Monday, March 31, 2014


Neratel - Latest news was this morning where the group announced that it has received $31.1m worth of contracts. Apart from that, in its latest FY13 results few weeks back, NeraTel posted FY13 earnings of $23.5m (+21%) that came in above street estimates, while flat revenue of $178.2m slightly missed. For 4Q13, net profit of $3.8m and revenue of $44.5m was largely unchanged y/y. For the quarter, NeraTel’s top line was hurt by slower sales of microwave radio equipment in the Middle East and Africa market under its Telecom segment (-28% y/y), but balanced by better sales of network equipment to the service providers under its Infocomm segment (+22%). The group’s gross margin improved from 31.0% to 35.1%, driven by an improved sales mix, as well as higher profit margin recorded from the completion of projects, but the impact on bottom line was negated by absence of a one-off gain related to accounts collection in 4Q12. Going forward, competition in the Telco segment is expected to remain intense, with major global telecom equipment vendors aggressively competing to gain market share and customers driving down operational and capital expenditures. The Telco segment ended FY13 with an order in-take of $67.6m (-8% y/y) as a result of lower orders from both Wireless Infrastructure Networks and Satcom business areas. The Infocomm segment may perform better, having secured $125.7m (+24% y/y) of order in-take, driven by the Network Infrastructure and Payment Solutions businesses. Management declared a final dividend of 4¢, bringing full year payout to 6¢ (FY12: 8¢), implying an attractive 8.2% yield. NeraTel continues to maintain its strong financial position, with zero debt, and cash of $39.3m (10.9¢ per share). At $0.735, NeraTel trades at 11.3x P/E.

Genting SP

Genting SP: announced that all the conditions precedent for the JV with Landing Int’l to develop and operate a US$2.2b IR on Jeju Island have been met in order for the deal to move forward. This includes govet approvals for the JV as well as execution of management agreements between GENS and Landing with regards to gaming operations, the theme park, hotel and residence business. CIMB notes that an endorsement by the Korean government could be a catalyst for GENS’s share price which has remained flat since announcing the JV on 7 Feb. In comparison, Landing’s share price has risen 24%. The house values GENS’s 52% effective stake in the project at $0.09 per share in GENS’s RNAV. Maintains Add with TP $1.81.


Asiaphos: Voyage initiates at Overweight with TP $0.275. Asiaphos stands out for its natural advantages in the phosphate industry and has outlined a two tier plan to raise mine output and phosphate chemical production. The company owns an integrated phosphate mine and chemical production business. As the company produces its own phosphate rocks, it has a strong cost advantage over other chemical producers. For catalysts, mine output is expected to rise from 128,000 tonnes in FY13 to 264,200 tonnes of phosphate rock in FY14, while maiden contribution from P4 chemical sales should kick in from 2Q14.

Wilmar (technical)

Wilmar : Trading Central says the stock remains on on bullish trend after the upside penetration of a medium term declining channel. The 20day simple moving average also reversed up and cross above the 50day. Daily RSI stands firmly above its 50% support. As long as $3.35 (horizontal support) is not broken, expect further advance to $3.65 then $3.75 in extension.

OUE Hospitality Trust

OUE Hospitality Trust: DBSV initiates coverage with a BUY recommendation and target price of $0.95. The house notes that OUE HT portfolio comprises two revitalised assets in the heart of Orchard Road worth S$1.76bn – the landmark Mandarin Orchard Singapore with 1,077 rooms, and Mandarin Gallery, which was birthed of a S$200m renovation of the hotel in 2009, and sports 152m of scarce Orchard Road frontage. The Trust offers investors exposure to a diversified hospitality and retail play in Singapore’s most expansive and frequentlyvisited shopping destination. The high fixed income component offers solid downside protection and income resilience. In the Sponsor’s Right of First Refusal (ROFR) is Crowne Plaza Changi Airport, a 320-room transit hotel in Changi Airport. If acquired, it could boost the Trust’s portfolio room count by 30% and give the Trust an opportunity to benefit from the government’s plans to expand Changi Airport and increase passenger traffic.

TalkMed Group

TalkMed Group: To set up a new medical centre in partnership with Thu Cuc International General Hospital. The centre, Singapore Cancer Centre (Thu Cuc) will provide specialist medical oncology services in Hanoi for an initial period of 5 years, with an option to renew for a further period of 5 years.

Second Chance

Second Chance: 2QFY14 net profit slid 9.9% y/y to $2.7m, despite revenue climbing 3.4% to $10.5m. The increase came from a 62.8% spike in Securities revenue attributable to coupon payments and dividends received. Revenue sources from all other businesses fell. Gross margins slid from 58% to 57%. Interim dividend of 2¢ declared.

ParkwayLife REIT

ParkwayLife REIT: Completed 3 acquisitions in Japan, being the Maison des Centenaire Hannan, Maison des CEntanaire Ohhama and Sunhill Miyako.


Swissco: Exercising the option to purchase No.21 Tuas Road, Singapore 638489, to expand its water front yard facility. The property to be acquired has water front of 107m and a 30m by 100m slipway. Consideration is $16.2m


OCBC: CIMB downgrade to Hold with $10.67 TP. The house highlights that if Bloomberg reports of OCBC being close to an agreement to acquire Wing Hang Bank at 1.9x P/BV are correct, think that OCBC will come under further selling pressure ahead. At 1.9x P/BV, reckon that it will be paying a control premium of 55-60% above Wing Hang’s fair value. Also, its ability to settle for an all-cash deal and avoid any share swap or share issuance will dissipate i.e. there will be dilution. With a competitive HK mortgage market and a peaking HK property market, can only see OCBC coming through the deal on a wing and a prayer. Don’t hang on to the shares. Downgrade it from Add to Hold with de-rating catalysts expected from EPS dilution after the deal.

Genting SP

Genting SP: CIMB maintains Add with $1.81 TP. The house notes that Genting SP (GENS) has announced that the conditions precedent for the JV to develop a US$2.2bn integrated resort (IR) on Jeju Island have been met. This includes government approvals for the venture. Therefore expect some form of official announcement by the Korean government to follow, similar to the Caesar, Lippo and OUE JV in Incheon. The house keep its RNAV-based target price and EPS forecasts, and maintain an Add rating. The key catalyst for GENS’s share price is the utilisation of excess capital on its balance sheet. The Jeju JV is a prelude to the full potential of GENS’s balance sheet, which is expected to be fully unlocked if it does secure a concession in Japan as well.

Nam Cheong

Nam Cheong: Announced this morning that it has clinched contracts worth a total of US$43.1m for the sale of one unit of Anchor Handling Towing Supply (AHTS) vessel (5,150 BHP) and one unit of Platform Supply Vessel (PSV) of 5,000 DWT under its built-to-stock model. Deliveries for both vessels are scheduled in 2014. This lifts Nam Cheong’s YTD contract wins to seven vessels amounting to US$113.1m. The AHTS was sold to a new customer, Kayfour Development Corporation Sdn Bhd, while the PSV was sold to a repeat customer E.A. Temile and Sons Development Company of Nigeria Limited. According to Nam Cheong, its order book stands at ~MYR1.4b following these order wins. OCBC maintain its BUY rating and $0.42 fair value on Nam Cheong.

Stats Chippac

Stats Chippac: In what is seen in accounting terms by some investors as a potential red flag, Stats Chippac has announced that its CFO, Mr John Lau has resigned from his position to pursue other career opportunities. The company will announce in due course the replacement for the CFO. To re-cap, in its recent 4Q13 results, Stats raked in a 4Q13 net loss of US$6.1m versus a net profit of US$1.7m from a year ago. Revenue for the quarter fell 17.8% y/y to US$395m, as strength in the emerging market chipset space and new product ramps in the global handset space was offset by seasonal weakness in the computing and consumer markets. Excluding the benefit of an extra week last year, core revenue would have decreased 11.4% y/y. Going forward, management guides 1Q14 revenue to be impacted by seasonality and to decrease 8% to 14% q/q. The group projects capex in 1Q14 to be between US$105m and $125m, to supports the anticipated demand for advanced wafer level packaging services this year, as well as for the US$45m to $55m progressive construction of a new factory in Korea. At the current price, Stats trade at just 0.67x P/B.

SG Market (31 Mar 14)

US shares halted a two-day slide, as investors latched on positive US data. The S&P500 closed 0.5% higher at 1,858. Consumer spending rose 0.6% in Feb, extending a 0.2% gain in Jan. Shares in the sector rallied 0.8%. However, a late selloff in biotechnology shares weighed on the tech-centric Nasdaq, which pared most of its intraday gains to close at 4,156 (+0.1%). The recent decline in biotech stocks has been largely attributable to the reallocation of capital back to large companies with stable earnings, approaching the end of the quarter. For this week, investors will likely focus on Feb Chairman Janet Yellen’s speech at Chicago today, as well as payrolls data due Friday, for clues on the US interest rate outlook. In the region, both the Nikkei and Kospi are up 0.6% and 0.2% at 8.25am this morning. Similarly, expect the S’pore market to open on a firmer footing today. The STI has broken above its long term declining trend line and the 3,150 psychological resistance. The key RSI and Stochastic indicators are exhibiting strong upward momentum, which suggests the index could climb further to test 3,200 followed by ~3,240 (200day moving average peak in Oct ’13) in extension. Stocks to watch: *Low Keng Huat: 4Q13 net profit plunged 84% y/y to $6.7m, as gross margins halved to 34% from 67% a year ago. Revenue fell 13% to $22m, due to a decrease in construction activities. Final dividend of 3¢ (FY12: combined final and special dividend of 4.5¢). *Nam Cheong: Sold two AHTS vessels worth ~US$43.1m to new customer Kayfour, an emerging oil and gas player in M’sia. This lifts the group’s order book to RM1.4b. *Linc Energy: Successfully finished drilling and completion of its Umiat #23H well, in the Alaskan National Petroleum Reserve Area. Management is impressed by the ease of the well flows and quality of the light sweet crude oil, and is discussing with the State of Alaska to work together to finalize the permit process to take Umiat into full commercial production. Initial internal calculations suggest oil flows could achieve ~2,000 bopd. *Olam: The Republic of Gabon will invest an additional US$56.8m towards equity and increase its stakes in the palm (from 30% to 40%) and rubber (from 20% to 40%) joint ventures with Olam in Gabon. This is expected to release US$30m cash for Olam and will result in a gain of US$14.5m. Separately, Olam has terminated the agreement with Tata Chemicals and will not proceed with the proposed 25% equity participation in the greenfield ammonia-urea fertilizer manufacturing project in Gabon. *SIA: Increased its stake in Virgin Australia (VA) to 22.2% from 19.8% for A$30.4m, taking over Etihad Airways (19.9%) to become the second largest shareholder after ANZ (24.5%). *ST Engineering: Injects $216m in new equity into its aerospace arm, ST Aerospace to support the latter’s expansion. *TT Int’l: Updates that its Big Box warehouse retail project will be fully operational by Dec ’14, and become the group’s leading revenue driver. Management intends to carry out independent valuations that will likely result in a higher valuation for the Big Box (FY13 carrying value: $90.9m) and reverse the current negative equity position of TTI by FY15. *Broadway: Received confidential, non-binding approaches by parties in relations to transactions involving its business and/or shares. Nevertheless, discussions remain only at a preliminary stage. *Etika: Is in discussions with a third party that has expressed interest to purchase certain businesses of the group. *SP Ausnet: Requests for trading halt; in discussions with Singapore Power in relation to a management services agreement. *Ipco: Proposed to place 1.02b new shares at $0.0108 each to four individuals. Gross proceeds of $11m to be used for working capital, repayment of bank loans, short term investments, business expansion in China and real estate development in the US. *Interra Resources: Proposes to undertake a 1-for-10 free bonus warrant, that comes with additional 1 piggyback warrant for every 2 bonus warrants that are exercised. The bonus warrant has an exercise price of $0.27, while the piggyback warrant has an exercise price of $0.205. Both issues are exercisable within the same one year period from date of issue of the bonus warrants. *UMS: Proposes 1-for-4 free bonus share issue.

