Keppel Corp: CS thinks property will unlikely be a boost to Keppel Corp, as Keppel Land sales volumes should remain lacklustre in the near term. Vietnam (8% of GAV is a bright spot), while China residential (40% of GAV) to weaken in 2016e due to oversupply.
The house also thinks there are limited capital recycling opportunities for its investment portfolio, as major investments in China and Indonesia are expected to be completed 2017 and beyond. This will likely cap upside to revaluations and divestmetns, which have been a boost to group profit in recent years.
The house reduced SOTP based TP to $7.50 (from $8.20), valuing KepLand at 30% discount to RNAV. The house is Neutral on Keppel Corp
Wednesday, December 2, 2015
SGX
SGX: Launched 11 stock indices tracking five themes, healthcare, real estate, minerals, O&G, and O&M. These cover $200b of stocks listed on SGX.
Two of the indices tracking real estate companies and REITs are tradeable. As such, ETF providers could create related ETFs.
To that end, SGX has been targeting the growing ETF market in Asia, and expresses that its indices will provide theme-benchmarks to encourage the creation of ETFs related to Singapore-listed stocks.
Separately, Deloitte suggests Singapore’s IPO market could benefit from China’s One Belt One Road initiative.
Chinese SOEs have been encouraged to expand their scope to SE Asian countries, such as Indonesia to ease overcapacity in China. Deloitte expresses that Singapore is a natural choice for these companies to raise funds, due to its relative establishment as a financial market.
SGX is currently trading at 22.2x FY6/16 consensus P/E
The street currently has 9 Buys, 7 Holds and 3 Sells on SGX with a mean TP of $8.17
Two of the indices tracking real estate companies and REITs are tradeable. As such, ETF providers could create related ETFs.
To that end, SGX has been targeting the growing ETF market in Asia, and expresses that its indices will provide theme-benchmarks to encourage the creation of ETFs related to Singapore-listed stocks.
Separately, Deloitte suggests Singapore’s IPO market could benefit from China’s One Belt One Road initiative.
Chinese SOEs have been encouraged to expand their scope to SE Asian countries, such as Indonesia to ease overcapacity in China. Deloitte expresses that Singapore is a natural choice for these companies to raise funds, due to its relative establishment as a financial market.
SGX is currently trading at 22.2x FY6/16 consensus P/E
The street currently has 9 Buys, 7 Holds and 3 Sells on SGX with a mean TP of $8.17
SG Market (02 Dec 15)
Singapore shares may inch higher at the open as Wall Street kicked off Dec with a rousing start but most local investors are expected to stay side-lined in anticipation of a slew of economic releases and central bank speeches this week.
Regional bourses are trading lower this morning in Tokyo (-0.2%), Seoul (-0.4%) and Sydney (-0.4%).
From a chart perspective, technical indicators are oversold with topside resistance for the STI seen at 2,940, with support at 2,850.
Stocks to watch:
*Economy: S’pore Commercial Credit Bureau's (SCCB) latest quarterly Business Optimism Index has fallen to a historical low of -2.93ppt for 1Q16 versus +0.14ppt for 4Q15, with S’pore firms becoming more pessimistic due to falling global demand. SCCB expect optimism levels to remain muted for months ahead.
*NOL: Ex deputy CEO Lim How Teck opines that NOL should carve out and sell its terminals in US and Asia to a 3rd party, instead of selling its business as "one whole package", as such a move will enable Temasek Holdings to fetch a "premium" in its planned sale. NOL’s current NAV/share stands at $1.38, although it fails to take into consideration its terminals' MTM value. Temasek is in talks with France's CMA CGM, and both parties have until 7 Dec to agree on a deal. CMA CGM is reported to be in talks with lenders to finance the potential takeover bid.
*Sembcorp Marine: Issued profit warning for 4Q and FY15 amid a challenging operating environment and customers deferring or seeking to defer their rig orders.
