Monday, September 30, 2013


SPH: Telenor, Norway's leading telco operator, is buying a one-third stake in media company 701Search, at an enterprise value of €180m ($303m). Telenor will buy an equal number of shares each from the present joint owners, SPH and Schibsted Classified Media. SPH will receive $16.9m for its 701Search shares. Established in 2006, 701Search operates online classified companies including in Malaysia and in Indonesia. With this move, 701Search will be able to leverage on Telenor's Asian telco network, mobile Internet capabilities and subscriber base to bring online classifieds into the mobile sphere.


DBS: has received “a few thousand applications over the past five months” for its new POSB HDB loan. The loan now accounts for 25% of new bookings, and makes up for some of the slack in the private-home loan market. The majority of customers, over 80%, are refinancing from the HDB, or are first-time bank customers. Last year, two-thirds of the 59,000 HDB homebuyers took a loan from the HDB paying the 2.60% concessionary rate. It is this group that DBS hopes to target with its product that charges 1.75%. Those who took up a POSB HDB loan when it was launched in April could be looking at savings of as much as $1,600 by next month, a according to DBS’ calculations. The first POSB HDB loan pilot launch - where homebuyers enjoyed a floating-rate loan with interest capped below the HDB concessionary rate for 10 years - was fully sold. The bank is now into its second offering, which charges the same rate but for eight years. DBS has the highest HDB loan market share at 30% of new loans. Its HDB loan portfolio is almost $10b, or about up 25 per cent of the bank's Singapore mortgage book.


Yangzijiang: Deutsche maintains its Buy rating, lifts TP to $1.48 from $1.30. The house visited YZJ’s main yards in China during the 10,000 TEU launch and is confident that YZJ should benefit from the impending industry consolidation. Deutsche highlights YZJ’s busy facilities contrasting with smaller Chinese shipyards which are running out of jobs. Regarding 10,000 TEU containership units, the house is confident Seaspan will exercise its options hence projecting an increase of net earnings of 5-7%.

Otto Marine

Otto Marine: says it has reached an amicable agreement to end the disputes and all the arbitrations with its customer, the Mosvold Supply Group, arising out of the terminated contracts of four AHTS vessels constructed by Otto. The parties have agreed to settle without admission of liability and on a confidential basis.


YHM: to lift trading halt at 8.30am. Secured a contract worth more than US$37m over a 20 yr period to lease a set of hydro-electric power generation eqpt for power supply to a national utility board in South Asia. The co expects the lease to commence after the commissioning of the power plant which is expected to be before end 2013. The transaction will be funded through internal resources, a fund raising exercise and bank borrowings. The co believes this will allow it to diversify its earnings stream through a stable operating model and allow it to establish a foothold in the energy services business segment. Meanwhile, YHM proposes to raise up to $50m by way of a placement of up to 1b new listed warrants at an issue price of $0.025 per warrant, with exercise price of $0.025 each. The combined cost of $0.05 to buy and exercise each warrant, compares with YHM’s last traded price of $0.072. The bulk of the proceeds will be deployed toward the oil & gas business (80-100%), and the remainder toward the above energy services project (0-10%) and working capital (0-10%).


SingHaiyi: Has acquired a 100% stake in Tri-County Mall in Cincinnati, Ohio. The acquisition price of US$45m values the mall at a 77% discount to its net book value, and translates to just ~US$43.5psf of effective retail area. Earlier this month, Singhai had paid a deposit securing its 65% stake in the mall for US$29.3m, hence its increased investment reflects its confidence in the US real estate market. The mall has 1.26m sf of lettable retail space, of which 0.23m sf is owned by Macy’s, a leading department store. Sitting on a total size of ~3.3m sf, the mall also has a total of 7,118 parking lots. With a current occupancy rate of 84%, Tri-County Mall recorded EBITDA of US$5.7m in FY12, and US$2.6m for 1H13. These translate to gross yields of 12.7% and 11.5% respectively. Singhaiyi will be able to consolidate the revenue and profit of the mall immediately. Singhaiyi believes the mall’s occupancy rate, affected by the previous receivership and foreclosure proceedings, can be improved through focused efforts. Discussions are already underway to secure new tenants and increase occupancy rate Singhaiyi will fund the acquisition from the $226m raised from a recent rights issue and share placement that was undertaken as part of the group’s strategy to expand its real estate investment activities beyond Singapore to include the US. Besides the Tri-County Mall, Singhaiyi and its partners are currently developing four residential projects in Singapore with a combined gross development value of ~$900m.


CapitaLand: Deutsche maintains Buy with TP $4.37. CapitaLand’s launch of Sky Vue at Bishan over the weekend met with strong response, with 450 units sold by Sunday evening. Agents noted the strong number of investment purchases, with 1 and 2 bedroom units on lower floors being most popular. Hopes on the street is that a there’s a pick-up in market sentiment following several rounds of property cooling measures. Capitaland’s strategy of building shoebox units seems to work well for Sky Vue, by focusing on smaller unit sizes. Sky Vue’s ASP of ~$1,500 psf is not far off that of Sky Habitat’s ASP of $1,589psf. The latter is also a CapitaLand project and located just next door, but focused on bigger unit sizes. CapitaLand plans to launch its Marine Point project later this year, and also has its Coronation Road landed site in its domestic pipeline. The developer remains Deutsche’s top sector pick, with valuations attractive at 35% discount to its RNAV of $4.86.

Courts Asia

Courts Asia: Maybank-KE maintains BUY with $1.06 TP (reduced from $1.15) pegged to 14x earnings. House hosted a NDR with Courts to confirm our views on the retail scene in Singapore and Malaysia. Believe the share price has already priced in overall weakness in demand. Barring a longer-than-expected closing of the JEM store, the trough should be seen in 1QFY14 (2QCY13). Going forward, expect things should improve on (1) a loosening in credit policy to improve sales, particularly in Malaysia, (2) a short term boost in sales from iPhone 5S and (3) the maiden store opening by FY3/15 in Bekasi, Indonesia to boost sales.


OUE: UOB Kay Hian maintains Buy with $3.57 TP. Note that OUE is exploring the listing of a commercial REIT with OUE Bayfront included in the initial portfolio, which could result in another similar special dividend as the Hospitality REIT (10-20 S cents/share). The impact from the sale of its China hotels is minimal. House maintain BUY with a reduced target of $3.57 based on 20% to its revised RNAV of $4.46, factoring in adjustments for special dividends and office property values.


SATS: OCBC maintains Hold with $3.35 TP. House note that SATS will acquire Singapore Cruise Centre (SCC) from Temasek for $110m. This acquisition will complement SATS's existing cruise services at the Marina Bay Cruise Centre, and give it control of the ferry terminals at Tanah Merah, Pasir Panjang, and HabourFront Centre, which has an anchor client in the form of the popular Star Cruises. House view the deal favourably as it is cash generative (SCC had revenue of S$45m and PBT of S$16.7m in FY13), should enhance SAT’s FY14F EPS by at least 5%, and will provide growth opportunities for its gateway and food solution businesses.

Frasers Commercial Trust

Frasers Commercial Trust: OCBC maintains Buy with $1.45 TP. Note that the REIT has essentially locked in robust growth for FY14 with lower interest costs and the redemption of its 321.9m Series A Convertible Perpetual Preferred Units (CPPUs) this year. In addition, expect FCOT to gain from its growth initiatives embarked over the past year. For one, FCOT has completed the Precinct Master Plan and asset enhancement works for the office tower at China Square Central, and is likely to benefit from improved occupancy and higher secured rentals going forward. Moreover, FCOT has successfully completed the renewal of 511,000 sqft of the underlying leases at Alexandra Technopark and has achieved positive rental reversion of 17.4% at the property. According to the latest report by DTZ, note that sequential rental increments were seen within the CBD in 3Q13 on the back of better occupancy rates. This is consistent with view that office leasing activity is likely to remain healthy.

Nam Cheong

Nam Cheong announced that it has sold four Platform Supply Vessels (PSVs) worth ~US$120m (approximately $150m) to a new customer based in Latin America. The vessels are scheduled for delivery in 2014 and are expected to contribute positively to the group’s earnings for FY13 and FY14. The latest contract win brings the group’s order book to RM1.7b, with 20 vessel sales worth RM1.7b year-to-date, versus 21 vessels for the whole of 2012. This is in line the group’s recent acceleration of its build-to-stock shipbuilding program to 28 vessels for FY14 versus 19 vessels for FY13, which could translate into higher earnings going forward. As a guide, Nam Cheong notes that the global oil and gas industry remains robust amid growing demand for energy. With global exploration and production spending expected to reach a record US$678b by 2013, expect OSV demand to continue growing. This brings the group on track to overtaking last year’s sales record. At current price, valuations remain compelling with Nam Cheong trading at 8.5x forward P/E versus regional peers at 12.5x. The street has six unanimous Buy calls on the counter with a mean TP of $0.35.


UOB: UOB and ANZ are considering a bid for Hong Kong's Wing Hang Bank, according to people familiar with the matter. Wing Hang, with a market capitalisation of US$4.7b, announced earlier this month that its controlling shareholders had received preliminary offers from independent third parties to purchase their shares in the bank. It did not name the bidders.


SMRT: Expect investor’s sentiment to take a dent, after Standard and Poor's (S&P) cuts SMRT’s rating to negative from positive, although its AAA rating was affirmed. S&P note that SMRT's financials have deteriorated more than it had expected because of larger operating expenses and high capital spending over the 12 mths to Jun13. S&P is also withdrawing its 'axA-1+' short-term ASEAN regional scale rating on SMRT. Overall, Maybank-KE has a Sell Call on SMRT with a $1.00 TP, noting that prospects remain challenging in the absence of fare adjustments and operating costs are expected to rise with wage revisions, higher headcount, and higher train maintenance and depreciation. The group is continuing its discussion with the S’pore government on how best to sustain a viable business model with a new rail/bus financing and operational framework but no time-line has been given on the outcome of the talks. At the current price, SMRT trades at 22x forward P/E versus ComfortDelgro’s 16x.

