Thursday, December 30, 2010

Ying Li

No particular news out today, however recent news surrounding Co. is the building of its International Finance Centre (IFC) in Chongqing, which have seen extremely good take up rates & offers so far….

Co. was initially targeting Rmb20,000psm, but investors were cited to be prepared to pay much more. When building is completed in 3Q11, it will be one of the few top grade office buildings in Chongqing. For yrs, the only office building in Chongqing that measured up to international Grade A standards was Li Ka Shing’s Metropolitan Tower and Plaza….

With the IFC, YingLi will add 71,000 sqm of office space and 50,000 sqm of retail space to its existing portfolio of 64,450 sqm retail space. We note that currently Yingli trades at a Steep Discount to RNAV of 83c/share, giving investors a significant margin of safety, and if grp managed to complete all projects in coming yrs, investors could see a potential steep bounce in earnings. Kim Eng has Buy Call with $0.50 TP.


Armada: Considering acq of co in China. Details not revealed but target is expected to add to existing operations of grp in IT and communications. Negotiations are expected to conclude before Chinese New Year in 2011. The deal is likely to require approval from both sh/h and regulators and co is looking at financing options…

Co has earlier acquired China RFID remaining 25% for S$4.1m which has exclusive rights to procure and sell radio freq identification (RFID) chip modules. Co has been loss-making since late 2008 and saw a loss of HK$61.12m (S$10.2) in Sept 3Q2010…

Armada jumped 14.3% yday, to close at $0.04 before mkt closed. Unlikely to have impact on price today unless further details are revealed.


Starhub: Scored a multimillion pay-TV and communication deal with IR operator MBS. Under the multi-yr agreement, co will provide a range of voice and data services, high-speed broadband and internet lines, as well as enterprise msging and web apps. Co’s cable TV channels will be available in all 2.5k guest rms and 75 public displays…

Co-branded pre-paid SIM cards will be offered at $15 to resort visitors as well. No details of exact amt or length of contract mentioned. Starhub now trades at trailing P/E of 17.68x and rival Singtel at 12.85x. Deal will provide slight increase in recurring earnings for Starhub, may stir positive interest in counter. As of 9M10 in Sep, rev for co was at S$1.6b and net profit at S$242.6m

East Asia Tech

East Asia Tech: Announced that the TDRs of its Shares will be delisted from the Taiwan Stock Exchange on 17 Jan11. Co. will make an announcement on the definitive date for the delisting of the Co. from the Official List of the SGX in due course after the completion of the Compulsory Acquisition Exercise.


Ziwo: Announced a delay in TDR issue due to delay in obtaining approval of Taiwan authorities, poor mkt conditions in Dec and time needed by Co and Underwriter to prepare for roadshows. Co has sought SGX's approval in extending the deadline for placement of new shares from 31Dec10 to 31Jan11….

Technically, see near term support at $0.365 (Recent week low) and resistance at $0.38.


Wilmar: announced a 2nd property deal with its JV partners in Liaoning Province, China. To jointly bid for 6 sites in Yingkou city, Liaoning province, designated for residential and commercial purposes. The invmt could cost up to Rmb7.5b (S$1.4b), with Wilmar contributing Rmb2.6b. Wilmar expects to fund the project using internal resources and bank borrowings...

Recall last wk, the JV successfully bid for 3 plots of land, also located in Yingkou city, for mixed residential, commercial, and hotel development expected to cost up to Rmb 2.6b in total. Wilmar will hold a 35% stake in the JV, while partners Kerry Properties and Shangri-La Asia to hold 40% and 25% r’ptively. All 3 cos are linked to the Kuok family...

Investors are unlikely to welcome this deeper foray into property dev, given worries abt loss of focus on its core agri-business at a time when margins are under pressure. Wilmar's shares slumped 5.1% on Dec 22 when it first announced its intention to diversify. Still downside may be limited, as further dev on the property front should not come as too much of a surprise now. Moreover the stock is already down 18% since its Nov high, albeit partly on fears over food price controls in China...

Wilmar to hold an analyst meeting tmrw to provide further updates.
Expect 52-wk low at $5.25 to provide firm support, hence further share price weakness could present a potential buying opportunity.
The majority of Street has Buy/Hold ratings with latest target prices ranging btwn $6.73-8.18.

SG Market

SG Market: Singapore shares may continue to grind higher in quiet trade, taking leads from slightly firmer Wall Street. But the upside could be capped by profit-taking after 4 straight sessions of gains. Immediate resistance tipped at 3218-3220 area but if that is broken, the STI could challenge Nov high of 3310 in Jan 2011.

Wednesday, December 29, 2010


Genting: Analysts note that Genting is poised in 2011 to give Las Vegas Strip & Asian region's 2 biggest mkts, S Korea and Australia, a run for their money, highlighting the speed at which SG’s gaming mkt ramped up this yr, tipping momentum to continue into 2011 as the IRs expand their shopping and entertainment offerings….

Citi highlights SG gaming run rate cld hit US$5.3b next yr vs Las Vegas Strip's est run rate of US$5.8b, while 1Q nxt yr could see the anticipated licensing of junket operators which may result in SG’s VIP mkt doubling in 2011….

CLSA note that if good quality junkets are licensed, VIP volume could surge to US$6bn nxt yr vs US$2-2.5b on an annualised basis currently. Add that it may be premature to expect Genting to issue dividends 2011, but potentially expect a huge dividend to be paid in 2012, as debt would have been paid by then...

Highlight that cashflow generated from RWS is enormous and will be sustained given the large SG gaming mkt with limited competition and low risk of new supply & low tax rates.


GuocoLand: Co may float 2 Reits worth S$6b-8b, one office and the other retail, with assets in Spore, China, Msia and possibly Vietnam - potentially worth about S$6-8b in total. Float will be over medium term (3-5 yrs) as portfolio is not completed, and even if completed, time will be needed for yields to stabilize…

Co has several invt properties in the region, totaling about 4m sq ft gfa for offices (more than the office space at MBFC) and about 4.6m sqft retail space as well as some 5k car-park lots all expected to be completed within 3-5 yrs…

Price has appreciated 20.1% since end 2009 and traded at $2.55 yday. Currently trades at trailing P/E of 1.12x, avg of 1.28x. Other developers’ trailing P/E, Capitaland at 1.17x, Keppel Land at 1.94x and Allgreen at 0.78x

SG Market

SG Market: Spore shares likely to continue their recent rangebound trade in relatively low volume. While buying in blue chips towards the year-end is likely to support the index, upside may be limited amid weaker regional bourses and after yday's gain. The STI ended +0.8% at 3184 with 26 index members finishing higher; it has now advanced 1.5% over the last three sessions…

UOBKH expects the STI to drift upwards toward the 3200 resistance level, on the back of year-end window dressing and positive sentiment in global markets. Adds, in the absence of substantial volume, strong direction from the index is unlikely to emerge.
News flow again light this morning. GuocoLand may feature on reports it plans to start two Riets with assets of btwn $6-8b.

Stocks to watch:
* Genting SP: may see interest following today’s Business Times glowing feature on the Spore casino industry outlook. Stock jumped 7cts yday to close at $2.19.
* GuocoLand: to consider listing an office Reit and another trust holding retail assets. The two trusts, worth btwn $6-8b combined, could hold assets in Spore, China, Msia and possibly Vietnam, and may be listed over the medium term.
* Palm oil: Mar ’11 futures prices climbed to a 33-mth high at RM 3778/ton, on concern that a prolonged drought in regions of S America may reduce output of soybeans, boost demand outlook for veg oils made from other plants. Key beneficiaries are upstream players Golden Agri, Indofood Agri, First Resources.
* First Reit: the rights offer for the health-care property trust was 23% oversubscribed. Separately, the co’s existing portfolio has been revalued at $355.5m, or $0.57/unit, +4.3% ytd.
* Asia Water: won a contract to build a centralized water supply and waste water treatment station in Xinjiang, China, valued at Rmb 68.8m.
* Asian Micro: the mnftr of plastic components won a 5-yr contract to supply and transport compressed natural gas from Rolls-Royce Spore. The total gas contract amount is about $6.7m

Tuesday, December 28, 2010


Sunmart: SIAS has issued a technical call, highlighting that counter is trading at unsustainably high lvl. Major resistance at $0.25, RSI in overbought region. Support lvls at $0.18 and $0.15. Note, trailing P/E is at 10.92x and hist avg trades at 4.44x. Stock has seen rise from around $0.15 since 3Q results and its proposed dual listing in Korea. Stock still trending upwards with no signs of reversal as of yet but is at 2007 highs.


ThinkEnv: Following memo of agreement with Mornington, co has entered into an agreement to acquire a 70% stake in Mornington for US$35m which will give co control over gold concessions in Mali owned by Mornington….
LowXuYang :

Acq will be paid by initial US$5m in new shares at $0.689, VWAP on 27th Dec, remaining US$30m expected to be paid in cash based on certain production and independently certified reserves amts, co also has option of paying 70% of this cash amt in new shares…

Mornington has not generated profits yet and has been loss making in 2009 and 2010. ThinkEnv itself has had problems remaining profitable, recording a loss in its most recent Sep results.Co’s current mkt cap is approx $503.56m at 0.70 so dilution will not be overly significant in this deal.

SG Market

SG Market: Spore shares likely to remain rangebound in subdued trade as the market continues to wind down towards the year end, with perhaps a slight negative bias after Wall Street's mixed showing Monday and amid weaker regional bourses. The STI closed +0.5% Mon at 3159, shrugging off the potential negative catalyst of China's rate hike; however it ended well off its highs, showing investors are happy to take quick profits on any gains…

Market volume likely to remain modest (only 581m shares traded yday), and it seems unlikely that the index will break out of UOBKH expected 3120-3200 yr-end range. Company-specific news flow starting to return.
Keppel Corp may rise after announcing more contract wins, adding $240m to its 2010 offshore orderbook.

Think Environmental may be in focus on its Mali buy, which makes it the only main board listed company in Singapore with gold mining assets.

Stocks to watch:
* Keppel Corp: secures 3 conversion and bespoke shipbuilding contracts worth a total of S$240m, boosting O&M 2010 orderbook to S$3.2b.
* SGX: proposes to expand membership to foreign brokers based abroad. If successful, move will expand the pool of int’l participation, and improve mkt efficiency and boost liquidity, trading volume.
* Think Environment (TTEC): may see interest after entering into conditional S&P to acquire 70% in Mornington, which would make TTEC the first mainboard-listed co here with gold mining assets. Still, this concept stock is not for the faint-hearted, due to the significant execution risk involved.
* Commodities: sector is set for a good year in 2011, with an anticipated price rally for raw materials likely to benefit upstream players and commodity supply chain managers. Noble Group and Olam tipped to be among the top beneficiaries. For upstream exposure, palm oil plantation firms Golden Agri, Indofood Agri and First Resources offer much promise.
* Rickmers: bags extension on ship's charter after Chilean customer, CSAV exercises option to renew lease for another 12mths wef 25 Mar ’11. Hire rate trebles to US$23.9k/day vs current US$8.3k/day.
* ECS: halted. The 4th-largest distributor of IT products in China by revenue plans to raise gross proceeds of US$50m from the listing of TDRs by 1H11.

Monday, December 27, 2010

SG Market

SG Market: With no lead from the US, investors' focus will likely to be on regional markets' reactions to China's 25 bps interest rate hike on Saturday, 25bps hike in mortgage rates on Sunday. Moody’s downgrade of Vietnam govt bond ratings may also weigh on companies with exposure there, namely Keppel Land, CapitaLand, APB...

