Wednesday, November 30, 2011


UMS: CIMB has Technical Sell Call. House note that The countertrend rebound from its October’s low hit the 50% FR level before easing to current levels. Looking at the chart, think there is still risk to the downside. Hence, aggressive traders may want to lock in some profits now.

There is a minor support at the 50-day SMA. A slip below this level would indicate that the next downleg has unwound. Next support levels are $0.30 and $0.275. Indicators are showing signs of exhaustion. MACD has staged a negative crossover while RSI is also below the 50pts mark. Put a buy stop at $0.355, just in case.


F&N: CIMB has technical Buy Call. Note that prices have been consolidating sideways for the past few weeks. Yesterday, prices broke out of this channel and this should entice the bulls to join the buying bandwagon. Hence, traders with higher risk appetite may start to nibble now to ride the breakout run.

The following resistance levels are $6.58 and $6.85. Add that the Technical landscape is improving. MACD histogram bars are falling at a slower pace while RSI has also hooked upward. As long as prices stay above the $6.01 level, the odds continue to favour the bulls. However, it is important to place a stop at below $6.00 to limit downside risks.

SembCorp Ind

SembCorp Ind: IIFL reiterate Buy, TP $5.70, Note that Utilities business growing nicely.
Note that over the nx 3yrs, power generation capacity would rise by 67% to 5.5GW. water treatment capacity would be boosted by 67% to 10m m3/day by 2015.

Sg contributes to 56% of utilities net profit with the remaining coming from China, UK and the Middle East. Non-marine businesses (utilities and industrial parks) currently trade at 6.9x FY12 P/E, valuing the marine business at current market price. Overall, reiterate Buy on high visibility and robust growth outlook of the utilities and marine businesses

Capitaland and CapitaMall Asia

Capitaland and CapitaMall Asia: jointly won a land tender for a 817,000-sqm mixed-development site in Chongqing, China, for Rmb6,536m.

DMG maintain Buy on CAPL, TP $3.52, acquisition is expected to enhance CAPL’s RNAV per share by 2¢ based on initial estimates (14% IRR). Continue to like CAPL for its active capital deployment into potential RNAV accretive developments, stock is trading at attractive 42% to RNAV.

JP Morgan remain O/w on CAPL, TP $2.80, Key downside risks include
1) failure of the group to deploy its potential debt financed investment capacity into accretive investments and
2) continued aversion to return cash to shareholders in terms of special dividend.

Daiwa reiterate Buy on CMA, TP $1.47, Marginally accretive based on CO. guidance.

SG Strategy

SG Strategy: UBS has SG strategy report. House note that SG economy forecast to grow 1-3% in 2012, 3Q11 GDP +6.1% YoY, Industrial output +24.4% YoY, CPI in Oct +0.4% MoM. NODX in Oct -16% YoY, and -5.9% MoM on a seasonally-adjusted basis. Below are house recommendations:

SG Banks - Stick with growth; loan growth momentum continues, DBS is top pick as its NIMs may have bottomed out, and as it is willing to grow its loan book.

SG Property Outlook - The drag from economic uncertainty is likely to persist and hurt growth. Prefer defensive sub-sectors like Retail and Industrial, key picks are CMT, FCT, AREIT, and MINT, cautious on developers but like UOL and GLP.

Industrials -
STE: maintain Buy, Valuations remain attractive;
SCI: maintain Buy, attractive valuation, strong utilities earnings;
SMM: Steady 3Q11 results, special dividend potential;
COSCO: margins remain questionable;

Telcos – ST: Buy, defensive stock for volatile times;
Starhub: remain Neutral, lack of catalysts.

Transportation – HPHT: attractive yield, defensive play;
Tiger Airways: still a fragile business.
Comfort Delgro: Overseas shines, CDG on hunt for more.
SATS: Q2 earnings satisfactory; earnings without Daniels.
SIA: 2Q profits dip; no surprise from low cost proposal.
NOL: Lower EPS on poor Q311.
SMRT: Tough ride for public transport operators.

Consumer, Commodities and others Spore Traders: Reiterate defensive.
Noble: expect fiscal stimulus and the potential spinoff to unlock value for the company.
Olam: demand remains defensive (maintain Buy and top pick).
Wilmar: looks fairly valued (maintain Neutral).

Genting Singapore: Q3 below expectations; cautious outlook
Venture Corporation: Recovery not in the near sight
OSIM International: Wooing Chinese consumers

Genting SP

Genting SP: has in Nov, set up two Mongolian subsidiaries with principal activity to be in real estate. Each of the subsidiaries has paid-up capital of ~S$125k.
This development strikes us as curious, given GENS’ mainstay operations in gaming. Nevertheless, this is not the only side invmt for GENS. Earlier this yr in May, GENS bought a 69% stake in Goldnature Investments for US$60m. Goldnature has portfolio interests in natural resource ventures.
The ventures so far are not expected to have any material impact on the financials of GENS, but it could be interesting to watch the co’s progress in this area going forward.


LionGold: Dissolves Exco and appoints Stellar Services to assist the Board to drive operations and strategic direction. Co is of view Exco's early task of pursuing gold mining licenses around the world (Mali, Ghana, Philippines and Mongolia) has been met. Board is of view that it is timely now to work to monitor and accelerate gold production in the coming mths. A member of the Exco, Mark Gillie will remain as the person responsible for operation in Africa and advisor Errol Smart is now designated for strategic advice globally.

Lian Beng

Lian Beng: Secured contracts worth $13.2m from HDB and $84.5m from 55% owned Lian Beng-Centurion Mandai (LBCM). HDB's contract is for 149 units in Tampines which will commence in Dec 2011 and be completed by Sep 2013. The contract from LBCM is for the construction of a 10 storey ramp-up factory and 2 blks of 12-storey workers' dormitories at Mandai from Nov 2011 to May 2013. As of 29 Nov, co's orderbook is approx $859m. Co is at current P/E of 3.1x

Most recently 50% owned Spottiswoode Dev has also acquired “Dragon Mansion” through a $130m purchase.

Wee Hur

Wee Hur: Awarded $159.3m in a public housing project by HDB. The project covers 8 residential blks of 1154 units, a basement car park and communal facilities such as pavilions and playgrounds at Sengkang, forming a precint named Fernvale Riverbow. Co's construction orderbook of $363.7m as of 30 Sep 2011. Wee Hur currently trades at 7.0x P/E.


Ezra: Couldsee positive interests after Co. secured a new charter and charter renewals worth US$231m from national oil Co’s and an oil major. Charters are for 4 OSVs for 4.25 yrs avg, including option periods, which will be deployed in South America and Asia-Pac. By Oct, grp's subsea order book has reached US$745m, with overall order book exceeding US$1.2b for the first time.


STX OSV: Likely to see positive interest in counter, after Co. announced that it has won a sizeable contract for construction of one Research Vessel for the Norwegian Defence Logistics Organisation valued at NOK 1.2b. Delivery is scheduled in 4Q14.

We note that contract win places grp’s Orderwin to approximately Nok 10.3b (3Q11 only at Nok 5.1b), already surpassing bearish estimates which was earlier raised this yr, attributed largely to the recent contracts of its 8 LPG tankers (approx. Nok 3b) which was made effective.
Grp’s orderbook currently stands at approximately Nok16.5b vs FY10 of Nok17.0b, underpinning earnings visibility till 2014.

SG Market

SG Market: Spore shares are likely to trade with a downward bias following the S&P downgrade on 15 global banks including 4 of the biggest US banks. Sentiment across the region is also expected to be negative. STI is tipped to stay within the 2640 and 2770 trading band amid the oversold nature of the market. STX OSV, Ezra, Lian Beng and Wee Hur may see positive action after announcing contracts.

Tuesday, November 29, 2011

SIA Engrg

SIA Engrg (SIE): has signed a Tailored Support Package (TSP) contract with Airbus to maintain SIA’s additional fleet of 15 new A330-300 Airbus aircraft scheduled for delivery from 2013. SIE will provide a wide range of MRO services, incl transit and light maintenance checks at SIE’s facilities in Spore.
The transaction is not expected to have a material impact on SIE’s performance in FY11/12.
Stock trades at 14.8x P/E.
The majority of Street has Hold ratings with recent TP btwn $3.66 – 4.86.

CapitaLand / CMA

CapitaLand / CMA: the joint tender by CAPL, CMA and Singbridge for the Chao Tian Men Site has been accepted by the Chongqing govt, and awarded at the tender price of Rmb 6.4b (~S$1.3b). The site has a land area of ~91.8k sm, with total gfa of abt 817k sm. The JV intends to develop the site into a landmark mixed devt designed by renowned architect Moshe Safdie, which will include a shopping mall and 8 towers for residential, office and hotel/ services residence use. Including land cost, the total devt cost of the project is expected to be ~Rmb 21.1b (~S$4.1b). The project will be funded through a mix of debt and equity.

CAPL and CMA each own 25% effective stake in the devt, Singbridge owns 30% and the remaining 20% will be held by unrelated parties.

Parkson Retail Asia

Parkson Retail Asia: IIFL initiates Coverage with Reduce Rating and TP $1.05.
Note that despite strong fundamentals with extensive distribution network, well-known
brand, and strong balance sheet, together with one of the highest profit margins and ROE amongst Asian retailers, after a 24% increase in stock price since its IPO, valuation is excessive. House value the stock at 15x FY12 P/E.


Noble: Prudential increases its stake from 5.97% to 6.31% approx 22.1m shares.


MCT: Established arrangement with IRAS for tax refunds on over-deducted tax on income distributions. Individuals, to whom all distributions are tax exempt, or foreign non-individuals which are supposed to be taxed at reduced rate of 10%, will be eligible if they were taxed on their distributions at a higher rate. Details of the procedure are available on the SGX announcement page.

Tiong Seng

Tiong Seng: Co has been awarded a contract for $189.5m from United Venture Dev for the proposed condo development at Bedok. This is likely to be the site that United Venture won at Bedok Reservoir Rd with a top bid of $320m, to be within walking distance to the future Bedok Town Park. Co as of last reported results on 11 Nov had an order book of approx of $1.0b over the nxt 12 to 30 mths. This brings its order book to around $1.2b. The construction co has a current P/E of 6.0x with P/B of 0.8x

Pan Hong

Pan Hong: Co. has signed a LOI to sell 6 parcels of land in Zhejiang province to the Huzhou Economic Technological Development Area Mgmt Committee for Rmb234.4m or $47.6m. Parcels have a total site area of 221k sqm.
We note that the sale of the land raises questions, as to why the developer is selling off potential landbank, which could be used for future development.

Sheng Siong

Sheng Siong: CEO highlights that Grp is in talks with a potential partner to help it expand into Msia. Grp currently owns 25 stores in SG, and aims to own at least 50 outlets in Msia over the longer term as a fast-growing population and rising income will boost demand for basic necessities like groceries.

Grp is planning to open its 1st Msian supermarket in Johor, and is currently in discussions to form a jv with a listed co in Msia. It does not plan to compete in the hypermarket space, which is already crowded with larger rivals.
We note that such a move seems positive for grp, who is facing a strong competition within a very saturated mkt in SG, from larger peers, and could provide grp with a new avenue of growth. Street is currently mixed on counter with a wide range of Calls and mean TP of $0.42.