*SGX: Launched 11 stock indices tracking healthcare, real estate, minerals, O&G, O&M, covering $200b of stocks listed on SGX. The indices will be reviewed every Mar and Sept. Two indices tracking real estate companies and REITS are considered tradeable, which could see ETFs created.
*Asian Micro Holdings: Renewed its five-year contract, ending 31 Dec, with Rolls-Royce Singapore for an additional 15 months to 31 Mar ‘17, for the supply and transportation of compressed natural gas (CNG), and maintenance of Rolls-Royce CNG's yard. The contract has an option to extend for another year and total order amount of CNG is estimated to be $3m, excluding the option.
*Memstar: Regarding its proposed RTO of Longmen Group, target purchase price has been reduced to US$200m from US$323m, following IFA report and completion of first fundraising tranche and the issuance of a convertible loan. Consequently, post-completion of RTO, Longmen will now own 53.8% of Memstar, from 71.2%.
*Allied Tech: Entered into a non-binding MOU to acquire Maxz Universal Development. Maxz Universal holds a 93.9% stake in Treasure Resort which in turn operates and manages resorts such as Mövenpick Heritage Hotel Sentosa.
*EMS Energy: 20%-owned associate, Oilfield Services and Supplies (OSS) has commenced its pre-admission process for a planned IPO on the Catalist board of the SGX.
*Intraco: Won a final award of $3.6m in its arbitration proceedings against Timor Global in relation to a failed JV agreement.
*Weiye: Undertaking a share consolidation exercise on the basis of 1 new consolidated share for every 10 existing shares.
Regional bourses are trading lower this morning in Tokyo (-0.2%), Seoul (-0.4%) and Sydney (-0.4%).
From a chart perspective, technical indicators are oversold with topside resistance for the STI seen at 2,940, with support at 2,850.
Stocks to watch:
*Economy: S’pore Commercial Credit Bureau's (SCCB) latest quarterly Business Optimism Index has fallen to a historical low of -2.93ppt for 1Q16 versus +0.14ppt for 4Q15, with S’pore firms becoming more pessimistic due to falling global demand. SCCB expect optimism levels to remain muted for months ahead.
*NOL: Ex deputy CEO Lim How Teck opines that NOL should carve out and sell its terminals in US and Asia to a 3rd party, instead of selling its business as "one whole package", as such a move will enable Temasek Holdings to fetch a "premium" in its planned sale. NOL’s current NAV/share stands at $1.38, although it fails to take into consideration its terminals' MTM value. Temasek is in talks with France's CMA CGM, and both parties have until 7 Dec to agree on a deal. CMA CGM is reported to be in talks with lenders to finance the potential takeover bid.
*Sembcorp Marine: Issued profit warning for 4Q and FY15 amid a challenging operating environment and customers deferring or seeking to defer their rig orders.
*SGX: Launched 11 stock indices tracking healthcare, real estate, minerals, O&G, O&M, covering $200b of stocks listed on SGX. The indices will be reviewed every Mar and Sept. Two indices tracking real estate companies and REITS are considered tradeable, which could see ETFs created.
*Asian Micro Holdings: Renewed its five-year contract, ending 31 Dec, with Rolls-Royce Singapore for an additional 15 months to 31 Mar ‘17, for the supply and transportation of compressed natural gas (CNG), and maintenance of Rolls-Royce CNG's yard. The contract has an option to extend for another year and total order amount of CNG is estimated to be $3m, excluding the option.
*Memstar: Regarding its proposed RTO of Longmen Group, target purchase price has been reduced to US$200m from US$323m, following IFA report and completion of first fundraising tranche and the issuance of a convertible loan. Consequently, post-completion of RTO, Longmen will now own 53.8% of Memstar, from 71.2%.
*Allied Tech: Entered into a non-binding MOU to acquire Maxz Universal Development. Maxz Universal holds a 93.9% stake in Treasure Resort which in turn operates and manages resorts such as Mövenpick Heritage Hotel Sentosa.