AmFraser expects a knee-jerk reaction to China’s move, with the mkt likely to close lower today. STI closed +0.2% at 3144 with gainers overtaking losers 171 to 164 in a shortened session. Support likely at last week's 3121 low while resistance remains at 3167.

Stocks to watch:
* CapitaLand: fraud discovered in its 100% owned Ascott's Msian ops. To commence legal proceedings against employees and external parties to recover RM 33m. Separately, expect weakness given its exposure to China (a fifth of sales) and Vietnam.
* City Dev: this month announced its first land purchase in Chongqing, China.
* F&N: completes corporate and debt restructuring of Frasers Property (UK), raises indirect sh/h from 68% to 100%.
* Mapletree Logistics Trust: acquires industrial warehouse at Loyang, Singapore for $13.8m, used by the aviation and aerospace industry. Deal may be mildly earnings accretive.
* Viking: sold ~1.23m shares, or 35% stake of Marine Accomm for $4.8m.
* Otto Marine: obtained temporary court injunction to restrain customers from making calls on refund guarantees on vessel orders.

Friday, December 24, 2010

RH Energy

RH Energy: Won contracts worth US$8.7m to provide design and service for the upgrading of Caprolactum (chemical used in nylon production) plant of 200k ton annual capacity and Epoxy (adhesion and protective material) used in plant of 50k ton annual capacity for SINOPEC companies…

To impact earnings till 2nd half of 2011. Co has had recent US$8.5m contract win in Oct. Adding both contracts at US$17.2m, still falls short of FY09 rev of US$24.8m and 9M10 Sep’s rev of US$28.4m. Note that co has started return to profitability in last 2Qs but will need to win more contracts to prevent earnings decline. Trades at trailing P/E of 10.9x, avg at 12.6x


NOL: secures US$926m financing for its acquisition of 12 new container ships worth US$1.2b, which are expected to be delivered from 2012 through 2014. Remainder of financing needed will come from an earlier bond issue and internal resources. Net gearing expected to increase from 0.22x to 0.53x (level not seen since 2003)…

Recent Street ratings mostly at Buy or Hold, with targets ranging $2.41-2.55.
Technically, counter is still in a longer term uptrend, although it has dipped ~8% since peaking in early Nov in view of softer freight rates in seasonal 4Q. Indicators still pointing downward, but prices are near the $2.10 support, which may be a possible entry level. 200MA at $2.05 has held since Jul ’09.


Roxy-Pacific: To acq a commercial building at 116 Changi Rd at S$35.5m. Property has a showroom/retail space on first storey and an existing gross flr area of 50.9k sq ft equivalent to plot ratio of 3.0 over freehold site are of 17.0k sq ft. Cost to be funded by internal sources and bank borrowings…

Stock has been trading in an upward channel since Oct, now trading at resistance level $0.43. Possible break out since stock is testing the channel top for the 4th time. DBSV TP is at $0.55 up from $0.44 on 22 Dec. Trading on high side of P/E 7.4x, compared to avg at 5.9x.

P/B 1.72x compared to high of 1.8x and avg of 1.4x


Oil: surged above US$91 a barrel to its highest price in >2yrs, on the back of ultra-cold weather stoking demand and depleting US stockpiles at the fastest pace in 12 yrs. US$100 eyed, as Libya, an OPEC member, appeared unconcerned by the gains. The mkt generally looks to OPEC signals for supply outlook.
News may give boost to rig builders, SMM, Keppel Corp, and the smaller O&G svcs plays like Ezra, STX OSV.

EU debt crisis

EU debt crisis: Fitch lowered its rating on Portuguese debt a notch, citing 'deteriorating' near-term economic prospects and a likely recession next year. The agency cut its long-term foreign and local currency rating for Portugal to A-plus from AA-minus, with a negative outlook. The short-term currency rating fell to F1 from F1-plus.

SG Market

SG Market: Activity in the Spore bourse is expected to be light in today's shortened trading session. Upside for the STI will be capped at 3188 while support of 3118 is unlikely to be broken. With a lack of market-moving corporate news, attention may again fall on small caps & penny stocks as traders seek out low-price plays for a quick punt. On the ratings front, IIFL has upgraded CMA to an Add from Reduce & raised its target price to $2.21 from $2.18.

Ezra may continue to see further interest after breaking above its 50-day MA y’day on good volume. In other corporate news, Otto Marine has filed arbitration notice against Mosvold over a disputed late delivery of an AHTS vessel.

Thursday, December 23, 2010

Global Logistic Properties

Global Logistic Properties: -0.9% at $2.16 in thin trade, with investors paying little heed to group's HK$539m (S$91m) acquisition of a 19.9% stake in Shenzhen Chiwan Petroleum Supply Base (200053 CH). The lukewarm response is expected since initial returns are unlikely to be substantial, given SCPSB's 2009 net profit of only Rmb112m (US$16.8m) vs GLP's Sep-quarter US$85.4m earnings…

Citi, which has a Buy call and $2.80 target notes that although the initial NAV/earnings impact does not look significant, cooperation should help the combined group dominate their market share in China; this would make it difficult for potential newcomers, including ProLogis which could re-enter the China market after Feb ‘11, to catch up with GLP's scale in China.
SCPSB owns BLOGIS, which has 12 China logistics projects. Support at last Friday's $2.12 low.

Bio-Treat / Boustead

Bio-Treat / Boustead: Boustead to reduce its investment in Bio-Treat to $4m (100m shares @ 4cts) from a proposed $42.7m in convertible bonds that would have translated to a 20% stake on a fully diluted basis, as the latter will have less need for investment after its rights issue. The issue of CBs was delayed due to regulatory concerns, hence the decision to proceed with the rights issue first. The share acquisition will be financed from Boustead's internal cash resources…

Separately, Bio-Treat’s rights issue was 55.3% oversubscribed. It expects to issue the 948m rights shares today and list them at 9am tmrw.
Bio-Treat, a Chinese wastewater firm, has been looking to raise funds after uncertainty over its going- concern status arose due to debts incurred under a previous convertible bonds programme and a HK$360m (S$61m) loan from former substantial sh/h Precious Wise.

move somewhat positive for Boustead, as investment risk in Bio-Treat is reduced. Moreover terms of share purchase (at 4cts/sh) are more favorable than the previous arrangement to take up the CBs (convertible at 5cts/sh).
Neutral for Bio-Treat since they still manage to raise the needed capital.

Tuan Sing

Tuan Sing: the property developer is back in the spotlight, following Business Times’ feature today and yday.
BT quotes analyst, says the stock price should continue upwards, but it depends if they can achieve good selling prices at the time of sales launch, and if the co continues to be active in the market and generate more positive news flow…

Recall, trading interest was sparked by Tuan Sing's success with 2 property acquisitions in Spore: $99.1m for Serene House and $123m for a land parcel, both of which will be developed into housing projects. The co is also deemed a beneficiary of the growing interest in Spore's office market, as it owns 2 properties in the CBD. Stock viewed as an undervalued play at 0.64x P/B, vs other smaller developers which generally trade at 0.8-1x P/B +5.2% at $0.305, pulling back slightly after earlier making new 2-yr high at $0.315. Possible break out candidate, especially if it closes above the critical $0.3 resistance level. Yday’s gap up, and long white candle on strong volume bodes well for the near term technical outlook. Next resistance levels at $0.35, then $0.40.


Fuxing: Co has entered into 3 separate and independent acq agreements for 3 companies in Fujian Province. Fulong Zipper involved in dyeing and fabric tape for zippers at Rmb120m, Jianxin Weaving which supplies dyed yarn at Rmb107m, Fuxin Electroplating providing plating services on zippers, buckles and other metal products at Rmb145m...

Co.s were purchased at discount to valuation and total Rmb372m (S$73.2m) will be paid for using internally generated funds. While details of the acq valuation is not known, co’s acq complements existing operations

Hu An

Hu An: To expand annual production capacity of its copper rods business from the existing 21k tons to 75k tons. Total est cost of Rmb88.9m (S$17.5m) will be financed through proceeds raised from the issuance of TDRs in Oct 2010…

Plant is expected to be completed by Sep 2011. The new production line is expected to increase daily quantity from 80 tons to 300 tons, operate more efficiently and produce quality consistent rods. Co is one of few players with license to produce these products allowing it to tap China’s demand of copper. Impact shld be mildly positive with results to show in the longer term through increased sales.


Jasper: Morton Bay, which owns a 79% stake, will capitalise all its existing loans of about US$194.6m, to support Jasper's fleet-expansion ambitions. Recall Jasper ordered a US$180m rig from Keppel Corp yday, with an option for another…

Morton Bay will subscribe for 1.95b new Jasper shares at 13cts/sh. Jasper will also raise about US$8.9m by issuing 121m new shares to Hygrove Investments 9.6cts/sh. Jasper last closed at 8cts, so the new issues will be done at 63%, 20% premium r’ptively. This may spur near term trading interest in the concept stock.


UOL / UIC / UOB: UOL to acquire UOB’s entire 9.7% stake in UIC at $2.40/sh (vs last close at $2.41), afterwhich UOL will overtake Gokongwei’s JG Summit (owns 36%) to become the largest sh/h of UIC with 42% interest. The total cost of $320.5m will be funded by bank borrowings and internal resources. UOL is not required to make a general offer, as the parties are considered acting in concert…

Within the UOB-linked circle, Haw Par and Wee Cho Yaw also own 4.9%, 0.1% direct interest in UIC r’ptively; there could be room for UOL to consolidate its sh/h further. Interestingly, we note that over the past month, both Gokongwei and Wee Cho Yaw have been nibbling at UIC shares in the open mkt at prices btwn $2.35-2.40. The battle for control over UIC may be heating up and we wonder if this move may be a precursor of further developments to come...

UIC is one of Spore’s largest office landlords in the CBD and also has indirect interests in 3 five-star hotels with ~1,880 rooms in the Marina Bay Area. It has a portfolio of more than 2m sf of office space and more than 1msf feet of retail space in Spore.


FinancialOne: Voluntary delisting at $0.485 per share by Mr Andre-John Lee who holds 43% of shareholdings. Exit offer represents 15.5% premium over last traded price of $0.42 and 19.9% premium over 3mth VWAP of $0.40…

Counter as been suspended since 15 Nov. As of Sep this year grp’s NAV was 52.92 US cents approx 68.8c in SGD.*Kim Eng staff are prohibited from comments, recommendations or discretionary dealing or purchase in co.


GLP: Entered into agreement to acq 19.9% in Shenzhen Chiwan Petroleum Supply Base (SCPSB) the parent co of BLOGIS, which is the 2nd largest modern logistics facility provider in China after GLP. Stake was bought from Toll Holdings and JTC Corp, for HK$539m (S$91m) at HK$11.75, a 2.0% disc to 22 Dec closing at $11.99...

Acq to be funded by IPO proceeds. SCPSB as of FY2009 reported net profit of Rmb112m with net profit margin of 34% and is in line with the core business of GLP.

SG Market

SG Market: Spore shares may get a slight boost from modest gains on Wall Street overnight although intraday profit-taking can be expected on thin volumes. The immediate resistance for the STI is at 3188 while support remains at 3118. Property stocks may be in focus with Global Logistic Properties acquiring 19.9% of logistics base in Southern China for HK$539m & UOL raising its stake in UIC to 42% from 32.3%, making it the single largest s/holder ahead of Gokongwei’s 36%.