StarHub: has acquired the exclusive broadcast rights to UEFA Euro 2012, which will be held form 8 Jun – 2 Jul 2012.
Deutsche notes StarHub’s pay-TV acquisitions and pricing could accelerate ahead of the 2012 broadcast. Recalls back in 3Q08 during the 2008 broadcast, Starhub’s pay-TV net adds jumps to 9k from the avg 3-4k in preceding and subsequent quarters. Also the previous 2008 EUFA Euro package was charged at $21.40 and $53.50 (incl GST) for Starhub’s Sports Group and non-Sports Group customers rptvly.
While specific costs of the 2012 rights were not disclosed, Deutsche believes they were higher than what Starhub paid for in 2008. Starhub itself has said on past occasions that content costs are generally expected to continue to rise.

Of greatest significance is that the UEFA Euro 2012 content will need to be made available for carriage on competitor pay-TV platforms. Deutsche believes SingTel may be in discussions with Starhub, though it remains unclear at present what form the commercial negotiations will take.

The house maintains Buy with TP $3, in view of Starhub’s near term dividend sustainability, but otherwise is cautious on the Spore telco sector given emerging structural challenges.


SMRT: may see some interest after the Transport Minister announced that the Circle Line (CCL) extension will open on 14 Jan next yr, ahead of mkt expectations.
The extension comprises a new station at Bayfront and will connect CCL to the existing N-S Line at Marina Bay station. The 2 additional CCL stations are expected to serve the integrated resort (MBS) and the new Int’l Cruise Terminal.

Deutsche highlights that it recently upgraded SMRT to a non-consensus Buy (TP $2.21), on expectations that CCL ridership growth will surprise on the upside. Notes its view is supported by its own ridership checks which showed a surge in CCL commuter flows post opening of stages 4 and 5. Believes that the worst of SMRT’s operational challenges are largely behind. Says, while valuations (at 19x FY12E P/E) are not cheap, the expected operational turnaround, consequently robust earnings growth and defensive 4-5% dividend yield are key differentiators.

SG Market

SG Market: Spore shares are likely to track higher following Wall Street, which posted its biggest single-day gain in a month on optimism over Europe, thanks to news eurozone leaders are working towards a new pact to stem the debt crisis. However, gains are unlikely to be in the same order of magnitude as in the US as caution remains over the very fluid situation. Resistance for STI is tipped at around 2770, representing the 50-day MA with support at 2650.

CapitaLand and CapitaMalls Asia may be in focus after both, along with Singbridge Holdings, have been awarded a site in China's Chongqing for Rmb6.54b to build a landmark mixed development.

Monday, November 28, 2011

China XLX

China XLX: To issue Rmb324m worth of convertible bonds to priv co Nitro Capital Ltd. The proceeds will be used for expanding their plant and Xinjiang acquisition. The bonds will have a conversion price at approx Rmb1.84 ($0.375) per share and is approx 15.0% of enlarged share capital. Co currently trades at $0.36.

Most recent 3Q revenue showed a 35.4% increase yoy mainly due to higher ASPs and increased sales volumes. Co currently trades at 10.2x P/E


Wilmar: (The Edge) On track to build sugar business and expects better 4Q on higher margins.
Note that a successful acquisition of Prosperine Sugar Mill would increase Wilmar’s market share in Australia’s sugar-cane processing to nearly 50%, although the loss making Properperine is not expected to have a significant impact on Wilmar’s earnings in the near term. By 3Q12, Sugar Business contributed abt 12.6% to Wilmar’s pre-tax profit.

Grp’s CPO business prospect are also beginning to look brighter, with the Indo govt reducing its export tax of processed palm products (9% lower then CPO), as such, Wilmar’s refining margins are expected to rise in 4Q due to the wider export-tax differentials, while Co has also benefited from better margins for its consumer products business in China after the Co. recently raised the prices of its cooking oils when price restrictions in China was relaxed.

JP Morgan expects Wilmar to report better numbers in 4Q as margins for consumer products continue to recover and margins for its palm and lauric business in Indo benefits from the revisions to export taxes. Overall forecasts a 17% increase in earnings for 4Q11.

Sheng Siong

Sheng Siong: Daiwa has unrated report. Note that grp is a major force in grocery shopping, with plans to increase floor space by 10%/year for the nx 3yrs. Increased own-brand mix to boost margins. Expects more aggressive expansion post IPO; overseas expansion to be measured.

Ascott Res Trust

Ascott Res Trust: To acq 60% interest in a freehold property in Shinjuku, Tokyo from Mitsubishi Real Estate and Citadines Shinjuku Ippan Shadan Hojin for JPY2.7b ($45.7m). The property is a 12-storey building with 1 basement and comprises 160 apt units with site area of approx 901 sqm and GFA 6.2k sqm. The property was valued at JPY5.8b ($98.1m), and a 60% stake would be approx $58.9m. Capitaland holds the remaining 40%. While co has said that acquisition is expected to be yield accretive at implied yield of 4.5%, co’s current est gross yield is at 9.1% by analysts’ consensus.

Genting SP

Genting SP: JP Morgan has sector report. House note of tighter advertising and promotions guidelines. Casino Control Regulations 2011 has tightened advertising and promotions regulations for the domestic market to cover promotional activities.

Housebelieve this measure is negative as it would limit the casino operators’ flexibility in promoting to and rewarding customers and expect negative share price reaction to this latest news which marks stricter regulations for the 2 casino operators. Do not discount the possibility of further regulatory tightening measures ahead. Overall, house Neutral on GEN SP.


UOB: CS note that Underperformance overdone and valuations are starting to look attractive.

UOB now trades at 1.1x P/B, at decade lows excluding 2009. It appears overextended (-1.8 sd) vs 5yr avg of 1.6x and P/B vs peers is near 5yr lows. House think it is too early to assume UOB’s asset quality performance could be worse this cycle than peers’ and while book value risks are real, mgt has been actively managing the exposure and has
already taken provisions on the exposure. UOB’s underperformance appears overextended and could reverse in the short term.

UOB is ‘aggressively’ reducing its exposure to European securities, now significantly below $1b (vs S$1.2b as of Sept). With pressure on funding costs and efforts to shore up USD liquidity further, NIMs will probably remain under pressure near term. Asset quality remains comfortable—the NPL increase in 3Q11 does not indicate an incremental deterioration of the book. House however maintain U/p, TP $17.70.

ARA Asset Mgt

ARA Asset Mgt: Citi maintains Buy with $1.90 TP. House hosted an investor lunch with Group and below are the key takeaways from the luncheon:

Target size of ADF II is about US$1bn and, based on the last results, ARA has secured US$300m. ARA will look to commit about 10% as seed capital for the fund. Requirements of the seed capital will be progressively drawn down, pending on opportunities for investments, with existing cash reserves as the first option.

ADF II likely to have more investments in China. According to mgt, investment mandate for ADF II will be similar to ADF I (Pan-Asia) but ADF II is likely to have more on investments in China. Mgt sees greater momentum in new REIT listings in HK relative to SG and sees a push for China assets to be injected into REIT vehicles. Some of the exit strategies for properties in ADF I would be
i) a REIT listing;
ii) divestment to existing REITs;
iii) direct sale of assets.

Mgt is committed to paying out 4.8c p.a. as dividend, supplemented by bonus issues. Since listing, the share base has grown by 32%, following a 1-for-5 and a 1-for-10 bonus issue in the past two years. Mgt is comfortable with growing AUM by $2b p.a. but highlighted that growth of AUM could also come from M&A opportunities, either at the REIT level or mgt company levels.

Pac Andes

Pac Andes: Results in-line with expectations. FY2011 rev at HK$9.7b +30.7% with net profit at $622.8m -19.4% yoy. This included an early redemption of senior notes, if excluded, net profit would have been approx HK$690.3m. Decrease in net profit was due to higher selling, admin and interest expenses.

Revenue from frozen fish accounted for 45% share of rev attributed to demand from China and growth in Africa. Rev from fishing made up the remaining 55% driven by stronger contributions from South Pacific fleet and Peruvian fishmeal ops offset partly by North Pacific operations.

Of note co has penetrated the West African mkt where in FY2010 made up only 3.8% of rev and in FY2011 currently forms 18.0% of revenue.

Net gearing from co is currently approx 43.9% higher than prev year 32.4%

Co has a dividend policy to distribute 1/3 of its profits and a dividend of 1.08c has been declared. Pac Andes is currently trading at 5.9x P/E.


GLP: Reportedly planning to issue $300m-$500m worth of perpetual bonds at approx 5% with a step-up in Apr 2022. Co intends to raise funds for acquisition opportunities in this depressed economic environment. GLP has approx $1.7b in cash currently with net debt to gross asset ratio of around 23%. Fitch has assigned a BBB- rating to the perpetual notes, viewed as a hybrid, 2 notches below GLP’s BBB+ rating.

Great Eastern

Great Eastern: Announced that it will invest US$380m in the cornerstone tranche of Beijing-headquartered New China Life Insurance Co.'s Hong Kong share offering.

Great Eastern, which is 87%-owned by OCBC said it will subscribe to the overseas H-Share component--of the offering. New China Life has received approval from both Hong Kong and China regulators for a dual Hong Kong and Shanghai listing in December that could raise up to US$3b. We note that such a move could provide a stepping stone for Great Eastern and OCBC to target the Chinese insurance mkt.


Sakari: Could see some negative sentiments, after the collapse of the public Kutai Karanegara suspension bridge over the Mahakam River on Saturday. While Grp has announced that at this pt in time, no formal exports of the damage have been confirmed, and they are currently still ascertaining the impact on its Jembayan operations. Production is for now still continuing as usual in Jembayan.

We note that any disruption to the transportation of Jembayan coals could potentially weigh on 4Q11 results, with Jembayan currently contributing abt 85.2% of grp’s total sales vol, based on 3Q11 results.

China Fishery

China Fishery: Reported FY11 results which was broadly in-line. Rev at US$685.5m, +27.2% yoy, while net profit at Rmb 103.7m, -11.1% yoy. Ebitda margins dropped slightly from 40.3% to 35.3% yoy. Lower yoy net profit attributed to a one-off exceptional item, excluding it net profit should have been up 5.1% yoy.

Rev was driven by contribution from grp’s Peruvian fishmeal operations and the South Pacific fleet, contributing 76.5% and 23.5% respectively to total rev respectively. Peruvian fishmeal operations benefitted from a higher production volume in FY2011, arising from an acquisition in May10 and also on back of higher ASP.

South Pacific fleet continues to be a proven success as the fleet leveraged on experience gained from last yr and benefited from Group’s strategy to diversify its fishing grounds. Rev from the North Pacific trawling operations recorded a marginal decrease in rev of 3.3% to US$374.7m due to lower sales vol that resulted from Group’s decision to delay the fishing schedule in order to enhance fleet efficiency and resources utilisation.

Going forward, grp remains confident of outlook, and expect the Group’s Peru operations to benefit from the acquisition of two Peruvian fishing Co’s in Nov this year and will also continue to identify new and sustainable fishing grounds with rich resources. Overall, grp is confident of achieving continued profitability for FY12. Grp trades at 6.4x P/E vs historical average of 12.8x.

SG Market

SG Market: Spore shares are likely to rebound from its deeply oversold levels following fresh news that IMF is working on a €600b rescue loan package for Italy, sending the S&P futures 1.8% higher. Focus will be on the blue chips, cyclicals and high beta stocks with resistance for STI pegged at 2700 followed by 2720 levels. Bottomside support is seen at 2600.

On the corporate front, Sakari Resources may take a hit from the collapse of a bridge on the Mahakam River, which is a majot conduit for coal barge traffic to and from upstream mines, including its Jambayan mine. Tightening regulations on casino adverts and promotions targeting locals may also dampen buying sentiment on Genting Spore.