SG Market (30 Sep 13)

SG Market: S’pore shares are poised to a choppy session as Wall Street fell last Fri amid concerns that the political brinksmanship and impasse over the federal budget has brought the government closer to its first shutdown in 17 years, which would hurt the economy. Tthe Democrat-led Senate stripped a House funding bill of a provision to defund a health care law and sent it for approval only for the Republican Congress to amend the bill with a one-year delay on Obamacare, which the White House is likely to veto. The risk is if the House fails to pass a funding bill today (Washington time), the government officially shuts down. While essential services will remain in place, many departments will operate on a skeleton crew and many businesses will see government contracts suspended. Latest economic data showed consumer spending in the US rose in Aug for a fourth consecutive month, climbing 0.3% but consumer confidence dimmed to a five-month low in Sep. Focus will be on Friday's jobs data. Economists expect jobs growth to accelerate in Sep, with the economy likely adding more than 200,000. Any number much higher or lower than that key milestone could trigger a stock slide. Lower than 200,000 and the recovery looks shaky again; higher, and the Fed may reduce bond purchases sooner rather than later. Expect the STI to range trade between the 3,200 psychological resistance and underlying support at 3,166 (50-day moving average). Stocks to watch for: DBS: Its new POSB HDB loan package is a big hit with HDB flat buyers and now accounts for 25% of new bookings, and makes up for some of the slack in the private-home loan market. Over 80% of customers are refinancing from the HDB, or are first-time bank customers. DBS has the highest HDB loan market share at 30% of new loans and its HDB loan portfolio is almost $10b, or ~25% of the bank's S’pore mortgage book. *CapitaLand: Sold 430 out of 505 units at initial sales launch of Sky Vue at Bishan Central, with average selling price of 1,500 psf. The group’s strategy of building shoebox units to attract buyers seeking lower total price quantums appears to have panned out for Sky Vue. The strong response fuelled cautious hopes of a pick-up in market sentiment following several rounds of property cooling measures. UOL/SingLand: Its JV 99-year leashold Thomson Three project sold 90 more units to take total to 250 sold out of 320 units released to-date at an average selling price of $1,350 psf. *SPH: Telenor, Norway's leading telco operator, is buying a one-third stake in media company 701Search, at an enterprise value of €180m ($303m) from present joint owners, SPH and Schibsted Classified Media. SPH will receive $16.9m for its 701Search shares. *SMRT: S&P cuts its rating to negative from positive although its AAA rating was affirmed. The credit agency noted that SMRT's financials have deteriorated more than it had expected because of larger operating expenses and high capital spending over the 12 months to Jun 13. *YHM: Secured a 20-year contract worth >US$37m to lease a set of hydro-electric power generation equipment to a national utility board in South Asia. The group expects the lease to commence after the commissioning of the power plant which is expected to be before end 2013. Meanwhile, YHM proposes to raise up to $50m via placement of up to 1b new listed warrants at an issue price of $0.025 per warrant, with exercise price of $0.025 each. The bulk of the proceeds will be deployed toward the oil & gas business (80%), and the remainder toward the above energy services project (10%) and working capital (10%). *Tritech: Plans to raise $77.3m to fund future expansion in engineering and water-related businesses, including potential M&A via a proposed 1-into-2 stock split, to be followed by a 1-for-2 issue of up to 386.57m non-renounceable bonus warrants. Each warrant is convertible to 1 new share at $0.20 exercise price. *SingHaiyi: Acquired Tri-County Mall in Cincinnati, Ohio for US$45m valuing the mall at a 77% discount to its net book value, and translates to US$43.5psf of effective retail area. The mall has 1.26m sf of lettable retail space, of which 0.23m sf is owned by Macy’s, a leading department store and sits on a total site of ~3.3m sf with 7,118 parking lots. With a current occupancy rate of 84%, Tri-County Mall reported EBITDA of US$5.7m in FY12, and US$2.6m for 1H13, which translate to gross yields of 12.7% and 11.5% respectively. *Otto Marine: Reached an amicable agreement to end the disputes and all the arbitrations with its customer, the Mosvold Supply Group, arising out of the terminated contracts of four AHTS vessels constructed by Otto. The parties have agreed to settle without admission of liability and on a confidential basis. *China Merchants: Entered into a conditional share sale and purchase agreement with China Merchants Properties Development to divest its non-core property development business in New Zealand for HK$356m. This divestment is part of the group’s strategy to focus on its core business of toll road operations. *SATS: Singns MOU with Oman Air and Oman Airport Management Co to explore potential joint venture to develop and operate cargo facilities in Oman. *China Fishery: Launched a second general offer at NOK68.17 for Copeinca, equalling the cash offer of its earlier acquisition, which gave it control of 99.1% of the Peruvian fishmeal producer. The acceptance period expires on 25 Oct 13.

Friday, September 27, 2013

Vard (technical)

Vard - Technicals appears to be trending down, although do note that Stochastics has reached Oversold position. The 50 day Ma at $0.87 would provide critical support for share price

Informatics (technical)

Informatics - Technicals appear to be reversing, following the recent surge, with RSI and STochastics all hooknig downwards from OVerbought positions. The 200 day MA at $0.104 will be the critical support.

Civmec (technical)

Civmec: The counter broke its mid-term downtrend on 16 Sep. On the near-term, counter seems to be losing its strength on the upside provided by the widening ADX up/down bands, and may consolidate around the $0.72-$0.87 region, supported by the declining Stochastics towards the oversold region. Potential investors might hold out until the counter moves towards its near-term support at $0.79, or the bottom of the range at $0.72.

Rowsley (technical)

Rowsley: Counter seems to be testing the support at $0.595 today. A close below may portend a downside towards the $0.58 level. Near term resistance is at $0.655 followed by $0.670.


Theroretically, there will not be any theoretical ex-price for Rowsley as it is giving a bonus issue of warrants, not shares, BUT as the warrants are deep-in-the-money, the market will adjust the share price down to reflect a potential dilution from the exercise of warrants at $0.18 apiece. The workings are as follows: $0.60 + (2 X $0.18) divided by 3 shares = $0.32 However, the adjusted ex price is likely to be higher than $0.32 as the warrants will have a time value of 3 years from point of listing and there is a vesting period of 6 months before warrant holders can exercise the warrants. Hence, dilution will only take effect 6 months after the warrants are listed till their 3rd anniversary.

Kris Energy

Kris Energy: CIMB has an unrated report on the counter. Note that led by an experienced team with a proven track record, KrisEnergy is a young but promising E&P company with a multi-asset balanced portfolio across Southeast Asia. Its existing reserves appear to be priced in but share price could be catalysed by new discoveries. Being in the early stage of E&P, KrisEnergy has yet to accumulate substantial reserves. Based on its peer group’s average EV/reserves of 39.3x, KrisEnergy could be worth S$1.25 on its 2P reserves. Successful new discoveries of oil and gas is needed to move the needle. House see this most likely in Vietnam where hitting a low estimate of risked recoverable prospective resources could raise its value to $2.21 per share.

HPH Trust

HPH Trust: OCBC maintains Buy with US$0.84 TP. Note that according to Dow Jones, HPH Trust has secured a US$3.6b refinancing loan which comprises three tranches – a US$1b one-year loan, a US$1.6b three-year loan and a US$1b five-year loan. The one-year tranche is at an interest rate of 0.6% above Libor, while the three-year and five-year tranches are 1.1% and 1.4% above Libor respectively. On a blended basis, estimate that the interest rate cost for this loan is ~1.5%, dramatically lower than the 2.5% rate which management had previously guided. Estimate that HPHT is currently trading at an attractive FY14F dividend yield of 7.9%.

Raffles Medical

Raffles Medical: OCBC maintains Buy with $3.61 TP. The grp recently announced that it has entered into a framework agreement to collaborate on the proposed development of an integrated international hospital with more than 300 beds in Shanghai, China. Negotiations on the finalisation of terms will likely take place over a timeframe of six months to a year, while relevant regulatory approval is also required. Recall that RMG is also in the process of exploring an integrated international hospital collaboration in Shenzhen, China. Should these negotiations be successful, it would allow RMG to expand its operations overseas. House positive on RMG’s decision to explore business expansion opportunities in China given the immense growth prospects, although regulatory uncertainties would likely be the largest risk, in our view. Roll forward valuations on RMG to 29x FY14F EPS.


OCBC: UOB Kay Hian maintains Buy with $11.86 TP. House note that the rout for government bonds in 2Q13 is unlikely to be repeated and expect contribution from life insurance to normalise to S$150m in 3Q13. Great Eastern’s underlying life insurance franchise continues to expand with TWNS expanding 33.8% in 1H13.

Dairy Farm

Dairy Farm: CLSA maintaining its U/w call with US$10.72 TP. The house note that while Dairy Farm maintains a unique Asian retail platform, its Asean businesses are under pressure from competition and in Singapore costs are heavy. Government policies that cut cheap foreign-labour availability are stalling growth. Since 2010 operating profit has shrunk at 6% Cagr and expect continued underperformance. Furthermore, the grp’s focus on rebuilding market share in Malaysia, imply continued margin pressure; volatile market and currency conditions in Indonesia; and potential for disruption of the rational duopoly in Hong Kong supermarkets on the proposed sale of Park N Shop all weigh on shares and support the house Underperform call.

SATS Services

SATS Services: Announced the acquisition of a 100% stake in Singapore Cruise Centre (SCC) from Temasek, for a consideration of $110m (implied 7x P/E). The acquisition is subject to regulatory and shareholders’ approvals, with the approval process estimated to complete by Mar 2014. The transaction is expected to be EPS accretive immediately. Strategically, the acquisition allows SATS to develop its cruise-fly proposition and to expand the cruise business beyond Singapore. On this note, management indicated they would be keen on regional M&A. Growth opportunities are significant, with the Singapore cruise industry still developing – STB projects 65% Singapore cruise pax traffic increase by 2017. Deutsche view the transaction as positive for SATS. This also demonstrates management’s willingness to drive a more aggressive capital structure. CS considers this acquisition as a positive to SATS' medium prospects, providing another growth avenue for the medium term. Expect SATS-Creuers to use its experience and track record as the leading cruise terminal operator in Singapore to bid for more projects or engage in M&A to expand in this space.


Albedo: Feature in BT today, where they caution buyers to beware, calling it a speculative punt. The newspaper gave a brief background on Danny Tan, Vincent Tan’s brothers, calling him a Malaysian entrepreneur with more than 30 years of experience in property development, resort management, restaurants, leisure and entertainment operations. Infinite owns Reflections Oasis Inc, which is in the process of buying seven parcels of land with a total area of 267.8 hectares in Gelang Patah, Johor. These agricultural sites have been earmarked for commercial, industrial and residential development. Based on a valuation by Knight Frank Malaysia, the total market value of the properties was about RM2.71b ($1.05b) on Aug 30. Albedo and Infinite Rewards are also in talks for the inclusion of two parcels of land of about 94 ha in the agreement. If the RTO deal is successful, the bets are that the deal will transform the otherwise lacklustre steel trading company into a prominent property player in Iskandar.


Roswley: Peter Lim has boost his stake to 49.64% from 29.9% via Jovina, Bellton, Garville holdings. This was due to the latest allotment and issuance of 1.27b and 546.9m new ordinary shares in Rowsley to Jovina Investments and Bellton International, respectively as partial consideration for the sale of land from Vantage Bay to Rowsley.


UMS: UMS’s largest customer, Applied Materials (AMAT)’s acquisition of Tokyo Electron Ltd (TEL) will make it a dominant industry player, OSK DMG see UMS as the sole Singapore proxy to ride on this landscape-changing event. The deal benefits UMS especially since AMAT contributes close to 90% of UMS’ revenue. Post acquisition, AMAT's enlarged customer will translate into increased sales, boosting demand for UMS' components. In addition, UMS has cost advantage over Japanese component suppliers. OSK DMG maintains Buy with TP of $0.71.


