SembMarine: Citi maintains Buy with $4.76 TP. House has takeaways from Meetings with Mgt. Note that Mgt was upbeat and believes the strength of the cycle remains intact despite concerns over slowing economic growth.
SMM is particularly positive on the deep-water segment and opined that recent rebound in day rates has improved prospects significantly. Possibility of a stronger-than-expected orderbook scenario in 2012 is not ruled out, underpinned by fixed platforms, FPSOs and semi-subs.
Continue to like SMM for its strong execution and growing footprint in the value chain (rigs/FPSOs/fixed platform). SMM is currently trading below mid-cycle valuations, believe growing demand for production equipment and the on-going rig replacement cycle will \continue to support sector fundamentals.
Thursday, December 1, 2011
Wilmar
Wilmar: Transfers 20% of 2 flour milling co Yihai Kerry Quanzhou and Yihai Kerry Anyang to FFM Berhad for US$3.8m in cash as well as $1.2m equity injection and $7.2m in shareholder loans to the 2 companies. PP Group Berhad is the holding co of FFM Berhad and a controlling shareholder of Wilmar.
Keppel T&T and Keppel Corp
Keppel T&T and Keppel Corp: Keppel T&T's subsidiaries have sold $34.3m of group relief qualified tax deductions to Keppel Corp and K-REIT for $5.8m (17% of $34.3m, the prevailing corp tax rate). Generally beneficial for Keppel T&T as it allows them to make use of tax deductions earlier. Currently, Kep T&T trades at approx P/E 7.6x.
Sim Lian
Sim Lian: Co has obtained the top bid out of a total of 10 bids, paying $805.3 psf ppr for a 99 yr leasehold commercial and residential site at Bt Panjang. The site will be integrated with 3 transportation nodes (MRT/LRT/bus interchange) Site attracted 10 bids in total. URA has specified that a min of 35% and a max of 40% of the 612.1k sf max gfa for the site has to be set aside for commercial use. The bid is on the high side as property consultants had expected top bids to range from $600-700 psf. Analysts expect a target ASP of $1300psf for the residential component. Bedok Residences was recently launched at ASP of $1350 psf. Sim Lian trades at a P/B of 0.7x
GLP
GLP: Announced that is has priced its $500m perpetual bonds at 5.5%, the lower end of 5.5-5.7% guidance due to strong demand (order book was > $780m). The allocation to private banks was 78%, followed by fund managers and banks which got 10% each. SG investors accounted for 92% of allocation. The funds will be used for general corp funding purposes, and serves as pre-emptive move to raise money before the financial mkts deteriorate further.
We note that mkts are generally bullish on stock with 9 Buy Calls and 1 Sell with mean TP of $2.32.
We note that mkts are generally bullish on stock with 9 Buy Calls and 1 Sell with mean TP of $2.32.
Spore market
Spore market: likely to see a strong opening, following the rally in US stocks overnight. Positive drivers come from the coordinated action by the global central banks to boost credit supply, as well as China’s surprise cut in RRR.
As at 8.13 am, the KOSPI is up 3.4%, and Nikkei is up 2.4%.
Expect main beneficiaries to be the banks, property firms with exposure to China (GLP, CapitaLand, Keppel Land), commodity plays (Noble, Olam, plantations), transport (NOL, SIA).
Corporate news flow is light.
GLP prices its $500m perpetual bonds at 5.5%, at the lower end of 5.5 – 5.7% guidance due to strong demand.
On broker calls,
F&N: Deutsche, KE reiterate Buy
NOL: Deutsche raises container shipping sector to Overweight. Upgrades stock to Hold from buy.
On the technical front, the indicators are starting to tilt up, with Stochastics likely to reverse out of oversold territory, which bodes well for a short term bounce. The 20 day MA at 2763 seems like a more reasonable resistance level than the 50day MA, in light of the favorable news backdrop.
See support at ~2650, which if broken could signal the continuation of the longer term downtrend.
As at 8.13 am, the KOSPI is up 3.4%, and Nikkei is up 2.4%.
Expect main beneficiaries to be the banks, property firms with exposure to China (GLP, CapitaLand, Keppel Land), commodity plays (Noble, Olam, plantations), transport (NOL, SIA).
Corporate news flow is light.
GLP prices its $500m perpetual bonds at 5.5%, at the lower end of 5.5 – 5.7% guidance due to strong demand.
On broker calls,
F&N: Deutsche, KE reiterate Buy
NOL: Deutsche raises container shipping sector to Overweight. Upgrades stock to Hold from buy.
