Spore Market (22 / 5 / 12)

Spore Market: SG shares likely to open higher after Wall Street rebounds on hopes of some stability being restored to the eurozone, with the mkt more confident that Greece will try and tow the line and stay in the EU, although things can change quite drastically. Investors are now awaiting the June 17 Greece election for cues on the eurozone's economic and political future. Expects the STI to trade in a 2750-2800 range in the near-term. Stocks in view include GLP after it announced a US$169m project in Japan, and commodities plays such as Golden Agri-Resources and Wilmar. JEL could also be in focus after new wires reported that Popiah King Sam Goi look set to become a director in the co.

Cityspring

Cityspring: No reports available. Co announced results on the 3 May with distributions of 0.82c per unit with current annualized yield of 8.75%. This was lower than the 1.05c for prev year due to the earlier rights issue. Basslink is still having problems and currently has a dispute with its its service partner Hydro Tasmania over a risk sharing agreement, and both parties are in talks. Co currently has an NAV of 27.9c per unit, down from 35.4 a year ago and trades at current P/B of 1.3x.

Capitaland (technical)

Capitaland, While RSI and Stochastics does appear OverSold, ADX momentum does suggest that there is still some room for the downtrend to continue before any reversal, counter is currently testing the Fibonacci Support of $2.50, following which, next support is seen at $2.40 (Resistance turned support)

STX OSV

STX OSV: Goldman says STX Group’s 50.75% stake sale reportedly imminent, with the Maeil Business Newspaper (dated 18 May) saying that a preliminary agreement would be signed during the wk of May 21, and that the deal value would be based on May 18’s closing price ($1.61 /sh). Recall Bloomberg reported that Italy’s state-owned cruise shipbuilder Fincantieri and private equity firm The Carlyle Group were the likely buyers. Assuming that the deal was done at $1.61 per share, it would value the 50.75% STX OSV stake at $964m, and imply 2012E/13E P/E of 8.0x / 7.9x, P/B of 2.3x / 2.0x and EV/EBITDA of 4.8x / 4.5x. This compares with STX OSV’s historical average (since listing Nov ’10) for 5.3x P/E, 1.8x P/B and 3.6x EV/EBITDA. Goldman notes, according to SGX rules, any buyer would be required to immediately extend a general offer for the remaining shares of STX OSV and at a per share value not less than the stake sale price.

Upcoming IPO: Hospitality REIT

Upcoming IPO: Newswires says Ascendas Group is seeking to list its proposed US$500m hospitality REIT in Spore in early-to-mid June. The group--which is owned by JTC Corp --has received eligibility to list the REIT from the SGX and is currently meeting cornerstone investors. However, the timing of the listing is dependent on market conditions. The listing would incorporate hospitality assets such as hotels in various countries, incl Australia and Japan, and the assets could potentially be worth up to US$1b. HSBC, Nomura and StanChart are managing the deal.

F&N

F&N: is +0.8% at $6.46, pausing its recent slide. The stock has bounced off nicely from the ~$6.40 support, with the fast Stochastic hinting of a positive crossover of the slow Stochastic. Traders looking to “play the bounce”, may see resistance at $6.60, with support at $6.40. Strict cut loss if stock closes below support. The medium term technical outlook isn’t very clear now that the positive trend channel (Aug ’11 – Apr ’12) is broken. RSI is still some distance from being oversold, hence it is hard to be sure if price has hit a bottom. A dip below the recent $6.375 low could signal further price weakness toward the 200day MA ($6.28).

Mewah

Mewah: interview with Reuters. Hurt by falling refining margins in Msia and a general weakness in palm oil prices amid plentiful supply in Msia and Indonesia, Mewah has been forced to reassess its growth strategy and look for new sources of revenue. Mewah will focus on lower-cost Indonesia to grow its palm oil business, while simultaneously expanding its consumer pack segment to include dairy products and rice. The consumer pack business currently incl edible oils, fats, bakery and confectionary oils, and fats in packaged form under the co's own and third party brands. Mewah's agri-business group traded about 45k mt of rice in 1Q12. This was the first foray into this segment and the co is encouraged by the initial response. Mewah is also investing ~US$50m in dairy facilities in Msia. Mewah said it is also on track to complete its Indonesian palm oil refinery by the end 2013. Weaker demand for palm oil in key export markets and the pressure on prices amid bumper production in Indonesia and Msia last year put Mewah's operating margins under pressure in 1Q12, slipping to US$34.2/ton, down from $42.6/ton yoy. Also, hurting Mewah's performance was Indonesia's new export duty structure. To boost domestic refining, Indonesia has changed its export duty structure to have lower duties on refined palm oil products than on crude palm oil. Spot refining margins in Malaysia, where the group presently has refineries, are almost non-existent while margins in Indonesia are ~US$80/ton higher. The stock trades at 10.8x P/E. The majority of Street still rates the stock negatively, with 6 Sells, 3 Holds and 1 Buy. Street TP ranges btwn $0.37 – 0.55.