OUE: On the commercial reit that OUE cited interest in, Deutsche notes that the potential listing would be positive for NAV realisation, given that OUE currently trades at a discount to NAV of 44%, compared to the 13% discount to book for the office-focused REITS. However after a divestment, OUE's earnings could be hollowed out further in the absence of timely capital redeployment. Deutsche would not rule out opportunistic acquisitions in US, although mgmt had previously commented that Singapore would continue to be the key focus market. House maintain Buy on attractive valuations and deep discount to NAV, has a TP of $3.43, translating to an upside of 34.5%.


Solar: According to a news article on AsiaOne, HDB plans to go big on solar energy, calling its largest tender for a company to own and operate panels on some 125 blocks in Ang Mo Kio, Sengkang, Serangoon North and Buangkok. Singapore-listed counters exposed to the solar panels industry include: i) Boustead- Group recently entered a JV to develop utility-scale solar photo-voltaic projects in Japan. ii) Unionmet- produces Indium ingots, one of the main raw materials for solar energy material (Copper Indium Gallium Selenide). iii) Swing Media Technology- Group manufactures energy systems for PetroChina's petrol stations throughout China. iv) Renewable Energy- Earlier this year, group entered into a contract with the Cao County Economic Development Zone Management Committee to develop a 100 MW solar farm in Cao County, Shandong Province. v) Anwell Tech- Suspended counter, undergoing investigation by govt over matters relating to a govt capital injection.


Tritech: Proposed 1-into-2 share spilt in a bid to improve liquidity. Following the share split, Tritech will issue bonus 5-year term warrants on the basis of 1-for-2 with an exercise price of $0.20/share. As an illustration (based on the last closing price of $0.715), the bonus warrants would be deep-in-the-money with a discount of 44% to the post share-split theoretical adjusted price of $0.3575. The estimated gross proceeeds, assuming warrants are fully exercised, of $77.3m will be used for group's future expansion plans in its engineering and water-related businesses and general working capital.

Hartawan Holdings

Hartawan Holdings: Two-year long proposed acquisition of Wilton Resources Holdings has been brought back to life. The $300m acquisition will be via the issue of 1,500m shares at $0.20/share and would result in a RTO, transforming Hartawan from a property leasing and hospitality group into a gold-mining company. Thereafter, Hartawan Holdings will be known as Wilton Resources Corporation. As a payment for corporate advisory, Hartawan will issue an additional 4.4m shares to Canaccord Genuity. In addition, Hartawan proposed a 12-into-10 share consolidation after the acquisition, on its enlarged share base of 2,316.5m shares. Approval of the above will be sought at the EGM to be held on 21 Oct at 10am.

SG Market (27 Sep 13)

SG Market: S’pore shares likely to see cautious trading after Wall Street snapped its 5-day losing streak and edged up on an encouraging jobs report but gains were slim amid concerns that Congress will fail to reach a budget compromise to avert a government shutdown and debt default. But if the past were any guide, expectations are for lawmakers to take the standoff to the wire and strike a stop-gap deal only at the last minute. The buying came on the heels of positive news that initial jobless claims fell 5,000 to 305,000 last week, near 6-year lows, while separate data showed the US economy grew an unrevised 2.5% in the 2Q and pending home sales fell 1.6% in Aug, slowing for a third month in a row but below the 2.3% decline expected. Expect the STI to test the 3,200 psychological resistance but gains will be limited with the US funding and debt issues overhanging the market. Underlying support lies at 3,166 (50-day moving average) with overhead resistance at 3,275. Stocks to watch for: *SATS: Acquires S’pore Cruise Centre (SCC) from Temasek for $110m via subsidiary SATS Airport Services (92%) and 60/40 JV SATS-Creuers (8%) to hold effective 96.8% stake. SATS-Creuers has a call option to purchase 42.3% of SCC, which will reduce SATS’ interest to an effective 79.9% by Mar 14. SCC, which operates the international cruise terminal at HarbourFront and 2 ferry terminals at Tanah Merah and Pasir Panjang, reported revenue of $45m and pretax profit of $16.7m for FYMar13. *Sembcorp Industries: Raised OMR53m ($173m) from the IPO of 33.4m shares, representing 35% of the share capital of Sembcorp Salalah Power & Water Co in Oman, which was oversubscribed and will commence trading on the Muscat Securities Market on 10 Oct. The company owns and operates the US$1b Salalah Independent Power & Water Plant. Post-listing, the group will hold a 40% stake (down from 60%) in Sembcorp Salalah and recognize a total gain of $117m (EPS +6.6¢), comprising a $37m divestment gain and $80m fair value gain. *Hartawan Holdings: Two-year long proposed acquisition of Wilton Resources Holdings has been brought back to life. The $300m acquisition will be via the issue of 1,5b shares @ $0.20 and would result in a RTO, transforming Hartawan from a property leasing and hospitality group into a gold-mining company. Post acquisition, Hartawan proposed a 12-into-10 share consolidation. Thereafter, Hartawan Holdings will be known as Wilton Resources Corp. *Sysma: Secured $7.5m contract to build a two-storey good class bungalow (GCB) at Jervois Hill over 18 months commencing Oct 13. This follows an earlier $10.4m contract won last month to erect a GCB at Nassim Road. *Tritech: Proposed 1-into-2 share spilt in a bid to improve liquidity. Following the share split, Tritech will issue bonus 5-year term warrants on the basis of 1-for-2 with an exercise price of $0.20/share. The estimated gross proceeds of $77.3m , assuming full exercise of warrants, will be used for the group's future expansion plans in its engineering and water-related businesses and general working capital. *Rowsley: Substantial shareholder Peter Lim Eng Hock boosts stake to 49.64% from 29.9% after being allotted shares as partial consideration for the sale of Iskandar land to Rowley. *TTJ: Both FY13 net profit and revenue declined 11% to $14.9m and $127.4m respectively, mainly due to lower revenue from structural steel business. DPS of 0.9¢ proposed.

Thursday, September 26, 2013

CNA (technical)

CNA: Investors may be looking out for a near-term bounce with Stochastics at the oversold region. Resistance at $0.205, followed by $0.215, while near term support is at $0.199, followed by $0.196. A close below $0.191 may portend a downside towards $0.137 to cover the gap up on 19 Jul.

First Resources (technical)

First Resources, Technicals appears to be reversing from Oversold positions, which could indicate further upside. Share price is currently testing the 20 day MA at $1.90. A close above these levels could see further highs.


Liongold - No co. specific news today. Although do note that its not uncommon and or rather becoming the norm, for the whole web of companies which Liongold is associated with (e.g Asiasons, IPCO, Blumont, Innopac) to ocassionally see sudden surges in price movements.

Noble (technical)

Noble: a classic bullish flag formation has formed, but would like to see a break out above the recent high $0.975 as confirmation of the bullish signal. The indicators However, would reverse to a negative view if the stock dips below the Jul low of $0.89.

Golden agr (technical)

GOlden agr- Technicals appear Oversold, with RSI hooking upwards, although Stochastics have yet to confirm the uptrend. The near-term resistance would be at the 50 day MA of $0.54.


Yangzijiang: UOB Kay Hian maintains Buy with $1.32 TP. HOuse visited YZJ’s New Yangzi and Xinfu yards and attended the launch ceremony of YZJ’s first 10,000TEU containership and believe it is a milestone for YZJ who has the potential to build larger containerships and compete with leading Korean yards. Its 2013 order target of US$2.5b is well achievable and the recent pick-up in newbuild prices is positive for YZJ.

Lippo Malls Indonesia Retail Trust

Lippo Malls Indonesia Retail Trust: Has priced $150m 4.25% notes due 2016. The notes will be issued under its $750m Guaranteed Euro Medium Term Note Programme. The fundraising does not come as a surprise since management had indicated during the 2Q13 analyst conference call that LMIRT may refinance the S$147.5m term loan due June 2014 as early as late 2013. House maintain DDM-based FV of S$0.44 on LMIRT and HOLD rating for now

CapitaRetail China Trust

CapitaRetail China Trust: OCBC maintain Buy with $1.58 TP. Note that CRCT has announced that ~6.0m new CRCT units have been allotted and issued at an issue price of S$1.447 per unit to eligible unitholders of CRCT who have elected to participate in the Distribution Reinvestment Plan in respect of the distribution of 4.69 cents per unit for 1H13. The new units will commence trading on the SGX-ST today. With the issue of the new units, the number of issued units has increased by ~0.8% to 756,140,024. Since 3Q13 results will be announced soon, house will hold off on adjusting our model for this development.

Sheng Siong

Sheng Siong: OCBC note that although 3Q13 is coming to a close, we are unconcerned by the lack of new store additions by Sheng Siong Group (SSG). While this development means that SSG will be unable to achieve its 10% gross floor area target for the year, the group should still experience decent top-line growth for 3Q13 from full-quarter contributions of new stores added last year. Furthermore, expected margin stability and a conducive macro environment – more dining-in of consumers and relatively subdued supermarket competition – provide price support for SSG’s share price at current levels. Favouring the counter for its defensive qualities and healthy balance sheet, house maintain BUY with a slightly lower fair value estimate of $0.78 ($0.80 previously). A potential catalyst for the counter exists in the form of its pilot e-commerce initiative, which is likely to commence in 4Q13.

Super Group

Super Group: Maybank-KE reiterates Buy with TP $6.00, implying 28.3x FY14e P/E. China branded consumer sales currently make up less than 5% of Super’s total revenue (largely through instant cereal), but this segment has the potential to become a significant contributor over the next 2-3 yrs. Super recently expanded its product offering in China, with the launch of its coffee products in Aug, endorsed by famous Chinese actress and singer Wang Luodan. In the accompanying trade, more than 1000 regional distributors turned up, and sales orders and reception were “very positive”. While China is still predominantly a tea-drinking country, coffee consumption has been picking up, driven mainly by a younger audience influenced by the Starbucks culture and patient marketing by Nestle. The coffee segment is expected to grow at a healthy 12% clip on average over the next five years, and the time is ripe for Super to capitalize on this expected growth without overinvesting.

Tat Hong

Tat Hong: Credi Suisse issued unrated report. The weak 1Q14 results were largely due to one-offs, plus demand slowdown in key markets, with Australia (46% revenues) being the key weakness. Nevertheless, the house expects commencement of some delayed project commitments post election. Singapore (23% revenues) remains steady with MRT projects, but the rest of ASEAN sees some softness. Malaysia is seeing completion of some major projects, Indonesia is seeing demand softness inline with commodity prices and Thailand is seeing slower demand. With revenue expected to stabilize, mgt focus is on improved cost efficiency and capex discipline.


Yangzijiang: CS reiterates Outperform with TP $1.30. At the launching ceremony of Yangzijiang's first 10,000 TEU containership, mgt expressed confidence that customer Seaspan is likely to exercise options for further vessels in the coming months. The group is expected to deliver eight 10,000 TEU containerships in 2014 in total. YZJ also looking to move further up the value chain to secure contracts for 14,000 TEU containerships. As of Sep ‘13, YZJ has US$2.9b of options for 29 bulkers and 22 containerships. CS expects YZJ to secure US$2b of contracts in 2013, as improving order momentum drives a re-rating of the shares.


