Monday, December 31, 2012
Memstar Tech: is +12.7% at $0.089, on active volume. Memstar appeared last wk on our 52 wk high alerts. Counter has been seeing increased trading volume and rising share price over the month of Dec. Interesting also to note that Memstar and United Envirotech (both water plays) have been showing strong share price momentum during this same period. Both companies are not unfamiliar with each other, having previously signed an agreement to co-develop and test the use of membrane distillation technology in wastewater treatment and water reclamataion, with Sembcorp Industries as a third partner. In a NextInsight interview in Jul 2012, United Envirotech CEO Dr Lin vouched for Memstar as an OEM supplier of quality membrane products, because they are "very good value for money" . Given the recent trading interest, perhaps the time could be ripe for re-look at Kevin Scully's hypothesis back in Aug 2011, in which he mooted Memstar as a possible takeover target . http://www.nracapital.com/research/kevinblog/651
Ramba: has discovered 222 ft of gross pay at the Lemang Block (51% working interest), located in Sumatra, Indonesia. Testing results from the Selong-1 exploration well – the first well drilled by Ramba at the Lemang Block – flowed up to 790 bpd of oil from a depth of ~5,380 ft in the Lower Talang Akar Formation and up to 16.8m std cubic ft per day (“MMSCFD”) at a depth of ~4,750 ft from the Upper Talang Akar Formation. The drilling of the Selong-1 well has been temporarily suspended as a discovery well on 27 Dec pending further field development. More tests and possibly additional zones may be tested in the future. Mgt notes the discovery marks a major milestone, and raises confidence in the commercial potential of the Selong and Akarata prospects and the overall potential of the Lemang Block. Ramba’s second scheduled exploration well is the Akatara-1 well, which the company plans to complete in early 2013. Excluding mobilization, drilling is expected to take ~26 days, with possibly an additional 25 days for testing and analysis. Separately, recall the co’s proposed renounceable underwritten 2-for-5 rights issue at $0.20 per rights share to raise ~$19.37m. Indicative timetable is as follows, - Shares trade ex-rights : 4 Jan 2013 , 9.00 am - Despatch of Offer Information Statement: 11 Jan 2013 - Commencement of trading of “nil-paid” rights: 11 Jan 2013 , 9.00 am - Last date and time for splitting rights: 21 Jan 2013 , 5.00 pm - Last date and time for acceptance and payment of Rights Shares: 25 Jan 2013 , 5.00 pm - Expected date for commencement of trading of Rights Shares: 4 Feb 2013
Keppel Corp: Trading Central notes share price has extended gains recently following the bullish penetration of the 50day SMA. Adds the 20day MA also provides a support role and should continue to push the price higher. Notes RSI has jumped above its previous declining trendline and is now displaying strong upward momentum. Says as long as $10.55 is not broken, look for further upside to $11.40 and $11.60 in extension.
Federal Int’l: Proposes a renounceable underwritten 1-for-2 rights issue, at an issue price of 2.2cts for each rights share, to raise ~$9.6m net proceeds. This represents a discount of 54% to the 4.8cts last closing price of the counter. 73% of net proceeds will be used to pay down existing term loans and reduce leverage, and the remaining 27% used for working capital purposes.
China Essence: faces problem redeeming HK$30m in CBs on 31 Dec, as it is experiencing difficulty making payment on time. Highlights lower potato starch prices worldwide have dampened sales, and repayment of the co's receivables from customers have been slow. This "3rd redemption" payment due is part of an instalment repayment plan for a HK$260m zero coupon guaranteed CBs which matures on 31 Dec'14. The group is now in discussions with bondholders and trustee, HSBC, concerning the postponement of the 3rd redemption.
SC Global: CEO Simon Cheong highlights his $1.80/sh privatisation offer is final and will not be raised. Mr Cheong's "no-increase" statement will prohibit him from making further amendments to his offer, which lapses at the close of Jan 16. The news will be disappointing for SC Global minority shareholders, with SC Global stock last trading at $1.90 before the weekend. SC Global also refuted speculation that it may explore a merger with Wheelock Properties, a 16.1% shareholder of the co. Says "there is currently no discussion with Wheelock Properties with respect to any merger". This denial was likely prompted by a DMG report, which ventured that a merger would be complementary, combining SC Global's land bank with Wheelock's strong balance sheet. Simon Cheong currently controls >60.9% stake, and needs to acquire a further 10.04% stake to lower SCGD's public float under the min 10% threshold required by SGX to stay listed. Minority shareholders who reject the offer face risks whether Mr Cheong succeeds or fails in privatising SC Global. Either they may be stuck with highly illiquid stock or the share price might drop, according to market watchers.
Keppel Land: has secured a 6.6 ha prime city centre site for mixed use devt in Beitang District, Wuxi, Jiangsu province, China for Rmb 417.6m (~S$82m), which will comprise 1135 high-rise residential apts and commercial components. This is KPLD’s 5th project in Wuxi. Targeted at the upper-middle market, the proposed devt comprises mainly two- to three-bedroom units ranging from 90 to 140 sm and will include shopping streets and SOHO (Small Office Home Office) units. The future MRT Line 1 station located next to the site will commence service in mid-2014, The devt is expected to be launched in 1H15.