Friday, March 28, 2014


Noble: has been on a four day winning streak, soaring 13% versus the STI’s 2.9%. Earlier this week, Noble announced that it signed a 10-year supply agreement with Sundance Resources, which is planning to mine iron ore in central-west Africa. According to a report on Business Spectator, the Noble-Sundance deal may be worth as much as US$3.5b a year, based on a sales price of US$100 a tonne after costs. Under the terms, Noble will buy 100% of the iron ore mined at the Mbalam-Nabeba project in Cameroon and Republic of Congo, which has been forecast to produce 35m tpa for 25 years. After taking up the mine’s produce, Noble will be selling the ore with 62.6% iron content to steel factories across the world. Meanwhile, Bloomberg reported that iron ore entered a bear market in early Mar, pressured by both miners boosting global supply and concerns that a possible slowdown in China may curb demand. Macquarie warrants on Noble: T7SW NobleGrpMBeCW140701 Call 1-Jul-14 $1.25 SU9W NobleGrpMBeCW150102 Call 02-Jan-15 $1.10 T7RW NobleGrpMBePW140505 Put 5-May-14 $1.15 TH8W NobleGrpMBePW141001 Put 1-Oct-14 $1.00


Centurion: OSK DMG took some fund managers for a visit to their Toh Guan and Mandai dormitories. In particular, DMG themselves were surprised by the good facilities and comfortable living environment and social activities at the dorm. This affirms the motto “managing with heart” which management prides themselves for having, and isn’t shy to communicate that this is a key differentiating factor between them and and other dorm providers. Occupancy for newer dorms are fast filling up. Toh Guan’s new block which started early this year is now 50% filled, while the Mandai dorm is already 90% filled, with full occupancy achievable over the next 2-3 months. Potential new projects are in Singapore, Penang and Qatar. Specifically, JTC just put up 2 dorm land parcels for tender,: a 6-year, 2,000-bed one in Mandai, and a 20-year 9,200-bed one in Tuas. Centurion is awaiting tender results from a 25,000 bed worker’s village in Penang, and a 20,000 bed worker’s accommodation in Qatar. Dormitory gross margins are good over 50%, and with the closing of its optical business by 2017, gross margins could ramp up to 68%. On top of that, the dorm provider also stands to book 14.4m gain from industrial ramp-up JV project M-space. We like the execution abilities of management, and believe that their “managing with heart” style is sustainable in the dorm business. This is especially key post the Little India riot, where gov’t is now focusing on better living conditions for foreign workers. In this regard, Centurion is best poised to gain given their track record. OSK DMG reiterates Buy on Centurion with TP $0.82.


Goodpack: Announced on 19 March that there may be a bigger for its shares. Stanchart believes suitors could be Brambles, China Merchants Group (CMG), and private equity firms, with China Merchant Group being the top candidate, given its related company, China International Marine Containers, is Goodpack’s largest supplier of IBCs and already owns 2.5% of Goodpack. In addition, in 2010, CMG acquired Loscam, a leading pallet pooling company in Australia and Asia, which also offers IBC solutions. News reports from 2008 said that Loscam was interested in Goodpack. Historically, similar offers were concluded at 7.4-11.7x historical EV/EBITDA, but StanChart’s TP of Goodpack reflects 15.2x EV/EBITDA. The house sees this as reasonable, given Goodpack’s scale, profitability and growth profile. StanChart maintains Outperform on Goodpack with TP of $2.71.

Neo Group

FYJan14 net profit more than doubled to $6.4m, as topline grew 25.6% to a record $52.4m, driven by robust growth in the food catering business (+27%). Food retail business also contributed with a growth of 15.6%, as net outlets grew to 23, compared to 19 outlets a year ago. To support future growth, the group has launched a new product range under the brand name “Best Catering” to cater to the mass market with Tingkat services and economical buffets. Neo will also build a new centralized kitchen that will increase its capacity from 10-15k guests/day to 15-20k guests/day. Final dividend of 1.51¢ per share brings full year payout to 2.67¢ (FY13: 1.5¢), implying yield of nearly 3%. Neo Group trades at 20.27x P/E.

SG Market (28 Mar 14)

The S&P500 ended Thursday 0.2% lower at 1,849, dipping below its key support level of 1,850. Losses were led by the tech and financial sectors. In a case of “good news being bad news”, while the US 4Q GDP figures were revised up, and weekly jobless claims fell by more than expected to the lowest level in four months, investors worried that the improving economic data might lead the Fed to start raising rates earlier than anticipated. Similarly, both the Nikkei and Kospi are down 0.6% and 0.3% at 8.35am this morning. Amid the dry corporate news flow, the S’pore market may take cue from the regional markets and open softer before heading higher later in the day. From a technical perspective, the STI has broken above its long term declining trend line and the 3,150 psychological resistance. An extension of the positive momentum could propel the index further to test 3,200 next. Stocks to watch: *Neo Group: FYJan14 net profit more than doubled to $6.4m, as revenue grew 26% to a record $52.4m, driven by robust growth in the food catering business. Final dividend of 1.51¢ per share brings full year payout to 2.67¢ (FY13: 1.5¢). To support future growth, the group has launched a new product range under the brand name “Best Catering” to cater to the mass market with Tingkat services and economical buffets. Neo will also build a new centralized kitchen that will increase its capacity from 10-15k guests/day to 15-20k guests/day. *CapitaLand: Agreed to subscribe for a 60% stake in two JV companies for total cash consideration of Rmb752m, which will develop two adjacent residential sites in Chengdu. The sties measure a total of ~133,333 sqm and can be developed into 4,600 apartment units with gfa of 479,850 sqm. *Sembcorp Industries: Commenced construction of its largest energy-from-waste facility in Singapore, worth over $250m. The project, to be completed early 2016, will be the first to use industrial and commercial waste to produce steam for supply to companies on Jurong Island. *Osim: Its 55% owned Brookstone, a US retailer, has filed for bankruptcy. Nevertheless, there will be no further financial effects on Osim, which previously made a $77m write-off of Brookstone in 2009. *SGX: Said to be considering gold futures contracts, which includes gold for physical deliveries in and out of S’pore. *Grand Banks Yachts: Has appointed Washington-based NW Explorations (NWE) as a Grand Banks authorized services centre, and endorsed NWE to both sell and charter Grand Banks yachts. *Asiasons Capital: Term sheet in relation to the proposed acquisition of a 20% stake in Black Elk Energy Offshore Operations has lapsed. *Memstar: goes ex today for its distribution-in-specie (75 United Envirotech shares for every 1,000 Memstar shares) and capital reduction (~2.45¢).

Thursday, March 27, 2014

Addvalue Tech

Addvalue Tech: Provided insight for its $330m deal announced 25 Mar; The value of the deal- an incredible premium of 1883% over NAV, was derived as the group was one of the only two authorized global developers-cum-suppliers and the only one residing in Asia, for: i) land and maritime Inmarsat Broadband Global Area Network (BGAN) satellite terminals; ii) Thuraya-centric maritime satellite terminal. The Company believes that its technology is attractive to players who are interested in expanding into the field of high-end sophisticated digital broadband satellite communications. Hence, the disposal value of $330m.

Indofood Agri

Indofood Agri: DB highlighted in a rpt today on positive investor thoughts for the palm oil sector from their US roadshow (posting at 8.44am). Apart from that, industry watchers are bullish on CPO, expecting prices to hit RM3,000/mt by Apr, underpinned by an increasing chorus by weather forecasters that an El Nino will develop from Jun-Jul onwards. Indofood Agri derives 74% of revenue from CPO in FY13.

Yoma (technical)

Yoma: Technical breakout for the counter today on good volume, after trading in a downtrend for the past 6 months. In the near-term, Yoma may test its next resistance at $0.775 followed by $0.80. Fundamentally, CLSA's recent roadshow saw reasonable interest of Yoma, but rich valuations and lack of understanding for the country’s property market are key pushbacks. Many investors are eagerly waiting for the approval of Landmark development’slease extension which is viewed as the biggest overhang for stock rerating at themoment.

Ascendas HT

Ascendas HT: Entered into CSPA with Ainodake Godo Kaisha to acquire Osaka Namba Washington Hotel Plaza in Osaka for $110.8m, 3.3% below independent valuations. This is the second property acquisition since IPO in Jul’12. This represents a NPI yield of 6.4% post property taxes, insurance and maintenance capex. Acquistion expected to complete by mid-April 2014. HSBC expects the acquisition to be funded by a mix of debt and equity, and earnings could be ~1-2% accretive to DPU. Citing this acquisition a marginal positive, HSBC maintains Neutral with TP $0.75


Sarine: Maybank-KE reckons that the long-term investment case for Sarine is still fundamentally intact and the strong potential is not to be missed, reiterates their Buy call with TP of $3.09, implying a 27% upside on the current price. Sarine's Galaxy system is on track to become the leading automated inclusion mapping system for the world’s rough diamond industry, amidst the scant competition. Sarine Light and Sarine Loupe, the two new pillars of growth which target the highest value-add segment of the diamond industry is expected to generate substantial contributions by FY15.


hyflux: Has inked a JV agreement with Tolaram Corp to explore opportunities for the development of membrane-based water treatment plants in Nigeria via the new Singapore based JV company Yewa Water Company. Hyflux is focusing more on actively bidding for projects in the Middle East and Africa beyond its established markets in Asia.

Boustead Singapore

Boustead Singapore: Announced that Energy-Related Engineering Division had secured over $50m in contracts from the OP&G industries globally. These contracts involve the disign, process engineering and supply of process heater systems and waste heat recovery units to energy developments in Africa, Asia and Europe. These contracts would bump latest orderbook to $450m and is expected to have a material impact on earnings for FYMar’15

SG Market (27 Mar 14)

US markets gave up early gains and faded sharply into the afternoon, led by losses in materials and technology sectors. The S&P500 sank 0.7% to close at 1,853, while the Nasdaq and Russell indices also fell, joining the Dow in being negative year-to-date. The highly anticipated IPO of King Digital (better known as the maker of hit mobile game Candy Crush) turned out to be a flop and closed 15% below its IPO price on its listing debut. Accordingly, peer Facebook also fell 6.6%. In the absence of meaningful macro news flow, the Nikkei is down 1.3%, while the Kospi is roughly flat, at 8.33am this morning. Amid the dearth of major S’pore corporate news flow, the STI may follow suit to open on a softer note. From a technical perspective, the STI broke above its long term declining trend line yesterday, hence any pullback may be limited to the 3,113 support level. Watch for a break above the 3,150 psychological resistance, as momentum could propel the index further to test 3,200 next. Stocks to watch: *Boustead: Its energy-related engineering division has in recent weeks secured over $50m in contracts from the oil & gas industries globally to supply process heater systems and waste heat recovery units to energy developments in Africa, Asia and Europe. Group order book backlog lifted to over $450m. *Hyflux: Inked a 50/50 JV agreement with Tolaram Corp to explore opportunities for the development of membrane-based water treatment plants in Nigeria. *Ascendas Hospitality Trust: To acquire Osaka Namba Washington Hotel Plaza for ¥8.9b ($110.8m or $159,000 per key), a 3.3% discount to independent valuation. The freehold, 698-room hotel will continue to be master leased to operator, Washington Hotel K.K. until end 2015, at a fixed rent of ¥653m ($8.1m) p.a. The acquisition is expected to boost pro forma DPU by 2% to 4.15¢. *Mandarin Oriental: Will expand its Munich hotel through the construction of a mixed use complex on an adjacent site. The group’s total investment in the project, which will also include a refurbishment of the existing hotel’s 73 rooms, is estimated at €124m. The project is estimated to be completed by 2021, and generate incremental EBITDA of US$17m in 2023. #Heeton/ Lian Beng/ KSH: A consortium comprising Heeton, Lian Beng (32.7%) and KSH (34.7%), has entered into a 49/51 JV with Cambodian national, Lok Oknha Sear Rithy, to acquire the Imperial Garden Villa & Hotel in Phnom Penh, for consideration of US$64m. *SATS: Extended the long stop date for the the acquisition of Singapore Cruise Centre to 30 Sep ’14; the Competition Commission of Singapore is about to commence phase 2 of its review.