Friday, November 25, 2011


Capitaland: DMG maintains Buy, TP $3.52. House note that China residential headwinds intact.

Sites acquired in China through the OODL transaction are in good locations and present a value proposition. Any upside potential for CapitaLand regarding its China residential exposure is capped in the near term with policy headwinds intact. Poor share price performance over c.14% over China residential exposure is largely overdone. The bright spot lies with its commercial/retail exposure through 65% owned CMA.


GLP: Announced that it has appointed banks to advice on its proposed issuance of SGD denominated perpetual capital securities. Grp has mandated JP Morgan as global coordinator for the offering, while Citi, Goldman Sachs, and DBS have been appointed joint bookrunners and joint lead managers.

Co. didn't state the size of the proposed offering, but said proceeds will be used to fund general corporate purposes. On top of that, Co, is scheduled to take part in UBS Global Property Investor’s Conference this wk to discuss Co’s outlook and strategy.

GLP highlights its strategies going forward and for China, grp aims to enter new submarkets with > 75% lease ratio and targets organic growth of 1.66sqm of development starts for FY12. In Jap, grp will continue to partner with CPPIB to build modern logistics properties in Jap, while monetization of its Jap assets are still on the cards.
Majority of street remains positive on grp with 8 Buy calls and 1 Sell call, with a mean TP of $2.26.

Spore market

Spore market: may open with a slight negative bias, taking cue from weakness in the European markets, after Germany’s Chancellor Angela Merkel repeated her firm opposition either to bonds issued jointly by the eurozone countries or to an expansion of the role of the ECB as quick responses to the sovereign debt crisis. Meanwhile, Fitch downgraded Portugal’s debt to junk status due to its high debts and poor economic prospects, and Moody’s downgraded Hungary’s govt bond rating by one level to Ba1 from Baa3, maintaining a negative outlook.
In the region, the KOSPI is down 0.7% at 1,783, while the Nikkei is flat at +0.1% at 8,176 at 8.29am.

Corporate new flow is thin.
GLP proposes to issue perpetual capital securities.
China Fish and Pacific Andes release full year earnings.
China New Town Devt announces profit warning, to report a full year loss.
Hock Lian Seng wins auction for an industrial site after submitting a bid of $78.2m.
Spore Windsor agrees to buy 1% stake in Real Green Material Technology, a Taiwan-based maker of polysilicon used in the manufacture of solar panels, for NT$100m.
Transcu proposes restructuring.

Thursday, November 24, 2011


UMS: Sias maintains Increase Exposure Call with $0.79 TP. Note that share price traded ‘ex-div’ today and shareholders can look forward to a handsome yield of 10.5%, based on the 23 Nov close of $0.380.

While still maintaining its div payout, UMS has been building up cash reserves to leverage on possible M&A opportunities for growth. Given the 60% sequential increase in cash to $35.96m at the end of 3Q 2011, UMS looks well positioned to bring back some growth. With a huge Warchest, UMS ended the qtr with cash, net of leases, of $32.4m, which is equivalent to 9.43c / share. Net cash now accounts for 24.8% of UMS’s market value. As UMS has no bank borrowings except for $3.56m of finance leases, Co. can lever its balance sheet to make acquisitions of decent size.

UMS also intends to shift more activities to its lower cost Penang facility to further streamline its cost structure. Cost savings will be further boosted by the Penang facility’s pioneer tax status obtained in 3Q FY11. The tax status will last for at least five yrs, reflecting a structural change in the Co’s tax regime.


NOL: Samsung Securities initiates coverage at Buy with TP $1.50, based on 1X P/B. Says "NOL will be one of the names most positively affected by the short-term change in sentiment towards the liner sector, which we expect to begin early next year as capacity exits the system, due to its liquidity, profile, and link to the Spore govt."
Says NOL has increased exposure to growing intra-Asian trade lanes, though it still generates more than 50% of revenue from Transpacific routes; "Thus, the company should benefit from any pop in rates resulting from upcoming capacity constraints, for which we see mounting evidence."
Longer term, Samsung estimates that NOL's fleet replacement program and its capacity flexibility should drive unit cost base down by around 15%. Adds, NOL's logistics operations should expand its 15% revenue contribution "and enjoy margin expansion as 2011's growth-related investments in the business platform bear fruit."
NOL shares outperform, up 3.5% at $1.04.


Memtech: CIMB has Technical Sell Call. House note that prices have fallen below its uptrend channel support back in July and prices have stayed below it since then.

The weekly MACD and RSI are now in a neutral to mildly positive mode, which could prompt further upside from here. However, do not expect prices to retake the $0.12, $0.135 and $0.16 resistance levels. Recommend traders to continue to sell into strength. Long term, prices could fall back towards the $0.045-0.06 levels.

PSL Holdings

PSL Holdings: CIMB has Technical Buy Call. House note that the 200-day SMA was tested twice in Aug and then in Oct again but it held firm on both occasions. That has led to a strong rally from the $0.235 low to current levels. Both its 30-dayand 50-day SMA are also on a rising trend, which bodes well for stock in the medium term.

There are still no bearish divergence signals yet, suggesting that the trend is still up. However, note that the RSI is overbought, which could see a short term pullback in the near term. As long as prices remain above the key support band of $0.32-0.36, the trend would likely continue upwards. Resistance is seen at the $0.51 levels as well as the $0.56 levels.


Genting: Nomura maintains Reduce ratingo on stock with $1.41 TP. House note that in a recent Singapore article, the SG govt is studying ways to deter frequent gamblers from visiting the casinos, quoting Acting Minister for Community Development, Youth and Sports, the govt will soon amend the Casino Control (Advertising) Regulations to make it crystal clear to both casinos that they cannot target the domestic market.

While the reported impending changes are not known, the latest development is consistent with house core assumptions that unlike Macau, where govt policies are encouraged to make Macau into a gaming hub, SG government has no plans to make Singapore a gambling hub, in house view. As a result, growth potential is likely to be more moderate (+10% p.a. according to estimates) in a relatively small market like SG, unless junket licenses are issued, GENS’s valuations (30% premium to the Macau peers using house estimates) are not inexpensive.

Golden Agri

Golden Agri: Gave positive guidance on output and earnings. Grp expects output to increase as plantations are expanded in Indonesia and new trees mature, bolstering profitability.

Grp will add at least a further 20,000 ha of plantations this yr, and expects to plant as much as 30,000 hectares in 2012. Co produced 1.58m ton of CPO in 9M11, +24% yoy, while production in 2010, totaled 1.85m ton vs 1.91m ton in 2009. Add that about 33% of Golden Agri's estates are less than six yrs old, which is considered as young to immature, which will be grp’s key driver for growth as they mature.

We note of the increasing number of houses turning bullish on the stock, with 17 Buy Calls, 1 Holds and 3 Sell Calls and a mean TP of $0.83. To add on, CPO Guru Dorab Mistry last wk forecasts CPO prices to hit RM 4,000 by 1H12 vs current price of RM 3,161.

SG Market

SG Market: Spore shares are likely to open weaker after Wall Street tumbled Wed on increased fears about contagion of Europe's debt woes after a German 10-year bond auction met with weaker-than-expected demand, sending eurozone bond yields higher across the board. With the benchmark STI down 1.5% yday to its lowest level since Oct 12, there are renewed fears that the index is poised to revisit the recent low of 2521. However, we see some support kicking in around the 2600 level, which corresponds roughly with the 78.6% Fibonacci retracement of the rally from 2521 to Oct's peak at 2905.

In corporate news, construction company TA Corp secured 2 condo development contracts worth $271m. Watch for weakness in cyclical plays such as rigbuilders KepCorp and Sembcorp Marine, especially after crude oil's 2% slide, and commodities traders Olam and Noble.

Wednesday, November 23, 2011


Sakari: Macquarie reiterates O/p, TP $3.80, after cite visit. House note that Sakari is a preferred play in the ASEAN coal space (5.0x FY12E P/E), given the strength at Sebuku, due to higher coal prices and better product mix at Sebuku..

Trims 2011E/2012E EPS by 4-7% predominantly on the back of lower Jembayan production forecasts; however this is largely offset by increasing Sebuku’s (higher margin) 2012 production from 2.5mt to 3mt.

Similarly, IIFL Reiterate Buy Call with TP $3.25. Note that limited execution risk in SAR achieving 13% CAGR in coal production over 2011-13. The profitability of Sebuku’s Northern Leases is twice that of Jembayan and hence, ramp up of production at Sebuku’s Northern Leases will improve SAR’s profitability over the next few years.

Co. may hold back production growth at Jembayan if coal demand and prices weaken in the near-term, to focus on improving its operating efficiency; however, this would be offset by ramp up at Sebuku. Expect SAR to deliver 54% EPS CAGR over 2010-13

China XLX

China XLX: to acquire 100% equity interest in Tianli, a coal mine co in Xinjiang, for a total consideration of Rmb 84.5m (~S$17m), of which,
i) Rmb 40m will be payable to the Vendors as the price of the Tianli. A Chinese valuer has estimated Tianli’s NAV at Rmb 40.5m.
ii) Rmb 44.5m will be used to increase the registered capital of Tianli.
XLX will finance the transaction with internal funds and external bank borrowings. Where appropriate, a fund raising exercise from the capital mkt will be carried out.

Tianli holds a coal mining license for approved mining area of 1.343 sq km and has an annual pdtn capacity of ~90k tons.
XLX says the acquisition will allow it to obtain the necessary upstream experience in managing coal mines, and opens future expansion opportunities in Xinjiang with an integrated secured coal suppy, since coal is one of its main raw materials and accounts for ~70% of its urea pdtn cost.

While mgt says it has considered the coal pdtn track record of Tianli, the financials show that Tianli was loss making in FY09-10, and only became profitable in 9M11.
Also, we highlight the sudden drop in net tangible asset value to –Rmb 1.7m in Sep ’11 from Rmb 14.2m in Dec ’10, contrasting with the big jump in net asset value to Rmb 40.5m from Rmb 16.5m over the same period.
Lastly, there was no disclosure regarding the type of coal produced at Tianli. We cannot be certain if this acquisition would help XLX with its raw material procurement, since the co uses mainly anthracite coal in its urea pdtn.

The consideration for Tianli works out to at 8.6x annualized 9M11 P/E, vs XLX’s trailing P/E at 10.2x. Nevertheless, we note that the short and lumpy financial track record of Tianli.
The Street has mostly Buy ratings with TP $0.39 - 0.51.


SATS: Air France becomes the latest airline to boost capacity into SG's Changi Airport. Air France is ramping up capacity on its Paris-Spore service by 30% from 2Q12 with 3 additional flights a wk.

Air France is just the latest in a string of global carriers boosting capacity to SG. Lufthansa recently introduced its larger Airbus A380 between SG-Germany, as well as an all-cargo freighter service, while Dubai-based Emirates raised its Spore-Dubai capacity by 25% with five additional wkly flights.
We note that SATS who has a 80% mkt share at SG's Changi Airport, could benefit from the increased flight frequencies. Street currently has a mix of Buy and Hold Calls on counter, with a mean TP of $2.46. Counter currently trades at 13x current P/E vs historical average of 14x.

SG Market

SG Market: Spore shares are likely to drift without a clear direction following the rather mixed close on Wall Street. Downside risk for the benchmark STI is at 2680, which was close to being tested yday while resistance stands at 2760. Corporate newflow has virtually dried up following end of reporting season but oil-related counters may see some interest as oil prices firm up amid resurgent Mid-east tensions. Noble (may have found temp bottom), Yanlord (recent purchase by prominent shareholders) and STX OSV (new contract) remain in play.