GLP: Credit Suisse maintains Outperform with TP $3.15. Private equity and real estate news agency, PEI PERE reported that GLP is raising its first China-focused real estate fund with as much as US$1.5b. While GLP has denied entering into any binding agreement presently, it is still an option mgt will evaluate. CS assumes increment of 50% to existing mgt fee base and a 15x P/E multiple, might add ~2% to RNAV. Also, this would be positive for ROEs, as it should lighten the capex requirement for future developments. The house also believes such capital recycling would be seen positively by market, evident from the positive implication of last year's GLP J-REIT exercise. The house also highlights the increase of leasing momentum corroborating above buy arguments that GLP is a proxy to the defensive logistics sector, with growth kicker from developments.

Internet Technology Group

Internet Technology Group: to lift halt at 8.30am. The Goh family’s special purpose vehicle, WLH has proposed a voluntary delisting and will make an exit offer to acquire all shares of ITG at $0.127 in cash, representing a 7.6% premium over the last closing price of $0.118. WLH, in concert with the undertaking shareholders, comprising mainly the Goh brothers and their family investment vehicle Ossia Holdings Pte Ltd, currently control ~61.4% of the shares out. The delisting and exit offer will be conditional on the delisting resolution being approved by a majority of at least 75% of the shares present at an EGM to be convened, and not being voted against by 10% or more of the shares. The rationale for delisting is that ITG has not raised any funds from the capital markets since its IPO in 2000, and is unlikely to require access to capital mkts to finance its operations in the foreseeable future.

Sky One Holdings

Sky One Holdings: Extended the long-stop date of its proposed acquisition and disposal agreement to 30 Jun 2014. Recall, the proposed acquisition of Energy Prima via the issue of 1,600m new shares at $0.25/share would result in a RTO, transforming the group into a coal mining player. The proposed disposal is the sale of the company's existing transport and logistics business at a 10% discount to NAV to controlling shareholder and CEO, Dicky Suen. The non-binding MOU on the proposed acquisition and disposal was initially signed on 10 May 2012.

Macquarie International Infrastructure Fund

Macquarie International Infrastructure Fund (MIIF): Completed the 40% stake sale of Changshu Xinghua Port to Pan-United for $112.2m. The fund will distribute the net proceeds from the sale through a capital reduction, amounting to 9.7¢/share to shareholders. The shares will trade ex-entitlements on 9 Oct. Consequently, MIIF provided a guidance of 0.8¢/share for its FY13 final dividend, for the six months ending 31 Dec 2013.

Pan-United Corp

Pan-United Corp: Completed its $112.2m purchase for a 40% stake in Changshu Xinghua Port (CXP), raising its effective stake in CXP to 85.5%. CXP is an integral part of Pan-United , being its second-largest source of earnings. CXP contributed 9% to group revenue and 16% to group net profit in FY12. Its operating momentum is expected to continue in the next few yrs. Latest brokers' recommendations: CIMB has Outperform with TP $1.08 Voyage has a Buy with TP $0.965 PhillipCapital has a Buy with TP $1.27 DBSV has a Buy with TP $1.21


OUE: ($2.56) Exploring opportunities for a commercial REIT listing OUE has announced that it could be exploring the listing of a Commercial REIT, which could initially consist of its OUE Bayfront property, an 18-storey office building at Collyer Quay, alongside with its ancillary properties which comprises a tower building used for F&B purposes and a link bridge with retail shops. Current occupancy rate of OUE Bayfront stands at 93.3%. The company adds that other commercial properties owned by Lippo China Resources would also be up for consideration to divest into the proposed REIT. OUE note that key details of the proposed REIT are currently under review and the REIT’s establishment and listing would be subjected to market conditions, with no certainty that it will or will not proceed. We recall just last week, Lippo Group’s founder and Chairman, Mr Mochtar Riady said that the group aims to seek real estate acquisitions in the US, adding that overseas deals will be handled by OUE, which is headed by his son, Stephen Riady. In line with earlier guidance to investors, OUE aims to double its asset base to $10b over the next three years. Early this year, OUE made its first foray into the US with the acquisition of US Bank Tower in Los Angeles for US$367.5m. Going forward, the younger Riady expects future investments to be of similar scale, and is targeting California, New York and Miami for possible deals. Overall, OUE (Buy, TP $3.40) remains one of Maybank-KE’s top property pick in Singapore, as the group levers up for expansion and seeks to diversify its predominantly Singapore portfolio. At $2.56, OUE trades at a steep 50% discount to Maybank KE's RNAV of $5.10

SG Market (26 Sep 13)

SG Market: S’pore shares are poised for another struggle as Wall Street slump to its longest decline since Dec on a possible government shutdown, debt default and softer economic data. Investors fretted over two looming deadlines in Washington as the House and Senate remained in gridlock over funding issues that are set to expire on 1 Oct and a federal borrowing limit being reached by 17 Oct. Adding to the pressure, US durable goods rose just 0.1% in Aug, after a sharp drop in Jul, while new home sales but the pace of 421,000 units was near its low end this year due to higher mortgage rates. If the psychological 3,200 level on the STI fails to hold, next support lies at 3,168 (50-day moving average) with overhead resistance at 3,275. Stocks to watch for: *OUE: Group is considering listing a commercial Reit on SGX mainboard, with an initial portfolio comprising OUE Bayfront office property and its adjacent F&B tower building and a link bridge with retail shops. The proposed Reit may include other commercial properties owned by Lippo China Resources. *SingTel: Seven telco firms, including M1 and StarHub has urged the regulator to reject SingTel's proposed $126m acquisition of OpenNet, which is developing the next generation nationwide broadband network, over concerns over competition issues. *MIIF/Pan United Corp: MIIF has completed the sale of its 38% stake in Changshu Xinghua Port to Pan United Corp for $112.2m and will distribute a capital return of 9.7¢ per MIIF share by 29 Oct. Following the divestment, MIIF has issued a final 2H13 DPS guidance of 0.8¢, based on the expected income from remaining asset, Hua Nan Expressway. *Internet Technology Group: Major shareholders, the Goh brothers, who currently control 61.4% of ITG under familt investment vehicle Ossia Holdings, has made an exit cash offer of $0.127, representing a 7.6% premium over its last closing price of $0.118, and a proposed a voluntary delisting. The exit offer and delisting will be subject to approval by a majority of at least 75% of the shares present at an EGM to be convened, and not being voted against by 10% or more of the shares. *OKH Global: Entered into non-underwritten placement agreement with UOB Kay Hian to issue up to 60m new shares @ $0.68 each, which would raise $39.5m. The placement price represents a 8.4% discount to the weighted average price for trades done on 24 Sep. *Asia Fashion: Terminated its MOU relating to the proposed acquisition of An Kang City Han Bin District Guishan Stone Coal Mine and An Kang City Chengxing Mining Co after due diligence review. Meanwhile, the group has reached settlement agreement of Rmb461.5m with 8 customers on compensation claims amounting to Rmb517m for defective goods that failed to meet specified colour requirements. A Rmb300m cash compensation will be paid by Dec 13 and the remaining Rmb161.5m will be deducted from future fabric sales over next 5 years. As at Jun, group has cash reserves of Rmb356.6m. *Sky One Holdings: Extended the long-stop date of its proposed acquisition of Energy Prima via the issue of 1.6b new shares @ $0.25 and disposal of existing transport and logistics business to CEO Dicy Suen to 30 Jun 2014. The proposed RTO will transform the group into a coal mining player. *RH Petrogas: Drilling of Zircon-1 exploration well in the Salawati Kepala Burung PSC, Indonesia has reached total vertical depth of 1,525m on 25 Sep and logging operation has commenced. Oil shows were encountered during drilling. Production testing will follow if log analysis confirms the presence of hydrocarbon zones. After completion of Zircon-1, the rig will move to drill the Koi-2 appraisal well. *Lippo Malls Trust: Issued $150m 3-year medium term notes (MTN) bearing a fixed rate of 4.25% per annum, drawn down from its $750m Guaranteed Euro MTN Programme. This will be the fourth draw-down by the trust on the MTN Programme established on 25 Jun 2012, with $275m remaining. *Hu An Cable: Announced that it is considering to undertake a third TDR programme for the issuance of 151.7m new shares to underlie 121.4m TDRs to be listed on the Taiwan Stock Exchange. *Synear Food: Closing date of exit offer extended from 25 Sep to 30 Sep.

Wednesday, September 25, 2013

Marco Polo Marine

Marco Polo Marine: OSK DMG had a yard visit in Batam. All three drydocks were busy with repair operations, construction of a third-party 8,000bhp AHTS vessel and two similar vessels for its own fleet. In preparation for better shipbuilding times, a new slipway is almost complete. The slipway provides for an optimal strategy to utilise available space for shipbuilding during times of boom, and make facilities improvements during downturns. + With current contracts expiring soon and AHTS supply still far behind demand in Indonesia, the house expects each vessel will be re-chartered immediately at prevailing market rates, which are 33% higher. Investors were most interested in the company’s 20% net margins. The house is confident that new vessels and re-chartering will help MPM maintain its margins. The house reckons 0.8x P/BV is undervaluing 15% ROE, with FY14 P/E at 5x. Maintains Buy at TP: 0.61

First REIT

First REIT: After a recent site visit, Voyage found the following traits of its assets: i) all the assets are strategically located along key toll roads or in the middle of the CBD for easy accessibility; ii) assets with longer operating history are properly maintained and have utilization rates of 75+%, suggesting the possibility of AEI; and iii) newer hospitals were equipped with high-end machines and network integration across buildings are relatively rare in Indonesia; Over the last few months, there were concern over the depreciating rupiah and economic turbulence but house reckon that the impact is minimal given their S$ based rental structure and defensive nature. Measures were also adopted recently to lower their floating bond exposure and extend their loan duration. First REIT now trades at FY14 dividend yield of 7.0%, Voyage has an Overweight rating on First REIT with TP $1.44.


IPCO - Latest news on the co. was its recent results where the grp saw 1QFY14 revenue grew 35% y/y to $7.9m but lower than net profit of $12.8m (-19%) was higher due to fair value gains of $12.2m (-32%) from investments in financial assets. The stronger topline was achieved on back of a 47% jump in sales of ESA Electronics and contributions from China Environment Energy. Note however that the above is likely to be a non-event. More interestingly: IPCO holds a 6.61% stake in Blumont, which currently has a market cap of $5.68b. In contrast, IPCO's market cap currently stands at only $178.5m, versus its stake in Blumont which is wroth $375m.

Falcon Energy

Falcon Energy: making new 52 wk highs this morning. Voyage Research reiterates Overweight with TP $0.55. Notes Falcon recently carried out some share buy back activities and absorbed back ~2m shares (avg daily px of $0.348 – 0.372) from the open mkt this month. This seems to be a signal from mgt that Falcon’s current share price is undervalued. This may be partially explained by the recent sale of its two 45.5% owned jack up rigs at an est px of US$225m each last month. These two rigs have a cost of ~US$196m each, and could result in an attributable profit of US$26m for Falcon, which it would probably recognize in the upcoming 2Q results. Voyage also continues to have a positive outlook on Falcon’s marine division, underpinned by healthy charters rates due to current high energy prices and active drilling programmes. As at end Jun ’13, Falcon has 163m outstanding warrants with an exercise px of $0.40 per share, with last conversion date due 1 Nov ’13.