Wednesday, March 26, 2014

Kepland (technical)

Kepland: Price seems to be heading upwards to test resistance zone around $3.30. If successful, next resistance level would be $3.75 (seems to be a strong one). Support at $3.10

UOB (technical)

UOB: Recent strength on the short-term uptrend hasn't shown any weakness with ADX still on the rise, althought RSI and Stochastics are within the overbought region. Overall, counter still trading within its range between $19.40-$22.00. Near term support at $$20.65 (200MA) followed by $20.45 (20MA & 60 MA), while resistance levels are at $21.80 followed by $22.00.

DBS (technical)

DBS - Technicals appear to be hooking upwards, witH RSI and STochastics all trending higher, will share price has jsuit broken pass the 20day MA at $16.06. A close above these levels could indicate further upside.

Boustead Singapore

Boustead Singapore: awarded a major multi-million dollar contract to design and supply water and wastewater treatment facilities for the Balance of Plant scope of a 2,000 MW ultra supercritical coal-fired thermal power plant in Indonesia. The client, one of the world’s largest employee-owned EPC corporations, has requested to remain anonymous, and terms of this contract not to be disclosed. The power plant will supply electricity to Indonesia’s national power corporation, PLN for a period of 25 years. Boustead Singapore has secured over $35m in water contracts secured by division in FY14. Latest order book is around $400m.

Addvalue Technologies

Addvalue Technologies: Proposed to dispose wholly-owned subsidiariary, Addvalue Communications, for $330m. This translates to $0.279/share, compared to their last closing price of $0.063. The proceeds from the disposal may include a special dividend.

CapitaCommercial Trust

CapitaCommercial Trust (CTCT): Management has confirmed that the positive leasing trend in 4Q13 has carried into 1Q14, and that office rents are clearly on the rise. Although gearing is low (29% as at 31 Dec 2013), management sees extremely limited acquisition opportunities in Singapore because capital values are still high. Daiwa maintains its BUY rating and TP of $1.69, views CCT as one of the best proxies for the rental recovery in the Singapore office sector.

SG Market (26 Mar 14)

US stocks ended a 2-day losing streak to close higher with the S&P500 up 0.4% to 1,866, as traders latched onto positive data which saw March consumer confidence exceeding expectations and hitting a six-year high. Adding to the upbeat mood was talks that China could launch fresh stimulus to keep up the pace of its economic growth. Industrials were the best performers rising 0.9% as a group, while biotechnology companies were firm, arresting the sector’s recent decline. European stock markets also rebounded from sharp losses, spurred by comments from the European Central Bank (ECB), where its president Mario Draghi guided that its monetary policy is becoming more effective and the ECB will do whatever necessary to achieve price stability. Regional markets are higher this morning with the Nikkei up 0.9%, Kospi up 0.8% and ASX up 0.8% as at 8.20 a.m. Following the trend, the STI is expected to open higher with resistance tipped at 3,142 (200-day MA) Stocks to watch *Boustead Singapore: Awarded a major multi-million dollar contract to design and supply and wastewater treatment facilities for the Balance of Plant scope of a 2,000 MW ultra supercritical coal-fired thermal power plant in Indonesia. The latest contract win raises Boustead’s order book to $400m. *RH Energy: Regarding the proposed acquisition of Chiwayland Group from Chiwayland and Petchem (Petchem), and for its proposed disposal of R H Energy (HK, Zoneda Energy, R H International, Greenzone Energy, and 70% of the entire issued and paid-up share capital of Amersun Energy to Petchem, the long stop date has been extended to 30th Sep ’14. *SMRT: Signed a MOU with Huawei Enterprise Business Group (Huawei), which will see both companies partnering to jointly develop and market products and solutions in the international market. *Mandarin Oriental: To construct a mixed-use complex adjacent to its wholly-owned hotel in Munich, Germany. The US$170m expansion will add 51 additional guestrooms (+70% capacity) and slated for completion at end-2020.

Tuesday, March 25, 2014


Memstar: Will go ex on 28 Mar for its distribution-in-specie and capital reduction, subject to no objection from its creditors before 26 Mar. An investor with 1,000 shares in Memstar will receive 75 shares of United Envirotech (UEL), as well as 2.8¢/share from the capital reduction, which works out to $0.14/share based on UEL's current price of $1.49. Meanwhile, Asdew Acquisitions- spearheaded by local renowned investor Alan Wang, has been raising his stakes from 5.35% to the current 11.11% since Jan '14. We do not rule out the possibility of a reverse takeover (RTO) deal in future, given that Memstar's listed shell status subsequent to the distribution makes it an ideal M&A target. As a rule of thumb, listed shell entities generally command a market premium of ~$15-20m, translating to 0.6¢-0.8¢/share.

GuocoLeisure (technical)

GuocoLeisure - Technicals appear to be trending higher, with RSi and Stochastics all hooking upwards again. The recent high of $0.915 would act as the near-term resistance.


Olam: On the Temasek cash offer, StanChart guides few possibilities on why, and why now: 1) Temasek is comfortable with Olam and wants to increase its exposure to the structural ‘more mouths and bigger wallets’ food theme, before price rise further on higher agri-commodity prices 2) To reduce free float, ahead of possible later privatization later 3) This is pre-cursor to a change in capital structure, with the family sell-down at this stage a rout toward securing cash to support a rights issue. StanChart downgrades Olam to In-Line (from Outperform) but TP is revised upwards to $2.23 from $1.93 (latter TP was set in Nov last year)


Noble: StanChart upgraded Noble Group to OUTPERFORM with a higher TP of $1.28 (from $1.02), representing an upside of 19%. Taking a cue on the valuation of 1.4x P/B from Temasek’s offer for Olam, House TP for Noble equates to a 1.3x P/B. StanChart expects sugar to underpin an earnings recovery or even a re-rating, given a combination of maturing assets and higher prices. In addition, should the current discussions relating to a sale of its agri business with COFCO lead to a deal, it may unlock value and shift sentiment. CEO Yusuf Alireza continues to focus on positioning Noble towards its core supply-chain manager skills, with an asset-light structure. We view investments in X2 and Resource Generation as on-strategy and value- and reputation accretive. Moreover, management has a mantra that ROE is “the ultimate goal”, but “not with a weak investment grade”.


Memstar: Announced that the counter will go Ex-Entitlement on 28 Mar in relation to the dividend in specie of shares in United Envirotech (UEL), as well as the capital reduction, subjected that creditors do not file any objections before 26 Mar. Memstar shareholders will receive 75 UEL shares for every 1000 Memstar shares, as well as 2.8¢/share from the capital reduction. Valuation wise, United Envirotech currently trades at a hefty 44.12 forward P/E, compared to peers HanKore's 23x (post-RTO) and SIIC's 30.1x.

SG Market (25 Mar 14)

US stocks fell with the S&P500 down 0.4% at 1,857, as global markets continued to digest the flash China March HSBC/Markit manufacturing PMI, which saw its lowest reading in eight months and spent the third consecutive month in contraction territory. Investors remained on the defensive and took profit on technology and biotech shares which had outperformed the market recently, as US President Obama arrived in Europe for talks following Russia’s annexation of Crimea last week, stoking concerns of further sanctions. In other economic data, US Markit Manufacturing PMI in March came in lower than expected at 55.5 vs 56.5 estimate, while the Chicago Fed National Activity Index came in higher than expected at 0.14 vs 0.08. Taking the lead from the US and the slew of negative data, regional stocks are mostly lower this morning, with the ASX down 0.5%, Nikkei down 0.8% and Kospi down 0.4% as at 8.40 a.m. Similarly, the STI is expected to open lower with downside support seen at 3,100 (20-dayMA) and 3,081 (50-day MA) Stocks to watch *Memstar: Subjected to no objections from creditors made before 26 Mar, Memstar indicated that books will be closed for its proposed distribution in specie of United Envirotech's shares, as well as capital reduction on 28 Mar. *United Engineers (UE) / UE E&C: UE currently in discussions with a third party on a possible transaction which may lead to a general offer, which may involve the sale of shares in subsidiary UE E&C. Group has appointed OCBC as its financial advisor on the possible transaction. *China XLX Fertiliser: Entered into MOU with Xinxiang Taihang Infrastructure to purchase the right to use a 53.3 hectare land located in Jia Tai Hu District of Xinxiang County in China, which will be used to produce water. *Asia Power: Applied to seek voluntary delisting from SGX, upon receiving controlling interest of 89.52% following its unconditional offer of $0.16/share. *ICP: Books will close on 28 Mar for its 1-for-1 renounceable non-underwritten rights issue at $0.1¢ apiece. *Breadtalk: Issued a "Trade with caution" tag by SGX, following the 13.2% rise in share price on 24 Mar. *WE Holdings: Extending its non-binding MOU with businessman Nay Win Tun to carry out petroleum operation projects in five target oilfields in Myanmar, through a project company. The MOU was originally entered in late June’13 *CityDev: Subsidiary Millenium & Copthorne Hotels New Zealand has successfully raised $111.8m from its offer of redeemable preference shares. The offer was oversubscribed by 15.5%.

Monday, March 24, 2014


Memstar: Based on United Envirotech's (UENV) current price of $1.49, Memstar's fair value would be $0.140, or 3.7% above its current price of $0.135. To recap, Memstar shareholders had approved in its recent EGM, to sell Memstar’s entire core operating assets to UENV in a deal valued at $293.4m. Post transaction, Memstar would effectively be left with $73.4m cash (2.8¢ per share) and 200.1m UENV shares (25% stake) as its key assets. The deal has a long stop date on 28 Apr 2014. This means that Memstar’s fair value can be linked directly to UENV’s share price, with the calculations as follows: = [$73.4m cash + (200.1m UENV shares x $1.49 current share price)] / 2,661.41m Memstar shares

Ezion (technical)

Ezion: Counter may see strength on the upside in the near-term, supported by the rising Stochastics and MACD crossover. A close above the 20MA today at $2.17 would also be an additional positive signal. Support at $2.05 followed by $1.95, with resistance levels at $2.17 (20MA) and $2.26 (60MA).