Tuesday, November 22, 2011

Indofood Agri

Indofood Agri: Goldman Sachs adds counter into its Conviction Buy List. House note that despite rising CPO prices, the stock price has under-performed since reporting weak 3Q11 results. Believe earnings may rebound in 4Q11, and that IFAR benefits both from rising CPO prices (5% increase boosts 2012E EPS by 7%) and Indonesia’s export tax changes (benefits IFAR’s refining and plantations businesses).

IFAR’s 3 year (2010-13E) vol growth CAGR of 12% is the highest in the sector and house see strong LT growth potential from its large immature and unplanted landbank. Meanwhile, valuations are attractive, trading at 11% discount to NAV and 6.6X 2012E P/E. House reiterate Buy.

Memstar Tech & United Envirotech

Memstar Tech & United Envirotech: 60% Memstar, 40% United Envirotech owned JV Max Rise Envirogroup has obtained US$60m in syndicated facilities by Stanchart Bank with a tenor of 5.5 yrs. The facilities will be used for the payment for wastewater treatment plants at Bazhou and Tangshan. Both companies had collaborated in a equally owned JV for a wastewater project in China previously in March. The two counters have seen high volume and a sharp spike in share prices since early Nov. A plausible catalyst could be a project that the increase in funding would be used for.

Super Grp

Super Grp: IIFL reiterate Add, TP $1.72, on the growth track. Super expects to achieve 10-15% revenue growth in the branded consumer segment and robust sales growth in the ingredients segment. Like Super’s cash-generating business and expect it to register 16% profit CAGR over 2010-13. At 12.3x 2012 P/E, Super trades lower than its peers’ valuations of 14.3x-22.1x. See re-rating potential and value Super at 14.5x 2012 EPS.


Noble: Nomura maintains Buy, with TP $1.70, noting that theworst may be over. FY11 priced in, looks attractive in CY12, but near term overhang. 3Q, CEO departure and ratings may be near-term overhangs. Add that we should not extrapolate 3Q to CY12; as every year is a fresh year. Earnings to rebound well on utilizations, margins, volumes. Trading at 8xCY12 P/E and 1.1xCY12 P/B, near the floor, (Olam’s P/E is 11x; Wilmar’s 13x).

Mapletree Commercial Trust

Mapletree Commercial Trust (MCT): Takeaways from Deutsche non-deal roadshow with mgt in HK.
Mgt reiterated their commitment to abstain from any acquisition/capital raising within 12-mths from IPO (27th Apr) which investors read as a positive signal. Apart from DPU accretion, market conditions would have to be conducive as the acquisition of MBC (valued at $1,035m as at Mar ‘10 or 36% of its portfolio) would entail both debt & equity raising. There were no disagreements on the quality of MBC with stable income from long 5-10 yr leases, embedded rent escalations and good credit worthy tenants. Leasing risk is minimal as MBC is already 90% leased.

On VivoCity, shopper traffic & tenant sales continue to be firm (+13.9% and 9.4% rptvly in 1H11). The Circle Line opening has provided a boost to shopper traffic (+20% MoM in Oct) with the entrance next to MRT seeing a doubling in flow. Occupancy cost of ~17% after recent renewals is comfortable and lease negotiations for FY12/13 are progressing well (36% due out of which 10% has been concluded).
Mgt has been progressively restructuring the leases to incorporate a higher % of step-ups (fr 38.5% to >50% for Vivo) and raising the % of base rents to enhance earnings stability.

Mgt's optimal gearing remains at 40% (currently 38.5%) with limited refinancing and interest rate risk (85% fixed, earliest expiry in Apr 13). Liquidity in the SG debt market remains comfortable and MCT does not have any European bank exposure.

On AEI, Alexandra Retail Centre (ARC) will be progressively opened fr Dec with >50% of space pre-committed and should benefit from the MRT access. Mgt is still studying AEI plans for Vivo which may involve the conversion of car park space in B1 to retail space and improvements to layout and tenant mix in other floors.

Deutsche has a Buy rating with TP $1.


Sakari / Indonesian Coal: UBS has coal report. Note that weather risk looming over coal producers. La Nina conditions strengthening and heavy rains could disrupt production. Expect buyers to return in the near-term. Over all house like Sakari Resources and Adaro Energy continue to prefer coal miners with the highest production growth as the bases of superior earnings growth, such as Adaro Energy and Sakari Resources. Given the high operating leverage, still see room for attractive earnings momentum.

Juken Tech

Juken Tech: Flood in Thailand affects supply chain operation as customers have been affected. Co's plant in Thailand is physically unaffected. Impact to grp's performance cannot be assessed at this pt in time. Co is involved in precision manufacturing and other industrial products

Courage Marine

Courage Marine: Signs memorandum of agreement with Zhejiang Zengzhou Ship Building to acquire a vessel for a total of US$26.6m. The vessel is a newbuild with capacity of approx 57k DWT. Delivery will take place in Dec 2011. This is the 2nd identical purchase by Courage Marine from the vendor in a month.

Keppel T&T

Keppel T&T: JV Keppel Logistics (Foshan) officially opened its new distribution centre in Foshan which adds another 35k sqm of warehousing space bringing a total of 100k sqm of space in the Guangdong province. This is co’s 3rd milestone in China for 2011 after prev projects of a river port along Yangtze River and land use rights for a green logistics distribution centre. Co expects a 80% occupancy rate by end of this yr. The JV has grown 6-fold from 41.6k TEU in 1995 to 258.8 TEU in 2010. Co trades at fwd P/E of 9.4x


Capitaland: Co’s serviced residence business unit Ascott Ltd has clinched contracts to manage 2 properties a 186 unit in Foshan opening in 2016 and a 71 unit in Hong Kong opening in 2013. Ascott has now secured over 870 units in 6 serviced projects in China on track to almost double its units managed in China to 12k units by 2015. Ascott REIT is 48.2% owned by Capitaland and may eventually be the recipient of any spin-offs but Capitaland has made no such mention of its Chinese serviced residences as of yet.


SinoTech: Problems continue to suffice for Co. plagued with accounting fraud, with its special auditors issuing a ‘Report of Independent Review’.

In the Report, KPMG stated that they were not given access to five of the six computers used by Co’s and its subsidiaries’ employees in order for them to perform their forensic tech procedures, and that the Local Tax Bureau refused to accede to Co’s request for copies or a summary listing of the Company’s China subsidiaries’ sales and purchase invoices.

As a result, KPMG was not able to complete their entire scope of engagement. This means that the discrepancies highlighted by Co’s auditors, Ernst & Young LLP, which the Company has announced on 14 April 2011, remain unresolved. In light of this, the Audit Committee has decided, as a preliminary step, to recommend the appointment of a firm of valuers, to carrying out a valuation of the Co’s assets and liabilities to ascertain what is, in the opinion of the valuer, the current value of the Company.

The Audit Committee also hopes that a valuation may help reconstruct the Company’s accounts which were lost in the fire. The Audit Committee will also seek professional advice on a further course of action and will keep shareholders informed of any material developments.

HL Asia

HL Asia: Announced that its has increased its stake in New York-listed China Yuchai (CYI) to 34.565%.

Recall that CYI is a subsidiary of HLA, involved in the businesses of diesel engines, hospitality and properties, and lifestyle through its investments, which include SG-listed Thakral Corporation.

We note that in grp’s latest 3Q11 results, sales rev of Yuchai was affected by proportionately higher sales in off highway diesel engines vis-à-vis medium duty engines, while sales of industrial packaging products fell from reduced orders by major customers from excessive stocks in the pipeline. The Group’s green tech business segment (GPac) also sold more pallets during the year but its revenue contribution remained insignificant.


Oceanus: Co. has responded to queries raised by SGX, we mention the most important questions and answers set out below, and continue to remind investor’s to exercise caution when trading on the Co. shares.

1) Please show how provision for warrant redemption premium of Rmb 108m was arrived at?

Warrant Redemption Premium of 68% less interests paid over the term of the Loan and Warrant is applicable to institutional investors, Ocean Wonder and Hupomone Capital Partners. The provision of Rmb108m was arrived based on 291.5m shares X SGD 0.15 X 50% @ 4.9425 (RMB exchange rate)= Rmb108m.

2) Co issued profit guidance on 9 Nov11. Please explain why profit guidance could not have been issued earlier. In the explanation, please state when Co. first became aware of each of the various factors?

- Decrease in caged population due to mortality. The 30 Sept 2011 biological count was finalized and sent out by PRC staff on 29 Oct11.
- Lower abalone prices for smaller sized abalones – the prices were finalized and adjusted downwards on 11 Nov11. The impact on lower prices resulted in loss of Rmb292m.
- Provision for warrant redemption premium – this was adjusted after consulting Deloitte on 3 Nov 2011. Profit guidance was first drafted on 8th Nov and finalized version filed on 9 Nov.

3) Please explain why the density per tank over the same period last yr has reduced to below industry average?

- Production team faced unexpected high mortalities, both the Head of Production and CEO believed that lowering the densities would help reduce mortalities. They also believed it would be safer for the animals during event of power failure.

4) It is stated that the quality of the population has been eroded by the severe mortality rates of 63% seen in larger sized abalones of 5.8 cm and above. Please give the reasons for
the high mortality rate?

According to the CEO, the abalones were in poor conditions likely from unavailable quality feed and high temperatures during the summer season, resulting in high mortality rate affecting the larger abalones.

Ultimately we would like to remind investors to exercise caution when trading with Oceanus stock, highlighting the Fiasco that S-Chips have been embroiled in recent mths, which involves the manipulations of Cash Holdings, Inventories, accidents which involves Burning of Offices prior to auditors check etc….. So, what more lifestocks, where mortality rates are hard to prove and justify?


Ezra: said its deep-water subsea business may return to a profit next year as rising energy demand spurs exploration.
“Demand for our services remain extremely strong despite the European slowdown,” said Lionel Lee, Ezra’s managing director. “I don’t see even in the next three to five years a slowdown in our activities.”

Ezra is bidding for subsea projects worth >US$6b globally, including US$2b of contracts in the Asia-Pacific region. The subsea division, which accounts for a third of Ezra’s revenue, posted an operating loss
of US$18 million last fiscal year because of costs stemming from the purchase of Aker Marine Contractors (AMC).
Order backlog for the business was ~US$745m as of Oct, including a contract from BP in the Gulf of Mexico.

The stock trades at 13x P/E, 0.7x P/B.
The Street has a mix of Buy and Hold ratings, with TP btwn $0.97 – 1.70.

SG Market

SG Market: Spore shares are likely to head south, tracking falls on Wall Street, after the US congressional deficit-reduction committee acknowledged its failure to forge a deal on cutting the budget deficit. Investors will be taking to the hills, fleeing from the debt tsunami from Europe and US. The STI is expected to break below the 2680 support today, after which it could head towards the 2600 level; resistance is pegged at 2760.

Monday, November 21, 2011


P-Life REIT: (The Edge) Eyes new mkts and consolidating Jap business. Note that stock has gained 12% Ytd vs STI’s decline of 12.5%. Current portfolio now worth abt 1.3b, almost dbl that when it listed in 2007.