SG Market: S’pore shares could suffer from some jitters following the tumble on Wall Street as lawmakers fail to achieve a breakthrough in the budget talks over the weekend. With HIS futures already trading lower, the STI is unlikely to push higher to break the 3200 threshold in this half day session. Support lies at 3150 and 3110. In corporate news, Keppel Land is acquiring a 6.6 ha prime city centre in Wuxi for Rmb417.6m, while Simon Cheong’s $1.80 offer for SC Global is final with no merger with Wheelock. China Essence faces problem redeeming HK$30m CBs due on 31 Dec12. KS Energy acquires a jack-up drilling rig for US$68.2m.
Friday, December 28, 2012
Olam: Analysts note that short sellers should take heed after Temasek's latest move to raise its stake in the commodity supply-chain play, with the SG state-owned investment fund now holding 19%, up from 18%. Olam's swing from its early low of $1.485 as it began trading ex-rights to rise as high as S$1.565 may be due to Temasek's buying. While Temasek didn't fully disclose its purchase prices, Olam's SGX filings for seven of the transactions, starting Dec. 18, show averages of $1.465-S$1.565. Most of the transactions were on days when the share price slipped below $1.50. The purchase prices may draw a line in the sand, suggesting solid support levels. SGX data show no Olam shares are available for lending to short sellers.
Top Picks for 2013 by The Edge Magazine: 1) UOB: Steady investment to tap opportunities in Aseans begins to pay off 2) Singtel: Asean units are profitable and growing fast 3) Jardine C&C: Car retailer to ride growing Indonesian appetite for new vehicles 4) Golden Agri: Indo’s largest planter to gain from CPO price recovery 5) Thai Beverage: Acquisition may turn spirits and beer marker into a regional soft drinks play 6) Parkson Retail Asia: Building department stores across the Asean market 7) IHH Healthcare: Hospital assets in SG and Msia are a play on growing demand for healthcare services in the region Lippo Malls Indo Retail Trust: REIT of mall operator in good position to tap Indo’s expanding retailing sector and rising middle-class spenders 9) Petrafoods: Sharper focus on the Asian chocolate market 10) Aussino Group: Loss-making bedsheet seller to be transformed into a Myanmar petrol retailer
UOB: -0.6% lower at $19.76, retracing some of its 3.5% drop to $19.18, the likely driver for the STI's slip into negative territory. Amid low vol UOB's traded price suddenly made a large drop from one trade to the next, with the price moving to $19.20 from $19.52, which could suggest a fat-finger error. We're definitely seeing some strange moves in the market, says IG Markets, citing low volume and end-of-year portfolio moves.
STX Pan Ocean jumped as much as 13% in Seoul to KRW4620 or $5.28 equivalent on news that Korea’s 2 biggest conglomerates Samsung and Hyundai Motor are seeking to take over the country’s 3rd largest marine transportation firm. Another company expected to join the bid is Hahn & Company, a private equity fund. STX Pan Ocean will soon be up for grabs as its cash-strapped parent STX Group is considering selling controlling stake in the company as part of effort to improve its financial health. But both Samsung and Hyundai Motor have denied the reports, saying that they have yet to make any decision on the takeover of STX Pan Ocean.
SC Global: to recap, Simon Cheong has made a voluntary unconditional cash offer for all SC Global shares he does not own, at $1.80/sh. The offer closes 5.30pm, 16 Jan 2013 or at such later date as may be announced. At latest update, Simon Cheong holds a 60.84% deemed interest in the co. Valid acceptances received to date are negligible, amounting to only 416k shares, or ~0.1% of shares in issue. After news of the offer, second largest sh/h Wheelock bought over 1m SC Global shares at ~$1.81, taking its stake to just above 16%, commenting that the share price of SC Global represented a discount of 40-50% of its estimated RNAV. Shares of SC Global have since continued to trade above the $1.80 offer price, with traders anticipating a higher offer price to come, even after the independent directors commented that the offer is “fair and reasonable”. SC Global’s NAV stands at $1.56 as at 30 Sep 2012. Meanwhile, among analysts in Singapore, the range of targets for SC Global’s RNAV is between $3 - $4. Maybank KE has noted that previous such deals were carried out at 30-40% discount to RNAV, which would translate to an offer price of as much as $2.50/sh or as little as $2.10. From the individual shareholder’s perspective, if the 90% breach doesn’t occur, nothing happens if he doesn’t take up the offer. He will continue to hold his SC Global shares. SC Global, on the other hand, as a company, has reason to privatize itself. As a listed company, it is considered a foreign developer, and may face financial penalties totaling up to an estimated $71.7m in 2013 , for its unsold units beyond the two year grace period post TOP.
CapitaLand: Trading Central notes share price remains strongly supported by a medium term upside trend line since May ’12. Both the 20 day and 50 day MA are heading upwards, which should limit the downside potential. Daily RSI stands firmly above its neutrality area at 50%. Highlights that as long as support at $3.46 is not broken, further upside could occur at $3.90 and $4.00 in extension.