Breadtalk - Recall, last week readTalk climbed to a high of $1.13 (+7%) in the morning session, advancing for the second consecutive day following the company's statement on Monday that it has isolated the ingredients purchased from Hangzhou Guangqi. Over the weekend, Chinese news portal, Shanghai Daily reported that Hangzhou Guangxi, a food ingredient company, was being investigated for repackaging and selling expired products, some of which were more than two years past their shelf-life. Meanwhile, Maybank-KE wrote in an email today that BreadTalk is incredibly undervalued on its forward earnings growth, underpinned by further penetration of its bakery business in Tier 2 and 3 Chinese cities. At the current price, BreadTalk trades at 21x forward P/E, compared to the regional peer average of 24.1x. Maybank-KE has a Buy rating and TP $1.54


CWT: Counter surging more than 8% last week after DBSV initiated coverage on the counter, while the counter was also featured on The Edge magazine over the weekend too. CWT’s logistics business to be a key driver going forward, where three new warehouses under construction will raise its total warehouse space by 20%, while earnings are also expected to scale up should CWT diversify its trading portfolio. Based on SOTP, CWT’s warehouse portfolio is valued at abt $1.26 per share, and its combined stakes in Cache Logistics and Cambridge REIT at $0.14 per share. This means investors effectively get CWT’s supply chain management business for free based on current share price.


Frencken: Seeing quite a lot of recent interests on Frencken Group recently, with two Buy calls last Friday and a feature in The Edge magazine as well. The electronic contract manufacturer recently saw a turn around from a loss of $12m in 2012 to $17m profit in 2013, and the positive performance is expected to continue, with the group benefitting from the recovery in demand of their key automotive, medical, semiconductor customers in Europe (62% of sales) Its 2014 growth of 20% compares favourably to its forward PE of 6x; which is also undemanding compared to sector peers such as Amtek’s 10x despite similar return and growth profiles. Amtek's share price has been pretty strong after it acquired Interplex which manufactures precision parts for end segments in the automotive and mobile segment, so given Frencken’s similar strong focus in the automobile segment and its more favourable valuations, DMG is tipping Frencken as its preferred sector pick versus Amtek. Amtek’s P/B of 0.5x and dividend yield of 5% provides down-side support.


Courts: Courts celebrated its 40th anniversary last Friday, and we can expect brand building to be pushed ahead despite retail slowdown. MKE feels that Courts’ main concern comes from its lack of opportunity to differentiate itself in electronics retailing. That said, MKE is comforted that it is expanding on other fronts, such as launching a brand-new “World of Wellness” concept to tap into rising health awareness. In Malaysia, Courts is primarily a credit business. And as lending rules becomes relaxed, sales should improve in the coming quarters. Margins should also be enhanced given that interest income is a big profit driver. MKE upgrades to Hold from Sell with TP $0.60

Mapletree Industrial Trust

Mapletree Industrial Trust: Agreed to develop its fourth built-to-suit project for Hewlett-Packard Singapre at MIT’s Telok Blangah Cluster for $250m. The current cluster has GFA of 437,000 sq ft (1.3 plot ratio) accounting for c.2% of revenues, which will be upgraded to a high-spec 824,500 sq ft (2.5 plot ratio) facility. The development will be conducted in 2 phases, with completion slated for 1H17. The new building will be HP’s new Asia-Pac and Japan HQ, and HP has committed to fully leasing for an initial period of 10.5 years with annual rental escalations and two consecutive options to extend the lease for 5 years. This should help add stability to MIT’s relatively short WALE of 2.5 years. Deutsche reckons this will enhance the MIT’s Hi-Tech portfolio. Assuming the project is fully funded, net gearing is expected to rise from 36%-41% upon completion. Project will be near term dilutive, but should boost medium term DPUs by 5-6%. Deutsche remains Buy with TP $1.48 on attractive 7.3% FY14e yield, upside potential from redevelopment, and potential offshore acquisitions.

China New Town

China New Town: China Development Bank's (CDB) subscription of 5,347.9m new shares in China New Town at HK$0.27 ($0.0443) apiece is expected to take place on 28 Mar, following the completion of the preconditions. The new shares will represent 54.3% of the enlarged share capital and the completion of the subscription will pave the way for China New Town's disposal of existing assets for Rmb2,069.8m, intended for completion within 24 months. CDB intends to make China New Town its urban land development platform and transform the company into the PRC’s leading, largest integrated new town developer and operator.


Oxley: Sold more than 50% of the 811 units on the first day of its launch of Royal Wharf, Oxley's premier London waterfront development and first development outside Singapore. Prices for the units ranged from £235k (S$495k) for a studio apartment to £1m for the largest townhouse unit. Completion for the first phase is expected to complete in 3Q16. At current price of $0.68, Oxley trades at 4x P/B.


Albedo: Albedo will resume trading this morning, after the company updated that the RTO agreement with Infinite Rewards remains valid and binding, despite representatives from the vendor requesting for a mutual termination on its RTO agreement. To recap, Infinite Rewards- Tan Sri Dato' Danny Tan's investment holding company, planned to inject 13 Iskandar land parcels with land size over 479 ha worth an aggregate $1.86b, which will transform Albedo into a major property developer in Iskandar. Separately, Albedo has a new substantial shareholder, Jarmata Profits, which acquired 33.9m shares on 19 Mar for $0.0589 each, raising its stake from 3.76% to 5.58%. We note that the disclosure may be erroneous and misleading, given that Albedo's share price never went above $0.058 that day. Jarmata is owned by entrepreneur Dato Sri Thomas Hah Tiing Siu, chairman of Joinland Group.

SG Market (24 Mar 14)

US shares slipped with the S&P500 closing down 0.3% at 1,867 after rising to an intraday record, as investors booked profits ahead of the weekend amidst lingering concerns of growing tensions between Ukraine and Russia. Healthcare stocks were amongst the biggest losers following a letter of complaint by three members of congress regarding the high prices of a Gilead Sciences hepatitis C drug, while financial stocks were firm, latching on to positive sentiment that only one out of the nation's 30 banks had failed to pass 'stress tests'. Market jitters are expected to intensify today after Russian troops stormed a Ukrainian airbase in Crimea over the weekend, while Nato’s top military commander warned of a massive build-up of Russian troops near Ukraine’s border and urged his Western allies to move troops to the east. Despite the uncertain investment climate, regional stocks are mostly higher this morning although gains were capped ahead of Chinese manufacturing data, with the HSBC purchasing managers’ index projected to signal a third month of contraction. The Nikkei was up 0.9% and Kospi up 0.7% as at 8.20 a.m. Taking the cue, the STI is expected to open higher this morning with the index expected to trade within the 3,027-3,113 band. Stocks to watch *Albedo: Updated that Infinite Rewards- Tan Sri Dato' Danny Tan's investment holding company, had requested for a mutual termination on its RTO agreement, but has not reach any mutual agreement at this stage. Separately, Jarmata Profits acquired 33.9m shares on 19 Mar for $0.0589 each, raising its stake from 3.76% to 5.58%. Jarmata is owned by entrepreneur Dato Sri Thomas Hah Tiing Siu, chairman of Joinland Group. *Yong Xin: Appointed UOB Kay Hian as its new financial adviser for its proposed acquisition of Oriental Land, in place of PrimePartners Corporate Finance. Recall, Yong Xin entered into a conditional agreement to acquire Oriental in May'13, which would result in a RTO upon completion. Oriental is a property developer and owner based in China, with a focus in residential, commercial, industrial, retail, exhibition and convention, logistics and hospitality. *Oxley: Sold more than 50% of the 811 units on the first day of its launch of Royal Wharf, Oxley's premier London waterfront development and first development outside Singapore. Prices for the units ranged from £235k (S$495k) for a studio apartment to £1m for the largest townhouse unit. Completion for the first phase is expected to complete in 3Q16. *China New Town: China Development Bank's (CDB) subscription of 5,347.9m new shares in China New Town, at HK$0.27 ($0.0443) apiece, is expected to take place on 28 Mar, following the completion of the conditions. The new shares will represent 54.3% of the enlarged share capital and the completion of the subscription will pave the way for China New Town's disposal of existing assets for Rmb2,069.8m, intended for completion within 24 months. CDB intends to make China New Town its urban land development platform and transform the Company into the PRC’s leading, largest integrated new town developer and operator. *Tigerair: Ordered 37 Airbus A320neo with Airbus and Pratt & Whitney for US$3.8b (S$4.8b), including the option to increase its order by up to 13 additional aircraft. The new aircraft will be delivered over a period of eight years from 2018-2025. Consequently, Tigerair's outstanding order of nine Airbus A320, that were part of a larger 2007 order, will be cancelled. *Hotel Royal: Has entered into a sales and purchase agreement to purchase Bursari Resort in Phuket, through the acquisition of Panali Co for Thb 1.3b. Bursari Resort has 186 rooms, situated less than 3 minutes from Patong Beach. *Enviro-Hub: Awarded $19.2m piling contract from Kranji Development, involving construction, completion and maintenance of bored piling works for a proposed 7-storey multi-user warehouse with ancillary facilities, at 108 Jalan Lam Huat. Expected to be completed around Oct’14, the project will contribute positively to its FY13 financials. *KS Energy: New rig KS Java Star 2 will be ready for delivery by end of Mar’14, and will be deployed to drill in Vietnam for one plus one year contract. The rig cost US$165.5m, and is capable of working in up to 300-feet water depths.

Friday, March 21, 2014


NSL: ($1.86) FY13 earnings surge on associate stake sale; bumper $0.50 per share dividend As expected, NSL’s FY13 net profit spiked 218% to $148.6m, mainly boosted by a net gain of $121.7m from the sale of associate Bangkok Synthetics (BST) in Nov '13. Excluding contribution from BST, NSL’s core pre-tax profit would have increased 13% to $27.2m, in line with the higher revenue of $507.7m (+21%), driven by higher sales volume from its precast operations in Singapore and the regional dry mix business, as well as higher spreader deliveries and improved product mix under its Engineering division. Investors will likely cheer the special dividend of $0.40, in addition to the usual final dividend of $0.10. Following the combined payout of $0.50 per share (26.7% return), NSL will still be left with net cash amounting to ~$0.62 per share. Coupled with NSL’s strong cash generative core business (FY13 operating cash flow of 7.7¢ per share), this could inspire hopes of another round of special dividends to be paid in future, particularly if the group is unable to find new businesses to invest in. Market Insight retains NSL as a constituent in its model Value portfolio. The counter is a deep value asset play with re-rating catalyst to come in the form of capital management. NSL trades at 1x P/B, though valuation narrows considerably to 0.4x on an ex-cash basis. Similarly, the counter trades at 12.8x adjusted P/E (ex-cash). NSL: ($1.575) Add to Value portfolio on bumper dividend hopes SGX has no objections to grant NSL a waiver from seeking shareholder approval at an EGM, prior to the proposed disposal of its 22.8% stake in Bangkok Synthetics for $328.3m. Instead NSL would only need shareholders to ratify the deal. This paves the way for a smooth completion of the disposal, which will allow NSL to unlock $0.88 per share, or 55% of its market cap, from a non-core investment. With NSL’s net cash hoard set to surge from $76.6m to an impressive $404.9m ($1.08 per share), this will likely inspire hopes of a sizeable capital distribution. Meanwhile, investors get paid to wait as NSL has been consistently paying $0.10 dividend p.a. (6.4% yield) for many years now, supported by its strong cash generative core businesses. NSL shares have gained only 9%, or $0.135 per share, since the proposed disposal was first announced on 18 Nov, compared to the estimated gain of $0.32 per share that it stands to book on sale completion. Market Insight still sees upside, and adds NSL to its model Value portfolio.