Keppel T&T

Keppel T&T: CIMB issued an O/PF report with TP: $1.65. Keppel T&T has been aggressively expanding its core operation ,with 4 new logistics facilities and a third data centre slated to open in FY14-15 which will allow earnings profile to rely more on core businesses vs investment in M1. The 4 new facilities will add 144,000sm of warehouse space to the current 229,000sm of space owned by Keppel T&T and its subsidiaries. Given the sheer size of these new facilities, the house forecasts y/y logistics revenue growth of 16-30% in FY14-15 and expects the logistics segment to contribute to 39-45% of earnings growth forecasts for FY14-15. The third data centre, Keppel Datahub 2, will add 6,000sm to the current 12,300sm of data centre space that Keppel T&T runs in Singapore, and expects data centres to contribute to 31% of earnings growth forecasts in FY14-15 Valuations are currently undemanding at 10.1x rolling fwd P/E, 1 s.d below historical mean of 11.8x.

First Resources

First Resources: UOB Kay Hian maintains Buy with $2.40TP. House confident that First Resources is on track to deliver a good set of numbers for 2H13. Besides the better-then-peers ASP, FFB yield has showed good recovery to deliver better upstream profit in 2H13. Add that downstream operations are getting competitive as new capacities come on-stream but the impact on FR is mitigated by a timely switch to biodiesel production as EU demand returns.

CapitaCommercial Trust

CapitaCommercial Trust: OCBC maintains Buy with $1.61 TP. CCT reported that it has refinanced committed term loan facilities of an aggregate amount of S$450m and a revolving credit facility of S$100m with various expiry dates in 2014 and 2015. In addition, the trust also secured a new committed revolving credit facility of $100m. These set of new facilities, with an aggregate amount of S$650m, will expire on maturity dates from 2018 to 2020. $480m of the new facilities has already been drawn down, with $450m to refinance the existing facilities and $30m for capital expenditure and general working capital. House see this as a positive move for CCT which will significantly extend the average maturity of its debt portfolio from 2.8 years as at end 2Q13 by an additional 0.8-1.1 years, according to estimates.


NOL: OCBC maintains Sell with $0.95 TP. House note that despite industry wide efforts to push through general rate hikes, freight rates according to the Shanghai Containerised Freight Index show continued softening in Sep instead. With the traditional 3Q peak season weaker than expected and drawing to a close, likely to see freight rates subsequently head lower in 4Q13 as demand typically drops off, further affecting the ability of liners to force through rate hikes for the remainder of the year. House forecasting a much smaller core operating profit for NOL in 3Q13 and another loss-making 4Q13 to end a disappointing 2013. In light of the weaker outlook for 2H13 and beyond, maintain SELL on NOL with an unchanged fair value of S$0.95. The lack of any near-term catalyst compels house to keep P/B peg at 0.9x.

Tat Hong

Tat Hong: Maybank-KE upgrade to Hold and raise TP to $1.00, pegged to 12.3x FY6/14F PER, in line with its 5-year mean and adjust earnings forecasts by 2%. House met with management to assess the outlook on the company’s respective markets. Tat Hong’s core market, Australia, is expected to remain weak on the back of a change in the country’s political leadership, while earnings from China are supported by reasonable growth from nuclear plant construction works.


AsiaMedic: CEO Dr Wong was interviewed by internet finance portal, NextInsight. Dr Wong shed light on AsiaMedic’s new JV, Cyroviva Singapore – which intends to enter into the cord blood banking business in Singapore – and elaborated on his marketing strategies and product pricing. Dr Wong is confident of taking the competition to the current market leader, Cordlife, and believes it is “not difficult” to breakeven within the first year of operations.

EMS Energy

EMS Energy: secured from its major shareholder, Koastal Industries, a contract worth US$36m to build a Derrick Equipment Set (DES) complete with full drilling equipment, for an offshore tender assisted drilling rig – its largest order secured to date. Delivery is slated over 18 mths. Financial recognition of the DES will commence from 4Q13 with the bulk of contributions and positive financial impact kicking in from FY14. EMS expects to secure two more DES of similar value over the next few mths, which would bring the total orders from Koastal to ~US$108m. Koastal, which provides engineering, procurement and construction mgt for offshore projects, has previously outsourced to EMS major equipment supplies for smaller AHTS vessels. EMS’ order book now stands at $67.8m vs 1H13 revenue of $3.8m (impacted by fewer significant projects secured).


ISDN has announced the acquisition of two Indonesian-based energy-related companies – PT Alabama Energy and PT Prima Paluta Energy, via a sale and purchase agreement to acquire 80% equity of both companies from their vendors. The latest development will cement ISDN’s footprint in the vast Indonesian energy market where hydro-electric has been identified as one of the key energy sources to meet the rising demand of electricity.


Vard: Mitsubishi UFJ Fund had a short one-month stint of being a substantial stakeholder, after the fund disposed 573k shares via the open market on 24 Sep between $0.905-0.935, reducing its stake from 5.01% to 4.97%. Earlier on 29 Aug, Mitsubishi UFJ acquired 4.4m shares on the market between $0.845-0.880, boosting its stake from 4.77% to 5.14%. Share price has risen 6% since Maybank-KE upgraded the counter to Buy from Hold, citing the positive longer term outlook for Vard on the high levels of optimism on OSV demand from its clients. Maybank-KE has a TP of $1.48 for Vard.


Cacola: Proposed placement of 19.6m shares @ $0.032 (10% discount to VWAP of last trading day) to Advance Opportunities Fund. Gross proceeds of $629.3k will be used mainly for exploration of new investment opportunities, payment of fees and general working capital. In addition, Cacola entered into a settlement agreement to repay an aggregate $548.3k debt through the issuance of 17.1m shares. The aggregate 36.7m new shares will increase existing share capital by 10%. Advance Opportunities' director Tan Choon Wee was previously Head of Dealing at RHB Securities and is familiar within Elektromotive Group and Contel as the Exec Director of both companies. In Jun, the furniture manufacturer entered into an agreement to acquire a chinese gold mine that would result in a reverse takeover of Cacola. While the MOU had lapsed on 31 Jul, Cacola is still engaged in ongoing discussions with the vendor of the gold mine. Proceeds from the share placement as well as the pare down of debt may aid to push the company forward on its next leg. Consequently, renewed interest from investors may spark a positive uptake on its share price.


GLP: Rectified Pere's news article on 24 Sep titled "GLP launches its first China real estate fund", that the group has not entered into any binding agreement pursuing the initiative. Pere is a global paid-news service for private equity real estate professionals. GLP did state the group's on-going reviews on various initiatives to strengthen the group's position, being the leading logistics facility provider in its operating countries, which also included the potential establishment of a fund management platform in China. CLSA view the setup of a China fund being an exit vehicle for China assets as a catalyst in the medium term. GLP remains a favorite amongst the street, with 12 Buys, 3 Holds and 2 Sells. We too, continue to see value in keeping GLP as a constituent in our model Growth portfolio. Recent selected brokers' ratings as follows: CLSA reiterates Conviction Buy with TP $3.40 DBS Vickers maintains Buy with TP $3.31 JP Morgan reiterates Overweight with TP $3.15 Credit Suisse maintains Outperform with TP $3.15

SG Market (25 Sep 13)

SG Market: S’pore shares are likely muddle along after Wall Street extended its losing streak as worries over the looming budget talks and a drop in consumer confidence outweighed a rise in home prices and easing concerns in the Mid-East. The market erased earlier losses as President Barack Obama soothed some Mid-East tensions in his address before the UN General Assemby, saying that the US is committed to finding diplomatic solution for the Syrian conflict and that recent Iranian overtures may offer a basis to resolve the ongoing dispute over Iran’s nuclear program. But stocks turned lower in late session as investors watched the debate in Washington over spending cuts with the Democrat-led Senate offering new proposal to fund the government through 15 Nov and Republicans opposing funding for the health-care law. Adding to the dampng sentiment, the Conference Board’s index of US consumer confidence slumped in Sep to a four-month low, offsetting the 1.8% rise in S&P Case-Shiller index of home prices in Jul, its smallest monthy gain since Mar. With momentum iduicators still in overbought territory, downside risk for the STI is seen at the psychological 3,200 level followed by 3,168 (50-day moving average) with overhead resistance at 3,275. Stocks to watch for: *Geo Energy: Entered into 2 deals with PT Parisma Jaya Abadi; 1) a mining services contract to provide overburden removal in a specific 150ha within a concession area in East Kalimantan with service fee of US$2.50/m3) and 2) mining cooperation agreement to produce 420,000 tonnes of coal from same work block with purchase price of US$61.55/tonne of coal with calorific value of >6,800 kcal/kg and US$71.55/tonne of coking coal. *EMS Energy: Won US$36m contract to build a derrick equipment set for a offshore tender rig from controlling shareholder, Koastal Industries, with delivery in 18 months to a China state-owned shipyard. Group expects to secure another 2 such drilling modules over the next few months, which will lift its total order size to US$108m. *Ley Choon: Awarded 4 contracts totalling $30.6m, comprising 2 PowerGas contracts worth $23.6m to lay and commission high pressure gas transmission pipelines along Old Choa Chu Kang Road (completion in 3Q15), a $2.2m JTC project for road surfacing and reinstatement works in Tuas, Woodlands and Yishun as well as $4.8m subcontracting works for the supply and installation of power cables for SP PowerAssets. Orderbok has strengthened to $233.4m *ISDN: Acquired 80% stakes in 2 more Indonesian hydropower-related companies for total US$1.9m. PT Alabama Energy is expected to enter into a 20-year power purchase agreement with state-owned power distributor Persero to build, own and operate a 9MW plant with estimated annual revenue of US$3.6m and investment cost of US$18m. PT Prima Paluta plans to build, own and operate a 10MW plant costing US$20m and estimated to generate US$4m annual revenue. *Cacola: Proposed placement of 19.6m shares @ $0.032 (8.6% discount to last close) to Advance Opportunities Fund. Gross proceeds of $0.6m will be used mainly for exploration of new investment opportunities, payment of fees and general working capital. In addition, Cacola entered into a settlement agreement to repay an aggregate $0.5m debt through the issue of 17.1m shares. The aggregate 36.7m new shares will increase existing share capital by 10%. *AVIC Int’l: Design and engineering subsidiary Deltamarin is setting up a ship-design unit to target Chinese shipyards. Group is taking advantage of the lack of in-house structured design capabilities among Chinese yards to offer customised designs for individual customers. Backed by parent Avic group, a Fortune 500 SOE in China, AVIC also gets strong support from Chinese financial institutions and business networks. *HTL Int’l: Responds to SGX query on trading activity and discloses that management had on 20 Sep met with several fund managers and private investors, following their request to seek a better understanding of the company and its business.