On the technical front, the indicators are starting to tilt up, with Stochastics likely to reverse out of oversold territory, which bodes well for a short term bounce. The 20 day MA at 2763 seems like a more reasonable resistance level than the 50day MA, in light of the favorable news backdrop.
See support at ~2650, which if broken could signal the continuation of the longer term downtrend.
US Market
US Market: US stocks surged Wed, with the Dow chalking up their best day in more than 2 ½ yrs, as the Fed and five other central banks moved to help banks hit by Europe’s debt crisis. The Blue Chip DJIA shot up 490pts to 12,046 while the broader based S&P500 jumped 52pts to 1,247 and the tech-based Nasdaq soared 105pts to end at 2,620. Vol was very high with 10b shares traded, while advancers thrashed decliners by about 7 to 1 on the NYSE.
US stocks joined a global rally, after the central banks of US, euro, Canada, UK, Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements and agreed to make other currencies available as needed, while China said it would reduce the reserve requirement ratio for banks by 0.5 ppt from Dec 5, marking its first cut since 2008. In the US, positive economic data further contributed to the rally, as Co’s boosted payrolls in Nov by the most this yr and US businesses expanded at the fastest pace in 7 mths.
Financials were the outperformer, rallying 6.6% as a grp, with Goldman Sachs, Morgan Stanley, Citigroup, Jefferies and JP Morgan spiking more than 7%. BofA which hit its 52-wk low onTuesday, also closed up 7.3%. Commodities and materials also outperformed with the S&P materials sector index jumping 5.9%, as oil gained 4.4% to close at $103.50, with Chevron and Exxon Mobile all up at least 4.6%. Caterpillar, the world’s largest construction and mining- equipment maker, rose 8.1%, while US Steel surged 15%. A measure of homebuilders in S&P increased 6.5%, led by PulteGroup who jumped 8% to pace gains in homebuilders.
Among other stocks in focus, Cisco Systems gained 5.4% after Deutsche recommended buying the world’s biggest maker of networking equipment, while Netflix slumped 4.5% as the video- streaming and DVD subscription service was cut to U/p from neutral at Wedbush Securities, citing rising content costs, continued customer losses and concerns about the Co’s growth.
Traders note that yesterday’s global coordinated move was the first since Nov08 and the degree of coordination sends a message to the mkts that global leaders are going to do whatever they need to do to instill confidence in the markets. Add that an indicator called McClellan Oscillator, which measures the moving average of net advancing shares in a market, has moved into a low phase from where a ‘lasting bounce’ may start and continue for several days, which simply means the market is back in tactical bull mode. Meanwhile UBS recommended investors should buy US stocks as an indicator of momentum and breadth, as the S&P 500 has reached oversold levels.
US stocks joined a global rally, after the central banks of US, euro, Canada, UK, Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements and agreed to make other currencies available as needed, while China said it would reduce the reserve requirement ratio for banks by 0.5 ppt from Dec 5, marking its first cut since 2008. In the US, positive economic data further contributed to the rally, as Co’s boosted payrolls in Nov by the most this yr and US businesses expanded at the fastest pace in 7 mths.
Financials were the outperformer, rallying 6.6% as a grp, with Goldman Sachs, Morgan Stanley, Citigroup, Jefferies and JP Morgan spiking more than 7%. BofA which hit its 52-wk low onTuesday, also closed up 7.3%. Commodities and materials also outperformed with the S&P materials sector index jumping 5.9%, as oil gained 4.4% to close at $103.50, with Chevron and Exxon Mobile all up at least 4.6%. Caterpillar, the world’s largest construction and mining- equipment maker, rose 8.1%, while US Steel surged 15%. A measure of homebuilders in S&P increased 6.5%, led by PulteGroup who jumped 8% to pace gains in homebuilders.
Among other stocks in focus, Cisco Systems gained 5.4% after Deutsche recommended buying the world’s biggest maker of networking equipment, while Netflix slumped 4.5% as the video- streaming and DVD subscription service was cut to U/p from neutral at Wedbush Securities, citing rising content costs, continued customer losses and concerns about the Co’s growth.
Traders note that yesterday’s global coordinated move was the first since Nov08 and the degree of coordination sends a message to the mkts that global leaders are going to do whatever they need to do to instill confidence in the markets. Add that an indicator called McClellan Oscillator, which measures the moving average of net advancing shares in a market, has moved into a low phase from where a ‘lasting bounce’ may start and continue for several days, which simply means the market is back in tactical bull mode. Meanwhile UBS recommended investors should buy US stocks as an indicator of momentum and breadth, as the S&P 500 has reached oversold levels.
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