Financial One may gain as its Taiwanese chairman seek to delist it with a $0.485/share offer vs last close of $0.42. Silverlake may see some pressure after controlling s/holder propose to sell 50m vendor shares in a share placement.
Stock ratings changes:
*Noble Group target priced raised to $2.78 from $2.52 at IIFL
*SembMarine target priced raised to $6.78 from $5.58 at BNP

Wednesday, December 22, 2010


Sunpower has secured a RMB23.7m (S$4.7m) contract with Jiaxing Petroleum a subsi of Tong Kun, China’s leading polyester and textile manufacturer. Co will supply several heat exchangers use to Jiaxing. Earnings to be positively impacted during delivery in FY2011. Full yr 09 rev was at RMB753.6m and net profit of 70.6m, and with 3Q net profit of RMB53.7m...

Recent hefty contract wins of RMB415.1m (>50% of 09 rev) in 2 Dec polysilicon contract, RMB149.5m in 10 Nov petrochem contract, which might stir interest in co…

…Balance sheet relatively sound, current ratio 1.44x though with high % in receivables and payables, expected in industry. Co does heat transfer technological equipment and energy-saving systems.


GMG: -8% at $0.275. We mentioned previously that there was unrest in the Ivory Coast following the political standoff after the recent elections. The uncertainty has escalated and the UN notes the country is on the brink of civil war.
GMG has 1600ha of plantations, 36k tpa of processing facilities over there. The group has 41.6k plantations, 141k tpa capacity in total.

Ivory Coast accounted for 29% of total revenue, 20% of operating profit in FY09.

Technical outlook for the stock has turned decidedly bearish with today's fall breaching the $0.295 support line & represents a pullback from a triple top formation at $0.335 set in Oct, Nov & Dec. Downside support lies at $0.25.

Tuan Sing

Tuan Sing: Positive article out on BT today, summarizing strength of portfolio and balance sheet of the diversified property grp. Recent acq of Seletar Rd site and Serene House coupled with new project of Mont Timah may stir interest...

Cluster of owned prime commercial properties Robinson Towers, Annex and Intl Factors building valued at $206m could have room for upward revaluation as nearby Finlayson fetched $2,600psf compared to Robinson Tower prev at $1,500psf. Possibly explains interest in stock today.


HPL: 50% owned subsi Leisure Ventures (LV) with a JV has acq a hotel with 99 rooms in Prague, Czech Republic. Consideration is nominal with assumption of bank debt but LV and partner will inject EUR10m into the JV. Financing will be through internal funds from LV…

This is expected to decrease HPL's earnings by 1.097 cents and net tangible assets per share by $0.011 based on yr ended 31 Dec 09. HPL in 3Q2010 had 9mths EPS of 4.7c, annualized EPS of 6.3c and NAV of $2.45.

Technics Oil & Gas

Technics Oil & Gas: Received approval from Taiwan Central Bank and in-principle approval from the GreTai Securities Mkt of Taiwan (GTSM) to trade TDR on the GTSM. Co will proceed to make its application to the Taiwan Financial Supervisory Commission, Executive Yuan, Securities and Futures Bureau for approval of the proposed TDR issue.


Wilmar: Enters into a JV with Kerry Properties and Shangri-La Asia for development of real estate. The JV has bid successfully for 3 sites in China, Bayuquan, Yingkou City, Liaoning province for total of US$36m. Sites are designated for residential, commercial and hotel use and have area of 200k sqm gfa…

Co will hold 35%, Kerry 40% and Shangri-la 25% stakes in the JV. Wilmar's invt will be US$134m of total US$386m. Funding to be from internal sources and bank borrowings. JV is conditional upon all necessary approvals from Chinese authorities...

Considered an interested party transaction as Kuok Khoon Chen and Kuok Khoon Ean are the Chairmen of Kerry and Shangri-la respectively and are also directors of controlling shareholder of both co, Kerry Holdings. Both are cousins of Kuok Khoon Hong….

Rationale is to leverage on Wilmar's business affiliation and network in China. GS issues note that while rationale is sound, real estate is a departure from core business and there maybe concerns on mgmt losing focus. GS has a Neutral rating at TP S$6.25

China Fish / Pacific Andes

China Fish / Pacific Andes: Peru, the world’s largest fishmeal producer, may double anchovy catches next year, according to the Production Minister Jorge Villasante. Trawlers in 2011 may catch as much as 6m tons of anchovy, used for fishmeal, a livestock feed. Catches fell 40% this year to 3m tons due to the El Nino effect…

China Fish is among the top 5 largest fishmeal producers in Peru, with 41 fishing vessels and 9 processing plants there. Peru accounted for ~24% of China Fish’s sales in FY09.

Pacific Andes owns 56% stake in China Fish.
China Fish +5.5%, Pac Andes +7.4% since last wk, after the former announced plans for HK dual listing.


SembMarine: +1.4% at $4.99 yday. May gain and test 52-wk high of $5.20 on a US$400m boost to orderbook, after being engaged by repeat customer US-based Noble Corp to build 2 jack up rigs. The deal comes with options to build another 4 rigs, which could bring the entire contract value for the 6 rigs to around US$1.2b, equivalent to half of the US$3.16b contract value secured ytd. The options must be exercised by 1 Jan 2012, and come with potential price escalation terms…

The initial 2 rigs to be delivered in 4Q12 and 2Q13 r’ptively. The contracts affirm the recent sector-wide pick up in orders for high-spec rigs as oil cos replace their older fleet and upgrade some to meet higher safety standards. The news could also help ease concerns that SMM may have priced itself out of the race for some of Petrobras' 28 rigs.

DBSV yday raised its TP to $6.08 from $5.48.

SG Market

SG Market: Wall Street's modest gains overnight may help nudge Spore shares higher although activity may continue to dwindle as investors wind down ahead of X’mas holiday season with yday's volume was only 801.5m shares worth $834.7m, below the 1b mark for the 1st time in 4Q10. The STI may encounter resistance at 50-day SMA of 3188. Wilmar may fall on latest foray into property business in China as this is a sharp departure from its plantation business...

while SembMarine may see again test its 52-wk high of $5.20 after bagging a US$400m contract for 2 jackup rigs with options to build 4 more.

Tuesday, December 21, 2010

* Orchard Parade *

Orchard Parade has been the subject of a potential revaluation/redevelopment/asset restructuring play following launch of tender sale (closing 25 Jan) of adjoining Tanglin Shopping Centre at reserve price of $1.2b. Latest NAV stands at $2.56 but pegging Orchard Parade Hotel to TSC's tender price could raise the stock's RNAV to as high as $4.20.

Noble Group

Noble Group +1.5% to $2.07 on prospect of earnings boost from acqn of 2 Brazilian sugar cane mills for US$950m. Both mills generated a combined net profit of US$64.9m for FY10 ended April. While the puchase price is expensive at 25x P/E, DMG, which has a Buy call with a $2.58 target, views the move as positive given rising sugar prices will translate to stronger earnings prospects.

CIMB, which has an Outperform call with $2.60 target, cites the proximity of the 2 mills to Noble's existing sugar mills offers economies of scale, which should enable the company to raise the utilization of its newly completed export terminal in Santos. Noble will fund the acqn using internal resources. Resistance is tipped at $2.14.


Xinren: in preliminary stages of looking to build/ acquire a 4th smelting plant in China, SE Asia or Saudi Arabia. The China-based firm currently has 2 smelting plants, which produce primary aluminium such as ingots & plates, with total pdtn capacity of 275k tpa. It is waiting for provincial govt approval in China to build a 3rd plant with annual pdtn capacity of 100k tpa in Heilongjiang for Rmb 700m (S$138.4m). The invmt will be funded by ~60% internal resources and the rest by bank loans...

Other growth catalyst would be the tripling of capacity at its fabrication plant in China to 150k tpa by end 2011, expected to boost fabrication revenue by 20-30% from 2009.

Mgt said that the current average selling price for aluminium was around Rmb 16k/ton, up from Rmb 14.9k/ton in 3Q. Expects huge demand in China to drive price resilience in 4Q. Xinren’s total sales volume in 9M10 was 230k tons, +29% yoy.

GMG Global

GMG Global may come under pressure after group disclosed there have been delays in its shipments out of the Ivory Coast (which accounts for 12% of annual rubber exports) amid post-election unrest in the West African nation. However, its prodn facilities have not been affected & mgt does not expect the delays to have a material impact on its financials for FY10. Still, uncertainty over its future earnings or imposition of economic sanctions on the country may weigh on the stock.

Stock has fallen 10% in the last 5 sessions since hitting its $0.34 high but breach of $0.29 triple bottom support may take it back to $0.24 level.


Amtek: Morgan Stanley the stabilising manager for the IPO, has bought another 320k shares. The latest announced purchases on Dec 17 in a series of stabilising actions saw Morgan Stanley purchasing the shares at $1.10 to $1.12 apiece. Amtek's shares closed trading 3c lower at $1.09 y’day….

A regulatory filing shows that as at Dec 16, Morgan Stanley has a substantial stake of 5.0% or about 27.28m shares in Amtek, comprising a direct stake of 3.5% and an indirect stake of 1.6%. Meanwhile, Capital Group, another substantial shareholder of Amtek, has raised its deemed stake to 6.3% from 5.5%...

This followed open-market purchases on Dec 17. Amtek is still trading at a P/E of 20.7x, closing at $1.09.


Rokko issues profit outlook. Co expects to record profit of $3.8-4.2m more than 100% increase from FY09’s $1.8m, rev expected +40% yoy at $42.0m. Final dividend to be paid for FY2010. Co is involved in precision engineering, design and manufacture of semiconductor assembly equipment. Last done at $0.16, currently trades at trailing P/E of 13.3x. Co has turned a profit since 1H June 09 but results are not outstanding quarter on quarter.

Hoe Leong

Hoe Leong: Co will purchase 51% of Aries Offshore (49% owned by Otto Marine) and obtain a transfer of a loan of S$20.5m made to Aries Offshore from Aries AP. Consideration of $19.9m will be paid to Aries AP through mix of debt and internal resources…

Acq comes with 4 AHTS with existing bareboat charter contracts, and Otto Marine will step in as charterer if any contracts are terminated or expire within 3 yrs. The purpose of acq is to diversify from industrial parts biz to other income streams through provision of vessel-chartering services for oil and gas industry….

Total operating fleet size for Hoe Leong, now at 18 vessels.


Wilmar with Cussons to establish 2 JVs in Nigeria. 1) PZ Wilmar, a palm oil refinery business 49% by Cussons and 51% by Wilmar. 2) PZ Wilmar Food to be a consumer edible oils, spreads and margarines business held 51% by Cussons and 49% by Wilmar. Wilmar's share of the JV will cost $27.5mm and will be funded from internal sources and borrowings...

Expected to be completed within 2 yrs and aims to create a new food ingredients biz in Nigeria. Cussons is a consumer products UK grp listed on the LSE, and manufactures products such as soap, detergent, edible oils and spreads and electrical goods…

Wilmar has lost 13.5% since weak 3Q10 results in Nov. Concerns over its margins given price controls in China have affected co’s share price.


Noble: To purchase a vehicle (Newco) owning 2 sugar mills from Cerradinho for US$950m (US$600m in net tangible liabilities of Newco) which will be funded by Noble's existing resources. Acquisition will propel co to top tier of sugar cane milling cos, increasing potential crushing capacity to 17.5m tonnes…

Mills come with partnership agreements with Cerradinho for 15 yrs. Net profit of Newco is approx $65m. News was out on 17 Dec although not officially announced. Noble’s share price was down 1.5% at $2.04 y’day and resistance expected at $2.14 wk high.

SG Market

SG Market: Spore shares likely to remain sluggish as activity winds down in the last week of 2010. Support for the STI is seen at the 3118 neckline (almost breached y’day) of a potential head-and-shoulder formation with 3188 50-day MA providing resistance. The local bourse is currently experiencing the year-end holiday lull but the STI should soon resume its rising trend post Christmas & may test 3220 by year-end.