Frencken: OSKDMG and Lim & Tan have Buy calls on Frencken this morning. Lim & Tan: Recommending a BUY on Frencken Group (30 cents, down 1/2 cent) as (a) this 60 year old electronic contract manufacturer which turned around from a loss of $12mln in 2012 to $17m profit in 2013 is expected to continue to benefit from the recovery in demand from their key automotive, medical, semiconductor and analytical customers in Europe (62% of sales) such as BMW, Continental, Bosch, GE Healthcare, Siemens Healthcare, Philips Medical, Intel, ASML and Thermofisher; OSKDMG: The recovery in Europe’s auto sector is apparent in the climb in car sales six months in a row. The sector is revving up as the market responds positively to Amtek Engineering’s bid for an auto components maker at a 21.9x FY13 P/E. However, prefer Frencken given its lower gearing and stronger business. Lift TP to $0.49, based on a 9.6x FY14 P/E and 20% discount to the peer average, as its valuation tries to catch up.

RH Petrogas (technical)

RH Petrogas: UOB Kay Hian issued a Technical BUY call with $0.68 TP, translating into a 22.5% potential return. House is encouraged by the stock’s ability to close above its mid Bollinger band with higher comparative trading volume during the last trading session and is also followed by a +DI/DI crossover with its ADX turning up. UOBKH recommend accumulating the stock at current levels and/or on any retracement towards S$0.54 as the stock could have bottom out at its recent low of S$0.49. In the near term, watch to see if the stock could close above S$0.60, near its immediate trendline. Protective (trailing) stops could be placed at S$0.535. UOB Kay Hian's institutional research has a fundamental BUY with a target price of S$1.40.

Sino Grandness

Sino Grandness: UOB Kay Hian maintains Buy with $1.06 TP. The house notes that following its key Takeaways from its Taiwan Asean Conference, Garden Fresh’s listing remains on track. 1st-tier investment bankers and auditors started the IPO process in Nov 13 and expect the listing process to be completed by October, which is the maturity date of the first Rmb100m CBs issued in 2011. Investors are now concerned about the contingency plans in case of delays in the IPO process, the use of proceeds to boost Garden Fresh’s growth and expansion plans in Sino Grandness beyond the spin-off. Although the due diligence process may take longer than expected, the company believes it will be a greater testament to Garden Fresh new investors should the IPO be successful, and may even get a higher valuation post listing. The worst-case scenario is the listing gets delayed beyond Oct 14 due to unforeseen circumstance; the first CB will have the option to extend the redemption for another 8 months to Jun 15.


CWT: DBS Vickers initiates coverage with a Buy call and $1.82 TP. The house notes that CWT is a leading logistics player in Singapore with global presence in commodity logistics and marketing. Forecast a 13% EPS CAGR over FY13-15F, driven by logistics and commodity marketing segments. CWT is undervalued at just 7.2x FY14 PE and 1x FY14 P/BV vis-à-vis peers and historical trading bands.


Noble: Nomura estimates that Noble's agribusiness equity could be worth above US$1.5b, while the market currently factors in agri equity value of only about US$600-800m. Based on its estimates, Nomura lifts TP for Noble to $1.30, building in possible monetisation of the segment. Nomura would not be surprised if COFCO plays a part in Noble Agri’s future, since CIC owns 14% of Noble. House notes that COFCO has just picked up a 51% stake in Dutch Agri trading house Nidera and a Noble Agri stake would strengthen its sourcing network in the Americas and supply centres for grains, oilseeds, etc. The Agri division has gone from being the key focus (accounting for 40% of operating income in FY10) to loss-making — primarily driven by sugar, cotton and grains. However, with sugar prices at a cyclical bottom and utilisations on the up, Nomura believes the division could be a key catalyst over the next two years.

Far East Hospitality Trust

Far East Hospitality Trust: CIMB initiates coverage with Hold call and $0.82 TP. The house notes that with a portfolio diversified across Singapore and about 25% of it (by asset value) made up of serviced residences, FEHT is well-positioned to tap the visitor market in Singapore, in our view. In addition, fixed and commercial rents offer an estimated 60% (based on FY13 earnings) of gross income protection, which makes FEHT one of the more defensive hospitality REITs in Singapore. Although earnings are expected to be resilient, believe FEHT is fairly valued given the lack of strong near-term drivers, a lower NPI yield than peers and a higher valuation for its portfolio. Re-rating, however, could come from any positive surprises in tourist arrivals or corporate spending.

Suntec REIT

Suntec REIT: CLSA notes that Suntec’s $350m placement came as a surprise given the manageable gearing and sterling track record of not having to raise equity to lower gearing. With no acquisition target in sight, House estimate a dilution of~5% (assuming proceeds used for debt repayment). However, CLSA expect an acquisition in Singapore or Australia to be announced soon. An acquisition in Australia would yield economic merits given higher NPI yields but negative on a strategic view while a Singapore acquisition makes most sense to us given the recovering office market. CLSA retains Outperform rating on Suntec REIT with $1.75 TP, on the back of good execution at Suntec mall and exposure to Singapore office recovery.

Teho International

Teho International: Proposed to diversify into property development, investment and trading. Teho will have an initial focus on United Kingdom, Australia, Asia- specifically in Singapore, Malaysia, Thailand and Japan. Accordingly, Teho proposed to make a $12.3m acquisition for TIEC Holdings- a real estate developer specialising in residential properties with current projects including Elite Residence, Urban Heritage, a pair of semi-detached units at 7 Berwick Drive and one semi-detached unit at 61 Conway Grove. Teho will also assume liability as guarantor for TIEC's exisiting debt of $36.1m.

WE Holdings

WE Holdings: Entered maiden iron ore sales contract worth US$1.4m to sell iron ore lumps to China-based Ningbo Foreign Trade. Based on the contract, WE Holdings has to deliver 20,000 wet metric tonne of iron ore lumps at US$77.0 per dry metric tonne with at 56% FE content by 20 Apr 2014.

SG Market (21 Mar 14)

US stocks recovered almost all of the previous day’s losses, with the S&P500 closing 0.5% higher at 1,872, as investors chose to focus on upbeat economic data, which signaled a slow but steady trend for the economy. Data from the Philadelphia Fed Manufacturing Index rebounded 9% after Feb’s fall, beating expectations of a 3.8% rise. Jobless claims of 320,000 were lower than expected, and kept to near its three-month low. Meanwhile, Feb existing home sales was in line with consensus with 4.6m homes sold. Financials outperformed, following results from the Fed’s annual stress tests which showed that only one out of the 30 leading banks (Zions Bancorp) was not able to fulfil the minimum capital threshold. The mood is decidedly more positive in the region this morning. The Kospi (+0.5%) and ASX (+0.4%) are both higher as at 8.46am. Japan is closed today. Similarly, expect the STI to open on a firmer footing this morning, despite the dearth of major corporate happenings. In the near term, we see the index continuing to trade within the 3,027 - 3,113 band. Stocks to watch: *Ascott Residence Trust: Acquired a rental housing property in Fukuoka named Infini Garden for ¥6.3b ($78.4m) at an EBITDA yield of 6.6%. On a pro forma basis, the accretive acquisition is expected to increase FY13 DPU by 2.1% to 8.58¢. *Biosensors: Significant shareholder CITIC Private Equity Funds Management reiterates that it is still considering the options available to enhance the value of its investment in Biosensors. *Sim Lian: Will launch for sale the first phase of Vision Exchange tomorrow. The 99-year leasehold commercial development, located at Jurong Gateway, is expected to be completed in 2018. Sim Lian will release 250 units with average prices of $2,150psf for office units and $4,498psf for medical suites and F&B units. *CCM: Received a notice of termination in respect of its $94.6m building contract for Eon Shenton, on grounds of alleged breaches on contract. *Teho Int’l: Proposed to diversify into property development, investment and trading, with an an initial focus on the UK, Australia, and Asia (ie. S’pore, M’sia, Thailand and Japan). Accordingly, Teho proposed to make a $12.3m acquisition of residential real estate developer, TIEC Holdings, which will entail Teho assuming liability as guarantor for TIEC's existing debt of $36.1m. *Tritech: Awarded Rmb24.4m waste water treatment contract by HuaRong Xuehua Brewery, for the design, construction, supply and installation of the waste water treatment plant with a total capacity of 8,000 cubic metres per day. *KrisEnergy: Awarded a 100% working interest and operatorship of the production sharing contract (PSC) with an initial 4-year term for Block 115/09 offshore Vietnam. The block covers an area of 7,382 sq km in the southern Song Hong Basin. *Rex: its 5.35% owned North Energy will commence drilling at two of its licenses in 2H14. *Yoma: Set up two new subsidiaries in Myanmar, to engage in vehicle operating lease and rental, and construction and hotel-related activities. *WE Holdings: Kick starts iron ore trading business with first scheduled shipment of 20,000 wet metric tonne to China-based Ningbo Foreign Trade Co worth US$1.4m. *Devotion Energy: Will be delisted wef 25 Mar 2014

Thursday, March 20, 2014

Ramba (technical)

Ramba- Technicals are hanging in Overbought territory, although there is no sign of a reversal yet. Resistance could be expected at its 1 year high of $0.675


Yangzijiang: has been awarded "High Tech Enterprise" Status, which lower its corporate tax rate from 25% to 15% over three years. Other near term re-rating catalysts are: i) company exercising options for 10,000 TEU container vessels, and ii) receipt of deposit for two semi sub rigs The stock has been oversold on margin fears , chairman's potential retirement in 3 yrs, and concerns about the default risks in CHinese property companies to which YZJ lends 44% of its HTM portfolio. NEvertheless, OSK-DMG likes YZJ for being the strongest shipbuilder in China in a recovering industry. Maintains Buy with higher TP of $1.58 (from $1.55)

Del Monte

Del Monte: PhillipCapital initiated on Del Monte with a BUY rating and $0.82 TP. House are positive on Del Monte for its key growth drivers and excellent growth potential. Factoring in post-acquisition effects of the consumer food business of Del Monte Corporation, PhillipCapital estimates the shares to be currently trading at about FY13 PE 18.3x and FY14F (end Dec) PE of 15.9x, which are lower than its peers' average. With the strong international brand equity allowing for premium pricing, Del Monte's leading market shares in the US and Philippines provide a strong platform for further consolidation and growth. Key earnings growth drivers include: 1) Shift from juice concentrates to more profitable branded RTD beverages. 2) Continued growth from domestic market in the Philippines. 3) Expansion of the S&W branded business in North Asia and Middle East. 4) Expansion of its recently acquired business in the US.


Midas: China’s National Development and Reform Commission (NDRC) had approved plans for 5 railway projects in Xinjiang, Heilongjiang, Zhejiang, Jiangsu, Anhui and Shandong. The combined planned investment is Rmb142.4b, of which Rmb10.8b is expected to be spent on locomotive investment. We expect a portion of the latter to trickle down to Midas, which supplies aluminium alloy extruded products for both train makers CNR and CSR.