*EMS Energy: 20%-owned associate, Oilfield Services and Supplies (OSS) has commenced its pre-admission process for a planned IPO on the Catalist board of the SGX.
*Intraco: Won a final award of $3.6m in its arbitration proceedings against Timor Global in relation to a failed JV agreement.
*Weiye: Undertaking a share consolidation exercise on the basis of 1 new consolidated share for every 10 existing shares.
Tuesday, December 1, 2015
IPC Corp
(S$1.75) Monetizing its Japan hotel assets, the group announced that it was disposing seven hotels in Japan to GK Nishi Nihon and GK Shinsaibashi Jisho for ¥14.94b ($172.2m).
Based on the group’s FY14 accounts, the aggregate book value of the seven hotels is ¥10.36b ($119.4m), and the proposed disposal is expected to result in a net gain of ¥2.7b ($31.1m) or $0.365 per share.
This will enable IPC to unlock the value of the seven hotels acquired and held through the last few years.
Following completion, the board intends to distribute the net proceeds from the proposed disposal to shareholders by way of a capital reduction exercise.
IPC is currently trading at a 38.5% discount to its post sale NAV of $2.845 per share.
Based on the group’s FY14 accounts, the aggregate book value of the seven hotels is ¥10.36b ($119.4m), and the proposed disposal is expected to result in a net gain of ¥2.7b ($31.1m) or $0.365 per share.
This will enable IPC to unlock the value of the seven hotels acquired and held through the last few years.
Following completion, the board intends to distribute the net proceeds from the proposed disposal to shareholders by way of a capital reduction exercise.
IPC is currently trading at a 38.5% discount to its post sale NAV of $2.845 per share.
Midas
Midas is acquiring 100% stake in Huicheng Capital, a Hong Kong-based aluminium product specialist owned by its Chairman and six other individuals, for up to $264m.
Huicheng capital is the owner of Dalian Huicheng, based in China and its main products are aluminium alloy stretched plates and hot-rolled aluminium alloy plates and coils.
The group believes that the acquisition can help diversify its range of products and services, which currently only offers aluminium alloy extrusion and cold-rolled plates and sheets product offerings.
It is also expected to widen customer base from just rail transportation, to include aviation, aerospace, marine, automotive and petrochemical industries, thereby presenting cross-selling opportunities to the group.
Moreover, the deal would be a vertical integration for Midas as it can now source for raw materials such as hot-rolled aluminium alloy plates and coils for its cold-rolling plant from Dalian Huicheng.
The potential acquisition price of $264m can be divided into $166.3m in initial consideration, and up to $97.7m in earn-out consideration. An independent valuation suggests that Huicheng Capital is worth Rmb 1.27b ($279.8m) as at 31 Aug 2015.
Midas plans to finance the acquisition via an issuance of 733.3m new shares at $0.36 per share, representing 60.2% of its current share capital.
On financial impact, if assuming the acquisition was transacted at 31 Dec 2014, EPS will be diluted to 3.61 Fen from 4.63 Fen, and NTA per share will decline to Rmb1.87 from Rmb2.46.
Midas is currently trading at 29.8x forward P/E. The street has 1 Buy and 2 Hold ratings with a consensus TP of $0.30 on the counter.
Huicheng capital is the owner of Dalian Huicheng, based in China and its main products are aluminium alloy stretched plates and hot-rolled aluminium alloy plates and coils.
The group believes that the acquisition can help diversify its range of products and services, which currently only offers aluminium alloy extrusion and cold-rolled plates and sheets product offerings.
It is also expected to widen customer base from just rail transportation, to include aviation, aerospace, marine, automotive and petrochemical industries, thereby presenting cross-selling opportunities to the group.
Moreover, the deal would be a vertical integration for Midas as it can now source for raw materials such as hot-rolled aluminium alloy plates and coils for its cold-rolling plant from Dalian Huicheng.