Commodity stocks may be in focus as Wilmar forms 2 JVs in Nigeria to set up a palm oil refinery & food ingredients business while Noble Group acquires 2 sugar cane mills in Brazil.

Stock ratings changes:
*SIA target price raised to $20.50 from $19.50 at Goldman Sachs
*STX PO downgraded to Sell from Neutral by Goldman Sachs, TP cut to $11.30 from $17.40
SMRT target price raised to $1.75 from $1.53 at Macquarie

Monday, December 20, 2010


CWT: The Loi family has been quietly buying CWT shares from the open market over the last 2-3 wks.
Loi Pok Yen, CEO bought 134 lots or 0.023% on 3 Dec.
Loi Kai Meng, his father and Chairman bought 1700 lots or 1.17% from 9 Dec till today…

KE sees this as a positive sign of the owners/ mgt's optimism for the co's prospects next year, given the high purchase price of $0.95 -0.985 (stock traded at $0.90 <3wks ago).
Believes the stock is still undervalued, with mgt keen on building up the logistics business. Potential multi-bagger in the long-run. $1.40 target price based on SOTP.

HLN Tech

HLN Tech, a precision components maker diversifies into the real estate business by paying S$14.5m in cash and shares for 58.33% of Greatly Holdings, which owns 30% of Tianjin Swan Lake Real Estate, a developer in Tianjin''s Wuqing District. HLN will end up with 17.5% of Tianjin Swan Lake. Details of the target co are not disclosed. Co reported a modest 1H10 S$483,000 profit vs a S$2.4m loss a year earlier, its first ever loss since listing in 2005.


Yanlord: Acquires 150k sqm gfa prime residential site in Longgang, Shenzhen for RMB945.0m, avg of RMB6312.63 per sqm. It is situated near an industrial park, 20 min drive away from Shenzhen city centre. Plot ratio of up to 3.2 times and benefits from Shenzhen govt initiative to develop Longgang district into a secondary city centre. Co has another Shenzhen Ailian project which puts its total dev in Shenzhen at 600k sqm.


Contel: To lift trading halt at 9am. Mgt highlights RTO uncertainties. States that the takeover target Solar Silicon Resources Group (SSRG) has not generated any revenue yet, and the enlarged group may not meet SGX listing req. Says alternative is for transfer listing over to the Catalist, but subject to approval as well...

Notes the proposed acquisition is subject to numerous conditions and there is no certainty that the RTO will be completed on the terms set out in the earlier announcement…

Counter last closed at 4cts. If proposed 10-for-1 consolidation takes place, and acq is carried at 50.5cts per consolidated new share, suggests potential upside of 26%. The risk and reward should be considered before trading in this concept stock, which is play on silicon mining and the solar industry.

China Fishery & Pacific Andes

China Fishery & Pacific Andes: Pacific Andes' subsidiary, China Fishery intends to dual list in Hong Kong by issuing 175m new shares and an over-allotment option of 25m shares, a total of 200m new shares. Offer price will not be at disc of more than 10% to SGX-ST mkt price and will be determined closer to offering date.HSBC and UBS will be the joint bookrunners for the HK listing. Pacific Andes' 70.2% stake will be reduced to 58.5% if 200m shares are fully issued….

… Earlier in July, China Fishery cancelled its proposed dual listing in Oslo due to poor mkt sentiment, also on back of PE firm Carlyle Grp investment of US$190m, a 13.6% stake in the co which strengthened its capital base. Listing to be strategic as co derives more than half its rev from China and shares likely to benefit.

SG Market

SG Market: likely to be quiet as investors wind down ahead of Christmas amid thin newsflow. However keep a look out for jitters in the market as S. Korea plans to go ahead with a planned live firing artillery drill today that has prompted N. Korean threats of retaliation…

The STI, which closed +0.2% at 3153 Friday but -1.0% for the week, is expected to hold below 3200, a level not tested since Dec 10; support expected at Nov low of 3118. Do not rule out possibility of some yr-end window dressing toward end of the month, although any upside likely to be modest, accompanied by light volume.

#Stocks to watch:
* China Fishery: may outperform the market on expectations of higher valuations as the fishing group seeks a dual listing in HK; counter stock closed +4.6% at $2.26 Friday.
* Pacific Andes: parent of China Fishery, which owns 70% stake, may play catch up. Counter closed unchg at $0.345 on Friday.
* Ziwo: approval from the Securities and Futures Bureau of Taiwan Financial Supervisory Commission, Executive Yuan to list up to 71.2m TDRs (1 TDR = 1.25 shares). Indicative offer price not yet determined.
* Yanlord: picks up 150k sqm gfa prime residential site in Longgang, Shenzhen for RMB 945m at public land auction; this translates to an avg purchase price of RMB 6313 psm ppr.
* Contel: lifts trading halt at 9am. Mgt cautions that the proposed acquisition is subject to numerous conditions and there is no certainty that the RTO will be completed on the terms set out in the earlier announcement.
* SIA: recent weakness likely due to disruption at some of Europe’s busiest airports, including Frankfurt, Schipol and Heathrow caused by heavy snow. Separately, SIA to take an undisclosed stake in a Rmb 1b cargo venture with China Eastern Airlines (51% stake) and EVA Air.
* HLN Tech: lift halt at 9am. Makes foray into PRC real estate development, with proposed Rmb 73.5m acquisition of up to 58% interest in Greatly Holdings Invmt from Tan Jian You (the "Vendor").
* Boustead / TT Int’l: Boustead’s deadline to sign the Heads of Agreement with TT Int’l to invest in the Big Box (mixed warehouse and retail store) has lapsed.
* Teckwah: to acquire 3 units of factories in the Iskandar Development Zone for RM15.7m. The packaging, distribution and logistics firm plans to expand its pharmaceutical packaging pdtn facilities.
* Eu Yan Sang: acquired 90% interest in Macau firm Yan Sang Biotech for HK$6.1m. The latter is involved in the pdtn and sale of Chinese medicine and health products.
* Vibropower Corp: issues FY profit warning, due to expected loss from the failure of a major customer of the group to fulfill payment obligations of an outstanding debt of ~US$1.4m

Friday, December 17, 2010


OUE: Has been a favoured office play in most houses’ property reports. CS and CIMB’s top pick for 2011. Broke channel support at $3.29, MACD still negative. Indicators look to continue downtrend. Currently trading near support of 50-day MA $3.26 and lower Bollinger $3.23. Might be a good time to accumulate after the nxt few days when indicators turn positive if its fundamentals are believed.


REITs: DBSV has sector report. Note that S-REIT sector now trades at a normalized FY11F distribution yield of 6.1%, slightly below its historical mean of 6.5%. Spreads have narrowed but still remain attractive at 340bps above the long-term government bond yield, currently at 2.7%...

Add that S-REITs offer a good hedge against inflation given that earnings growth can potentially outpace inflation, which is expected to inch higher to 3.2% in 2011. Prefer S-REITs with the ability to deliver growing distributions organically while having the opportunity to acquire accretively….

Continue to hold view that hospitality and retail sectors offer a more robust outlook on the back of expected strong visitor arrivals in 2011. Office REITs are expected to see topline bpressure from negative reversions in 2011 though the sector is on an uptrend….

Over all, likes CMT, FCT, CDL HT and Ascott REIT, as they are expected to deliver strong organic growth potential coupled with sponsor injection possibilities. Note that P-Life REIT offers downside protection as rev is pegged to inflation, while MLT and Cache offer potential earnings surprise given their visible sponsor pipeline.


Super: UOB Kay Hian initiates at Buy, TP $1.66. Cites strong mkt share and solid earnings track record as undervalued proxy to Asia’s consumption. Grp is in top 3 mkt share (3-in-1 coffee segment) for Sg, Msia, Thailand and Myanmar and has 17% net profit CAGR. Valuation based on PEG of 1.0x and projected 16% CAGR net profit. Target price is approx implied target 16.4x P/E, avg P/E 17.7x.


Contel: to resume trading at 9am, after halt since 2pm Wed. To buy Solar Silicon Resources (SSRG) in US$1.2b RTO, in the largest such deal on SGX over the past 5 yrs. Contel will issue 3.1b consolidated new shares at $0.505/sh to AMRG. Contel plans to consolidate 10 shares into 1. AMRG will own 79% stake when the proposed acq and a $26m compliance placement are completed…

Contel last closed at 3cts, so deal effectively at 68% premium to last traded. Consideration for the 3.1b shares are 95m of SSRG shares. SSRG has net tangible assets of US$226m as at Sept 30. Note that Contel is very likely to enter into a Scheme of Arrangement to discuss terms with its creditors, was making losses and negative net assets as of 30 Sept….

SSRG is a wholly-owned unit of AuzMinerals Resource Group (AMRG), a mine dev and mineral exploration co in Queensland, Australia. SSRG supplies primary high-purity silica to solar manufacturers and owns a silica mine in Queensland. The group has recorded no revenue since incorp in Aug 2009 and a net loss of US$0.8m for 1H Sept 30.

Pacific Hotel

Pacific Hotel: Annouced that it will buy the 276-room Hilton Melbourne Airport Hotel for $142m. Contract is subject to certain conditions including approval from the Foreign Investment Review Board of Australia. Grp which also owns the Parkroyal Darling Harbour, Parkroyal Parramatta in Sydney, and Sheraton Perth - intends to operate its latest acquisition as a Parkroyal hotel….

Proposed acquision is part of PPHG’s plans to expand its hotel property portfolio and hotel management businesses in the Oceania region to enhance the collective operating efficiency of the PPHG Group's three other hotels in Aus, through economies of scale and greater brand awareness…

Deal is expected to be completed Mar 31, 2011 and funding will be through bank borrowings and internal resources.

Comfort Delgro

Comfort Delgro: Kim Eng maintains Buy with $2.08 TP based on 17x FY11E PE. Note that with the purchase of Swan Taxis in Perth, ComfortDelgro is now reported to be among eight companies vying to operate 850 metro buses in Adelaide…..

Note that overseas acquisitions, particularly in Australia are generally more lucrative than its domestic bus operations and believe aggressive expansion of operations abroad is just the ticket needed for investors to re-rate the stock…..

Comfort’s interest stems from the favourable operating model that the state govt afford operators. Essentially, the cost recovery model allows for a fixed amount to be given to cover depreciation and other fixed overheads, while a variable amount is given to cover mileage and passengers carried. Labour and fuel costs are also pegged to a price index to offset inflation…..

We note that grp continues to look attractive at less than 13x FY11E PE vs SMRT’s 19x FY Mar12 earnings.


YangziJiang: Add to growing trends of increasing consolidation amg Chinese Shipyards, after grp bought 100% stake in Jiangsu Zhongzhou Marine Eqpt (JZME) for Rmb420m ($82.5m). JZME owns shipbuilding facilities of 350k sqm yard space and 430m deep water coast line. Grp highlights the vertical acquisition is expected to shorten its production cycle by taking over full control of the fabrication process and to further improve the grp's profitability and margins….

JZME's net profit from 1 Jan to 30 Nov this yr stood at rmb49.37m, and net book value of rmb290m at end Nov. Independent valuer Suzhou Wanlong Assets Appraisal valued JZME's net asset at rmb351m, indicating a 20% premium paid on JZME…


STX OSV: Likely to continue it's recent upward climb after Co. announced it has secured another contract to design and build an offshore subsea construction vehicle with contract value of NOK600m (US$100.8m). Vessel is scheduled for delivery in Norway in 2012….