Grp intends to slow down activities in Jap, after an aggressive acquisition spree in the last 2 yrs, setting its eyes on Msia and Australia where it intends to acquire hospitals and medical Centres rather than nursing homes. Long-term goal is to generate 65% of rev from hospitals, 30% from nursing home and 5% from manufacturing facilities.

Add that with entry of entry of Knazanah via parkway holdings and the merger of it with Pantai grp, sponsor has 16 hospitals across Asia and also owns Parkway Novena, while recent entry of Mitui in Integrated Healthcare Holdings bodes well for grp’s overall structure. We note that DPU for REIT 9mth was at 7.13c, representing an annualized yield of 5.3%. Grp’s gearing of 37% enables grp to take on debt of another $260m. After grps YTD resilience to mkts’ decline most houses have a neutral call on grp, with UBS at $1.90 and DBSV at $1.96.


Oceanus: Chairman announced he has sent 7-8 people from the finance team in SG to take a stock-take of abalones for next 2-3wks, following grp’s net loss of Rmb 725m yuan for 3Q11, due to a fair value loss of Rmb 642.6m on biological assets as some 42m abalones died. The Chairman called the mortality rate as 'just not acceptable' as most of the abalones that died were larger-sized ones, while mortality rate of abalones typically reduces as they mature. Chairman declined to speculate how the abalone died in 3Q, preferring to explain how he is steering the group forward, and is confident of returning to the black in 2013.

We advise investors to exercise caution when trading with grp’s shares.
Below are some queries raised by investor’s on certain investor’s forum, following Oceanus Chairman’s announcement. Note however that this is based purely on the investor’s opinion/query and we are not able to verify the accuracy of his opinion, although it does provide an interesting angle:

1) Deloitte typically require more than 20 ppl spending three wks to cover a 5% sample of the total abalone population. Does that mean that previous stock take for the valuations was based on a 5% sample size and extrapolated?

2) New mortality of abalones "from now" has to be matched by new empty shells" that sounds like 100% counting from now===> imply previously NOT?

3) While the existing abalone stock still needs to be verified, some 500 tons of abalones that are 3 to 4 yrs old are expected to be sold early next yr. This is expected to generate cash of Rmb150m to Rmb 200m by 1H12------ Puzzle is, if they cannot verify existing stock, how can they make projections about the future?

4) The tanks are currently breeding abalones at low densities, an area he hopes to address. By working with good abalone breeders in China through profit sharing, yields can be improved and the number of tanks required for abalone breeding can be reduced to 10,000, down from over 30,000 currently---- the implication is that the missing abalones are NOT due to death by overcrowding since Dr Ng thinks that the tanks are at low densities. That is baffling, high mortality of biologicals are either due to toxicity, crowding (lack of space and pollution by excrement can reduce oxygen levels in the water) or wrong feed/feeding. Other factors like temperatures of water will only influence growth rates; not cause high mortalities.

5) Dr Ng called the mortality rate as 'just not acceptable' as most of the abalones that died were larger-sized ones. The mortality rate of abalones typically reduces as they mature----- To grow to adult size (i.e. larger ones), meant that the abalones has adapted well to the water conditions and if so why would an adapted abalone die suddenly? The crux of the problem is not with the rearing operations or aquaculture methodology but more likely with the stock taking!!

6) Given these plans, the group is confident of returning in the black in 2013----- Lets see what has been promised or tried so far; from renting out the tanks, to rearing sea cucumbers, to restaurant chain biz, to dried abalones, to lobster aquaculture, to KKR investing, to TDR listing. Dr Ng seems a very well connected person.


PCRT: Kuok Khoon Hong buys 1m units of co on the open market at $0.445 per unit increasing his stake from 4.65% to 4.74% on 16 Nov, last Wed.

Tye Soon and Cambridge REIT

Tye Soon and Cambridge REIT: Tye Soon has entered into a conditional Call and Put Option agreement related to a sale and leaseback with Cambridge REIT for $35.5m. The property is located at 3C Toh Guan Rd and is currently Tye Soon's head office and central warehouse. The lease if executed will for 3 yrs with option to renew for a further 3 yrs. This is subject to approvals from Tye Soon's board and relevant authorities as well as due diligence checks. Sale consideration is approx 92% of Tye Soon's mkt cap with net gain of approx $17.8m. Fair value as of 2 Nov 2011 was $31.0m.

Cambridge REIT has an fwd indicative yield of 9.2%

SC Global

SC Global: has been able to set a new record price at The Marq on Paterson Hill once every three months since May this year, despite thin sales volumes generally in the luxury residential sector.
In the latest transaction, a 3,003-sf, 4-bedroom apt in the Premier Tower is understood to have sold for nearly $6,850 psf or ~$20.5m.
This tops the previous record set in August for $6,394 psf, which in turn broke the May record of $5,842 psf. In all three cases, the units are of the same size and in the same tower.

The latest record comes fresh on the heels of news last month of a world-first collaboration between Hermes and SC Global. Designers from the French luxury house will fit out a 6,232-sf, 5-bedroom apt in the Signature Tower at The Marq, with a combination of furniture, fabrics, rugs, carpets, wallpaper and made-to-measure upholstered items. The world's first Hermes apt is due to be ready next year and will be kept by SC Global for private functions and Hermes exclusive events. It will not be for immediate sale.
The Marq, a freehold project which received TOP in Jan this year, comprises two 24-storey towers with a total of 66 units.

The stock trades at 0.7x P/B. Street recommendations are mixed with 3 Buys, 1 Hold and 3 Sells. TP has a wide range btwn $1.08 – 2.68.


CMA: CIMB downgrades to Underperform from neutral, cites concerns over capex commitments and valuations. Cuts TP to $1.15 (35% discount to RNAV) from $1.17.
The house notes CMA has been aggressive in acquisitions, committing to >$2.5b of purchases in 2011; some of its large-scale China invmts have yet to go through formally, with debt obligations yet to show up on its books. Highlights that funding costs have increased substantially, with CMA understood to be paying PBoC rates +20%. Expects CMA’s net gearing to rise from 6% currently, to 50-55% in FY11-13, vs mgt’s guidance for optimum gearing of 60-70%, which provides little margin for comfort. Estimates CMA’s operating cash flows will be unable to cover its devt capex needs in the near future, with pick up to come only by 2013.
Adds, with the recent dual listing in HK, equity raising in 2012 is possible.


Capitaland: Co has stated it will continue to invest in China despite property curbs by the government and that curbs on residential properties are unlikely to loosen before 1H of 2012. It will seek to maintain a balance btwn commercial and residential projects in China. Home prices in China broadly fell with 33 out of 70 cities down mom that the government monitored. Co aims to double its portfolio in China over the nxt 5 yrs, first reported in June. Capitaland trades at fwd P/B of 0.76x

Super Grp

Super Grp: To invest RM138m in botanical herbal extraction business in Johor Bahru and was awarded "Pioneer" status with tax incentives by Msia authorities. Tax incentives will for 5 yrs and Super Grp has made a request for another 3 yr extension subject to approval. The production capacity installed will be capable of up to 3k tons but the first phase will be approx 1.5k tons. The extraction process encompasses microfiltration and low temperature concentration with a recovery and drying process. The initial ingredients used will be Chicory, Green Tea, Black Tea, Tongkat Ali, Ginger, Chrysanthemum, Prunella and Medlar. Co is of the view this is a complementary business to its consumer and ingredients segments and a niche market in the region and supports the long-term strategy to be an ingredient specialist in Asia.

RHB also initiates on Super with Outperform with TP$1.70 based on 14.5x FY12 P/E.

ST Engrg

ST Engrg: its US shipyard, VT Halter Marine, has secured a $441m (US$353m) contract from Hornbeck Offshore Services to build 8 high-spec offshore supply vessels (OSVs). Construction of the first vessel is expected to start in 1Q12 with delivery of the first and eighth vessels scheduled btwn Oct ‘13 and Sep ‘14 rptvly. These DP2 capable OSVs would be based on VT Halter Marine's Super 320 design, have ~20,900 bbls of liquid mud carrying capability, 1102 sm of deck area and a fire-fighting class notation.

The contract also includes options for up to 24 additional identical vessels, first of which is required to be exercised by Sep ‘12. Assuming these options have the same dollar value per vessel as the S$441m contract, they could potentially amount to S$1.3b in future orders if exercised.

Deutsche views the positively, as it is the single largest win by STE's marine division in the last few years and would broaden the group's revenue base. Notes, this would further establishe STE in the lucrative O&M sector which is showing sound long term industry fundamentals.
STE currently trades at 15.6x FY12E P/E (lower end of historical band) and offers a dividend yield of 5.8%. Overall, operations should remain relatively stable despite the global macro uncertainties, with ~40% of STE's sales coming from the military and another 10-15% from govt-related contracts. The group has an order book of $11b as of end-Sep ’11, vs FY10 sales of $6b.
The house has a Buy rating with TP $3.20.

TA Crop

TA Crop: IPO debuts today. Total invitation/offering was abt 1.8x fully subscribed, with retail/public tranche of 2mil shares abt 50x over subscribed. The Placement Shares also attracted strong interest from institutional investors as well as high net worth individuals. Three investors, including funds under the discretionary management of Daiwa each took up more than 5% of the Invitation Shares.

We note that at IPO price of $0.28, valuation appears fair, based on historical P/E of 4.3x vs peer current average of 3.5x, and group intends to distribute 10% of its net profit as div for FY11-12, which may translate to a yield of 2.3%, assuming FY10 profit levels are maintained.

Overall freefloat is ard 26.2%, of which 98% has been privately placed and 2% for public balloting. See below for grp’s relative valuation according to IPO price.


Singtel: Indian police was reported to have raided the offices of Bharti, SingTel's associate Co, along with another Indian telco Vodafone Essar.

This raid appears to be politically motivated, as it involves the alleged sale of 2G spectrum in 2001-2003 to favored telcos at a token sum by the opposition party, at a time when the current National Congress Party ruling government is under fire for having sold 122 spectrum licences in 2007-2008 for a below-market sum, costing the Indian treasury some US$40b in lost revenue.

The Minister in charge in 2008 has defended himself as saying he was just following the previous opposition government's policy in awarding market spectrum. Both Bharti and Vodafone have said that they acted according to govt policy and in complete compliance of the rules. We await further developments on this news.


STX OSV: As expected, Co. announced that it has made effective its contract for 8 LPG Carriers, worth US$536m (Nok 3.1b) from Petrobas. Note that the contract has already previously been signed. in Jul10 but was not previously included it in grp’s orderbook. Confirmation of orders brings grp orderbook to 16.6b, underpinning earnings visibility for 1.5 yrs.

SG Market

SG Market: Spore shares are likely to see cautious trading ahead of the US supercommittee meeting this Wed to deal with the US budget deficit but with both political parties still squabbling, prospects for an agreement are getting doubtful, which may throw global markets off the high wire again.

The upward revision in Spore’s 3Q GDP growth to 6.1%, faster than the 5.9% reported earlier is not expected to give the local market a lift in view of the tepid 1-3% growth projection for 2012. What is more disconcerting is that the forecast does not even factor in potential downside risks such as a worsening debt situation or a full blown financial crisis in the developed economies. Separately, IE Spore also cut its forecast for Spore's non-oil domestic exports growth in 2011 to 2-3%, from 6-7% previously. For 2012, the govt agency expects non-oil domestic exports to grow 3%-5%.

In corporate, both ST Engrg and STX OSV may see some interest after announcing shipbuilding contracts for OSVs ($441m) and LPG carriers ($536m) respectively. SingTel will face some pressure after the office of its Indian associate Bharti was raided by Indian police.