Olam: goes ex-rights today. Recall, the renounceable rights are on the basis of, i) 313 bonds (principal amount of US$1, issue px at 95%, 5 yrs maturity, 6.75% coupon), stapled with ii) 162 warrants (exercise price of US$1.291/sh) for every 1000 Olam shares. Co highlights its 15 Jan'13 EGM will no bearing on its rights issue. The EGM will be to vote on the payment of sub-underwriting fee by banks managing its rights issue to Temasek's unit Aranda Investments. Temasek which collectively holds 18% stake will abstain from voting. CEO Sunny Verghese and Kewalram Spore with a combined 24.9% stake will vote in favour of the payment. A 'no' vote means Aranda will not be paid a fee but Olam will still have to pay the full underwriting commission to joint lead mgrs - CS, DBS, HSBC, JPM, which amts to 2% of bond's principal amt or US$15m. The banks will, in turn, pay 0.85% or US$6.375m to Aranda for absorbing all the rights that are not taken up by other sh/h - if given approval at the EGM. Olam: Grp now holds a 100% interest in NZ Farming Systems Uruguay (NZFSU), following its' full cash takeover offer for all of the shares it did not already own, which closed on Nov 30. On Nov 26, Olam had acquired more than 90% of the shares in NZFSU and it completed its' compulsory acquisition of the remaining NZFSU shares for NZ $25.8m. Separately, Jim Rogers is said to be taking up Olam's Rights issue according to The Straits Times, whose backing marks another show of confidence for the embattled firm, whose proposed rights issue of bonds and warrants is meant to shore up confidence and undermine short-sellers. This comes on the heels of Temasek Holdings' commitment to mop up all the bonds and warrants that Olam's other eligible shareholders choose not to subscribe to.
Technics Oil & Gas: announced that it will place 10.7m shares to Eversendai Crop at $1.05/sh. This brings Eversendai’s total share holdings to 40.3m, or 18.0% of enlarged share capital. Eversendai now needs to purchase another 4.6m on the open mkt to begin equity acctg their new associate and to likely acquire a board seat. DMG observes this placement was done at a 2% premium to the previous day’s avg trading price, bucking the recent trend of placements at discounts; believes this points to Eversendai’s confidence in Technics’ prospects and attractive valuation. The house maintains its Buy rating with a lowered TP of $1.15 (adjusted for dilution from the new placement), pegging to 12x FY13e EPS. Continues to like Technics for its steady growth (9% EPS CAGR to FY15e), high returns (ROE 32%, ROIC 37% in FY13e) and high div yield (5.8%).
Nam Cheong: Positive momentum continues after grp announced that it has sold three more vessels worth US$56.4m, bringing the number sold this year to a record high. These contract wins bring Nam Cheong's order book to RM1.45b ($577m), underpinning earnings visibility for the next 3 years, and also include a letter of intent for 4 multi-purpose PSV valued at US$130m. DMG add that astute investors would notice that Nam Cheong just pulled off a small miracle – selling 2 AHTS vessels for 1Q13 delivery when all the small AHTS for 2013 have already been sold since Novr this yr. Mgt clarified that the original buyers agreed to take vessels for delivery in 2014 and to give up their current 2013 orders to Icon Offshore. Add that Nam Cheong has already sold 9 out of the 19 vessels scheduled for delivery in FY13F, and with these sales four out of our forecast 20 vessels for FY14F have already been sold. Nam Cheong is keeping up a very strong order momentum. Overall, house maintain BUY with a TP ofS$0.300. With the year essentially closed, house roll valuations over to 8.5x FY13F EPS for a TP of $0.300, which is a very conservative multiple for a company growing at a 28% CAGR for the next three yrs.
Keppel Corp: has secured 3 new contracts worth a combined value of $420m, bringing the group’s total order wins for 2012 to $9.9b. i) the first contract is from Hydro Marine Services, a subsidiary of McDermott Int’l, for the construction of a high spec deepwater pipelay vessel. Work is scheduled to commence in 1Q13 and expected to complete in approx two and a half yrs. ii) the next contract is from Australia-based Bhagwan Marine to build a catamaran air dive support vessel. When completed in 1Q14, it will be deployed in north west of Western Australia to support the operations of Apache Energy. iii) the third contract is from Ezra’s EMAS Offshore Construction and Production, to modify and upgrade an existing FPSO facility, Lewek Arunothai. When completed in 2Q13, it will be deployed as an Early Production System in the Kamelia field, located in the Msia / Thai Joint Devt Area in the North Malay Basin. KEP trades at 8.7x P/E, 2.3x P/B, offers 4% div yield.
SG Market: S’pore shares may get a little lift on hopes that the US may avoiding a budget crisis after the House planned to reconvene on Sunday to cobble a deal to avert the fiscal cliff but expect little conviction in the market with most investors still preferring to sit on the sidelines. The upper limit for the STI remains at 3227 with 3150 providing immediate support. In corporate news, Keppel Corp bagged another $420m of contracts to take its O&M order tally to $12b this year, while Nam Cheong sold 3 more vessels worth US$56.4m. Technics O&G is raising $11.2m via placement of 10.7m new shares at $1.05.