Grp has been seeing sharp gains recently on order wins, such as Monday's 8.2% rise on a platform supply vessel contract. Today's news likely to reinforce investors view that demannd for high specification vessels is only likely to rise alongside increased E&P activity, with STX OSV well-placed to ride this demand..

We note that order brings grp’s Orderbook to date at approximately Nok19.6b (US$3.3b) vs FY10 E Rev of Nok11.9b underpinning earnings visibility till 2012-13. Goldman sachs has TP of $1.54 on grp.

SG Market

SG Market: Spore shares may gain slightly at open on the positive cue from Wall Street, which rose on further signs of the US economy pulling through, though subdued and directionless trade likely to persist in the local market as many players seem to have withdrawn for the holiday period…

STI closed flat yday at 3148, after ranging between 3137-3158. Technically, all eyes still on the forming head & shoulders pattern, which if completed, would signal a downward trend. UOBK notes the last line of defense at the STI support line at 3118, which if breached, could lead to a drop of up to 200 pts. Tips resistance at 3218.

Stocks in focus:
* STX OSV: may extend gains after securing NOK 600m (~US$101m) contract to build an offshore subsea construction vehicle for delivery in 2012. Recall Goldman Sachs initiated at Buy with $1.54 target two days ago.
*Contel: to lift halt at 9am. Possible concept play; to buy Solar Silicon Resources, a silicon miner in US$1.2b reverse takeover. To issue 3.1b consolidated new shares at $0.505/sh to seller. Deal effectively carried out at 68% premium to last closing price at 3cts (10-to-1 consolidation not done yet).
* Noble: to pay 1.6b reais (US$936m) for 2 sugar cane mills in Grupo Cerradinho, Brazil. Separately, 65% owned AU-listed Gloucester Coal was newly rated at Buy by BOA-ML.
*Yangzijiang: to buy a Chinese shipyard for Rmb 420m (S$82.5m). Acquisition likely earnings accretive as done at 7.8x annualized P/E, vs YZJ 12.7x P/E.
* SIA: premium travelers in Oct grew 10.9% yoy, largely driven by routes to and from Asia, according to IATA. Earlier this week, IATA upgraded its profit forecast for the global aviation industry by ~70% to US$15.1b, up from US$8.9b previously.

Stock ratings:
* Super Group: UOBK initiates at Buy with $1.66 target.
* Olam: UOBK maintains Buy with $3.80 target. No chg in view following African timber business acquisition.
* NOL: Phillip downgrades to Hold from buy, but raises target to $2.41 from $2.36.
* Yangzijiang: DMG upgrades to Buy from hold, raises target to $2.20

Thursday, December 16, 2010

Golden Agri

Golden Agri: CIMB has Technical Sell call. Note that prices are forming a small bearish wedge pattern as prices continue to nudge higher towards its key channel resistance at $0.81-0.82. The wedge resistance is at $0.80….

Highlight clear signs of a slowdown in buying momentum, and would advise against buying right now. The failure of its RSI to even reach the overbought levels suggests that the bulls are probably on its last tank. Yesterday’s long black candle suggests that prices are ready to move lower. A break below $0.77 would likely confirm that prices are heading lower to close the $0.71-0.72 gap, followed by $0.67. This view is premised on the $0.82 resistance remains intact.


XinRen: DBSV initiates Buy with $0.70 TP based on 7.6x FY11 P/E. Note that Grp is well positioned in the Chinese aluminium industry and that the Co. was profitable in the last 3 yrs despite the global financial crisis, while grp has been very cost competitive, providing them an edge over peers….

Highlight that Co. is undertaking plan to increase its exisiting fabrication capacity to 150,000 tonnes p.a by 2011, enabling grp to enjoy strong growth in the consumer-related industries in China….

TP represents a 40% discount to weighted average of worldwide peers, to take into account no equity ownership of smeling plants, potential risk of policy changes and 0 dividiends. TP suggests a 50% upside potential.


Property: Nov primary private sales market volumes rose 80% to 1,909 units sold, bringing YTD 2010 sales to record 15,018 units…

Credit Suisse expect developers to face policy headwinds as liquidity remains strong
and expect the office portfolios to outperform. Top picks are CDL and OUE….

Morgan Stanley prefer higher-end residential exposure, expecting the high-end market to pick up in 2011. Likes Wingtai, AllGreen and Capitaland.


ChinaGaoxian: Update on KDR listing. 600m new shares will be offered underlying 30m KDRs, of the proportion 20 shares to 1 KDR. The offering will be to investors in Korea, 20% to public and 80% to institutions...

Public offering to take place around Jan 2011, issue price to be determined. Declared interim dividend for 31 Dec 2010 of 0.5c per share payable on 24th Jan. Record date for dividend on 11 Jan, 5pm.


Amtek: 1Q results with rev at US$166.4m, +11%yoy and net profit of US$12.5m, +108%yoy. General yoy increase in most rev segments except an 8% decline in the Mass Storage segment due to weaker demand. Electrical and Electronics grew the most by 57%increase due to a customer transferring production from Europe to Asia...

June FY10 results were US$638.0m and US$21.7m. Results fairly positive, rev making up 26% and net profit 57.6% of prev full yr results. Amtek’s rev is made up of 7 segments, with 6 contributing more than 10% each. EPS at 2.3c, on an annualized basis, P/E will trade at abt 11.7x.


DBS: More details of the deal with RBS. DBS to take over 25k retail and SME customers in China, comprising US$900m and RBS’s 600 employees. Deal to double DBS China’s existing 25k customer base and boost deposits from RMB40b by approx 15% to RMB46b…

As a result, DBS will reduce its loan-to-deposit ratio, from 79%, to within regulatory limits of 75%. DBS China currently contributes 4% to DBS’s rev and has a mkt share of 5.1%, increasing to 5.7% after the deal 70-80% of accounts expected to be successfully transferred and the deal to be done in 6 mths. No financial consideration in this deal, essentially free for DBS due to RBS wanting to exit the sector.

Noble Grp

Noble Grp: Will be a major shareholder of relisted Blackwood Corporation on the ASX (previously known as Matilda Minerals), following a $12m capital raising tt what well supported by the market. Noble has subscribed for 30.8m shares in Blackwood at the issue price and will be Blackwood’s largest shareholder with a direct 25% stake.


SIA: May extend yesterday's 2% fall on its latest data showing declines in both passenger and cargo load factors for Nov. The overall load factor last month was 70.1% vs 72.3%YoY and 71.1% in Oct, mainly due to capacity increasing faster than passenger and cargo traffic growth….

Analysts however noted that load factors in Dec may turn out better if demand during the yr-end holiday season catches up with the carrier's additional capacity. RBS however remains skeptical, noting that with demand growth for most airlines tapering off, concerned that SIA will be bringing back flights at a time when the fight for market share will likely intensify….

Citi meanwhile maintains their $16 TP on stock, based on 1.32x P/B, above mid-cycle P/B of 1.2x. Note that stock deserves to trade above mid-cycle P/B as ROE projection of 10.3% lies above the mid-cycle ROE of 9.3%. Immediate support at Nov's $15.34 low & Aug trough of $15.06.


Olam: Could see some renewed interestes, after grp announced that it is expanding wood products business with $51.7m acquisition of Timber Intl from Dalhoff Larsen Grp on a cash and debt free basis, that will secure it 1.6m ha of natural hardwood forest concessions in Congo and Gabon.…

Acquisition will be funded internally and expected to be completed by mid next mth and will help grp build scale and global leadership in sustainable and certified hardwoods, and make grp one of the largest global tropical hardwoods and teak players….

Acquisition will not have any material impact on 2010 financials, but grp expect acquisition to be both value and earnings accretive from 1st full yr after consolidation. By FY2014, grp expects €80-100m steady state revenues, with Ebitda margins of 16-19%...

Technically, see resistance at $3.24, recent weeks high and support at $3.04, recent weeks low.

SG Market

SG Market: Spore shares are expected to drift lower today following losses on US & European markets amid heightened euro-zone debt concerns & given lack of positive news but declines are unlikely to be as sharp as yday. Stocks that may be in focus include - SIA after it releases weaker traffic growth for Nov with lower load factors, Olam on its 1.6m ha acqn of forestry assets in Congo & Gabon & Amtek Engrg’s doubling of 1Q FY11 earnings.

Support for the STI remains at 3118, the neckline of a potential head & shoulders pattern.

Stock ratings changes:
*XinRen initiated as Buy at DBSV with TP of $0.70
*Sembcorp Industries initiated as Buy at BNP with TP of $5.90

Wednesday, December 15, 2010


DBS: JPMorgan views the acqn of RBS’ China assets as a small but positive transaction which involves the right geography & is part of the bank's strategy to generate 30% of group revenue from Greater China. House maintains Overweight call with $18.00 target. Adds it expects DBS to differentiate itself from the past on 2 aspects - good execution of plans & passing over unsuitable & costly M&A deals. Believes DBS could shape up as one of the biggest turnarounds amongst Asian banks in 2011.

DBS is acquiring RBS retail & commercial banking business in Shanghai, Beijing & Shenzhen for an undisclosed amount, giving it up to 25k RBS customers. The deal is expected to be completed within 6 mths. Shares are down 0.6% at $13.94, tracking the broad market pullback. See support at $13.70


SIA: Announced that it will increase services across parts of its global network during the Northern Summer period (27 Mar 2011 - 29 Oct 2011) in response to continued growth in demand. Airbus A380 services will be extended to LA, from 27 Mar 2011. The route is currently served with Boeing 747-400 aircraft. Los Angeles will be the eighth destination that the A380 will serve from SG….

SIA also plans to launch a new service to in Brazil via Barcelona in Spain during the Northern Summer period. Sao Paulo will be the Airline's first South American destination. The new service is subject to Brazilian regulatory approval…
B0bbyLu : …. Frequency will also be increased on select services between SG and points in North Asia, West Asia and Europe. Four weekly flights will be added to the SG-Taipei route, bringing the total number of weekly frequencies to 18. With the new services, the route will be served with morning, afternoon and evening flights….

Services between SG and Male in the Maldives will also be increased to 3 times per week. In addition to the existing daily flights that operate at night, flight frequency will increase to 10 per week.


Suntec: Nomura maintains Buy at $1.72 despite issuance of new units for acquisition of 33% stake in MBFC. Suntec’s office portfolio increases to 2.4m sf vs (1.9m sf prev) Faster than expected pick-up in rents and capital values supported by squeeze in “reported” vacancies to result in growth...

This is in line with house’s property report favouring office sector. Nomura notes that Suntec has also completed its private placement for its initial portfolio of properties. Suntec’s 2010e yield is currently at 6.4%


SMRT: CLSA upgrades SMRT to Underperform from Sell with $2.05 TP. However note that there are still no catalysts in the short-term. Expect the rail operator's new Circle Line to take another 3-4 yrs to breakeven. Checks indicate only a slight increase in daily Circle Line ridership for Oct and Nov…

Add that near-term cost pressure is mounting as SMRT adds 220 more trains each wk in Dec to cater to the holiday season and suggests switching to rival ComfortDelgro for better valuations and prospects.

Stamford land

Stamford land Prices has broken above the ascending triangle and candlestick are also the key moving averages. Next resistance 0.65 is likely to be tested. Immediate support holds at 0.56


Ezra: +2.4% at $1.71, a 3wk high, as it continues to recover from a nearly 7mth low of $1.63 touched earlier in Dec. The offshore oil and gas support company has underperformed peers, down 8.2% since 2H10's start, compared with the FTSE ST Oil & Gas Index's +23.8%, partly on disappointment with its qtr results and the Co’s persistent delays in taking delivery of new vessels...