Friday, November 18, 2011


Noble: Goldman Sachs Maintains Buy with $1.55 TP. House see the 3Q11 quarterly loss as being non-recurrent in nature – when margins normalize, earnings can rebound (as was the case for Wilmar in 2011E, after Oilseeds losses in 2H2010). Meanwhile, Noble’s structural vol growth trend is intact (9M2011 +20% yoy), and its balance sheet remains healthy (3Q11: 0.42X adjusted net debt/equity, only 15% of debt due within 1 year, US$4b of unutilized committed credit lines). Despite prior CEO departure, do not expect major operational disruptions. Acting CEO Richard Elman is the founder/major shareholder of Noble and was CEO before Ricardo Leiman.

Overall, house expect earnings to recover in 2012E, with ROE rebounding to 14% (from 2% in 3Q11).
(2) Credit rating affirmation – S&P and Moody’s have put Noble on negative watch, but Noble’s (BBB rated) bond yields have already opened up a 300 bps spread with another similarly rated commodity trader (Bunge). If Noble’s investment grade credit rating is reaffirmed, it may be received positively by investors

Silverlake Axis

Silverlake Axis: CIMB notes recent 1Q12 core earnings of RM 27.8m (+20% yoy) formed 17% of full estimates, inline with expectations. This was driven by a larger orderbook and 2 large sales of hardware pdts. Expects revenue recognition to ramp up in 2Q, as i) Silverlake had delayed recognition from HNA group contracts as they were waiting on an external vendor to sign off on their contract delivery, and ii) recognition from Thai contracts was delayed bcs of the floods.
CIMB is confident about Silverlake’s orderbook, forecasts ~RM 210m contract revenue to be recognized this yr, in contrast to 2009 where Silverlake was caught at the tail end of its orderbook.
The co declared 0.2cts div.
CIMB keeps at Buy with TP $0.43.


EZRA: CLSA maintains O/p, but reduces TP to $1.15 frpm $1.20. House note that EOC’s termination of Lewek Arunothai’s contract with PTTEP is leading house to reduce FY12 earnings forecasts for Ezra by 10%. It is adding new uncertainty as the FPSO has not yet been awarded the new contract it bid for.

Note however that Ezra’s offshore support services business is however set to improve as charter rates pick up in 2H12. Additionally, expect AMC to start making positive contributions as the company recognizes US$400m in subsea contracts. Ezra’s gearing is set to reach 140% by the end of FY12 but we expect the company to divest some of its assets to raise cash.


Yanlord: Shares +3.4% to $1.23 following SGX anncmt that Marua Sitoros, a director of Wilmar has raised his stake to 5.1%. However, pls note that this is the same block of shares jointly owned by Kuok Khoon Hong, Wee Ee Chao and Peter Lim under the same vehicle Terzetto Capital. Hence, it is considered a deemed interest held jointly by all 4 personalities, not separate holdings.

An impending takeover seems quite unlikely as founder and major shareholder Shen Jian Zhong still holds a 66% stake in the property company. However, we do not rule out other corporate M&As or tie-ups involving Yanlord and the Kuok group in future projects given its rather high net gearing ratio of 0.83x, coupled with the deep pockets of the Kuok group. Another possibility is for Shen to pare down his holdings to 51%, giving Kuok and his associates a sizeable 22% stake in the company. At $1.23, Yanlord trades at a 13% discount to its NAV of $1.42. Street RNAV estimates range from $1.79-3.00.

Telco /M1 / Starhub

Telco /M1 / Starhub: Deutsche notes the telco sector has outperformed over the past 6 mths, as expected given the difficult markets. But highlights that telco share prices have increased, vs in 2008 when the outperformance was driven by telcos declining less than other stocks. Believes this has made telcos relatively expensive, and the majority of them is now trading at a premium to their own three yr and fives yr historic average valuations.

The house has a high conviction Sell on M1. Remains unconvinced that the National Broadband Network (NBN) significantly alters M1’s competitive positioning or growth profile, as it believes M1 will face an uphill task in gaining scale as a late new entrant into the mature fixed market. With a limited service offering, Deutsche believes M1 will need to compete on price which may be margin dilutive.

Deutsche’s top pick is Starhub for the relatively stable (albeit slowing) operations and dividend yield. Notes competition within the fixed-line sector is expected to intensify as the fibre-enabled NBN approaches 100% coverage, and increased operator emphasis on service bundling will drive competition across all products and result in more aggressive retention/acquisition activities, with potential margin implications. Expects a sustained regulatory focus on competition but does not anticipate any significant developments within the near-term. Overall, views the sector's operational outlook as challenging and would be cautious from a fundamental perspective.


M1: Citi maintains Buy, with TP $2.90. House maintain positive outlook with the Co. progressing in fiber subscriber deployment and limited risk on mobile margins in the medium-term. iPhone sales strong, but not a drag on profits. Remains the cheapest amongst the SG telco names at 11.3x FY12E P/E. Yield remains firm at 6% and could rise over time with special pay-outs.

ARA Asset Mgt

ARA Asset Mgt: CS maintains Neutral, but reduce TP to $1.45 from $1.71, Note that latest results saw solid performance fees; premium valuation for its resilience. 3Q11 NP (+95% YoY, +72% QoQ) of $25.4 mn brought 9M11 to $54.9 mn (+44% YoY).

Key updates:
(1) AUM grew 3% QoQ to S$19.3 b,
(2) ADFII continues to face delays, with final closing target at 1Q12, instead of 4Q11;
(3) a China REIT is in the pipeline, but believe unlikely in near term, given China property headwinds. Hui Xian REIT has lost 32% since IPO.

Overall, raise FY11E EPS by 12% for the performance fees, but cut FY12-13E EPS by 1-5% and TP on slower ADFII and lower MTM listed entities’ values. While ARA should be relatively resilient (div yield of at least 3.8%), given its fee income business model, negative sentiment on China property and fund flows could affect perceived performance of its ADF investments (>50% China) and ARA’s fund/AUM growth. Stock currently trades at 14-15x P/E, and is already at a premium to its peers’ 11x.


Hartawan: Substantial sh/h Chua Leong Hai boosts his stake from 10.10% to 11.26% acquiring more than 9.4m shares through a series of transactions on the 16 Nov. This likely resulted in Hartawan’s rise on 16 Nov where volumes traded was approx 20.9m. Hartawan is currently involved in a RTO deal with an Indo gold mining co.

Seroja Invt

Seroja Invt: Subsi PT Pulau Seroja Jaya (PT PSJ) to purchase 3 tugboats and 2 barges from Long Wealth Global Inc, a vessel-owning BVI co for a total consideration of about US$15.2m. Seroja Invt's contribution based on a 48% stake is approx $7.9m. The acq will increase PT PSJ’s current fleet from 60 vessels consisting of 31 tugboats and 29 barges to 65 vessels consisting of 34 tugboats and 31 barges. Co is of view that demand for coal will be strong, furthermore current existing fleet was fully utilised with an additional 4 vessels chartered to meet existing demand. Payment will be on a US$50k per mth basis for 60 mths. Current P/E for Seroja is high at approx 26.4x.

Courage Marine

Courage Marine: To dispose of a handysize vessel with capacity of approx 36k dwt for US$3.3m (net proceeds of $3.2m) to third party co AII. Co will record a loss on disposal of approx US$1.3m. The vessel's book value was approx $4.5m as of 30 Sept 2011. Co has been selling its handymax vessels at a loss and renewing the fleet with new supermax vessels. Most recently co posted a loss of $3.4m in 3Q2011 results compared to 812k net profit in the same period a year ago.


Capitaland: CEO said yesterday that demand for residential properties in China remains strong, although prices might drop slightly in certain regions and that grp intends to expand its shopping mall portfolio in China to capitalise on strong consumer demand.

China's efforts to cool its property market have shown modest signs of success, with housing transactions falling for the first time in three mths in October by 25% from Sept. However, with about 5,000 residential units set for development in second-tier Wuhan city over the next few yrs, do not expect prices to drop too sharply in China, which makes up about $10b, or 36% of CapitaLand's portfolio.

Prices will certainly be adjusted downwards, he added, although reiterated that real housing demand in China, which excludes speculative buying remains very strong and the Co. is also exploring expanding its shopping mall portfolio to boost revenue. In SG, the Co. will launch the 99-yr leasehold Bedok Residences by the end of the yr, despite slowing demand here.

Liang Beng/Construction

Liang Beng/Construction: Announced that its JV Co with Centurion, Spottiswoode Development, has bought Dragon Mansion, at 14 Spottiswoode Park, for $130m. The price translates to about $1,093 psf for the freehold residential development.

The 38,618 sq ft site has a plot ratio of 2.8 and a potential GFA of up to 118,943 sqft, including a 10% bonus space for balconies. It can be developed to a maximum height of 36 storeys. The awarded price was slightly below the indicative range of $132m to $142m when the tender was relaunched last month.

Separately, OCBC note that the latest qtrly results for construction firms under house coverage saw positive yoy earnings growth. Tat Hong and Lian Beng stood out, as they recorded the strongest earnings growth and house is encouraged by latest set of qtrly results, as it shows most firms are executing their projects well and increasing profits. At the same time, data such as BCA's tender price index and the land sales by URA in the past few yrs further adds to positive outlook for the construction sector. Tip pick in sector is Lian Beng [BUY, $0.51].

SG Market

SG Market: Spore shares are likely to open about 1% lower after Thursday's declines on Wall Street as European sovereign debt troubles continue to spook markets. Initial support for the STI stands at 1.2760 and if that breaks, it could attempt to close the gap at 2720. SIA may feature after it confirms an earlier order for 8 Boeing 777-300ER aircraft, indicating the flag carrier's optimism about the long-term prospects of the industry. Tiger Airways may face formidable competition after Indon caaier made a record order for 230 B737 aircraft. NOL may also benefit from a slight easing in global crude oil prices.

Thursday, November 17, 2011


UMS: Applied Materials (AMAT), the largest producer of chipmaking equipment and UMS’ largest customer (contributes up to 80% of sales), forecast 1Q12 sales and profit that fell short of analysts’ predictions, a sign that semiconductor makers are scaling back expansion plans.

Profit before certain costs will be US 8cts to US 16cts a share, AMAT said. Revenue will decline as much as 15% from the prior quarter, indicating sales of as little as US$1.85b. Analysts on average predicted profit of 18 cts on sales of US$2.07b.

Many chipmakers are reluctant to increase output until they see evidence that the economy is improving, said RBC Capital Markets. That’s damping demand for the gear needed to manufacture semiconductors. “Unless there is an inflection in demand, there is no need to spend on capacity.”

UMSH manufactures high precision components and is involved in complex electromechanical assembly and final testing services. Its products include modular and integration systems for semiconductor equipment manufacturing.

Stock trades at 4.4x P/E, 0.75x P/B.


Consciencefood: 3Q11resutls above expectations. Net Profit +194% yoy to Rp32.2m, Rev +30% to Rp183.4b.
- DMG maintain Buy, TP $0.29, increase FY11F revenue and earnings forecast by 2% to take into account higher sales of instant noodles, which would be offset by the delayed production of its beverage line. With two new avenues of sales coming on stream next year and growing
instant noodle sales, house remain optimistic on the stock.