Thursday, December 27, 2012
Wilmar: Wilmar is up 2.5% at $3.35, the best-performing STI component and among the most-active shares by value-traded. There's no specific reason from the company, analyst says. Add that the buying is certainly not on the institutional side, so presume it's more on the retail segment. Sell orders at the current level suggest a retest of the $3.37 intraday high is unlikely.
Olam: -1.0% at $1.53 in whisker-thin volume as few players look to take advantage of the last trading session to buy the shares to participate in the rights issue of bonds and warrants. Most people are in wait-and-see mode, analyst says. Don't see why people would rush out to buy this to get access to the bond or warrants, noting the instruments will be trading separately after they are issued. Add that the bond coupon is "ok, but not huge" and the warrants can't be exercised for a couple yrs. The instruments offer some value, but if you have a slight risk aversion you'll probably not change that for what's on the table." But notes, because vol is thin, wouldn't read too much into the shares' decline. Participation in the rights issue doesn't require investors to recall shares lent to short sellers, indicating a short squeeze isn't likely near-term; SGX data indicates there are no Olam shares available to be shorted.
Q&M / SMG: Grp has announced a takeover bid of about S$22.65m for Catalist-listed Singapore Medical Group, accelerating access into the lucrative multi-disciplinary specialist medical practice in the region. Grp is offering $0.1323/share of SMG. The offer price is a 41% premium over SMG’s last traded share price of $0.094. Q & M will purchase a 72.57%-stake from 2 substantial shareholders of SMG – Felix Huang and Dr Xiaoyan Baumann Geb Bi – for $13.99m. The proposed transaction triggers a mandatory general offer for the remaining shares of SMG at $0.1323/share. Barring any unforeseen circumstances, the proposed deal is expected to complete in 2Q13.
Courts Asia: CEO note that grp is well paced for 2013, and such strategies include developing innovative new services, the regeneration of its shops and enhancing its online shopping experience so that Courts continues to stay ahead of the pack in an intensely competitive part of the retail sector. Grp add that although SG economy is slowing, the exceptionally healthy job mkt, with near full employment, is helping to support the retail industry as consumer confidence remains strong. However cautioned that eye-catching results will not be repeated every quarter as some of the co's growth strategies might not have an immediate impact. In addition to building its presence in Malaysia, grp will also expand into Indonesia, where the economy there is growing much faster than many of its regional peers, resulting in a rapid expansion of the middle-class section of the population.
Genting HK: Channel News Asia notes more and more private investor attention is focusing on the Philippines, as the country aims to become the region's premier gaming hub. Notes, with the success of Resorts World Manila (RWM), Travellers International (50% owned by Genting HK) is now embarking on a bigger and grander integrated resort complex development, investing US$550 m into the project. It is expected to be completed by 2016. At 31 ha, Resorts World Bayshore (RWB) will comprise about a quarter of the 120-ha Entertainment City site, an attraction that the govt hopes will be the Philippines' answer to the Las Vegas strip. Mr Kingson Sian, President of Resorts World Manila, said: "Our first year will probably have 2m visits, not visitors, visits, some of them multiple visits. The following year we had 4m, this year we'll probably hit around 7m visits, so its been growing quite nicely." Proponents of Resorts World believe that with the Philippine govt's support, more and more investors will be tempted to place bet and take a stake in the country's gaming industry. Last year, Resorts World reported a net income of ~ US$98 m, +50% yoy. CNA observes, fun or not, investors like to play the odds when the risk is low and the returns are high. And with observers predicting the Philippines gaming industry will grow to some US$10 b by 2016, says, the odds do seem rather favourable.
Rowsley / Informatics: The Business Times highlights both penny stocks are back in limelight, as market turnover averages 25 cts per unit on high unit volume of 3.3 b. Both stocks are connected to prominent local businessman Peter Lim. Recall, Rowsley last week announced two deals aimed at transforming the co into a major property player in Johor's Iskandar region, and since then its share price - which started rising days before the announcement - has skyrocketed. In yday's session, the counter ended 19% higher at 31 cts with 242 m shares traded. Informatics, in the meantime, shot up 49% to 14.3 cts with 309 m done.
Gul Tech: shareholders now have up to Jan 9 to accept the cash exit offer of 16.2 cts/ sh from Greenwich Pacific, ultimately owned by a member of the Liem family which runs Tuan Sing. Trading in the shares of the co has been suspended since Dec 19. As at yday, Greenwich had secured 97.16% of shares in Gul Tech, a maker of rigid and rigid-flex printed circuit boards.
Darco Water: initiates legal action to terminate a $79m build and operate a wastewater treatment plant in Taiwan after it said the Taoyuan County govt breached terms of contract. Co is seeking compensation and damages. Contract was expected to rake in ~$298m revenue over a 35 yr concessionary period. Co highlights the county was late in handing over a piece of land suitable for the plant construction, and >80% of the land and up to a depth of 8m of it was polluted by illegal dumping.
CapitaLand: its wholly-owned serviced residence business unit, Ascott, has clinched contracts to manage three more properties in Shanghai and Suzhou, China. The 90-unit Ascott Heng Shan Shanghai, located in the Xuhui District, is scheduled to open in 2014. The 250-unit Ascott Emerald City Suzhou in the Suzhou New District, and the 194-unit Somerset Baitang Suzhou in the Suzhou Industrial Park, are scheduled to open in 2015 and 2017 respectively. The contracts take Ascott’s serviced residences in the 2 cities to more than 10.