Tuesday, September 24, 2013

Asia Medic

Asia Medic: laggard cord blood banking aspirant to play catch up with Cordlife? NextInsight interviewed CEO Dr Wong Weng Hong for his thoughts on how AsiaMedic’s new JV in cord blood banking intends to compete against established player, Cordlife. AsiaMedic is entering the cord-blood banking business as a 25% partner with an option to raise its stake to 49% anytime. Its partner, Cryoviva International, is 70%-owned by well-known Indian billionaire Mr Ravi Jaipura, Chairman of India-based RJ Corp, a conglomerate with businesses in real estate, hospitality, food & beverage, healthcare and education. The remaining 30% is held by Dr T Chandroo, Chairman of Modern Montessori International Group, a local company which specialises in early childhood education in the Asia-Pacific. Key takeaways as follows: - even though Cordlife has established relationships with gynaecologists in Thomson Medical Centre and Mount Alvernia Hospital -- the two main private hospitals for deliveries -- the AsiaMedic JV is targeting gynaecologists who do deliveries there but whose clinics are elsewhere. (Gynaecologists play an influential role in helping parents select a cord-blood bank.) - In addition, the JV named Cryoviva Singapore will seek to win parents who do deliveries in other hospitals, especially public hospitals - through its Indian partners, Cryoviva Singapore will be able to connect quickly with the 500,000 or so Indian nationals who reside in Singapore. Dr Chandroo, through his education business, also has a captive audience of high net-worth parents. - AsiaMedic too has its own existing clients to whom Cryoviva Singapore's services will be marketed. The start-up capex -- including automated processing equipment and storage tanks - is $1.5-2m. The fixed overhead costs -- including a couple of lab technicians and lab rental -- would come up to a few hundred thousand dollars a year. Cryoviva Singapore plans to price its services at similar levels to Cordlife and the other service provider, StemCord (which draws clients chiefly from Gleneagles and Mount Elizabeth hospitals). There are various payment plans with different upfront amounts and annual payments. The fees will be recognised over the 20 years that the cord blood samples are expected to be stored, translating into a few hundred dollars a year in revenue per client. Part of the fee that clients can be paid through their child's Child Development Account to which the govet contributes alongside the parents. The breakeven point for Cryoviva Singapore is about 800 samples in the first year after which the annual number for break-even will be lower. Dr Wong believes it is not difficult to achieve as there are 12,000 samples collected every year in Singapore and the figure is expected to rise as more people learn about the benefits of cord blood banking. The critical mass is a few thousand clients beyond which the profitability of Cryoviva Singapore will rise very fast.

Sino Grandness (technical)

Sino Grandness: OCBC Technicals says the counter could see more upside ahead after overcoming its 2-month downtrend resistance recently; this was followed by a bullish break above the $1.30 key resistance on heavy trading volume yesterday. Indicators are turning bullish, with the MACD still climbing steadily towards its centerline, suggesting that the upside momentum is building up now. Tips the counter likely to head towards the $1.60 next key obstacle (key peaks) in the weeks ahead. Advocates a stop-loss exit around $1.24, which is slightly below the newly established resistance-turned-support at $1.30.

China Fishery

China Fishery: Latest newsflow surrounds the settlement of its mandatory offer for Copeinca ASA. As at 30 Aug, China Fish owns 99.1% stake of Copeinca ASA and the mandatory offer is required to remain open for four weeks following that for the remaining Copeinca Shares not owned. China Fish intend to retain Copeinca's listing status on Oslo Børs and has received approval from the exchange to not comply with the requirements regarding spread of share ownership until 1 Oct 2014.

UOL (technical)

UOL: the rising key indicators suggests that near term momentum remains positive, however we would need to see a break above the $6.60 resistance as a confirmation signal. On a bullish breakout, the stock could move to test the $7.00 level in the wks ahead. See support at the recent $6.07 low.

Tat Hong

Tat Hong - No co. specific news to highlight today, although note that counter has been heavily sold off in recent mths, following the depreciation of the AUD, where the group derives ~50% of their revenue from. Seperately, the stock recently saw some interests after the company announced plans to consolidate and optimize its Singapore operations. With the award of a 22-year lease by JTC for a 16,100 sqm plot of industrial land at Tuas South, the group can now consolidate its operations in the Tuas area for better operating efficiency. Tat Hong has been facing planning challenges, as it currently operates in five different sites in western Singapore, which are small and have short remaining leases of between two to 11 years. The Group also plans to move some of its less time-sensitive operations to Johor, where land and operating costs are lower. The consolidation of operations will free up one of its lease-hold properties, at 11 Gul Crescent, which the Group intends to divest through a public tender. Depending on the final sale price and the completion date, the Group is expected to recognize a gain on the divestment of 11 Gul Crescent for FY14.


Kori: UOB KayHian has a BUY rating with TP $0.605, implied upside of 23.5%. UOBKH cites the expansionary mode of Kori with the recent issuance of convertible bond to strategic partner Keong Hong and its new storage yard in Malaysia. With plans to enter the private sector and a ready war chest of $14.3m to grow its business inorganically, UOBKH raise its 2014 net profit forecast by 16.0% to $12.3m. Further, with a growing population in a land-scarce city, house believe the release of an underground Master Plan is only a matter of timing. Kori being an underground specialist will be a key beneficiary of the master plan. Gross profit from its tunneling segment has increased at a 3-year CAGR of 17.7% from 2009 to $1.0m in 2012.

Vard (technical)

Vard - While RSI appears to show some potential reversal in the current downtrend, this has not been confirmed by Stochastics and ADX yet. Share priceis currently testing its 20 Day MA at $0.92, which would prove to be a critical near-term support.

GldUS$10 (technical)

GldUS$10 - Technicals exhibiting conflicting views, with RSI suggesting further downside, while Stochastics suggest more upside ahead. Would wait to see if share price close below/above the 50 day MA at $129.56 before positioning for an entry

Rex Int’l

Rex Int’l: JPM has an unrated company visit note. Rex is an independent oil and gas exploration and production company having 15 concessions throughout USA, Middle East, Norway and Trinidad and Tobago through various JVs. The parent, Rex Partners, claims to own “Rex Technologies” that mitigates exploration risks and reduces cost of exploration, which Rex has access to and enjoys right to first refusal in all global territories except certain locations. Rex Technologies significantly reduces the need for exploration and appraisal drilling thus reducing risks and costs involved in the exploration process. Management claims more than 50% success rate in exploratory drilling (versus 10-15% for industry). Mgt’s strategy is to identify and then acquire new concessions, increase value- introducing Rex Technologies, develop concessions and then sell off stakes thereby unlocking capital and value, as it sees its advantage limited to exploratory drilling phase. The group will look to add 8-10 concessions (5 added since IPO) alongwith its partners North Energy (in Norway) and Hibuscus Petroleum (Malaysia listed E&P name via its JV, HiRex in Asia-Pacific).


Neratel: CIMB has unrated report. House note that NeraTel is poised to benefit from the increased demand for networking equipment given its regional presence and extensive product offerings. Its attractive dividend yields and net cash pile point to limited share price downside. That said, the market may have priced in all the recent good news on NeraTel. Using a dividend discount model, house estimate that NeraTel could be worth $0.74 (constant dividends of $0.04 and cost of equity of 5.4%). Expect DPS of 6c for FY13 and 4c for FY14-15, translating into yields of about 8% and 5.5%, respectively. Free cash flows are expected to remain strong despite additional capex for POS terminals to be leased by customers. NeraTel remains in a strong net cash position, enabling it to invest in growth opportunities and ensuring future interim and final dividend payouts to shareholders.

Genting SP

Genting SP: Nomura upgrade to Neutral with $1.52 TP. House note that with SG’s market maturing, upside in GENS’s earnings is possible either through a sharp upswing in VIP volumes / win rate (difficult to forecast) or a deployment of its huge cash balance in overseas ventures, like Japan, where there are uncertainties on timing and competition. With Singapore tourist arrivals moderating to single digits (YTD arrivals up 8% y-y), and this being reflected in Sentosa traffic, house forecast a mid-high single digit growth in RWS’s top-line and argue that it and consensus earnings have limited downside risks now, and this should support the share price at current levels.


SMM: Held an analyst site tour for its new Tuas yard facility, which has been operational since 5 Aug. Mgt updated on the yard’s progress and reiterated the strategic rationale behind developing the yard. The 73ha yard is equipped with 4 VLCC dry docks and total capacity of 1.55m DWT, and quay space of more than 3.8km. It is expected to significantly enhance SMM’s capabilities by alleviating logistical issues faced at the older yard and contributing to reduced dependence on foreign labor on account of efficiency improvements. It will also free capacity for rig building activities at the old yards. Mgt previously guided for doubling of repair revenue from the current run-rate of $600-700m pa to $1.1-1.2b pa. With EBIT margins above 20%+ levels, this could provide a decent uplift to earnings next yr. Additionally, incremental capacity and faster turnarounds will likely result in higher conversions revenue as well. Nomura keeps at Buy with TP$5.20. CIMB keeps at Outperform with TP $4.80. Says stay invested on expectations of stronger 2H13 earnings, with margin upside from the execution of higher value contracts and repeat designs.

Ascott Residence Trust

Ascott Residence Trust: OCBC upgrades to Buy from hold, with TP $1.37. Believes ART is undervalued after the 13% fall since Jan this year. Notes business activity in the Eurozone is improving, having risen to a 27mth high in Sep. Gradually this should translate to better leasing prospects for ART’s European services residences. Meanwhile FX directions should help ART, with improvements in the EUR and GBP vs the SGD estimated to contribute a ~0.8% increase in portfolio value.

Starhill Global Reit

Starhill Global Reit: UOBK upgrades to Buy from hold, as valuations are attractive relative to peers, with a marginally higher TP of $0.93 (from $0.92). Notes Starhill is building sustainability for the long term, having successfully secured financing at attractive rates (2.4% vs an average interest rate of 3.03% as at 2Q13). As such, Starhill will not have any refinancing requirements until 2015. Meanwhile growth momentum remains intact with full quarter contributions from new tenants at Wisma Atria and positive rental reversions for Starhill Gallery and Lot 10 (+7.2% from 28 Jun) and Toshin master lease at Ngee Ann City (+6.7% from 8 Jun). Starhill offers the highest yields for a Singapore-centric retail REIT with a fwd yield of 6.4%, which is 40-100 bps above comparable retail S-REITS and is 60 bps above the sector avg yield of 5.8%.


Myanmar: SGX-listed counters exposed to Myanmar may be negatively affected from the disparate way of doing business evident by the several delays faced by WE Holdings. Investors should be wary that the proposed transactions of companies to extend their footprint into the country are not a done deal and are subjected to several conditions and risks, especially in a country undergoing rapid development. Other companies that are currently in the midst of its venture into Myanmar include: i) GRP: On its collaboration agreement with Myanmar Golden Star (MGS) Resort & Entertainment to develop and manage properties in Myanmar. ii) UPP: Entered into a US$25m purchase agreement with Mandalay Myotha Industrial Development Public Company (MMID) for a 16.67% stake in Myotha Industrial Park, which span 10,353 acres, and Semeikhon Port, covering 380 acres. iii) Cosmosteel: Group entered a non-binding MOU with undisclosed partner to seek opportunities in the production, sourcing and distribution of piping system components and other steel products in the energy, marine and other industries in Myanmar. iv) TEE International: Signed MOU with Ayeyarwaddy Cement- a subsidiary of A1 Group, to set up a JV-company to develop and operate a fully integrated cement plant to manufacture portland cement for sale in Myanmar.