Ezion: Gulf Marine Services’ (GMS) recent listing in London suggests Ezion is still attractively priced. Given the infancy of liftboat adoption in Asia and Middle East, where penetration rate is still low, Maybank KE views that prospect of competition are unfounded. Ezion, the first mover and largest player in SEA has been creating its own demand and would continue to do so as it expands its sphere of influence. Recently listed Abu Dhabi-based liftboat, GMS, last traded at implied valuations of about 11.7x FY14e P/E and 2.5x FYe P/B, Ezion still looks more attractive in comparison. And with the latter’s share price at 13% off its high of $2.43 on 22 Jan 2014, Maybank KE thinks the time is right to accumulate the stock. Maybank KE reiterates Buy with TP slightly shaved to $2.90 from $3.00

HanKore, Sunvic & China XLX

Small- Caps: CIMB note that Ten years since the influx of S-chips, many will recall the string of accounting shenanigans and trading suspensions that defiled the sector. A few investors, on the other hand, may hold fond memories of the various classic privatisation plays that were accompanied by share-price surges. The house take a look at three different approaches for reinvesting in some of the surviving names. The house think the environmental theme has legs, as do asset spin-offs with due diligence by institutions rewriting their intrinsic values. The biggest catalysing event has often been an exit from the local bourse by dual-listed names, especially when offered prices are significantly lower than their trading valuations in Hong Kong. Peferred picks in this space would be HanKore, Sunvic and China XLX.


Vard: Daiwa raises Vard's 2014-2015 order-win assumptions to NOK13b (from NOK11b) and NOK12.6b (from NOK11.6b) respectively, higher than most of those that make up the Bloomberg's consensus forecasts, reflecting the House's bullish outlook for Vard’s order-win momentum. Year-to-date, Vard has secured NOK5.3b worth of contracts to build 8 new vessels from new and repeat customers. Most of new orders won this year (6 of the will be built according to Vard’s own designs, which reflects the market’s acceptance of the company’s designs and enhances Vard’s credentials in building larger, more complex OSVs compared with less-established Asia yards with narrower product ranges. Following this, Daiwa raises 6-month TP to $1.14 (from $0.95) and reiterates its OUTPERFORM rating.

HG Metal

HG Metal: Announced that the company could see a possible sale of shares by Mr Goh Kian Sin, the Managing Director and CEO of the company, of his indirect controlling interests in the company to certain potential purchasers including, Mr Yap Xi Ming, the Chairman of the company.

Suntec REIT

Suntec REIT: Post-placement of $350m to repay existing debt, Daiwa reiterates BUY rating but lowers TP to $1.92 (from $2.00). Following the placement, gearing should no longer be an issue for investors that were uncomfortable with Suntec’s financial position before. Although the purported reason for the placement is to repay debt, Daiwa believes there could be other considerations for the placement, such as an opportunity to buy over the remaining 39.2% stake in Suntec Singapore International Convention & Exhibition Centre or possibly an acquisition in Singapore. Daiwa estimates Suntec REIT to be trading at 5.6% distribution yield based on the current price of $1.69.


Olam: Nomura advises shareholders to reject the takeover offer of S$2.23 a share, citing that the commodities firm was worth ~$2.50/share. House still see significant value in Olam, as various gestating assets start contributing over the next few years. House believes that even if Olam’s board approves the offer, Temasek would end up owning ~50-60% stake in Olam, at best. To take Olam private (which is not Temasek’s stated intent), it would need to offer a higher premium. While the offer values Olam at 14x FY14 P/E (~10% premium to peers Wilmar and Noble) and 9x FY14 EV/EBITDA, it is in line with the recent major transactions in the global agri space.

SG Market (20 Mar 14)

Morning Bites US shares were rattled after Fed Chairwoman Janet Yellen indicated that hikes to interest rates could come as soon as six months after the Fed ends its stimulus program. The S&P500 fell 0.6% to close at 1,861. Post the two-day FOMC meeting, the central bank reduced its bond buying program by another US$10b, with a view for the Fed Taper to be concluded by year end. In deciding when to raise interest rates, the Fed dropped the 6.5% unemployment rate as a guideline, and said it would instead consider a wide range of economic indicators. Latest forecasts by the Fed show that the benchmark rate, now close to zero, would rise to at least 1% by end 2015 and 2.25% by end 2016, of the following year, higher than previously forecast. The accelerated schedule for the rate hikes took the markets by surprise, with commentators predicting more follow-through selling in Asia. On the other side of the globe, investors are also starting to worry about a slowdown in China’s growth, after the RMB fell to a one-year low. News reports of another potential Rmb3b default by the largest private steel maker in Shanxi may spark fears of a systemic credit crisis in China’s shadow banking landscape. Regional markets are lower this morning, with the Nikkei and Kospi both declining 0.6% as at 8.40am. Similarly, the STI is expected to trade down today. Downside support at 3,025 (Dec ’13 trough). Near term, the index may range trade between 3,025 and 3,133. Stocks to watch: *Albedo: Refutes M’sian media reports that its planned RTO deal is off. In its reply to SGX’s query on trading activity, management clarifies that the parties involved “have not reached any mutual agreement... to terminate the proposed acquisition.” *GLP: To lease 53,000 sqm to a leading fast-moving consumer goods (FMCG) company at GLP Park Hefei Hi-Tech in Anhui, lifting the property occupancy to 100%. *Vibrant: Its effective 30% owned unit has acquired a ~89,000 sqm prime High Tech Industrial Park development site with a total estimated GFA of ~67,400 sqm in Changshu High Tech Industrial Park in Jiangsu for Rmb28.8m via a public land auction. The project is slated for completion in 2Q15, and is targeted to be leased to small and medium-sized auto parts companies from Europe and/or the US. *Otto Marine: Secured US$21m charter contracts for its offshore support vessel, which will be deployed to work in Vietnam and Australia for a major offshore construction project. *Asia-Pacific Strategic Investment: Proposed issue of 16.5m non-listed warrants to Sim Chek Tong at an exercise price of $0.423 per share. *HG Metal: Sale of shares by CEO Goh Kian Sin (26.6% deemed stake) to certain purchasers including Chairman Yap Xi Ming. *Starhill Global REIT: Divested Holon L Property, a retail property in Tokyo for ¥1,0b (~$12.8m), representing a 6% premium to latest independent valuation. Holon L accounted for 0.4% of SGREIT’s portfolio by asset value. *Tigerair: Completed the 40% shareholding sale in Southeast Asian Airlines (SEAir) to Cebu Air. *Interra Resources: Completed the development for well YNG3266 in the Yenangyaung oil field in Myanmar, where it has a 60% working interest.

Wednesday, March 19, 2014

China Property

China Property: China property developers led the decline in Chinese stocks today, with the nation’s largest developers China Vanke and Poly Real Estate both declining at least 1.7%. The decline came amidst recent news that Zhejiang Xingrun Real Estate had defaulted on its bank loans, and remains on the brink of bankruptcy, stoking concerns of a sharp property market correction that could lead to a systemic crisis in China. The bearish mood was further ‘soured’ after the shares of another listed developer, Country Garden plunged 6.2%, following the departure of its CFO. According to Bloomberg, the negative outlook has led to traders doubling their bearish bets on some of China’s biggest developers that trade in Hong Kong, with short interest in Evergrande Real Estate Group at 8.4% yesterday compared to just 3.2% a year ago. Shorts on Guanzhou R&F and Agile Property are at their highest levels since Dec ’12. The news flow does not bode well for sentiment on SGX-listed property counters with exposure in China. Key names that may be negatively impacted: CapitaLand, CapitaMalls Asia, Keppel Land, Yanlord, Ying Li and Ho Bee.

Vard (technical)

Vard: Technicals- Recognia has detected a double bottom pattern, indicating that the price may rise from the close of $1.01 to the range of $1.20 - $1.24. The pattern formed over 185 days which is roughly the period of time in which the TP range may be achieved. Vard has a current support price of $0.89, while no resistance level has been found.

KrisEnergy (technical)

KrisEnergy: Technicals- Recognia has detected a bullish bottom triangle pattern, indicating that the price may rise from the close of $0.73 to the range of $0.89 - $0.93. The pattern formed over 29 days would be approximately the period of time that the TP range may be achieved. KrisEnergy Ltd has a current support price of $0.73 and a resistance level of $0.74.


Goodpack: Announced that the company has been approached for a possible transaction, citing that the on-going discussions provide no certainty that it may result in any transactions. Accordingly, Goodpack has appointed Rippledot Capital Advisers as its financial advisor on any potential deals.


SingTel: won the 2014 FIFA World Cup Brazil broadcast rights on an exclusive basis. This means it will have to cross carry the content of the games with rival Starhub. SingTel has also finalized a deal to share the World CUp through free-to-air coverage for key matches (opening, both semi-finals, and the final). The standalone pricing for the World Cup 2014 will be $105 (before GST) for both mioTV and Starhub customers. A big contrast to the $15.75 fee that Starhub offered to its Sports Group customers back in 2006. Not surprisingly, the hefty increase has drawn an outcry from football fans. SingTel will offer the World Cup for free to customers who either sign up or recontract with mioTV for mioStadium+ or Gold Pack packages (two year lock in period). Starhub is considering to let its customers with existing BPL contracts to also be eligible for the free offer if they extend their contracts. Overall the event is not expected to have much impact on SingTel's FY14 performance. OCBC retains its Buy call with TP $3.74


Albedo: According to The Star, Tan Sri Danny Tan is aborting his plans to inject his prized Johor land into Singapore-listed Albedo Ltd, a company whose share price shot through the roof late last year on speculation that it would become a new “Iskandar play”. Sources said talks between Tan and the major owners of Albedo – a loss-making steel and raw materials company – broke down after they failed to agree on the terms of the sale. Both parties have mutually agreed to end the deal and are in the midst of making their announcements soon.


GLP: Management said in a meeting with Daiwa that GLP’s threat could come from SOEs getting together with private equity backing to form a logistics development business, and the recent US$2.5b partnership with Chinese SOEs greatly mitigates the risk. Management is also convinced that the partnership will allow GLP to expand its development starts in China by 30-40% p.a and help it to maintain its market-leading position. Daiwa’s view is that investors could see operational benefits in 6 months’ time through the increase in quarterly land acquisitions and development starts. Management also highlighted 3 positive trends: 1) Growth in third-party logistics providers (3PLs) reflecting the e-commerce boom could grow to 30-40% from the current 22% 2) Improvement in food safety and logistics infrastructure. GLP’s strategic partnership with COFCO will help establish a nationwide network of temperature-controlled warehouses 3) Growing importance of auto-parts industry to support what has been the world’s largest car market since 2009. GLP has strategic partnership with Jinbei Automotive Industries (subsidiary of Brilliance Group, SOE car-manufacturer) to develop logistics and industrial facilities in Shenyang. Daiwa maintains its Outperform rating on Midas, with TP cut to $3.12 (from $3.27), with decrease mainly reflecting changes in CNY/USD assumptions.


Hankore: CIMB initiates Coverage with Add rating and $0.156 TP. The house notes that riding China’s increasing environmental awareness, HanKore’s water business will soar on both capacity expansion and rising water tariff. The recently-announced deal with China Everbright International is a major near-term catalyst and will brighten its outlook tremendously. After years of rapid economic growth at the expense of the environment, the public is getting increasingly concerned about the environmental problems that have cropped up. As part of its 12th five-year plan, the Chinese government plans to invest Rmb430bn in wastewater treatment. Given the vast opportunities ahead and a relatively fragmented market, the water treatment industry outlook is bright over the next decade. HanKore recently announced its plan to acquire CEI's water business. After the deal, CEI will own over 60% of HanKore. The benefits to HanKore include: 1) it can leverage CEI’s SOE background in clinching contracts; 2) it could enjoy lower borrowing cost (HanKore: 7.5-8.5%, CEI: 5.0-5.5%); 3) the duo's geographical overlap will lead to stronger presence in certain regions of China. The house SOP-based target price of $0.156 implies a CY15 P/E of 17.3x, less demanding than its peer average of 19.6x.