Oriental Group: Looking to raise net proceeds of $21.4m in a placement of 179.2m new shares at 12c each. Plans to use 37% of the net proceeds for the proposed acquisition of carbon steel manufacturer Xinghua Rongcheng; 14% to grow the group's business of making and trading industrial and construction materials; and the remaining for working capital and general corporate purposes.
SC Global: Independent financial advisers note that the $1.80-per-share offer by CEO and Chairman Simon Cheong in SC Global is "fair and reasonable. Urge shareholders to accept bid or sell in open market if price is higher. Independent advisers PrimePartners Corporate Finance said that SC Global's RNAV per share is $2.25 on an as-is valuation basis, and $2.16 on a gross development value basis, based on the estimated revaluation surpluses on unsold and/or uncompleted development properties.
SG Market: S’pore shares are expected to pull back slightly on softer close on Wall Street as the clock ticks nearer the fiscal cliff deadline. Technical indicators for the STI have not corrected from their overbought levels, suggesting it may be a stretch for the market to push much higher. Above 3170, the next resistance for the benchmark index stands at 3227, while the immediate floor is tipped at 3150. In corporate news, the independent financial advisor highlighted the $1.80 cash offer by Simon Cheong as fair and reasonable and recommended shareholders to accept the offer or sell their share in the open market. This is in direct contrast to recent comments by Wheelock, which views the takeover price as being too low. Meanwhile, CapitaLand’s The Ascott has secured contracts to manage 3 more properties in Shanghai and Suzhou, while Darco Water may face some selling pressure after initiating legal action to terminate a $79m to build and operate a wastewater treatment plant in Taiwan after Taoyuan County govt breached terms of contract.
Wednesday, December 26, 2012
Consolidated Top Picks for 2013: We have tried to Tabulate the Top Picks for 2013 via the various strategy reports we have received from the various houses so far and key summary from what we have compiled are as per follow: 1) Kep Corp: Continues its 2012 trend to be the most favorite Pick for 2013 2) Capitaland, CMA and GLP appears to be the most preferred Developer Pick 3) Suntec REIT scores the highest among the REITs sector, followed by Ascendas 4) First Resources is the most favorite CPO/commodities play 5) Ezion is the most favourite Mid Cap O&M Play 6) NOL appears to be a favorite for the turn around theme, followed by Wilmar 7) Street appears tied in btwn DBS and UOB as the Top SG Bank Pick 8 ) Venture Corp, SATS, Comfort Delgro and STE appears to be the preferred Yield / Defensive Picks 9) Favorite Telco appears to be M1 Do note that the above findings are subjected to changes, as quite a couple of houses have not released their 2013 Strategy reports yet.
City Dev: The developer is expected to launch this week for Echelon, its 99-year leasehold private condo project next to Redhill MRT Station, with indicative price of ~$1,700 psf. Some 30-50% of project's 508 units may be released this week and >300 cheques have reportedly been collected. Echelon is jointly developed with sister companies Hong Leong Group's Intrepid Investments and Hong Realty's Garden Estates. The site was acquired for $396m or $754 psf ppr in Dec 11, giving an estimated breakeven price of $1,100-1,150 psf. Nearby sites sold this year saw winning bids at between $960-970 psf ppr.
SC Global: AmFraser note that 'The public's perception of SC Global's fair value is probably higher than the figure Simon Cheong has offered, and hence they are not in a hurry to accept the offer. Recall that CEO Simon Cheong offered to take SC Global private for $1.80/share, valuing it at $745m. At 61% more than the stock's 20-day average, it's the biggest premium for any acquisition of a developer in SG on record. Since then, SC Global's second-largest investor, Wheelock & Co, bought shares above the deal price, and the stock closed at $1.91 last wk, indicating that traders expect Mr Cheong to pay more. Maybank add that Wheelock is not happy with the price and the signal to Simon Cheong by Wheelock is that $1.80 is too low. Mr Cheong may need to raise his offer by as much as 39% to win over shareholders.
Rowsley: Shares surged yesterday after grp announced plans to buy a huge site in Malaysia's Iskandar region and a top architectural firm by issuing up to $581m in new shares. The deal will result in Peter Lim getting about 40% of Rowsley's enlarged share capital since he owns the 9.23 ha land parcel via a JV with the royal family of Msia's Johor state. The site is near the Malaysian side of a causeway linking the two countries.
Grandbanks: Grp’s current CEO Robert William Livingston II announced that he will not renew his service agreement when it expires on Dec 31, 2012. Current CFO will act as CEO until a new CEO is found. No additional comments were made by grp, who note that its No 1 priority is to get off the watchlist by returning to profitability.