WE Holdings

WE Holdings: Extended long-stop date for the $20m acquisition in Dragon Cement from 22 Sep to 21 Nov, to accomodate the laws and regulations in Myanmar. This is the third extension for the proposed 20% share acquisition which was originally slated to complete on 16 Aug. Dragon Cement is principally engaged in the business of manufacturing cement in Myanmar. With the acquisition, the plant’s production capacity is targeted to double from 400 to 800 tonnes a day. WE intends to fund the proposed 20% stake through its recent rights cum warrants issue.


HI-P: BlackBerry announced that it has signed a letter of intent with a consortium led by Fairfax Financial Holdings Ltd. to take the smartphone maker private in a deal worth $9 per share. The deal with Fairfax would total about $4.7b in value, as the consortium would acquire all the BlackBerry shares that Fairfax does not own for $9 per share. Fairfax currently owns about 10% of the company’s shares. Key customer Blackberry plunged 17% last Friday after the company issued a profit warning and slashed 30% of its workforce (4,500). Sales for 2Q to Aug’13 will come in at only US$1.6b, about half that of consensus expectations and will be writing down as much as US$960m in inventories. The inventory write-down was mainly for Z10 touch screen devices which the company had designated as its flagship model to compete with the iPhone. Net loss of the quarter is estimated to be 51c a share, way below expectations of 16c a share. On the other hand, Hi-P’s other major customer Apple is expected to post its best ever debut of their new iPhone models (6+m versus expectations of 5+m), notwithstanding that it was a disappointment when announced 2 weeks ago due to its high price point.


Oceanus: Typhoon Usagi hit Guangdong, coastal Zhejiang and Fujian provinces in China where the majority of China’s abalone production is sited. The Board was informed by the China production team that industry-wide damages were caused to abalone farmers and manufacturers in these affected areas. Some of the facilities in the group’s abalone farms that are located in Guangdong and Fujian provinces were damaged. The information available to the Board at this juncture is very preliminary. The typhoon has cut off access to some of the farms due to road damage, blockages and adverse weather, and electricity and phone availability has been disrupted. The mgt team will be visiting all the farms to asses the damages caused and update shareholders accordingly


Amplefield: entered into an MOU with Mr Ann Wam Tiang to incorporate a 70/30 JV called Amplefield Development (Aust) in Western Australia. The JV shall start with a proposed share capital of A$1m, and will acquire and develop viable parcels of land into residential, commercial or industrial units. It is in the process of discussion to acquire certain land parcels.

SG Market (24 Sep 13)

SG Market: S’pore shares are expected to take a back seat as Wall Street extended losses amid uncertainty over comments by top Fed officials and renewed concerns over possible budget and debt ceiling standoff, which offset upbeat euro-zone and Chinese PMI data. Both NY Fed President William Dudley and Atlanta Fed chief Dennis Lockhart advocated that an accommodative monetary policy is still needed, while Dallas Fed President Richard Fisher warned the central bank has harmed its credibility with the decision last week not to taper its stimulus. The mixed messages have created more uncertainty about the future direction of US monetary policy and increased volatility in financial markets. Also damping sentiment is the upcoming debate over the US federal budget and debt ceiling, which may potentially lead to a government shutdown by 1 Oct or a debt default. The quick pullback in the STI over the past 2 trading days has filled the huge gap at 3,204, created last Thu after the Fed announced its no-taper move but sentiment remains fragile with technical indicators still deep in overbought territory. Overhead resistance is tipped at 3,275 with downside support at psychological 3,200 level followed by 3,168 (50-day moving average). Stocks to watch for: *Global Logistic Properties: Signs agreement with Vipshop, one of China’s leading e-commerce companies, to develop 130,000 sqm of new built-to-suit facilities at GLP Park Dianshanhu II in Kunshan, Jiangsu province. Construction of the first phase comprising 60,000 sqm commenced in Aug 13. Vipshop is also expanding its lease at GLP Dianshanhu by another 12,000 sqm, making it one of GLP’s top 10 customers. *LionGold: Inked an ore processing agreement with ASX-listed A1 Consolidated Gold (market cap: A$22.1m), which may boost revenue over a 3-year period. Up to 150,000 tpa of ore from A1 gold mine would be processed at the Ballarat gold plant owned by subsidiary Castlemaine Goldfields. As part of the deal, LionGold will subscribe 34.5m new A1 shares @ A$0.116 apiece, representing a 19.9% stake, for A$4.7m. A1 will use the proceeds to develop its A1 gold mine, which is targeted to begin production within the next six months. *Oceanus: Cautioned that Typhoon Usagi has damaged some of the production facilities and affected its abalone stocks at its abalone farms in Guangdong and Fujian provinces. Highlighted the board currently has very preliminary information as the adverse weather has cut off road access and disrupted telecommunication availability to the farms. *Hotel Grand Central: Obtained approval for the redevelopment of the previous Hotel Grand Chancellor and Cashel Street retail and carpark in Christchurch, New Zealand which was destroyed by the Christchurch earthquake in Feb 2011. Costing an estimated NZ$100m, the proposed mxed development will have a GFA of 27,359 sqm, comprising one level of retail space (1,260 sqm), five levels of office (12,830 sqm), five levels totaling 136 hotel rooms and 64 car park lots, and will take 30 months to complete.

Monday, September 23, 2013

52 wk highs/ lows

52 wk highs: WATER -- Hankore, SIIC Environment OTHERS -- Riverstone, SHC Capital Asia, Plato Capital, Blumont, Rex, Rowsley, YHM, Soup Restaurant, Advanced Holdings 52 wk lows: Kencana Agri, DB X Trackers II Market IBOXX ABF Indonesia Government Bonds


Hankore: ($0.082) Gaining visibility and shareholders’ trust Hankore shares today advanced to a new multi-year high of $0.082, with a substantial 378m shares changing hands by 2.30pm, making it the second most traded stock on the index. Over the weekend, The Edge magazine carried a feature story on Hankore, noting how the group has successfully emerged from a financial restructuring. Hankore is now preparing for a rapid expansion plan to upgrade its existing facilities and to grow via acquisitions. To this end, Hankore is preparing to move its headquarters from Beijing to Singapore, which offers a better platform to engage its investors and bankers. Chairman Chen Dawei will also make the same relocation to support his company. With much scrutiny on S-Chips following various high profile scandals, Mr Chen is keen to build trust amongst its stakeholders, and improve his company’s corporate governance image. Hankore’s public relations efforts are starting to pay off. We observe improving sentiment in the counter, in tandem with increasing coverage on the previously neglected company. Two weeks ago, Market Insights was the first in the street to highlight Hankore’s recovery story. Readers can refer to our commentary dated 10 Sep 2013, titled “Hankore: Precipitating a fresh start”. Maybank-KE Research followed a week later with an unrated report on the stock. We do not rule out more brokers eventually picking up coverage on Hankore, which may lead to improved price discovery for Hankore shares. Hankore trades at just 12.4x P/E compared with its Singapore-listed peers of ~22x.

Keppel Land (technical)

Keppel Land - Technicals appears to be trending down, with RSI and Stochastics all trending down from Oversold positions. The 50 Day MA at $3.58 will be the near-term support.

Singtel (technical)

Singtel - Technicals appear to be trending downwards, with RSI and Stochastics hooking down from Oversold territory. TShare price appears to be testing its 50 day MA at $3.73. FOllowing which the 200 day MA at $3.63 will provide anotehr crucial level of support.

Formula One

Formula One (potential IPO): Bernie Ecclestone insists plans for a multi-billion dollar IPO in Singapore are still very much on despite a lengthy delay in the process, saying he was "sure" Formula One would float on SGX as soon as the timing is right. The glitzy, global Championship has been mulling a flotation for more than a year, but the process was put on hold in Jun ‘12 due to market volatility. Formula One is close to finalising a Concorde Agreement with its various teams to determine how to divide up revenues over the coming seasons. However, Ecclestone indicated the deal was not the major factor governing when the IPO would go ahead. Singapore, one of 19 stops on this year's schedule, is viewed as an attractive destination for IPOs because of it status as a large, stable and transparent Asian financial centre. English Premier League football club Manchester United also considered listing in Singapore before it eventually chose New York last year. Earlier reports said private equity firm CVC Capital Partners, the biggest shareholder, would seek a valuation of more than $10b when the flotation finally goes ahead. Ecclestone controls about a 5% stake in F1, which he has cannily built into an empire with annual revenues of ~$1.5b. He has also cleverly exploited F1's cachet and high profile to take the sport into new markets, charging venues large fees for the right to stage races.


KrisEnergy: Key takeaways from a recent HSBC roadshow are: i) Compared with its predecessor Pearl, Kris has a much more mature and diversified portfolio, with a higher hit rate. ii) Any of the big hits in Vietnam would change the company’s entire outlook. iii) The company expects to win the bids and expand into Malaysia and Bangladesh before next month. iv) Breakeven price is US$42-45/bbl, therefore there is enough room for oil price fluctuations. Kris has 16 blocks currently (two in Vietnam, five in Thailand, seven in Indonesia, one in Cambodia and one in Bangladesh) and is operational on eight of them. Since being incorporated in 2009, 27 wells were drilled and 18 discoveries made with seven now under development. The success rate is 67% versus 50% at Pearl. Keppel is a strategic investor in Kris and holds a 35% interest post-IPO. HSBC has a Underweight rating with TP of $1.10.

Declout/ Xyec

Declout/ Xyec: CLSA has a special report on cloud computing transforming the technology landscape, economic models and strategies. Cloud computing changes IT from a bespoke to utility model. Commoditization of IT will accelerate demand and innovation. Adoption has passed the inflection and signs point to the hybrid public/private cloud as the preferred approach. As a wave of new social, mobile and analytic applications emerges, custom software development becomes a key competitive weapon. As cloud computing disrupts the entrenched IT leaders, new innovations power emerging economic benefits. Open-source and services models exacerbate competitive pressures for infrastructure software and hardware vendors. Cloud computing alters the economic calculus of information technology via transition from products to services, from capex to opex. The transition to public or private clouds is gaining pace as companies in Singapore realize the potential for transforming business capabilities and driving new innovative services. Cloud computing in Singapore is expected to grow 43% from 2012-2017, exceeding the forecast of 29% in the region. Among the SGX-listed plays, Declout and recent-IPO Xyec Holdings provide cloud computing services.


Hyflux: OCBC Hyflux Ltd has officially launched Singapore’s second and largest reverse osmosis (SWRO) desalination plant on 18 Sep. According to management, the desalination plant is not only a showcase of its membrane technology but also strengthens Hyflux’s international track record in large-scale desalination plants, putting the company in a strong position to provide clean, affordable and sustainable water solutions to meet worldwide demand. During the Tuaspring launch, house also had a short chat with management and it appears that Hyflux is slowing but surely turning its focus back to the MENA region. But until see the award of a sizable contract from any of the above mentioned markets to replenish its order book, opt to maintain HOLD rating and $1.215 fair value.