DMG note that the worst could be over, with Ezra committed to ensuring no further delays, and high oil prices underpinning prospects for more exploration and production work by oil majors. Add that grp is still bidding for more than US$1b new jobs and believe newsflow on job awards will gain momentum over the next 6 to 12 mths when the results of these tenders are out. Immediate resistance at 50-day MA of $1.74.


Wilmar Int’l has received approval from the NZ Overseas Investment Office to buy CSR's sugar & renewable energy biz. This is the final regulatory hurdle to clear for the A$1.75b Sucrogen purchase. Wilmar had expected to complete the deal 22 Dec & had earlier extended the deadline to 31 Jan. Stock appears to be finding a bottom at ~$5.88 level.


Yanlord: Samsung Sec initiates a Buy with $1.95 target price based on a 20% discount to FY11 NAV estimate. Likes the China-based high-end developer for its quality project launches with projected sales of Rmb12.1b in 2011 & Rmb17b in 2012, +34% & 41% respectively from 2010. Attributes Yanlord's success to its detailed designs & sales tactics that target end buyers rather than speculators & forecasts 21% net profit CAGR over 2009-2012.

While house is less positive on high-end developers compared to mass-market ones, it believes Yanlord's end-user focus should support the company's growth under the current policy environment. Shares consolidating around $1.67-1.70 level past few wks.


NOL: CIMB has Container shipping sector update. Maintains Overweight on sector. We are positive due to light orderbook against existing fleet compared to the bulk and tanker sectors. Expect Freight rates to dip in 2011 after a strong 2010 performance, but should move up again in 2012. Rates NOL at Outperform with $2.63 TP, on back of structural cost reduction from fleet replacement.


SGX: +0.2% at $8.43, after initially opening lower, with interest picking up - over half of yesterday's full-day volume reached in the opening 15m. News that Australia's competition regulator said it wouldn't oppose the exchange's A$8.4b bid for ASX is likely help the stock snap its 5-session losing streak; but the gain is modest, reflecting the weak overall market tone and long road ahead for deal to come to fruition….

Analysts note that there's still all the political issues facing the deal, which could mean it still gets tied up for a while, noting that the Australian opposition are quite vocal and some of them seem to be using this as a platform to put on a show and basically raise their own profiles, so that will probably be the biggest stumbling block. The December high at $8.78 is likely to provide resistance near term.


Thakral: Plans to take a bigger step into Australia's property mkt and signaled that property could become its major business. Grp has set aside $15-16m for property projects and is seeking co-investors. Co is focusing on residential projects in Sydney and Melbourne as the supply of homes there is tight and developers are facing a funding gap…

Co is now actively working on 5-6 investment proposals which wld require $65m of capital in total. Investment horizon ranges from 1-3 yrs, and targets an IRR of 15-25%.


SembCorp: Unlikely to rise much on news its 40%-owned SembSita Australia is the successful bidder for a solid waste management service provider in Australia. The target, WSN Environmental Solutions, owned by the NSW govt, won't contribute to grp’s FY10 earnings as the A$235m acquisition will be completed only by end of Jan11….

As SembSita's financial results are not publicly available, its contributions to Sembcorp can't be readily assessed. SembSita will fund the purchase using debt and shareholder funds, implying Sembcorp may help with the financing. The move should in the longer term help bolster Sembcorp's utilities business, an area it's been seeking to expand….

3Q10 utilities earnings +6.0%YoYat $59.2m, aided partly by water firm Cascal, which Sembcorp acquired in Jul. Resistance is at the $5.20 52-week high.

China Animal

China Animal: Could see a bit of negative sentiment, after Co. announced that the reporting accountants of the Co. conducted a review on the Unaudited 3Q Financial Statements of the Group and consequent to the review, further adjustments have been made to the Unaudited 3Q Financial Statements and the auditors have given negative assurance on the adjusted fin statements for 9M10…

Overall, bottom line was reduced by Rmb5m to Rmb16.3m from Rmb21.3m. Technically, see support at the recent swing low of $0.39.The 30-day SMA and 50-day SMA is likely to provide support for the stock going forward. To date, the 2nd batch of shares has been transferred to HKSE, and the 3rd batch transfer will cease on 20 December 2010…

On the restated accts, grp will trade at a hefty 26.6x FY10E PE, however Kim Eng remains upbeat on grp’s prospects for 2011, with a TP of $0.48, pegged at 15x FY11E PE.

Tuesday, December 14, 2010

Citi Strategy

Strategy: Citi reiterates strategy for 2011. Tip yr end FSSTI Target of 3450. Note that although SG may underperform bullish regional view, see 20-30% upside in selected names. Ample global liquidity suggests continued SGD strength, low interest rates and buoyant commodity prices….

Note that Banks have lagged, yet are at record earnings, NIMs look close to bottom and business lending is recovering. In a low rate environment property office values could rise and mass market residential and REITs remain attractive…

Highlight that O&M is seeing a new rig replacement cycle underpinned by a strong demand outlook and firm oil prices. At 1.78x P/B, FSSTI is +0.5SD above mean, and well below bubble 2.3-2.4x levels of past cycle peaks. Top picks are DBS, Keppel Corp, Yangzijang, Genting, ComfortDelGro, M1, AREIT & Allgreen


Noble: CS maintains Outperform & increases TP to $2.60 from 2.55. Expect grp to be one of the most leveraged towards a global macro recovery, given its broad bulk commodities portfolio, and upstream energy assets. Cite that valuations are still undemanding, with limited earnings risk with China’s efforts to curb inflation….

With 4Q agriculture margins locked in, see further normalisation of SGA expenses to boost earnings. Tip Noble to utilise its strong balance sheet with further M&A traction. Raise earnings estimates by 4% on higher coal prices and see a stronger 4Q and 42% EPS growth in FY11.


YangZiJiang: CIMB maintains Outperform and raises TP to $2.57 from $2.15. Note that grp has secured US$1.3b worth of orders with pockets of orders in 4Q10 and believe the strength in containership orders could make up for softer demand for bulk carriers in 2011….

Raises order and earnings assumptions & higher TP takes into account earnings upgrade. Other stock catalysts could include stronger-thanexpected order wins and margins.

Eratat Lifestyles

Eratat Lifestyles: CIMB has Technical Buy Call. Note that stock has been trading in a sideways manner for the past 2 mths.This sideways movement shows that the bulls were building a base for the next leg higher, appearing to be a symmetrical triangle….

Highlight that yesterday’s push on strong vol suggests that the consolidation is over and a new short term rally is taking place. Technical indicators are also showing positive signals, supporting the bullish view….

Recommend investors buy now, but keep a stop below the recent swing low of $0.20, at $0.195. Near term, price could race towards the targeted levels of $0.24-0.25 next with a small chance of reaching the $0.285 levels.


STATS ChipPAC: Announced that it has more than 50% growth in flip chip business in 2010 compared to 2009 with exports of more than 250m units. Source of growth was likely from US as US has historically formed more than 70% of its export business for semiconductors and packaging services. It should be noted that co suffered a loss for 9 mths Sept 2009, so it was likely from a low base as well.

Li-Heng Chemical

Li-Heng Chemical: Stock in Top Volume today. CIMB has Techniacl Buy Call. Note that stock broke out of its bullish wedge pattern back in Sept and the recent pullback appears to be in a form of a bullish flag pattern. Prices broke out of this bullish flag pattern yesterday on rising volume…..

Technical landscape is now positive with its MACD now moving back into positive territory. RSI is also on a rising trend. A breakout above the recent high of $0.23 could see prices climb higher to try to close the gap at $0.26-0.27. The next resistance is at $0.295. Tip stop loss at $0.195.

City Dev

City Dev: RBS upgrades to Hold vs Sell and lifts iRNAV-based TP to $11.90 vs $10.93 to reflect higher valuations of the developer's commercial properties and its Millennium & Copthorne unit. Expect the capital value of CDL's commercial portfolio to appreciate next year on the back of higher transaction volume and rents….

Note that the hotel arm M&C should continue to do well as global economic conditions improve, but expects housing-market curbs in SG to continue to weigh, due to continued high liquidity in Asia. Consider it highly probable that the govt will introduce harsher regulations to deflate the property bubble.


FreightLinks: 2Q results came in with rev at 36.2m +17.9%yoy, +19.5%qoq. Profit at 0.9m was +8.7%yoy and -60.4%qoq. The qoq decrease was attributed to favourable 1Q results, due to a one time decrease in forex losses and writeoffs…

Co sold 5 properties to Sabana for $193.0m which was used to subscribe for Sabana’s shares, repay borrowings and fund invts and has an approx 51% stake in Sabana REIT. EPS for 2Q was at 0.04c and a total of 0.15c for 1H11 compared to prev yr 1H10 at 0.06c.

Novo Grp

Novo Grp: Announced 1H11 results, which saw Rev at US$207.8m, -4.7%YoY, as Total tonnages of steel products sold by Grp decreased to approximately 893,500t in 1H FY11 from approximately 1,676,000t YoY. In particular, rev generated from international trading -14.4% to US$178.8m. The decrease in the Group’s revenue during the period was due to decrease in international trading of finished products and raw materials….

Grp was impacted by the measures adopted by the PRC govt to cool the economy, particularly on the property sector which affected the steel industry and hence the demand for iron ores dropped considerably….

Sale of raw materials still dominated Grp’s rev, representing approximately 59.8% and 65.4% of total rev of Group in 1H11 and 1H10 respectively. We note that at current price, grp trades at trailing P/E of 5.7x, in line with peers average of 6x.


Ramba: Share prices could take a hit, after grp warns that FY10 financial results will be affected by share based payments and write-offs of acquisition-related costs incurred due to change in FRS103 - Business Combinations, and will provide details of its financial performance when it releases its financial result for FY10….

Technically, see support at $0.345 (yr Low) and $0.32 (Gap up support frm 2 yrs ago).

Genting HK

Genting HK: Could see renewed interests, after Chairman of SG Cruise Centre highlighted that Asia's cruise passenger throughput could swell to 6-7m annually as more cruise liners set their sights on Asia, backed by the growing affluence in Asia. UK-based consultancy Ocean Shipping Consultants projected cruise passenger throughput in Asia shld nearly double from 1.07m in 2005 to 2m by 2015….

Technically, CIMB has a Technical Buy Call on counter, noting that the stock appears to be forming a bullish flag pattern, with prices closing above both its 30-day and 50-day SMA on rising volume. MACD has confirmed its golden crossover and moving into positive territory again. Expect more follow through buying in the coming days. RSI is also rising steadily….

Recommend traders buy now, but keep a stop loss below the swing low of US$0.41, just in case. If prices drop below US$0.40, the flag support, then it would likely signal that prices are in for a deep correction.


Sinomem: Grp announced that it is seeking Catalist listing for its subsidiary, China Green Innovation, which produces pine-based products. Unit's production facility and ops are located in Wuping County in China, where one of its key raw materials, pine oleoresin, is commonly found....

Proceeds from the listing, which is subject to regulatory approval, would come in handy as Sinomem bids for more projects in China and seeks opportunities in India, where it recently formed a water treatment JV. Grp’s cash on hand was at $41.1m in Sept. CIMB has been hired as the sponsor but the time frame for the exercise is not disclosed….

Recall that Sinomem announced recent 3Q Net Profit, which doubled to $10.2m YoY on back of higher sales across all of its business segments. At current price, grp trades at undemanding valuations of 7.2x FY10E PE, vs the average of its larger peers who trades at 17x. Imemdiate resistance tipped at $0.50.