Ying Li/ Yanlord

Ying Li/ Yanlord: May see near term pressure following the bearish sentiments on the Chinese developers on the HK market, amid growing concern that a weaker real-estate market will curb property sales just as borrowing costs surge. Investors are bracing for losses as lenders pull back from the property development industry and local governments take steps to rein in home values, while data showed property prices in some of China’s largest cities rose last month at the slowest pace since 2012. At least 10 Chinese cities stepped up measures to cool local property markets at the end of last year with Shenzhen, Shanghai and Guangzhou raising the minimum down payments for second homes to 70% (from 60%). Ying Li currently trades at a 6% discount to NAV while China developer peer Yanlord trades at a 43% discount.


Capitland: Announced this morning that it has placed out its remaining 39.1% stake in Australand at an average price of A$3.75 per share, which represents a 3.6% discount from its last traded price and a 5.3% premium from last reported NTA. The sale will raise total proceeds of S$970.1m and result in a net gain of $35.7m. The group noted that it conducted a partial sale in Nov-13 to improve trading liquidity, which subsequently provided an opportunity for the group to sell its remaining AustraLand stake at a more favorable valuation closer in line with that of peers. Overall, the house have a favorable view on this action and believe that the market will likely take this positively as well, given the possibility of a special dividend from the sale proceeds later this year. Strategically, this divestment will further simplify the group’s structure and enable management to recycle capital into key markets - Singapore and China. The sale is estimated to further boost the group’s cash holdings to approximately $6.9b and reduce gearing to about 29%. Maintain BUY on CAPL with an unchanged fair value estimate of $3.50.

Suntec REIT

Suntec REIT: According to a Singapore Exchange (SGX) My Gateway report released yesterday, Suntec REIT has been named as the best performing REIT year-to-date, yielding a total return of 11.1% versus the FTSE ST REIT index of a 2.2% return. The latest announcement does not come as a surprise, with Suntec REIT largely tipped by some analysts in recent months as their top S-REIT pick for 2014, on expectations higher DPU growth once its asset enhancement initiatives in Suntec City Mall are completed by 4Q14 and begin meaningful contributions. Maybank-KE shares a similar view, touting Suntec REIT (Buy: TP $1.83) as the house top S-REIT pick, where in pecking order, it prefers the retail REITs, followed by office, hospitality and finally industrial. Although as a whole, Maybank-KE is still Underweight the sector. Separately, Suntec REIT announced that it has placed out 218.1m new units at an issue price of $1.605 to private investors. The price represents a discount of 4.7% to the volume weighted average price (VWAP) of $1.6839 and 3.5% to the adjusted VWAP of $1.6629 per Unit, for the full market day on 18th Mar’14. The proceeds from the placement will be used to repay the REIT’s existing debt and the balance used for general corporate and working capital purposes.


Midas: Secured Rmb71.9m worth of contracts from CNR Changchun, comprising the supply of aluminium alloy extrusion profiles for 38 train sets (228 cars) for the Shenzhen Metro Lines 2and 5 projects, and for 24 train sets (144 cars) for the Wuhan Metro Line 4. The contracts are slated for delivery between 2014 and 2015. These projects are expected to have a positive impact on Midas’ financial performance for FY2014-15. To recap, Midas has hitherto been CNR’s preferred supplier, so any strong order wins from CNR will likely bode well for Midas. Aside, CSR Corp had clinched Rmb20.8b worth of contracts. These could also flow down to Midas, which also supplies to the former. The stock trades at about 0.86x P/B, and 53.75x trailing P/E due to a low earning’s base. That said, forward P/E is expected to narrow to 17.3x.

SG Market (19 Mar 14)

US stocks advanced higher as markets reacted positively to Russia President Putin’s comments that he does not want to see a partition of Ukraine, despite signing a treaty to annex Crimea from the latter. The S&P500 rose 0.7% to close at 1,872. Homebuilders outperformed, with the S&P sector index rallying 1.5% after Feb housing starts data indicated that the industry is stabilizing. Separately, the US Consumer Price Index (CPI) was little changed at 0.1%, in line with estimates. Among other stocks in focus, Microsoft jumped 4% to close at its highest level in 14 years on expectations its Office suite of products could appear on Apple devices, while Oracle fell more than 4% after 3QFY14 earnings fell short of estimates. Following the positive overnight performance in the US, regional markets are higher this morning, with the Nikkei (+0.7%) and Kospi (+0.3%), as at 8.27am. The STI may open higher, with the index to test the resistance levels at 3,102 (20-day MA) and 3,146 (200-day MA) in extension. Still some investors may stay on the sidelines, ahead of the two-day FOMC meeting that end tonight. Consensus believes the Fed will cut its bond buying program by another US$10b, and switch to qualitative guidance for signaling when it will raise interest rates. Stocks to watch: *CapitaLand: Has disposed of its remaining 39.1% stake in Australand at A$3.75 per share. The proceeds of ~$970m will be reallocated to CapitaLand’s core businesses in S’pore and China, and for general working purposes including repayment of debt. The group is expected to book a net gain of $35.7m from the sale. *Midas: Secured Rmb71.9m worth of contracts from CNR Changchun, comprising the supply of aluminium alloy extrusion profiles for 38 train sets (228 cars) for the Shenzhen Metro Lines 2and 5 projects, and for 24 train sets (144 cars) for the Wuhan Metro Line 4. The contracts are slated for delivery between 2014 and 2015. *Suntec REIT: Completed a private placement of 218.1 new units (10.5% dilution) at $1.605 each. Net proceeds of $341.4m will be used to repay existing debt and lower aggregate leverage from 39.1% to 35%. *Rickmers Maritime: Will charter two 3,450 TEU panama container vessels to Maersk Line. The vessels will be chartered for a period between 12-24 months. Expected revenue is US$5m for the first year. *FSL Trust: Disposes two dry bulk vessels for US$23.6m to cut debt, as part of its loan restructuring efforts. *China Fishery: Has compulsorily acquired all the remaining shares in Copeinca, and will pursue the delisting of Copeinca from the Osla Bors and the Lima Stock Exchange. *Amtek Engineering: SGX advises to "trade with caution" after the company responded to its query that it is not aware of any reasons to explain the substantial 22% increase in its share price over 13-18 Mar. *UOB: Sets up FX advisory and trading unit small businesses in Southeast Asia. *DBS: Has launched a working capital advisory programme to help companies reduce overall banking costs, and to identify and unlock “trapped cash”.

Tuesday, March 18, 2014


NSL - latest news was its results in End Feb, where NSL’s FY13 net profit spiked 218% to $148.6m, mainly boosted by a net gain of $121.7m from the sale of associate Bangkok Synthetics (BST) in Nov '13. Excluding contribution from BST, NSL’s core pre-tax profit would have increased 13% to $27.2m, in line with the higher revenue of $507.7m (+21%), driven by higher sales volume from its precast operations in Singapore and the regional dry mix business, as well as higher spreader deliveries and improved product mix under its Engineering division. Investors will likely cheer the special dividend of $0.40, in addition to the usual final dividend of $0.10. Following the combined payout of $0.50 per share (26.7% return), NSL will still be left with net cash amounting to ~$0.62 per share. Coupled with NSL’s strong cash generative core business (FY13 operating cash flow of 7.7¢ per share), this could inspire hopes of another round of special dividends to be paid in future, particularly if the group is unable to find new businesses to invest in. Market Insight retains NSL as a constituent in its model Value portfolio. The counter is a deep value asset play with re-rating catalyst to come in the form of capital management.

DBS (technical)

DBS: Trading Central notes the downside breakout of a rising channel has already triggered a bearish reversal . Further downsides are more likely to occur to at least $15.2 (June 2013's low). Besides, the RSI favours further decline. Meanwhile the declining 20-day and 50-day SMAs should maintain selling pressure. As long as $16.4 is not surpassed, look for a return to $15.2 and $14.9 in extension


Memstar: ($0.131) Potential arbitrage opportunity; We highlight an arbitrage opportunity for Memstar, based on United Envirotech's (UENV) current price of $1.445. To recap, Memstar shareholders had approved in its recent EGM, to sell Memstar’s entire core operating assets to UENV in a deal valued at $293.4m. Post transaction, Memstar would effectively be left with $73.4m cash (2.8¢ per share) and 200.1m UENV shares (25% stake) as its key assets. The long stop date for the disposal will be on 28 Apr 2014. This means that Memstar’s fair value can be linked directly to UENV’s share price, with the calculations as follows: = [$73.4m cash + (200.1m UENV shares x $1.445 current share price)] / 2,661.41m Memstar shares With UENV trading at $1.445, this equates Memstar shares to $0.136, or 3.8% above its current price of $0.131.


OUE: A consortium consisting of OUE, Lippo Limited and Caesars Entertainment Corporation has been granted pre-approval by Korea's Ministry of Culture, Sports and Tourism to develop the first internationally branded integrated entertainment resort in South Korea. The KRW855b (S$1b) development consists hotel, retail and convention and residential properties with total gfa of 150,000 sm on a 4.3 hectares site, expected for completion before the 2018 Winter Olympics in South Korea. OUE will have a significant non-controlling interest in the landmark project, with its participation focused on the hotel component and convention centre. At $2.33, OUE trades at 0.74x P/B, pending a 2¢ FY13 DPS to go ex on 16 May 2014.


Vard: On its latest contract win announced last Friday, Citi reckons that not only will it improve capacity utilization at Vard's Vietnamese facility, the order is another demonstration of Vard's ability to successfully broaden both its customer and geographical mix (other new customers in recent months include Harkand Group and Carlotta Offshore). Vard's share price has rallied almost 20% since the start of the year on the back of its remarkable string of contract wins. Citi believes the robust order intake has raised investors' tolerance to the group's clouded earnings outlook in 2014, which is expected to remain hamstrung by operational headwinds in Brazil. Citi maintains its Buy rating with $1.02/shr TP, based on 8x average FY14-15E earnings.


JEP: NRA Capital has an update post group's 2H13 results, maintaining its Overweight rating and raise TP to $0.067 after rolling forward its 10x PER to FY15, underpinned by a decent 4% dividend yield. House believes that JEP's fundamentals remain strong in the commercial aerospace industry and that there is still room for growth as the group continuities to leverage on its growing recognition in the aerospace and O&G industries. The aerospace segment will remain the group’s main contributor for both revenue and profitability. The new 4-storey building in Loyang is currently under construction and is expected to be operational in 1Q15. It has added 15 new high-end CNC machines in the past two years, increasing capacity by 20%.