SPH: CIMB maintains Neutral with $4.08 TP. House note that SPH’s FY13 dividends could fall short of FY12’s 24 cents due to weak ad revenue and the loss of 30% of its property earnings. But one should not be negative on SPH as the S$757m raised from SPH REIT should compensate if management successfully develops new retail malls. House reduce FY13-15 EPS by 2-13% for weaker ad revenues and the 30% fall in property earnings following the injection of two assets into the REIT. SPH remains a Neutral as potential dividend headwinds are balanced by $757m cash proceeds that management is looking to deploy. House SOTP falls due to the payout of the 18c special dividend and a lower value for the core media operations after the EPS cuts.


SIA: CIMB maintains Neutral with $10.50 TP, following SIA’s latest JV with Tata Sons. House believe that this is a positive step for SIA, although any benefits are unlikely to accrue until the new airline has been established. No timeline has been set for this yet. While SIA has sufficient cash to invest in its latest venture, this development reinforces view that gains on the sale of its Virgin Atlantic stake will not be fully distributed to investors.


Ezion: Maybank-KE hosted Ezion for a NDR in KL last week and sense that investors’ key concern was how long Ezion could maintain its strong growth trajectory. House maintain positive view and Buy call with of $3.00. Note that as long as there is market demand, Ezion would continue to take in more contracts if can secure funding without over risking its balance sheet. House see this as a positive indication that growth momentum may not taper as soon as we thought. Ezion is comfortable with net gearing of about 1.2x. It emphasised that banks are comfortable with providing funding for its projects given the reliability of the cashflows from Ezion’s clients, who are reputable NOCs/IOCs.


Cordlife: Company feature in The Edge Magazine. Grp CEO note in an interview that if it were to run a low-cost strategy going forward, it cannot run it in a high cost country. With the recent acquisition of stemlife, hopes to offer cheaper plans for Cordlife’s customers in future by storing the cord blood units in Malaysia. Going forward, the grp wants to be the #1 player in Asean, and will launch new products into Asean countries, such as cord tissue banking.

Internet Technology Group

Internet Technology Group (ITG): Requested for a trading halt this morning, pending the release of an announcement. We draw a link on the management team of ITG, Ossia Group and VGO Corporation. The Exec Director (ED) Goh Ching Wah and his two brothers are responsible for overseeing the business directions of all three companies. Ossia's share price has had a tremendously good run recently with the counter skyrocketing 303% (since 21 Aug). The company was queried twice over the span of one week on its trading activity and concluded with an announcement that projects are being explored by the company on an on-going basis.


YHM: secured a contract with a value of up to ~US$183m over a 3-yr period with an additional 2 yr extendable option to provide a semi-sub rig to be used by a SE Asian based national oil company to support its oil and gas activities in the Andaman Sea. The co is in the process of forming a JV to own the semi. The semi will be upgraded and refurbished and is expected to be deployed btwn end 2013 and early 2014. The project will be funded through internal resources as well as bank borrowings. The project may have a positive contribution to the group’s consolidated revenue for FY13. YHM recently underwent a change of control, and is now a 49.3% owned unit of Ezion. YHM is now essentially a shell company, but intends to undertake new businesses in the oil & gas and marine related industry, including developing, owning and chartering of oil and gas and marine related assets.

SG Market (23 Sep 13)

SG Market: S’pore shares are likely to consolidate its gains after US stocks tumbled last Fri as concerns grew that a budget showdown and potential Fed stimulus cuts may pose a threat to economic growth. Emerging-markets shares dropped, gold retreated the most in 11 weeks and oil slid to a one-month low. The blue-chip DJIA shed 185 points (1.2%) to 15,451, while the broad-based S&P 500 dropped 12 points (0.7%) to 15,451, near the upper end of its trend channel. Investors braced for a bruising face-off in Washington over budget cuts and a debt ceiling that threatens to shut down the government on 1 Oct with the White House likely to veto a House bill to fund the government through to mid-Dec on condition that President Obama scrap his healthcare reforms. The Treasury will also exhaust its ability to borrow funds in mid-Oct and the Democrat-led Senate will present its funding alternative this week. Markets were also unnerved by Fed official James Bullard comments that the central bank made a close call not to reduce its bond purchases last Wed and suggested that a small tapering is possible next month if economic data improves sufficiently. Reports this week on 2Q GDP, consumer confidence and new home sales may give more evidence of the pace of economic growth and the likelihood of Fed winding down its easy money policy. Investors will also be eyeing HSBC/Markit flash manufacturing PMI for China this morning for indications of a China recovery. With technical indicators in overbought territory, the STI is expected to breach its 200-day moving average at 3,235 and attempt to close the yawning gap at 3,204, set last Thu. Overhead resistance is seen 3,275 (Jul high). Stocks to watch for: *Rex Int’l: 41% owned HIREX Petroleum has entered into a collaborative agreement with Bass Strait Oil Company to use Rex’s virtual drilling technology for exploration opportunities in the Gippsland Basin, one of Australia’s most prolific hydrocarbon regions. Depending on the prospects, HIREX may acquire a 51% participating interest in the permit and the JV may commit to drilling an exploration well in 2014/15. *YHM: Secured a 3+2-year contract with a value of up to US$183m to provide a semi-submersible rig to support the oil and gas activities of a SE Asian-based national oil company in the Andaman Sea. The rig will be upgraded and refurbished and is expected to be deployed between end 2013 and early 2014. *SGX: Signed MOU with Bank of China to explore joint development of Rmb products and services, promote SGX products in China and educational programs. BOC will also look into expanding its role in SGX’s markets. *Keppel Corp: Officially opened a new shipyard in Azerbaijan, jointly developed by Keppel O&M (10% share), State Oil Co of Azerbaijan Republic (65%) and Azerbaijan Investment Co (25%). Built at an estimated cost of US$470m, Phase I of the new 62-ha Baku Shipyard will be able to undertake up to 100 repairs and conversions per annum when operating at full capacity. Plans for Phase 2 include the construction of a graving dock with added facilities for offshore projects. Meanwhile, group sold its 50% stake in Keppel Kazakhstan for US$32.5m and a one-off gain of US$7.7m. *Grand Banks Yachts: Received approval in-principle from SGX for the listing of up to 57.7m rights shares at an issue price of $0.22 for each rights share, on the basis of 1 rights share for every 2 shares held in the company.

Friday, September 20, 2013

LionGold (technical)

LionGold: this is a stock where technical analysis may not work as well due to the sudden bouts of volatility that it appears prone to. If you must have a chart read, the near term trend is biased downward, evidenced by the declining RSI and MACD. Nevertheless firm support is not far off at $1.45, considering that the next support level at $1.30 is a long way off. Resistance is at $1.70.

First Resources (technical)

First Resources - Technicals appear to be heading downwards, with RSI and STochastics and ADX all trending down. The 20 day MA at $1.88 will be the near-term support.

CNA (technical)

CNA - Technicals appear to be trending, although would watch for a reversal in Stochastics, which could then indicate a possible uptrend. For nopw, the 50 day MA at $0.22 would servve as a key resistance.


Albedo: the key takeaway is that the key investor, Danny Tan , will be acquiring the majority stake in Albedo at 2.24¢, which represents a 67% discount to the current 6.8¢ last traded price. Investors who want to get a piece of the pie at this stage, have to stump up a hefty premium. Note however, that execution risk is the biggest risk factor here. There are numerous conditions that need to be fulfilled for the deal to go through, including: getting shareholders approval at an EGM, negotiating land purchases, etc. The concept of theoretical price is not applicable in this case, as this is not a straight forward rights or bonus issue. It is also impossible at this stage to conduct any form of fundamental analysis, because the land purchase deals are still under negotiations , and the company has no track record in the property development business.


F&N: DBSV upgrades to Buy with $6.50 TP. House note that as shareholders’ value is unlocked through dividend-in-specie of its property unit, Frasers Centrepoint Limited (FCL). Its JV partner in Myanmar Brewery Limited (MBL) has issued a notice of arbitration on FNN’s 55% stake. The outcome is unknown at this stage, but believe in the worst case scenario, impact on RNAV is low, at 2.5%. Stripping out the estimated value of F&B, estimate that FCL is trading at a steep 47%/27% discount to RNAV and book value, higher than the property sector’s average of 31% and 5%, despite FCL’s established position. House revised TP to $6.50 (Prev $9.52), after incorporating the recent capital distribution ($3.28/share).


KingWan: Counter's near-term catalyst would be the listing of KTIS on Thai Stock Exchange, after having received the approval for its IPO. According to a DMG rpt on 16 Aug, this would add a higher level of certainty on KingWan's declaration of a 1.5¢ special dividend/share, on top of its core 1.5¢ dividend. This translates to a 10% yield based on the current price of $0.30. KingWan's share price came off recently mainly due to the weakening Thai Baht and weak economic sentiment from the supposed Fed taper, which caused investors to expect a not-so-positive take up on the listing of KTIS. Stanchart's strategy rpt today highlights the potential inflows into THB bonds after seeing small buyers of THB bonds in recent weeks after having been heavy sellers since early June. The strengthening of the Thai Baht would be beneficial for its equity market.

UOL (technical)

UOL: the rising key indicators above neutral levels, suggest that near term momentum is positive. Watch for a break out above the key $6.60 resistance level (just above the 200day MA), which would position the counter as a strong bullish breakout candidate to test the $7.00 resistance in subsequent weeks. Initial support is at $6.40, followed by firmer support at $6.20.

SuperGrp (technical)

SuperGrp: Technicals appear to be heading down, after having failed to break above the 50 day MA at $4.64. The 20 day MA at $4.46 will provide near-term support.

UOB Restriction

Latest restricted stock list for UOB Online Trading (updated today): Asiasons (5ET) Blumont (A33) Cedar (530) Digiland (G77) IP Comdty.ETN.100US$ (J1QZ) LionGold (A78) Metech Int^ (QG1) Mirach Ener (C68) NexGenSCom^ (B07) Transcu (E15) Vallianz (545) WE Holdings (5RJ) Covered Warrants


Capitaland: OCBC maintains Buy with $3.77 TP. House note that CAPL priced its proposed S$750m 2023 convertible bond issue at 1.95% yield to maturity with a conversion price of S$4.212. The group announced that they will use ~95%-100% of the proceeds to refinance its existing indebtedness and has set up an invitation to repurchase for cash existing CBs due in 2016 and 2018. House see this as a positive move that would reduce interest payments and lengthen the group’s average debt expiry. Also look forward to CAPL’s new condominium launch – the 694-unit Sky Vue in Bishan. While estimate fairly slim profit margins in the low teens due to the pricing, believe a strong launch would be taken positively by the market, particularly now that the group has a large unsold exposure of over a thousand units in the Bishan locality in Sky Habitat (340 units unsold) and Sky Vue (694 units unsold).