Sheng Siong

Sheng Siong: Grp to sell industrial property at Marsiling Rd for $15.0m to Lam Soon Cannery. The property comprises a 2-storey factory building with ancillary offices, a 2 storey warehouse, a 2-storey canteen building and a workshop. The property has approx floor area of 8.8k sqm. Based on an independent valuation report, the mkt value of the property is approx $10.8m as of 15 Aug 2011. The completion of the sale is subject to approval of HDB and any relevant statutory board. Co is of the view that after moving its corporate headquarters and distribution centre to Mandai, the property is no longer required for its operations and will book a gain of $11.3m from the sale.

World Precision

World Precision: Re-accredited as a "High/New Technology Enterprise" by Jiangsu authorities which allows co to continue enjoying a preferential income tax rate of 15% instead of standard tax rate of 25% till FY2013. This will maintain co’s income tax rate at current lvls. Co posted stable 3Q results on the 10 Nov with current orderbook at Rmb287m. World Precision now trades at 9.0x current P/E

Genting HK

Genting HK: Macquarie labels stock the ‘cheapest casino stock in the region.’
At current stock price of US$0.28 cents, RWM business in which GENHK has 50% stake is available only at 1.3x 2012 EV / EBITDA.

Valuing the cruise business at only 7x EV / EBITDA (15% discount to CCLand RCL in US), the
Manila casino business is available almost for free. Believe the risk-reward is favourable and advise investors to accumulate the stock.


SATS: UBS maintain Buy, but reduce TP to $2.85 from $3.15.
With over $300m from the sale of Daniels, SATS is in a good position to pay a special div. Estimate it would amount to $0.09 per share, a 3.7% yield. Another catalyst could be a win in its bid for SG International Cruise Terminal, which could potentially add 4% to the bottom line in the medium term. Lowers EPS estimates for FY12/13/14 from S$0.18/0.20/0.22 to $0.16/0.18/0.20 to reflect the divestment of Daniels.


Yongnam: Citi maintains Buy, with TP $0.31. Note that the southern segment of the 21.5km NSE is expected to be fully underground, which might require the extensive use of struts during construction.

Reiterate view that Yongnam is a proxy for investors looking to participate in the multi-year construction boom arising from LTA’s Land Transport Masterplan. Given YNM’s market leadership in the strutting space, think the NSE (together with Downtown Line 3, Thomson Line and Eastern Region Line) will likely contribute to the group’s comfortable high margin base load of work over the nxt 3-5yrs.

Noble vs Olam

Noble vs Olam: UOB Kay Hian has report comparing the 2 supply chain managers. House note that both are globally diversified across commodities and geographies, but that could be where the similarities end. Structurally, they are different in terms of geographical footprint, commodity types and risk exposures.

Post-results Review
1) Olam’s net profit grew 15% while Noble turned in a loss. Olam posted net profit growth of 15% yoy in the seasonally weakest quarter while Noble turned in its first loss in more than a decade.
Compounding the shock loss for Noble was the announcement of the resignation of ex-CEO Ricardo Leiman just hours after the 3Q11 conference call. House downgrade the supply chain sector from O/w to M/w following downgrade of Noble.

2) Noble’s risk mgt in question. Noble was hit on several fronts during the quarter, including: a) cotton defaults in the US, b) lower-than-expected yields on its sugar crop, and c) weak soybean crush margins in China and South America.

3) Are Noble’s results a one-off event? Noble is likely to turn around in 4Q11. In house view, the 3Q11 loss was due a combination of factors, a few of which are not likely to be repeated. Some indicators, however, such as lower commodity prices, widening negative China soybean
crush margins as well as a poor outlook for Brazilian sugar cane crop, will likely put a lid on rev and earnings growth.

4) Risk management in focus. As Olam managed to avoid substantial default losses in the cotton business (where the two are comparable), Olam could be viewed by the mkt to have managed its risks more robustly than Noble.

Saizen REIT

Saizen REIT: To obtain JPY2.0b (S$33.5m) loan from Tokyo Star Bank. The loan is for 5 yrs up to 18 Nov 2016 with a fixed annual interest rate of 3.2% p.a with JPY60m of principal repayment per annum. A one-time fee of 1.5% of the initial loan amt will also be charged. The asset mgr of Saizen REIT will also act as a sponsor for the loan and charge a sponsor fee of 0.175% of the loan amt. The property portfolios of YK Shintoku and GK Chosei which are unencumbered and valued at JPY4.6b ($77.1m) will be pledged as security for the loan. This is the third loan co has obtained from Tokyo Star Bank. The REIT now trades at P/B of 0.4x with historical 12-mth yield of 7.2%


Yanlord: Moody's changes outlook from stable to negative and downgrades senior unsecured bond rating to Ba3 from Ba2. due to liquidity concerns after a $1.7b invt of a 50% equity stake in Shanghai. Moody's also expects onshore borrowings to trend towards 15%-20% of its assets which raises risk. Given strong regulatory measures and challenging economic outlook in nxt 12 mths, Moody's is uncertain if co can attain its 2012 budget.

Co also announced Standard & Poor's revision of the outlook to negative from stable and also lowered the Greater China credit scale rating to 'cnBB+' from 'cnBBB-' and that on the notes to 'cnBB+' from 'cnBBB-'. At the same time, S&P affirmed the 'BB' long-term corporate credit rating on Yanlord and 'BB' issue rating on the co's outstanding senior unsecured notes. S&P expects Yanlord's leverage ratios to remain high, profit margins to decrease from over 50% to 40% in 2011 and 2012 and govt policies to impact negatively.
S&P will consider lowering the rating if:
(1) cash receipts from property sales are less than Rmb8b in 2011;
(2) Yanlord's debt-funded expansion remains aggressive; or
(3) its debt-to-EBITDA ratio exceeds 5x in 2011 and there are no signs of improvement

This follows news yday that 3 investors Peter Lim, Wee Ee Chao and Kuok Khoon Hong raised their stakes above 5% sparking a run up in the counter. The downgrades announced were not entirely unexpected as S&P had revised its outlook on last Friday 11 Nov. Yanlord now trades at 0.84x P/B at yday’s closing price from prev 0.74x.


Wilmar: Sucrogen, the Australia-based sugar unit of Wilmar, announced that it has entered into an agreement to purchase the assets of Proserpine Co-operative Sugar Milling, which comprises a headline price of A$120m, plus a working capital adjustment, normal settlement adjustments, as well as provisions whereby Sucrogen will absorb all of the mill’s normal operating costs and certain critical capex incurred from 31 Oct11 until completion of the transaction.

CIMB note that the acquisition of Porsepine mill will raise Wilmar’s raw sugar production by 10% and boost its mkt share in Aus. House like the deal, but do not expect significant earnings impact in the near term. Believe the acquisition price is fair at below P/NTA of other recent sugar assets transactions in Australia possibly due to its weaker earnings against peers. Expect Wilmar to improve the efficiency and profitability of the mill over time. House Maintain O/p and $5.60 TP.

Tiger Airway

Tiger Airways: CIMB has Technical Buy Call. House note that Prices formed a bullish flag pattern and prices broke out of this flag on rising volume yesterday. The stock remains a technical buy despite the recent retracement towards its MA. Continue to believe that the $.625 low will be a significant trough.

MACD is starting to turn up again and the quadruple bullish divergence is still in play, coupled with a hook up on its RSI, expect to see a big run from here. Stock is still a buy with a stop placed below the recent low of $0.65. Expect prices to take out the $0.79 in the near term but it is more likely to continue on towards the $0.83-0.89 resistance levels. In a couple of mths, think that it could even reach as high as $0.95, the downtrend channel resistance as long as the $0.625 low stays intact.


OCBC: CIMB has Technical Buy Call. House note that prices were going to correct towards $8.16 and $8.03. Prices did fall into this band but the bulls quickly pushed prices back upwards. It has since moves sideways, likely forming a triangle above its 30-day SMA.

With both its indicators being flat at the moment, house believe that the triangle pattern is indeed taking place. A breakout above $8.49 would signal that prices are heading higher to test the 50%FR at $8.88. There is a strong resistance band at the S$8.70-8.90 levels. Recommend Aggressive traders to buy now with a tight stop placed below the recent swing low of $8.16. If prices open below the stop loss, please ignore this trading suggestion.

Keppel Corp

Keppel Corp: Secures two contracts from Indonesian customers worth a total of ~ $47m. The first contract is for a Coal Transshipment Barge for repeat customer PT Indo Straits Tbk. The vessel is scheduled for delivery in the 4Q12. The second is for the construction of three tugboats for a new customer, an int’l shipping co. The 3 tugboats, 2 of which are 45 tons and the last 50 tons are expected to be delivered in 3Q12 and 4Q12.
While positive, order size is small hence impact should be minimal.

SG Market

SG Market: Spore shares are likely to follow bearish leads after Wall Street's weak close on Wed, which was attributed partly to worries over US banks' exposure to the European debt situation. However, trade is likely to be volatile with the euro zone remains the wild card, and sentiment jittery over the looming Nov 23 deadline for US Congress super-committee to come up with a US$1.2t deficit reduction deal.

Rigbuilders Keppel Corp and Sembcorp Marine could see buying interest, as well as the whole offshore & marine sector, after US crude oil futures surged 3.2% to US$102.50/bbl, a 5 ½-month high. Keppel also announced 2 contracts from Indon customers worth $47m. Support for the STI is tipped at 2760; resistance at 2910.

Wednesday, November 16, 2011


StarHub: Qatar Telecom has acquired a further 7.45% in StarHub via its Asia Mobile Holdings 25/75 JV with Spore Tehnologies Telemedia on 10 Nov. The acquisition was completed through a share purchase agreement with Aranda Investments. No financial details were given. Asia Mobile Holdings now controls 56.6% percent of StarHub, with Qtel's effective holding at 14.1%.

Sun East

Sun East: lifts trading halt at open.
Singapore Petrol Development Co makes mandatory unconditional cash offer for all shares of Sun East at 0.2984cts/ sh that it does not own.
Prior to this, the Offeror acquired a combined 76% of the shares from major sh/h Ma Ong Kee and Sam Kok Yin, at the same price.
The Offeror does not intend to revise the Offer Price, except that it reserves the right to do so in a competitive situation.
The Offeror does not intend to extend the Offer beyond the closing date of the Offer, which shall be stated in the Offer Document.
However, it is the current intention of the Offeror to maintain the listing status of the Company on the SGX. As such, the Offeror does not intend to exercise any right of compulsory acquisition which it may have.

The Offeror may explore synergies between the complementary businesses and operations of Sun East, the Offeror as well as the Dahua Guohua Group, including but not limited to venturing into the business of trading of petrochemical products. This could be achieved by undertaking a comprehensive review of the organisation, businesses and operations of Sun East.
Kim Eng Corporate Finance is the financial advisor of this deal.


CWT: CIMB Has Technical Sell Call. House note that Prices appear to be edging upward slowly, likely in the process of forming a diagonal triangle. As prices are not yet at strong resistance levels, there is still room on the upside from here.

However, both its MACD and RSI suggest that the upward momentum is slowing down slightly. Hence, buyers should be extra cautious going forward. As the upside is likely capped by the strong resistance at RM1.10-1.15, would prefer to turn sellers near this strong resistance levels. A break below S$1.00 would likely signal that the downtrend has resumed. Support levels are at $0.95 and $0.89.


STX OSV: Could see some positive interests after announcing in an interview that orders may rebound next yr as energy prices rise and credit markets improve. If things normalize banking world, expect demand to be filled, although grp declined to give a forecast for contracts next yr.