SG Market

SG Market: Spore shares are expected to be rangebound as the lack of corporate events & somewhat flat on Wall Street provides few catalysts for any sharp moves in the market. Chart watchers will likely continue to focus on the 3120 level, which many tip as a key support at the neckline of a potential head & shoulders pattern, which may be triggered if China raises interest rates.

Nevertheless, most analysts are still generally hopeful of a yr end rally taking the STI to close above 3,300 for 2010. Oil-related svc providers & commodity stocks to remain in focus with banks, properties taking a backseat.

Stock rating changes:
*Noble maintained at O/P at Credit Suisse with TP raised to $2.60 from $2.55
*City Dev upgraded to Hold from Sell at RBS with TP raised to $11.90 from $10.93
*Keppel Land target ptice raised to $5.90 from $5.20 at RBS
*CapitaLand target price cut to $3.20 from $3.55 at RBS
*Golden Agri upgraded to Buy from Hold at OCBC Sec with TP raised to $0.91 from $0.78
*Wilmar target price cut to $6.48 from $7.04 at OCBC Sec
*Yangzijiang target price raised to $2.57 from $2.15 at Cimb

Monday, December 13, 2010


STX OSV: Announce that it has secured a new contract for the design and construction of a Platform Supply Vessel of PSV 09 design for an undisclosed international customer. The vessel is scheduled for delivery from STX OSV in 2012. With this latest contract, STX OSV will have an orderbook of 50 vessels as at 13 December 2010, out of which, 17 will be delivered in 2012….

We note that at current price, grp trades at undemanding valuations, with an annualized FY10E P/E of 5.2x vs SGX listed pers at 8.9x.

Citi Strategy

Citi Strategy: Citi has FSSTI Target of 3450 for 2011. Note that although SG may underperform, sees 20-30% upside in selected names. STI target represents 1.78x P/B, +0.5SD above mean, and well below ‘bubble’ 2.3-2.4x levels of past cycle peaks. Top picks: DBS, Keppel Corp, Yangzijang, Genting, ComfortDelGro, M1, AREIT, and Allgreen…

Expect Banks and property segments to be buoyed by liquidity, and ample global liquidity suggests continued SGD strength, low interest rates and buoyant commodity prices. Add that banks have lagged, yet are at record earnings, NIMs look close to bottom and business lending is recovering….

Add that in a low-rate environment, property office values could rise and mass market residential and REITs remain attractive. O&M is seeing a new rig replacement cycle underpinned by a strong demand outlook and firm oil prices….

GDP growth to moderate, but still resilient - GDP growth is expected to moderate
to +5.5% in 2011 from +15% in 2010 but activity remains well above the 2007/08
peak with recent manufacturing and export data, resilient services and new
capacity additions suggesting growth upside risks.

* Orchard Parade Hotel *

Orchard Parade Hotel: CIMB has Technical Buy Call. Note that stock is forming a triangle pattern but this is a running triangle instead of a symmetrical as above. Tip that prices are now at its tail end of this consolidation and should soon kick upwards from here…

MACD is now falling at a slower rate as it approaches the zero line while RSI is now flat above the 50-pts mark. Both support the triangle view. Recommend aggressive traders to go in now for a short term buy but place a tight stop below $1.52. A breakout above $1.60 would likely see prices shoot towards $1.75 and possibly $1.84.


SIA: DBSV maintains Buy with $18.50 TP pegged to 1.5x FY11 P/B, citing sanguine earnings outlook. Expect SIA’s core earnings to rebound nearly seven fold in FY11, on higher carriage, load factors and yields, to $1.4b and by 11% in FY12 to $1.57b, primarily driven by higher air travel demand….

Flushed with cash, grp has a few options to enhance shareholder value. As at end Sep 2011, SIA’s net cash position exceeded $4.5b and with an improving earnings and cash-flow outlook, cashhoard will continue to grow….

In order to improve its ROE (projected to be around 9%-10%), and enhance shareholder value, expect SIA to either 1) increase dividend payout to FY07 and FY08 levels of S$1 per share, 2) embark on a capital reduction exercise (like in FY0 or 3) acquire a stake in another airline to provide a boost to its medium to long term earnings (China Eastern Airlines?)….

Maintain Buy, but lower FY11 earnings by 7.3% to reflect recently announced fines for
its Cargo business.


NOL: UBS upgrades from negative to Neutral and raises TP to $2.48 from $1.82. In strategy Report, broker turning negative on bulk vs container shipping. Downgrade dry bulk sector view from Neutral to Negative. Note that 2011 will be challenging for dry bulk shippers due to a supply-led downturn, forecast a 10% YoY decline in the BDI, to an avg 2,500 in 2011…

Cite that policy tightening and structural changes in China’s economy indicate slowing demand growth for iron ore, forecast 10.6% vessel capacity growth in 2011 and expect supply growth to exceed demand by 5%. Add that record high container shipping profitability unlikely to repeat in 2011. Prefer container shipping to dry bulk on a relative basis.

Mandarin Oriental

Mandarin Oriental: Grp reported rev for 9M10, with RevPAR +20% in HK and +23% in SG, with two markets accounting for 48% of its rev. That said, compared to Shangri-La, Mandarin has much higher exposure to US & Europe (42% of 2011E rev vs 0% for Shangri-La). Detusche however prefers Shangri-La for better long term growth prospects….

Note that grp trading at historical average valuation of 12x EV/EBITDA. On the back of better demand outlook for luxury hotels, Deutsche raises 2010-12 EPS by 4-13%. For 2011, incorporate US$10m branding fees from the sale of Mandarin Oriental Residences in London….

Raises 2011 EPS is by 27%. New estimates largely in line with consensus. Note that upside risks include better RevPAR growth. Downside risk is delays in the hotel openings

Ascott Residential Trust

Ascott Residential Trust: CS initiates coverage with Neutral rating, and TP of $1.30, implying a 12% total return. Note that while Reits earnings stability and investability have improved after its recent acquisition of 26 European serviced apartments, in the near term, the acquisition may have diluted some of the stronger growth in thriving markets like SG….

Believe that potentially up to $1 bn of assets in Tier 2-3 China cities, Singapore, Malaysia and India could be injected into REIT over the next 12 months, citing that a cash call could potentially be necessary if the acquisition value is >US$500m. Suggest that, should a cash call be required, this could provide a good entry opportunity….

Valuation appears fairly attractive with a FY11E 6.4% yield, compensating the lower single-digit growth outlook, and expect REIT to rerate if management divests non-performing assets.
However, for hospitality exposure, broker prefers CDLHT for better growth prospects.

China Animal

China Animal: Announced that it has successfully received approval in-principle for the HK Listing (by way of introduction) following the hearing of its application by the Listing Committee of the SEHK on 2 December 2010. Grp will lodge its listing document (or propectus) on the website of the SEHK on Wed, 15 December 2010. Trading of shares is expected to commence on the SEHK at 9:30 a.m. on Tue, 21 Dec10, pending formal and final approval…

CIMB and Kim Eng has Buy Call on stock with $0.52 and $0.48 respectively.

Gallant Venture

Gallant Venture: Kim Eng Reiterates its Buy Call and maintaints TP of $0.75. Note that share price has recovered 41% to $0.36 since initiation report last mth and maintains view that the Co. is undervalued and if tourist arrivals to Bintan should beat forecasts, the upside to TP will increase as more developers come on board to speed up the rejuvenation of the island as a regional tourist destination….

Highlight that grp trades at a 30% discount to the understated book value & current share price remains an attractive entry level. Add that though policy risks in China may weigh on Gallant’s property project in Shanghai, it is unlikely to significantly affect its valuation as conservative forecast has taken this into account.

we note that Msian-listed peer Landmarks Bhd surged 20% on Friday, after a CIMB initiation.

SG Market

Spore shares may open slightly higher, taking their cues from gains in US stocks Friday and mostly higher regional markets; but eyes will be on China's reaction to Saturday's inflation data and the PBOC's latest move to rein in bank lending. STI ended -0.8% at 3185 Friday...

While there was market talk that China would raise rates over the weekend, the govt opted instead chose the lighter option by hiking bank reserve ratios by another 0.5% in a bid to absorb excess liquidity and curb inflation...

Technically the STI needs to take out the 3250 level to negate the formation of a head and shoulders pattern. If the STI falls below 3150, then the pattern would be formed, and may be viewed as a reversal indicator for the uptrend since Aug.
News flow thin. Interest may centre around smaller caps today.

Stocks to watch:
* Gallant: we note that Msian-listed peer Landmarks Bhd surged 20% on Friday, after a CIMB initiation. KE reiterates Buy.
* China Animal Healthcare: received approval in-principle for the HK Listing (by way of introduction). To lodge listing document (or propectus) on Wed, 15 Dec 2010. Expected to commence trading on the SEHK at 9:30 am on Tue, 21 Dec 2010.
* AFP: subsidiary PT Bumi Serpong to spend Rp 1 tr on capex next yr to expand its BSP City Project in Indonesia.
* Popular: 2QFYApr11 results. Reports 87% yoy jump in net profit to $2.6m, on +11% in turnover to $124.1m. Interim dividend of 0.4cts.
* Beyonics Technology: may extend recent losses as 1Q11 results indicate bottom line under pressure. $2.8m net loss vs $2m profit last yr.

Stock ratings:
* SIA: DBSV gives update on regional airlines. Maintains SIA at Buy, with $18.50 target.
* Ascott Residence Trust: Credit Suisse initiates at Neutral with $1.30 target.
* Tiger Air: Credit Suisse maintains Underperform with $1.90 target. CLSA maintains Buy with $2.46 target; tips 4Q growth to accelerate; notes a number of routes for Dec already sold out.
* Osim: OCBC cuts to Hold from buy, but raises target to $1.68 from $1.52.
* NOL: UBS upgrades to Neutral from sell, raises target to $2.46 from $1.82; prefers container to bulk shipping. Deutsche maintains Sell with $1.61 target, due to negative view of container shipping rates going into 2011.

Friday, December 10, 2010


OKP: CIMB maintain BUY rating with $0.85 TP, pegged at 10x CY11 earnings, below the mid-cycle valuation, and discount to bigger peers who re-rated upon awards of overseas contracts. Like OKP for its high projects visibility in the public sector, and its strong potential overseas expansion story…

Note that grp is a prime candidate to government infrastructural spending and the stock offers excellent value trading at 7.4x CY11 P/E against its 3-year core earnings CAGR forecast of 28.9%....

Keep consensus estimates unchanged, which captures OKP’s higher order book and margin recovery. Note that earningse stimates have not factored in the potential catalyst of the possible overseas projects. Sustainable earnings growth will be driven by fresh order wins, particularly opportunities arising from Downtown Lines awards….

Expect immediate re-rating catalysts likely tocome from stronger than expected order momentum, strong margins from recently awarded road-raising works that will bring the group to another record profits and higher dividend payout.


SIA Eng: Renewed service agreement with Silkair due for expiry in 2010. The new contract covers maintenance, repair, overhaul and fleet mgmt services for another 5 yrs and will add $300m in labour rev to co's order book. Co currently serving 11 airlines with fleet coverage of >200 aircraft with 130 in service and 70 more to be delivered. For full yr FY10, co achieved rev of approx $1b.


CMT: HSBC initiates CMT at Overweight TP $2.22. Stable income profile supported by non-discretionary spending and high occupancy rates even during down-turn. AEI projects have been key earnings and DPU growth, with tenants willing to pay higher rents and CMT’s portfolio has room for AEI opportunities...

Low cost of funding and asset base of $8.0b allows room for development growth (10% of assets Sg REIT guidelines) and accretive acquisitions. On P/B valuation, CMT is at 1.25x P/B vs historical avg 1.31x. Current DPU yield of 4.8% but HSBC factors asset valuations rising as point for growth.