The potential acquisition price of $264m can be divided into $166.3m in initial consideration, and up to $97.7m in earn-out consideration. An independent valuation suggests that Huicheng Capital is worth Rmb 1.27b ($279.8m) as at 31 Aug 2015.
Midas plans to finance the acquisition via an issuance of 733.3m new shares at $0.36 per share, representing 60.2% of its current share capital.
On financial impact, if assuming the acquisition was transacted at 31 Dec 2014, EPS will be diluted to 3.61 Fen from 4.63 Fen, and NTA per share will decline to Rmb1.87 from Rmb2.46.
Midas is currently trading at 29.8x forward P/E. The street has 1 Buy and 2 Hold ratings with a consensus TP of $0.30 on the counter.
BreadTalk
BreadTalk: Launched its 5th gen bakery outlet concept in VivoCity on 20 Nov 2015. It includes an integrated IT system and 50 new items.
Apart from advertising its new items and menu, the screens display upcoming bakery items set to hit the shelves in the next 10 minutes. Customers can sign up for digital alerts (email/mobile) which will notify them when their selected items are fresh out of the oven.
Daiwa believes this will potentially increase customer interaction and drive sales. Also, the new IT integrated system will also help BreadTalk better manage raw material costs and time its product release according to demand.
Daiwa maintains its Outperform rating and TP of $1.29.
Apart from advertising its new items and menu, the screens display upcoming bakery items set to hit the shelves in the next 10 minutes. Customers can sign up for digital alerts (email/mobile) which will notify them when their selected items are fresh out of the oven.
Daiwa believes this will potentially increase customer interaction and drive sales. Also, the new IT integrated system will also help BreadTalk better manage raw material costs and time its product release according to demand.
Daiwa maintains its Outperform rating and TP of $1.29.
SG Market (01 Dec 15)
Singapore shares could open higher, taking cue from Asian markets which are trading higher this morning, although volume could remain light with some investors expected to remain side-lined in anticipation of a slew of economic releases and central bank speeches this week.
Key data release today includes China’s official PMI, with economists expecting the number to stay at 49.8 in Nov.
Regional bourses are trading higher this morning in Tokyo (+0.7%), Seoul (+1.0%) and Sydney (+1.6%).
From a chart perspective, topside resistance for the STI is seen at 2,940, with support at 2,850.
Stocks to watch:
*O&M: Private owned Pacific Richfield Marine denies reports that its vessels are being offered for distressed sales, adding that its oustanding bank debt is ~US$100m, and not ~US$400m as reported, although the group confirmed that it was selling some of its vessels (as much as 1/2 its 40 offshore support fleet) to pare down debt and expenditure. Exposed banks include DNB, DBS, OCBC and UOB.
*Midas: Acquiring 100% stake in Huicheng Capital, an aluminium product specialist owned by its Chairman and six other individuals, for up to $264m ($166.3m initial consideration, $97.7m earn-out consideration). The acquisition will be financed via issuance of 733.3m new shares at $0.36 per share, representing 60.2% of current share capital. Assuming the acquisition was carried out at 31 Dec ’14, EPS will drop to 3.61 Fen from 4.63 Fen and NTA per share will decline to Rmb1.87 from Rmb2.46.
*Marco Polo Marine: Has taken its dispute with Sembcorp Marine (SMM) to the mediation stage, although should SMM refuse to mediate, Marco Polo (MPM) will proceed to commence arbitration against SMM.
*Yangzijiang: Acquired a 40% interest in China-based Zhuhai Lead Power Financial Leasing for Rmb40m. The transaction is not expected to have any significant impact on EPS and NTA per share for FY15.
*Ho Bee Land: Acquiring Apollo House and Lunar House in London for £99m, comprising 441,797 sf of office accommodation. Management expects the current rent to be highly reversionary.