Manhattan - Latest news was last week where Following a trading query by SGX with regards to its unusual trading activity, Manhattan Resources disclosed that it is currently in preliminary discussions with certain parties on potential business opportunities, including possible investments in a magnesium mine, power plant and hospital. The group however cautioned that such discussions are only at a preliminary stage and there is no certainty or assurance that any definitive agreement or business opportunities will materialise. Separately, the group revealed that it is in talks to undertake an internal restructuring exercise for its Chinese subsidiary. In its recent FY13 results, Manhattan registered a net profit of $1.8m, reversing from a net loss of $12.1m in previous year, on higher revenue of $23.7m (+11%) led by higher coal carrying activities from a long term contract customer in the first three quarters of FY13. Bottomline was boosted by a 187% spike in other income to $6.4m, arising from write-back of allowances, fair value and disposal gains. Going forward, the group has guided that volatility in coal prices could potentially affect its barging activities in FY14, although the group will aim to focus on optimising operational efficiency and cost effectiveness. Manhattan currently trades at 2.4x P/B.

Singapore telco

Singapore telco: Following a marketing trip by Maybank KE to Malaysia last week, clients were still on board the Buy M1/ Starhub wagon, given the duo remain the leading candidates to pay higher dividends among Singapore telcos and stand to benefit the most from data monetisation, in particular M1. Clients also resonated with Maybank KE’s cautious view on Singtel. Maybank KE thinks M1 (Buy, TP $3.86) still has capacity to pay more special dividends as there is room for earnings surprises, on the back of accelerated adoption of tiered data subscription, and its high percentage of heavy data users that are likely to upgrade their plans as old ones expire. On StarHub (Buy, TP $4.06), Maybank KE cites its strong balance sheet provides capacity for more dividends. Maybank KE feels that for SingTel (Hold, TP $3.67), investors are better off buying into listed associates, such as Bharti, for a recovery in their home markets than buying indirectly through SingTel given the risk of potential corporate actions diminishing the rewards, e.g. the talk about the sale of Shin Corp stake by Temasek to SingTel. On structural changes in the industry, Maybank KE notes now entrenched trend of declining voice/SMS amid the rise of Over-The-Top apps like Whatsapp, LINE, WeChat, KakaoTalk and Skype. Longer term, telcos need to take advantage of changes in technology, such as Voice over LTE, to provide an alternative to OTT services, and reinvent themselves as a solution or content providers instead of just being connectivity pipe providers.

Vard Holdings

Vard Holdings: DBSV upgrade to Buy. Recall, last week, Vard announced contracts for three vessels, taking YTD contract wins to about NOK4.6bn for six vessels, or 42% of the house existing full-year order win forecast within the first three months of FY14, way ahead of expectations. Vard is likely to end 1Q-FY14 with an orderbook of around NOK21bn, its highest since 2008. The strong momentum in order wins YTD in FY14 signals the continuing strength in the subsea construction market, as well as a revival in the high-end OSV space. The house think it is time to look beyond any minor earnings hiccups in the next few quarters, where margin outlook is still cloudy owing to the few remaining deliveries its Brazil yard, especially given that higher margin shipbuilding contracts are now flowing in and boosting revenue and earnings visibility in FY15.


Hankore: (Next Insight) Reaching out further to insti clients, wherein its latest communication with the investment community last week, HanKore's management spoke at Bank of America Merrill Lynch ASEAN Stars Conference. Hankore met with fund managers from more than 10 institutions, such as Goldman Sachs Asset Management, Fullerton Fund Management (a unit of Temasek Holdings), Daiwa Asset Management, Lloyd George Management (a member of the BMO Financial Group), and Mitsubishi UFJ Trust.


DBS: On the SocGen Asian private bank acquisition (SGBPA), Deutsche guides a potential win-win situation for both banks. Deal size is immaterial (0.7% of DBS FY13 book), does not look expensive based on previous private banking transactions in Asia (figure below). The deal will bring total high net worth AUM by 23% and total wealth AUM by 15%. DBS too thinks this is a good deal given the right size and minimal overlap as SGPBA focuses on ultra-high net worth clients with a north Asia focus. Also, DBS’s current AUM return is more than 90bp, and it intends to improve SGPBA’s AUM (~60bp) through execution, better infrastructure and a better distribution network. DBS hopes for a double-digit AUM growth in the next few years.

Tiger Airways

Tiger Airways: Tiger adopted an asset-light regional alliance strategy to accelerate growth, improve asset utilisation and return to profitability; its latest alliance involves its exit from the Philippines market, in favour of an alliance with Cebu Pacific. Tigerair Mandala could be up for sale according to Reuters (03 March), although this has been denied by Tigerair and local partner Saratoga. Nonetheless, we believe that an exit from Mandala should help stem annual losses estimated at over $20m. Tigerair Singapore will take on two more aircraft upon the exit from the Philippine JV, which will add to the over-capacity issue in Singapore. On the back of larger associate losses and weaker fares, CS now expect Tigerair to slip into losses in 2014-15E and cut 2016E EPS by 85%. With these changes, CS lowers TP to $0.32 (from $0.47) and maintains UNDERPERFORM rating.

Jardine Matheson

Jardine Matheson: CLSA notes that near term concerns around Astra’s competitiveness remain, but Friday’s news of Jokowi’s nomination is likely to spur excitement around greater investment in infrastructure as well as policies favourable to the Indonesian Rupiah – a big positive for Jardines. However, House is still negative on Astra on continued macro concerns as commodity prices remain soft and competition levels remain high for the automobile segment. CLSA maintains BUY rating on Jardine Strategic (TP US$32.75) and Jardine Matheson (TP US$59.01).


Olam: According to market murmurs highlighted by BusinessTimes, Olam's share price surge prior to the privatisation offer last Friday may have been due to interest by other firms in acquiring the agri-commodities trader. Firms include Sime Darby and two Japanese trading companies that were interested for Olam's exposure to the African markets. Market observers do not expect a competing offer for Olam, given that the offer involves existing shareholders with a large stake. The news may spur further interests in the two other commodity players, both underpinned by separate positive drivers. Noble, on its potential joint venture or sale of its agriculture business, and Wilmar, supported by the strong CPO prices. Majority of the street recommends that investors accept the offer at $2.23, in view of the high premium.


ComfortDelGro: Key points from Tokyo NDR are 1) Moderate revenue growth at the group level. Key pressure point is staff cost, especially Singapore, where current labour shortage continues to pose a challenge. Overall, management sees 5-7% annual earnings growth for the group is achievable. 2) The impending fare increase will only stem bus ops losses in the near term. In the longer-term, a more sustainable operating model is required. Meanwhile, Downtown Line contributions are expected to accelerate over the next few years, driving overall rail profitability improvement. Note that without DTL’s startup cost this year, FY13 rail operating profit margin would have been 14-15% versus 3% reported. 3) China Taxi business should continue to expand on economic growth and urbanization. Competition in china Taxi space should be benign on regulated fares. CDG continues to hold pole position in the 10 cities it operates taxis. In Australia, strategic focus lies in the prospect to privatize the balance of 70% of the bus market. CDG I swell positioned to capture structural growth opportunities when this happens. 4) On M&A, CDG looks at expected returns and access to majority control. The latter implies suitable targets in many ASEAN markets are limited. The latter criterion implies suitable targets in many ASEAN markets are limited. CDG isn’t very optimistic on US market either, citing lack of success of other overseas operators who have ventured into the latter. In any case, funding future acquisitions shouldn’t be an issue given CDG ended FY13 in a slight net cash position

Keppel Corp

Keppel Corp: Keppel secured $140m in contracts. Among the deals were the fabricating of a FPSO turret mooring system, and three ice-class offshore services vessels for its clients, including Bumi Armada Offshore and SOFEC. The contracts bring Keppel O&M's year-to-date order book past $1.78b in 1Q14, putting the group on track to achieve analysts' mean estimates of between $5b and $6b in new orders secured within this year. Last year, the company secured $7b in new contracts. Current orderbook stands at ~$14.5-15b, which should stretch its sales visibility over the next 3 years.

SG Market (18 Mar 14)

US shares ended strongly Monday, with the S&P500 gaining 1% to 1,859, as investors shrugged off concerns on sanctions imposed by the US and EU against Russia, which sought to deter Russia from annexing Crimea from Ukraine. Instead, investors focused on better-than-expected US economic data, including industrial production which came in ahead of estimates, while ignoring weak manufacturing and homebuilder confidence data. Amongst key stocks in focus, Yahoo jumped 4.0% after its 24% owned Alibaba Group filed for an IPO in the US, while Hertz Global added 4.8% following reports that the company will spin off its equipment rentals unit. Regional markets are up this morning, with the Nikkei (+1.6%), ASX (+0.7% ) and Kospi (+0.6%) as at 8.20am. Expect a positive open for the STI today. The index may test the resistance levels at 3,101 (20 day MA) and 3,147 (200 day MA) in extension. Still expect volatility to remain, as the FOMC meetings take place over 18-19 Mar, and investors watch for new guidance from the Fed. Stocks to watch: *Keppel Corp: Secured contracts worth a total of $140m to fabricate an external turret mooring system for an FPSO vessel for SOFEC (expected completion by 1Q15), as well as to build two ice-class supply vessels and an ice-class multi-purpose duty-rescue vessel for Bumi Armada (expected delivery by 2015). *St James: Proposed a series of transactions that will effectively result in a reverse takeover by property group Perennial Real Estate Holdings, and a spin-off of the original leisure and entertainment business into a separate listing. Will also make a voluntary conditional offer to acquire Perennial China Retail Trust (PCRT) at $0.70, in exchange for 0.5242 new St James shares (post a proposed 50-into-1 consolidation). *DBS: To acquire Societe Generale’s Asian private banking business for US$220m, in a move that will boost DBS’ high net worth AUM by 23% to $85b. *SIA: Feb operating stats. Pax traffic dipped 2.1% y/y, even as the airline cut capacity by 0.4%. Consequently, pax load factor fell 1.4 ppt to 76.8%, with weakness from all route regions due to a combination of the Lunar New Year shifting from Feb to Jan this year, and softer demand to Bangkok. Cargo traffic and capacity was 11.1% and 4.0% lower y/y, respectively. Consequently, cargo load factor fell 4.6 ppt to 58.1%. *Yongnam: Secured two subcontracts worth a combined $54.3m to provide more than 10,000 tonnes of structural steelworks for projects such as Changi International Airport Terminal 4 and redevelopment of UIC Building along Shenton Way. The contracts are expected to have a favorable impact on the group’s FY14 financials. *Int’l Healthway Corp (IHC): To buy two more freehold properties in Australia for a combined A$63.8m - an eight-storey commercial building at St Kilda Road, Melbourne (A$35.8m) and a four-storey medical-use building at Geelong (A$28m). *Hankore: Recently met with fund managers from more than 10 institutions, including Goldman Sachs Asset Management, Fullerton Fund Management (a unit of Temasek), Daiwa Asset Management, Lloyd George Management (a member of the BMO Financial Group), and Mitsubishi UFJ Trust at the Bank of America Merrill Lynch ASEAN Stars Conference. * EuroSports / Cambridge Industrial Trust: Eurosports has completed the sale and leaseback arrangement relating to its premises at 30 Teban Gardens Crescent for consideration of $41m, paving the way for Eurosports to declare a one-time special dividend of between $6m and $8m (2.26¢-3.02¢ a share) for FYMar15. For Cambridge, pro forma FY13 DPU is expected to rise from 4.98¢ to 5.22¢. *China New Town Dev: Auditor issued an emphasis of matter highlighting that the group’s ability to continue as a going concern depends on the subscription of its new shares and its ability to generate sufficient cash to pay off liabilities when they fall due. *Transcu: Auditor issued an emphasis of matter as the group’s current liabilities surpassed current assets.