CCT: HSBC initiates at Underweight with TP $1.47. Rollover of higher-than-mkt rentals are likely to rollover in nxt 2-3 yrs capping DPU growth. Invt demand to drive capital appreciation, to favour developers as cleaner way to play this over CCT. Possible upside risk from Mkt Str Car Park redev, but permissions from authorities not sought yet. Current yield of CCT at 5.1%. Valuations by HSBC are on high side with CCT currently at 1.05x P/B, higher than historical avg 0.86x P/B.

Spore Strategy

Nomura has strategy report. Remain positive on sectors that benefit from reflation and higher commodity prices, including banks, commodities, offshore marine and commercial property…

Note that SG Banks has good value but lacks catalyst, with interest rates remaining depressed, sector could continue to languish. Cite that UOB had underperformed significantly and seemed attractively priced….

Warming up to upturn in offshore marine, rig upgrade/build has been reviving, underpinned by regulatory change and an improving oil price outlook. However noted concerns about margins for Petrobras contracts which may not be attractive for Keppel and Semb Marine…

Highlight that Office cycle peaking with concerns about the high-end market, given the dearth of transactions, while contrarian views looked at the potential of rerating once policy
overhang dissipates…

For Upstream commodity plays, warn that investors may be wary about getting caught if the CPO price pulled back sharply. Generally agree with the positive view on Noble, but some scepticism about Olam’s recent M&A announcements. Note that Wilmar’s share price is finding support but with few catalysts in the near term.

CS has strategy report. Note that more positive global outlook augurs well for higher-beta names. Raises 2011 real GDP growth forecast to 4.7% from 4.2%, to reflect a more positive global growth outlook in 2011…

However Underweight on SG (mainly due to valuations), prefers export-oriented markets that will benefit from the recovery in global IP over domestic defensives. Note that Sectors that would benefit from the recovery in global IP includes capital goods, transport and commodity names….

Overweight capital goods, property and transport, and Underweight telecom and consumer discretionary. Market weight banks, consumer staples and financials. Top picks are SMM, NOL, CDL, Keppel and Olam.


OSIM: Co. announced that it submitted an application to the TWSE and the Taiwan Central Bank (TCB) for the offering and listing of 85m TDR units, at temporary indicative offer price of NT$20.80 for each TDR unit (each TDR unit represents 0.5 ordinary shares of the Company) representing an aggregate of up to 42.5m ordinary shares (or $1.80 equivalent for each ordinary share) to be issued out of treasury of the Company on the TWSE….

The Proposed TDR Issue is also subject to the approval of the Financial Supervisory
Commission, Executive Yuan, Republic of China. The application for such approval will be made after the relevant approvals from the TWSE and the TCB have been obtained…

Based on the temporary indicative offer price, the estimated proceeds will be NTD 1,768 million ($76m equivalent). Proceeds from the Proposed TDR Issue will be used for investment in developing specialty retail outlets for personal care and sports-related products & expand the scale of the Co’s business in China.

Comfort Delgro

Comfort Delgro: Macquare upgrades stock to Outperform from Underperform and raises TP to $2.00 from $1.19, on the back of strong economic growth and tourist arrivals in SG that account for 60% of revenues, and positive developments such as the Downtown Line
tender, the new taxi fleet in Singapore and acquisition in Australia….

Highlight that valuation is undemanding at 12.6x FY11E PE and the underperformance vs the Straits Times Index of 16% YTD is unjustified. Note that estimates are 6% each higher than consensus for 2011 and 2012.

Genting SP

Genting SP: Seeking to refinance $4.2b of loans, a $3.5b term loan and remainder revolving credit facility, used in building RWS. The term loan will pay initial interest at SOR+1.6% for 3 mths and then based on SOR +1.2-1.6%. Rate of 1.2% above SOR will depend on Genting’s debt-to-EBITDA ratio falling below 2.5x. Banks involved are Tokyo-Mitsubishi, DBS, HSBC, OCBC and Sumitomo Mitsui. While not published, for last quarter, net debt-EBITDA is approx 2.1x.

SG Market

SG Market: Expect trading in Spore shares to be light without any firm leads. Talk that China may announce new tightening measures amid release of inflation data, may result in investors being reluctant to take positions ahead of the weekend. Immediate resistance for the STI expected at 3230 (Nov 19 high), while support is at the 50-day MA of 3185. Last closed +0.2% at 3210 yday.

#Stock ratings:
* CCT: HSBC initiates at Underweight with $1.47 target.
* CapitaMall Trust: HSBC initiates at Overweight with $2.22 target.
* Comfort Delgro: HSBC upgrades to Outperform from underperform, raises target to $2.00 from $1.19.
* Hi-P: DBSV maintains Buy
* Venture: DBSV maintains Buy
* Suntec Reit: OCBC cuts to Hold from buy.

#Stocks to watch:
* Genting SP: may benefit from move to refinance $4.2b in loans taken to build Resorts World Sentosa, says new terms will be less restrictive.
* Tiger Air: neutral on Nov operating stats. Carried 464k pax, +2% mom, +10% yoy, spurred by addition of 1 new aircraft. But load factor dipped to 86%, -1 ppt mom, yoy. Mgt guides for more rapid fleet expansion to 28 aircraft by end FYMar11, vs 26 aircraft previously.
* Osim: submits TDR application to raise S$76m proceeds from sale of treasury shares. Indicative offer price at S$1.80/sh equivalent, 6% premium to last closing price.
* TCT: halt to be lifted at 9am. Private placement to fund acquisition of 2 new China malls significantly oversubscribed. Acquisition to be immediately NAV-accretive, and income accretive from 2011.
*SIA Engrg: renews expiring service agreement with Silkair. The new contract covers MRO and fleet mgmt svcs for another 5 yrs and will add $300m in labour revenue to order book.
* Bio-Treat: lands Rmb 500m contract to build a water treatment plant in Henan. Work expected to commence 1Q11 after feasibility study.
* DBS: sued by a client claiming fraudulent and negligent misrepresentations relating to a US$1.5m Lehman Brothers-related investment. Case pending; any impact likely small.
* Shangri-La Asia: halt to lift at 9am. Propose 1-for-12 rights issue at HK$19.50 per rights share.

Thursday, December 9, 2010

Tiger Air

Tiger Air: Phillip starts at Sell with $1.65 target. Says at 17X fwd P/E and 6X P/B, Tiger is one of the most expensive airlines stock. Warns of intense competition in the low-cost carrier market; notes Tiger's cost advantage in Spore over other LCCs no longer as strong after the recent price hike announced by the Changi Airport Group...

Tips jet fuel costs as the wild card as they make up most of Tiger's operating expenses; notes the key to Tiger’s profitability would be its ability to pass on the fuel costs to end-customers.


CAO: News from industry sources that co has signed term contracts with South Korea's S-Oil Corp and Japan's Cosmo Oil Co to buy jet fuel in 2011 at higher prices than this year. CAO also is in talks with SK Energy, PetroChina Co. (PTR) and China International United Petroleum & Chemical Corp (Unipec), to renew term contracts to buy jet fuel next year...

Discounts of $0.35 per barrel were narrower than last yr’s $0.70-0.85 per barrel implying both tighter supplies this yr and perceived demand for jet fuel nxt yr. In line with CPO forecasts. May weigh on airline stocks SIA and Tiger.

Think Environmental

Think Environmental: Update on proposed invt into Mornington Offshore for Mali gold mines, Mornington is in midst of determining measured and indicated reserves, and co is also in process of assembling own team. As such co is "cautiously optimistic" of setting production facility within nxt 12 mths...

Cost will range from US$250-400 per ounce and gold price is approx US$1400 currently. Co's subsi is working on environmentally friendly plan for operations. Recall stock is a concept play; has shot up 31.3% since 3Q results which were loss making. Caution advised as investment is still preliminary without firm figures, furthermore, co is not known for having expertise in mining or any form of JVs cited.


Strategy: CS initiates strategy report for 2011. Expect yr to turn out to be like 2005, with a recovery of IPO momentum & return of confidence would mean investors start to believe in an earnings recovery. Remains overweight on equities on 2011, forecasting 13% rise in global markets in 2011…

Expct 4.4% global GDP growth & equitites look cheap relative to other asset classes & provide hedge against inflation. Broker is underweight bonds. In SG, top picks are YangziJiang, Cosco and SembMarine…

Also remains bullish on SG office, expct 2011 to see continued sector cycical recovery in liquidity inflows & cap rate compressions should continue to play out. Expect double digit growth in off rents & hotel REVPAR. Amg sector top picks are OUE, CCT, KREIT & CDL….

For Transportation Sector, note that spot rates still falling, but tips carriers to hike rates and still likes NOL, OOIL, China Shipping, Evergreen & Wan Hai Lines.


GLP: Annouced that the non-complete clause agreement with ProLogis was not material information. GLP has an existing non-compete agreement with ProLogis, which cannot buy
or build logistic distribution facilities in China until Feb 2011. The clause also prevents GLP from building and buying such facilities in Japan until its expiration….

Information, which was 'not specifically disclosed' in grp’s prospectus, means that it could see stiffer competition in China nx yr when the restriction is lifted…

Citi reiterates Buy, with $2.80 TP. Note that price weakness due to the misunderstanding of the non-compete agreement may present an enhanced entry opportunity. Cite grp’s unique and policy-friendly business model as well as its China-Japan dual exposure will lead it to maintain its leadership in Asia’s modern logistics facility industry….

UBS maintain Buy, with $2.65, expecting no immediate impact, while Merrill Lynch has Sell Call with $2.10 TP, citing that valuations are overstating the group's growth potential over the next 12 months.

Straits Asia

Straits Asia: Indonesian govt forecasts coal output will increase by +19%YoY next yr as drier weather enables miners to ramp up production amid growing regional demand. Expect production of 327m tons next yr vs 275m tons YoY….

Indonesian miners forecast Indonesia coal production growth in 2009-2015 to be around 11%/yr and mostly from the major producers as well as newcomers. Tip supply to be sufficient to meet both the domestic and overseas mkts. Highlights investment by major buyers India and China in Indonesia's coal sector is expected to grow next yr as they are struggling to secure supply.

Pacific Andes Resources

Pacific Andes Resources Dev (PARD): to buy a 19.8% stake in Tassal, a leading Australia-listed salmon producer, for A$51.7m (S$67m). The deal was done at A$1.79/sh, 3.2% above Tassal’s closing px yday at A$1.735. This values Tassal at 9.3x P/E, vs PARD’s 7.3x P/E. The deal is expected to be completed by Jan ’11, with funding to be entirely from internal sources…

Tassal earned A$28.1m net profit on A$413m revenue for FYJun10, vs PARD’s HK$773m net profit, HK$7.4b revenue for FYSep10 (1AUD = 7.61 HKD). Tassel employs ~650 staff and this year harvested over 12k tons of salmon (70% of Australia's total salmon pdtn). PARD on the other hand, supplies frozen seafood worldwide and is one of the biggest suppliers of frozen fish to China…

While not earnings accretive at the moment, PARD notes this invmt would give it deeper insight into a new seafood biz that offers high growth potential and is well-protected with high barriers to entry. The venture into vertically integrated aquaculture also brings PARD one step closer towards a sustainable, farming biz model, similar to that of plantations…

News likely to be viewed positively. Recall StanChart at end Nov initiated on all 3 co’s within the Pac Andes group of companies at Outperform.
PARD ($0.47 TP), China Fish ($2.61 TP), Pac Andes International (1174 HK, HK$2.10 TP)