*Sunvic Chemical: Reprimanded by SGX for failing to make immediate announcements of and seek shareholders’ approval for transactions involving its current and former chief executives.
*First Ship Lease Trust: Took delivery of a new tanker on 18 Nov ’15, which is operating in the spot market. The vessel is expected to yield 14.3% annually based on a time charter equivalent of US$16.5k/day.
*Rickmers Maritime: Satisfied conditions of a loan-restructuring agreement. The group is now no longer required to negotiate for an extension of the value-to-loan covenant waiver which was due to expire on 31 Dec ‘15.
*iX Biopharma: Granted a patent in Indonesia for its WaferiX drug delivery technology. The patent will expire on 26 Oct ‘30.
*Neo Group: Terminated its proposed acquisition of AMAX Foods as certain conditions could not be agreed on.
*MDR: Terminated its proposed acquisition of Shenzhen Quanli Leather because the company is not likely to achieve the agreed minimum net profit by 31 Dec ‘15.
*Roxy Pacific: Will not proceed with the acquisition of a land parcel in Malaysia due to changes in market conditions.
Key data release today includes China’s official PMI, with economists expecting the number to stay at 49.8 in Nov.
Regional bourses are trading higher this morning in Tokyo (+0.7%), Seoul (+1.0%) and Sydney (+1.6%).
From a chart perspective, topside resistance for the STI is seen at 2,940, with support at 2,850.
Stocks to watch:
*O&M: Private owned Pacific Richfield Marine denies reports that its vessels are being offered for distressed sales, adding that its oustanding bank debt is ~US$100m, and not ~US$400m as reported, although the group confirmed that it was selling some of its vessels (as much as 1/2 its 40 offshore support fleet) to pare down debt and expenditure. Exposed banks include DNB, DBS, OCBC and UOB.
*Midas: Acquiring 100% stake in Huicheng Capital, an aluminium product specialist owned by its Chairman and six other individuals, for up to $264m ($166.3m initial consideration, $97.7m earn-out consideration). The acquisition will be financed via issuance of 733.3m new shares at $0.36 per share, representing 60.2% of current share capital. Assuming the acquisition was carried out at 31 Dec ’14, EPS will drop to 3.61 Fen from 4.63 Fen and NTA per share will decline to Rmb1.87 from Rmb2.46.
*Marco Polo Marine: Has taken its dispute with Sembcorp Marine (SMM) to the mediation stage, although should SMM refuse to mediate, Marco Polo (MPM) will proceed to commence arbitration against SMM.
*Yangzijiang: Acquired a 40% interest in China-based Zhuhai Lead Power Financial Leasing for Rmb40m. The transaction is not expected to have any significant impact on EPS and NTA per share for FY15.
*Ho Bee Land: Acquiring Apollo House and Lunar House in London for £99m, comprising 441,797 sf of office accommodation. Management expects the current rent to be highly reversionary.
*Sunvic Chemical: Reprimanded by SGX for failing to make immediate announcements of and seek shareholders’ approval for transactions involving its current and former chief executives.
*First Ship Lease Trust: Took delivery of a new tanker on 18 Nov ’15, which is operating in the spot market. The vessel is expected to yield 14.3% annually based on a time charter equivalent of US$16.5k/day.
*Rickmers Maritime: Satisfied conditions of a loan-restructuring agreement. The group is now no longer required to negotiate for an extension of the value-to-loan covenant waiver which was due to expire on 31 Dec ‘15.
*iX Biopharma: Granted a patent in Indonesia for its WaferiX drug delivery technology. The patent will expire on 26 Oct ‘30.
*Neo Group: Terminated its proposed acquisition of AMAX Foods as certain conditions could not be agreed on.
*MDR: Terminated its proposed acquisition of Shenzhen Quanli Leather because the company is not likely to achieve the agreed minimum net profit by 31 Dec ‘15.
*Roxy Pacific: Will not proceed with the acquisition of a land parcel in Malaysia due to changes in market conditions.
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