SG Economics: Overall CPI rose a smaller-than-expected 0.1% mom NSA (consensus: +0.4%, Oct 12: -0.2%), pushing Nov CPI down to a 2-yr low of 3.6% yoy from Oct 12’s 4.0% (consensus: +3.8%, CIMB: +4.1%). Core inflation eased from 2.2% to 2.0% yoy due to cheaper clothing, footwear and household durables. Due to the low base effect and a sharp spike in COE premiums, CIMB expect Dec CPI to rebound to 4.0-4.2% yoy, bringing 2012 CPI to 4.6% (11M12: +4.6%). For 2013, house expect CPI inflation of about 4%, within the official forecast of 3.5-4.5%
SG Market: S’pore shares may stay firm as Asian stocks advanced y’day with Shanghai Composite surging 2.5% on speculation new leaders will do more to spur growth and reform the financial system, while the Nikkei 225 Stock Average jumped 1.4% as incoming Japanese PM Shinzo Abe pressured the central bank to raise its inflation target. After closing the breakdown gap set in Aug 11, the next resistance for the STI is seen at 3227, while immediate support is at 3150, followed by 3110. Stocks with China exposure such as CapitaLand, CMA, Yanlord, Ying Li may play some catch-up following the strong move by Chinese property stocks. SC Global may continue to draw interest as traders are betting on a sweeter takeover offer from CEO Simon Cheong. Meanwhile, City Dev is expected to launch Echelon, its 99 yr leasehold private condo project next to Redhill MRT Station, this week with indicative sales price of ~$1,700psf. Marco Polo may also be in focus after 49% owned tug and logistics operator PT Pelayaran Nasional Bina Buana Raya (BBR) secured approval for its IPO on Indonesia Stock Exchange, with listing planned for a 9 Jan 13 listing.
Monday, December 24, 2012
Olam is down 0.6% to $1.545 in sluggish trade after the commodity-trader acquired Seda Solubles' coffee business for US$52m. This is Olam's second acquisition since it came under attack by short seller Muddy Waters last month for its “acquisition binge." Market watchers observe that Olam do not seem to have taken their foot off the gas and the purchase may be intentionally meant to be a signal that things are as per normal. In any case, this is a relatively small deal and may have been in the works. A separate announcement that the group has given up on a proposed sugar-mill acquisition in Brazil is just confirmation of a previously canceled deal as the parties could not agree on a price. But while management insists that the group is not in need of capital, questions are being raised why Olam is doing a relatively expensive capital raising. The rights issue closes on Dec 27, leaving just 2 more trading sessions for players to to participate. Nevertheless, the psot Muddy Waters situation appears to be stabilizing with share price has been bolstered by series of Temasek puchases, upping its stake to 18.0% from 16.3% last week.
Rowsley: Investment firm, Rowsley, which is which is controlled by former "Remisier King" Peter Lim, plans to transform itself into a property play via a $223m RTO of RSP Architects & Planners from Albert Hong and his 4 partners and a $358m acquisition of a 9.23ha of land in Johor's Iskandar project from Vantage Bay Sdn Bhd, now 70% owned by Peter Lim and the rest by Johor royal family. Both deals will be satisfied by issue of new Rowsley shares to respective vendors at $0.15 per share. The transaction will pave the way for the listing of one of S’pore’s oldest and Asia’s leading architectural firms with solid track record and project pipeline in S’pore, China, Vietnam, UAE and Africa. The Iskandar land is slated for a $3b integrated mixed-use township comprising apartments, malls, convention centres and offices, yielding more than 10m sf of GFA. The price paid works out to be $36psf/ppr. Note that both deal are on non-binding term sheets subject to diue diligence and further definitive agreements. Upon confirmation, Rowsley will offer a bonus issue of 2 free warrants for every share held to existing shareholders with $0.18 exercise price and term of 3 years. The warrants could raise $350m if fully exercised.
SG Market: S’pore shares are likely to come under pressure, taking cue from the weakness on Wall Street as optimism over a deal to resolve the US fiscal cliff fades as a vote on a Plan B was abruptly cancelled with little support. Low liquidity environment on a shortened session ahead of X’mas is expected to cap any movements with immediate resistance for the STI seen at 3227 and immediate support at 3140. Rowsley, controlled by renowned investor Peter Lim, resumes trading after announcing 2 deals to transform it into a real estate player via a RTO of RSP Architects and acquisition of a 9.23ha plot of land in Iskandar. Olam Int’l is also in the limelight after acquiring the coffee business of Seda Solubles in Spain.
