. The potential for a new segment of investor class to support Thai Bev may give the recent momentum more legs to run.
Genting SP: CLSA maintains O/p with $1.49 TP. House had meetings with LVS and Genting who highlighted the high profit margins at the two integrated resorts, reflecting required the returns on combined investment of $15b. Looking ahead the focus of both the govt and two operators remains attracting high spending individuals both from the major Chinese mkt as well as further afield for RWS. Note that the mass mkt has slowed to single digit growth led by the international visitor arrivals, while the govt is focussed on reducing marketing to domestic players. However, to maintain the growth in mass market SG will need more hotel rooms, almost double the current 5,500 rooms planned to be open by the end of 2014, Sentosa would boost RWS traffic. At present the IMA’s have 2 suites with two tables each or just 2% of the 190 VIP tables (562 in total). This is inline with forecast of growing to 6 tables by year end. 2013 has potential to deliver stronger VIP growth for RWS providing firstly, the Beach Villas are popular with high rollers. Secondly, economic conditions and the liquidity of VIP players improves, otherwise a 30% growth in VIP turnover, would materially impact receivables. With the Japanese government focussed on attempting to double the sales tax from 5% to 10%, it appears to have less resolve to push through the contentious reforms required for casinos in the short term. Thus the main focus for RWS’ development does not appear to be changing imminently. This leaves potential in Vietnam, Korea and moving on the existing Echo holding.
Olam: Has acquired 100% of Northern Coffee Corp, the largest coffee estate in Zambia for approx US$6.15m. A further US$40m will be committed as capex and pre-operative expenditure to develop 2k ha of Arabica coffee plantation over the nxt 5 yrs. The estate is expected to yield approx 4.5k MT of Arabica coffee beans by FY2021 at steady-state. The first 300 ha are expected to be planted in FY2013. Co currently trades at P/E 13.9x
Epic Centre: DMG upgrades Epicentre from a Neutral to a BUY with a TP of $0.41, pegged to 12x FY13F earnings, representing an upside of 32% in addition to a yield of 10-13% based on last closing. Earnings improvement in the coming results should be a catalyst to stock price. House expect the current Apple mania fad in Asia to spur Apple branded sales. APRs like Epicentre will continue to see sales grow despite the Apple Online Store as Epicentre is able to offer customers better bundle deals in terms of extended warranty, discounts on associated hardware like speakers, keyboards and accessories. FY12 earnings were affected by at least S$1m one-off costs associated with:- 1) Expansion in China, 2) New M-commerce platform, 3) New CRM programme, and 4) Forex costs. Excluding the one-offs, net margins would have come in at 1.1%. Add that the Group has historically offered a dividend payout of 90% and with costs set coming off and earnings starting to kick in and are confident management will continue to maintain this generous payout.