Expect to win deals for vessels used to move or supply oil rigs as Petroleo Brasileiro SA, Royal Dutch Shell Plc and other Co’s explore new oilfields after crude jumped about 30% in two yrs. Despite missing orders expectations in 3Q, grp note that the fundamentals in O&G business are strong. Co also expects to firm the long awaited orders for eight LPG gas carriers as early as this week.
Add that earnings in 4Q will be stronger.


Libra: Substantial shareholder individual Kerr Lay Kheng sold down his stake of 5.5m shares (approx 5.5%) to 1.4m shares (1.4%) with an unrelated third party on the first day of trading. Libra’s IPO price was $0.205 and rose over 180% on the first day of trading yday to close at $0.575.


Noble: 64.5% owned Gloucester Coal has announced a substantial upgrade of its Monash Coal resources and CLSA has also initiated a Outperform on Gloucester Coal with TP A$8.10. Total JORC coal resources up from 287mt to 577mt a 101.0% increase. Measured and indicated resources have also increased from 13mt (indicated) to 100 mt (measured and indicated). Gloucester Coal closed at A$7.19 yday.

Noble has also bought back its shares for the 3rd consecutive day with 8.5m purchased yday for a total of 33.9m shares over the 3 days. Noble’s chairman Mr Elman also bought 10m shares on the day after the poor results. Noble is trading at 11.3x fwd P/E

Tiger Air

Tiger Air: announced that Tiger Australia is allowed to fly 32 sectors daily (up from 22) with immediate effect, indicating that the unit is making good turnaround progress. Recall, prior to the Australian flight suspensions, Tiger was flying up to 60 sectors a day.

Still, Citi says it is too early to cheer, as it is unsure the extent that Tiger Australia can raise load factors and yields beyond current levels which are only sufficient to cover variable costs. Notes also that Tiger’s fleet remains underutilized with only 6 out of 10 aircraft in Australia actively deployed in the new flying program.
The house maintains Sell, reduces TP to $0.55 from $0.60, on the back of disappointing 2QFY12 results and a possible slow earnings turnaround. Says Tiger may have passed the worst moment of its recent history, but many challenges lie ahead.

DBSV keeps at Hold with TP $0.71, says visibility remains poor.


SIA: Annouced a decent set of October operating numbers, although there is not much to cheer about. Passenger traffic still managed to post marginal growth of 0.7% yoy, but the pace has slowed. Passenger load factor has also declined yoy and mom.

With mgt’s comments just 2 wks ago that advance passenger bookings are showing signs of weakness, growth may come off further in the next one to two mths, which could resul in flat growth or even a yoy decline. SIA’s cargo demand fell 2% yoy, better than most of its peers, and rebounded sequentially on seasonal strength. Load factor of 66% is at longterm average.

Credit Suisse note that with 30% of grp’s mkt cap in net cash, SIA’s forward P/B of 1.0x and EV/EBITDA of 4.4x are not excessive. That said house is concerned about the weaker macroeconomic environment, the intense competition in SG hub and the uncertainty regarding the viability of its new low-cost airline. Ratings are as per follow:

CS maintains Neutral with $11.00 TP,
Citi maintains Sell with $10.40 TP.


F&N: FY11 results slightly ahead.
4Q grows 23% yoy, taking FY11 net profit to $621m, +6.2% yoy.
Earnings growth was underpinned by growth from the F&B division which grew 13% yoy on the back of volume growth and price increases for Soft drinks and Beer.
Soft drink sales in 4Q improved ahead of the cessation of the Coke bottling arrangement, while margins improved with better sales mix.
APB posted 13% rise in FY11 net profit, with sales up 18% on strong volume growth from Oceania (+11%), Indochina (+17%), SE Asia (+20%) and new contribution from Indonesia and Caledonia.
Dairies however, posted a loss for the quarter due to loyalty provisions and lower volumes due to competition in the Msian mkt.
Regarding FNN's Rojana plant in Thailand, FNN stated that assets and operations are insured, and expects the plant to be back online in 4-6 months.

Property development earnings were flat for the year, driven mainly from Spore and bolstered by asset sales.
4Q11 Development PBIT (profit before interest and tax) grew 27% YoY to $153.6m, as a $40m gain from the divestment of 50% of its stake in its One Central Park project to Sekisui Holdings offset lower completions in China.
Commercial property PBIT fell 3.6% to $45m.
Momentum remains firm in Australia with 118 units (48%) sold at its recently launched QIII project in Perth and 77 units sold at One Central Park (from OCP and Park Lane phases).
In Spore, 171 units and 218 units were sold respectively at mass-market projects Seastrand and Boathouse during 4QFY11.
Mgt believes a moderation in demand and pricing may occur due to economic uncertainty and rising supply.However, long term prospects remain steady supported by low interest rates and unemployment. FCT and FCOT saw relatively flattish net property income for the quarter.

Nomura keeps Buy but lowers TP to $7.29 from $7.60 to account for lower valuation of its listed companies.
DBSV maintains Buy with TP $7.20

SG Market

SG Market: Spore shares are likely to stay muted in the absence of strong leads from Wall Street and on the corporate front as reporting season winds to a close. Sentiment will remain jittery as any adverse headlines coming out of Europe may send markets on yet another yoyo ride. Resistance for the STI is seen at 2910 with the 20-day MA at 2800 providing underlying near term support. Tiger Airways could be in focus after it says it receives regulatory approval to increase the number of daily flights in Australia, while Singapore Airlines too could draw attention after posting weaker operational results. F&N FY11 results came in slightly ahead of expectations.

Tuesday, November 15, 2011


Midas: Disappointing net profit due to costs and fall in associate contributions. 3Q rev at $259.3m +4.6% yoy -17.4% qoq with net profit at $27.4m -59.8% yoy -56.6% qoq. Loss from associate Nanjing SR Puzhen Rail Transport was due to fewer train cars delivered and finance costs rose 3 fold to Rmb15.2m on more borrowings and higher interest paid.

Co continue to caution on challenging railway industry outlook due to past incidents and major customers have been negatively impacted. Midas derives approx 70-80% of revenue from the industry and expects trade receivables turnover days to increase. Remains confident in customers as they are state enterprises.

Midas trades at annualized P/E of 10.9x currently vs hist avg of 23.8x


Oceanus: Posts a loss of Rmb720.0m compared to prev yr same period profit of Rmb68.6m due to a Rmb642.6m loss in biological assets due to mortality in larger sized abalones. CEO to resign on poor results. 3Q rev was 71.5m -19.1% yoy -36.6% qoq. Loss is very substantial given that NAV of co is Rmb1.1b

Co has stated it will restructure to improve liveability rates of the abalones grown and address issues of production costs and inefficiencies


NOL: reports Oct (Period 10) operating data.
Volumes rebounded 5% mom, 13% yoy, mainly due to higher volumes on Intra-Asia.
Rates continued to decline 4% mom, 18% yoy, mainly due to lower rates in the major trade lanes and a higher proportion of Intra-Asia volumes.

Morgan Stanley notes pricing indiscipline, where rates on the key long-haul routes have deteriorated to cash loss levels while volume growth remains relatively robust. Says, despite strong volumes, believes that the ongoing rate deterioration will imply sharp 4Q11 losses (forecasts net loss of US$135m), and could prompt NOL to raise capital to boost its balance sheet.

Separately, Citi notes NOL shares rose 2.9% yday on the back of renewed optimism that freight rates may have bottomed after news of a possible US$400/FEU rate hike in Transpacific. The house says it does not recommend chasing any short-term rally, believes NOL share price may lose the current positive momentum once economic reality sets in. Note that the ability to push through this rate hike hinges on the economic conditions at the time of implementation, as well as further capacity rationalization (ie. service cuts and laid up fleets).
Citi keeps its Sell rating with TP $0.90.

other Co's results

HPHT: 3Q11 results generally in line with expectations. Rev for 3Q was HK$3.2b + with net profit of HK$708.4m. Container throughput in HIT rose 1.4% yoy and throughput in Yantian fell 4.9% yoy. For the quarter, rev was 10% below IPO Forecast with net profit 3.4% below IPO Forecast but co maintains DPU guidance.

Distribution to be declared semi-annually, no distribution for this period.

Deutsche maintains Buy with TP US$0.80 on better throughput results compared to other HK and Shenzhen port assets showing quality of assets. Cites 1-2% increase in rev per TEU in 2011 and cost savings from RMB-denominated contracts to drive financial results.

HSBC maintains Neutral with TP US$0.77 down from prev US$0.81. Notes that mgmt has said risk of slowdown is higher than in 2012 though seeing growth in transshipment and Intra-Asia trade and revises volume growth forecasts down from 4% to 1% in 2011e and from 7% to 4% in 2012e. Cuts 2012-13e earnings on volume revision by 6-9%

Brief outlook, on other Co's results below. Asia Water Tech: 3Q11 Net Profit of Rmb13.35m vs a net loss of Rmb778,000 yoy. Rev +4.2% at RMB 84.29m due to contributions from its newly acquired business segment, Waste-to-Power segment and increase in revenue from Power Plant EPC, Water Purification Treatment and Wastewater Treatment segments.

#AusGroup: 1Q12 Net Profit +56.4% yoy to AU$3.15m, Rev -10.2% to AU$123.83m, due to lower activity levels in the Australian major projects segment as a result of completion of projects in the prior yr.

#Pan Hong Property: 2Q12 NP -70.3% yoy to Rmb 6.79m on higher admin costs and income tax expense. Rev -0.9% to Rmb 114.23m.

#Bukit Sembawang: 2Q12 Net Profit +11.9% yoy to $41.16m due to higher profit recognition on more development projects.

#China Dairy: 3Q11 Net Profit of Rmb 1.87m vs losses of Rmb 47.9m yoy. Rev +12.4% to RMB 482.24m attributed to a rise in sales of materials, finished goods, liquid milk and milk powder.

#Combine Will: 3Q11 Net Profit -45.02% yoy to HK$10.01m, Rev +17.58% to HK$412.92m, due to the rise in marketing efforts in machine sales which surged by 152.4%.

#Friven & Co: 3Q11 net loss of $1.46m vs $1.4m yoy. Rev -72% to $5m from S$17.64m.

#LionGold: 2Q12 net loss of $6.37m vs losses of $1.87m yoy. Rev -5.7% to S$40.23m, due to the discontinuation of rev recognition from the waste treatment plant after it was disposed in Mar11.

#Metro Holdings: 2Q12 net loss of $379,000 vs $51.91m profit yoy, due to a $9.9m decline in the fair value of the group's portfolio of short term investments while the previous corresponding 2QFY2011 had included an increased in fair value of the group's portfolio of short term investments of $4m.

#SinoPipe: 3Q11 Net Profit, +8.1% yoy to Rmb 22.06m, Rev +14.4% to Rmb 267.28m, due to higher revenue generated from plastic pipe segment.

#Sino Construction: 3Q11 Net Profit -84.7% yoy to Rmb3.65m, Rev +38% to Rmb 289.3m.

#Sunvic Chemical: 3Q11 Net Profit -41.1% yoy to Rmb 113.78m. Rev -18.5% to Rmb 799.41m, due to a decrease in revenue from acrylic acid and acrylate esters as well as other chemical products.

#Tai Sin Electric: 1Q12 Net Profit increased to $3.59m from $2.45m a yoy. Rev increased to $65.76m from $56.89m, due to higher rev arising from cable and wire segment.

#TT Intl Ltd: 2Q12 net loss of S$3.98m vs a net loss of S$1.24m yoy. Rev -9.2% at $98.23m due to continued working capital constraint and challenging market conditions.