Friday, December 21, 2012
Rowsley: announces plans to venture into property devt in Msia’s Iskandar region, through the acquisition of RSP Architects and Iskandar land parcels in a $581m all share deal. Breakdown of the deals as follow, i) Rowsley has entered into a non-binding term sheet with Albert Hong Hin Kay, Lee Kut Cheung, Lai Huen Poh, Liu Thai Ker and Hud Abu Bakar (collectively “RSP Vendors”), to acquire RSP Architects Planners & Engineers for a consideration of $223m, to be satisfied by issue of new Rowsley shares at $0.15/sh, which translates to a 6.3% premium over Rowsley’s last closing px at $0.141. ii) Rowsley has also entered into another non-binding agreement with Vantage Bay Sdn Bhd to acquire parcels of vacant land located within the Iskandar devt region in Johor Bahru, measuring 9.23 ha for a consideration of $358m, to be satisfied by new Rowsley shares at an issue price of $0.15/sh. The land is located within Flagship A of the Iskandar devt region, and is located on a waterfront site just a few hundred metres from Johor’s new customs, immigration and quarantine facility, and is in close proximity to Spore. The land is to be developed into an integrated mixed use township centring on a major shopping, entertainment and residential complex. It also comprises hotel, commercial and office devts. It is expected to yield a gfa of no less than 10m sf. Adjacent to the land will be a medical hub to be jointly developed by Thomson Medical and Vantage. iii) Subject to the acquisitions being completed, Rowsley is proposing bonus warrants with exercise price of $0.18/sh, to be issued to the existing sh/h for free, on the basis of 2 warrants for every 1 Rowsley share. The exercise period for the warrants will commence 6 mths from date of listing, and expire on the 3rd anniversary from date of issue. The co intends to use the proceeds arising from the exercise of the warrants for future working capital and expansion plans. For avoidance of doubt, the RSP Vendors and Vantage will not be entitled to the bonus issue. CIMB has been appointed the financial advisor to the acquisitions. Expect trading halt to be lifted soon.
UOB: Philip Securities says the bank is likely to continue to deliver strong results for the next few quarters even as the macro economy remains uncertain. Expects loans growth to be moderate, but positive, mitigating the continued pressure on NIMs. Forecasts fees and commission to grow rapidly, driven by strong transaction banking and wealth management performances. Geographically, contributions from UOB's overseas subsidiaries are expected to increase. Tips UOB may also benefit from an improvement in the China economy, which may drive higher trade volumes and banking services between China and Asean, in which UOB has strong capabilities. The house raises TP to $21.00 from $18.00 after increasing its forward P/B multiple to 1.35X and rolling forward to FY13 forecasts. Keeps an Accumulate call, continuing to prefer UOB over DBS and OCBC . UOB is down 0.8% at $19.69.
Sembawang E&C: has suspended its listing plan due to weak market conditions. Sembawang E&C is a subsidiary of Punj Lloyd Limited, a leading engineering and construction group based in New Delhi and listed on the National and Bombay stock exchanges of Mumbai.
Ezion / YHM: Ezion makes 0.18 ct /sh sgd0.0018/shs general offer for all the shares it does not own in YHM, after acquiring 3.2b shs and 3.96b options in YHM, with each option having right to subscribe for 1 new sh at 0.0018 ct/sh. As such, Ezion has a 44.1% stake in YHM, and triggers the mandatory GO. YHM has an outstanding tranche of 4.55b options, which are exercisable at 0.18 cts each, representing 38.6% of the max enlarged sh base. Ezion said it has no plans to introduce any major changes to YHM's businesses and intends to keep the company listed. Says, "it is the intention that YHM continues to carry on its existing business and its new offshore and on-shore oil and gas and marine-related businesses”. YHM's main operating subsidiary is engaged in the scaffolding business, catering to the construction and marine industries. Ezion shares closed at $1.54 yday, up half a cent, while YHM stock closed unchanged at $0.032.
Fortune Reit: StanChart reiterates Outperform, lifts TP to HK$6.90. Notes despite deteriorating macros, Fortune’s tenants are well positioned. The Reit achieved high occupancy of 96.1% and robust rental reversion of 20.1% in ytd 9M12. Fortune’s operational performance remained strong in 3Q12, underpinned by contributions from two new properties (Provident Square and Belvedere Square) and healthy reversion at the existing portfolio. Fortune’s trading liquidity has improved significantly of late, attracting interest in the stock. StanChart expects the Reit to be a compelling candidate for investors seeking high yield in the prolonged low interest rate environment.
Sing Land: Maybank KE upgrades to Buy from hold, lifts TP to $8.20 from $6.75, on narrower 30% discount to RNAV from 40% With the recent series of privatization deals, there is now a higher probability of privatization at SingLand. UIC holds a 79.8% stake in SingLand, while Silchester (a long term institutional shareholder) holds another 8.2%. This effectively leaves SingLand’s free float close to the 10%-mark, below which it will lose its listing status. With SingLand still trading at a 40% discount to RNAV, UIC may finally pull the trigger and launch a privatisation bid, funded by the low current borrowing costs. Assuming a bid of $8.80/sh corresponding to SingLand’s 10-yr average PBR of 0.75x, it will cost UIC $733m to buy the shares it does not already own. Fundamentally, while SingLand remains predominantly a commercial landlord, mgt is actively navigating the headwinds. As the outlook for the Singapore office sector remains muted, and the hotel sector also appears to have peaked, SingLand has turned to residential development by acquiring 4 sites in 2012. The sites have a combined attributable GFA of 788.4k sf and an estimated gross development value (GDV) of $1.3b. At a blended pre-tax margin of ~18%, margins are decent. After sluggish starts, both The Trizon and Archipelago (50% stake) are now substantially sold at 92% and 99% respectively. Maybank KE expects the progressive recognition of income from Archipelago to mitigate possible mildness in SingLand’s office rental income, with more development profits from FY14 onwards as the four newly acquired sites start to contribute.
SIA: NZ High Court orders SIA Cargo to pay NZ$4.1m penalty for price fixing, as part of pre-trial settlement. This is in relation to the air cargo cartel case brought by regulator. SIA Cargo admitted liability for agreeing fuel, security surcharges for cargo flown to NZ. This follows the A$11.75m slapped on SIA Cargo by the Australian Federal Court just two wks ago. Nevertheless, market reaction to the previous fine was barely noticeable, hence unlikely for this latest fine to have much impact on SIA share price either.
STX OSV: calls for trading halt. Fincantieri offers to buy STX OSV for € 900m in cash offer, which translates to $1.22/sh, 13% below yday’s closing price. Fincantieri made a €455m offer for STX Europe’s 50.75% stake in STX OSV, paving the way for a cash offer for the remaining stake. The transaction is expected to close within the first four months of 2013. STX group of companies are down in Seoul trading today.
GLP: has successfully completed its IPO of GLP J-REIT (3281 JP) on Tokyo Stock Exchange, which debuts today. GLP is contributing 30 of its properties to the J-REIT for an initial consideration of US$2.6b, making GLP J-REIT the largest logistics REIT in Japan. The sale of assets is expected to be completed on 4 Jan ’13. Net cash proceeds from the sale are est to be ~US$1b, which GLP intends to use primarily for invmt in China, Japan and other countries. GLP J-REIT completed an IPO of 1.83m units, comprising 57.5% / 42.5% domestic/ int’l offering. GLP continues to hold ~15.75% in GLP J-REIT. GLP J-REIT’s offer price at ¥60,500 compares with the last done at ¥62,600, +3.5%, at 8.35am. Of note, GLP J-REIT would be the first Japanese REIT to bolster the shareholder payout with money that its peers usually set aside to cover depreciation expenses. The REIT’s yield will rise to 6.8% from 6% with the inclusion of 30% of the depreciation for the warehouses it manages, according to GLP’s forecast. The average dividend yield for the Tokyo Stock Exchange REIT Index is 4.7%. GLP J-REIT seeks to compete with Singapore and HK REITs, which on avg pay ~100% of funds from operations, compared with ~ 65% for J-REITs, based on an estimate by CBRE Clarion Securities. Even though Japanese regulation allows J-REITs to pay as much as 60% of epreciation, no REITs in Japan have done so, partly because of concerns that they may not be able to cover renovations or other expenses. Most other J-REITs are awaiting to see the market’s reaction to GLP J-REIT, before deciding if any changes need to be made to their distribution policy. Japan’s REIT Index has gained 31% this year and is set for its biggest gain since at least 2004. The Bank of Japan, the central bank, has been buying the REITs since 2010 as part of a ¥76 tr (US$904.5b) asset fund to support the economy. The central bank has acquired 85% of the ¥130b in J-REITs it plans to buy by the end of 2013.
SG Market: S’pore shares are likely to thread water in the absence of any major moves on Wall Street ahead of the festive X’mas season and that life goes on despite the end of the Mayan calendar. Above 3170, the next technical resistance for the STI is at 3227 while underlying supports are at 3140 and 3110. The biggest disappointment of the day must be the long awaited cash offer of $1.22 by Italian shipbuilder Fincantieri for STX OSV, which is well below the $1.50-1.60 price range touted by the market. STX Group is also reported to be in talks to divest its bulk shipping unit STX Pan Ocean. Meanwhile, Ezion has launched a general offer for YHM Group with a cash offer of $0.18.
Thursday, December 20, 2012
IEV: UOBK says capital-raising may be on the cards, after IEV terminated an agreement for Altfield Global Resources to invest in wholly-owned unit IEV Energy Investments. Says the group will need to raise US$10 - 15 m to develop its upstream business. As IEV is currently in a net cash position, the capital requirements could be funded by a combination of debt and equity. Notes IEV's 49%-owned associate IEV (Malaysia) received a Letter of Award for a major transportation and installation project by an established OG operator for a Southeast Asian deepwater facility. The house estimates the contract value at RM 400 - 500 m, adding that its earnings forecasts already factor in the project's profit contribution. UOBK trims TP to $0.54 from $0.55 on a lower market value for associate CNG Vietnam (CNG.VH). Keeps a Hold call. On a technical basis, it notes the stock has twice rebounded from its $0.435 support level and tips it could test its next resistance at $0.62 if it breaks over $0.54. The stock is up 8.3% at $0.52.
SC Global: Simon Cheong's cash offer at $1.80 comes at a 49.4% premium to the last close of $1.205, on the date just before the offer announcement. By any measure, this is a decent premium. The offer price also translates to a 15.4% premium over the latest NAV. Yet, investors may still be dissatisfied. Some analysts have estimated SC Global 's RNAV to be as high as $4.00, while Wheelock itself shares a similar view that the offer price still represents a discount of some 40-50% of RNAV. Key to note however, is that RNAV incorporates the surplus value from developments, assuming that they are sold. Investors have chased up SC Global's share price to above the $1.80 offer price, after observing that Wheelock, the second largest shareholder, has raised its stakes, spurring speculation that Simon Cheong would have to sweeten the deal further if he is serious about taking SC Global private. Yet market watchers may note that Wheelock's move to buy more SC Global shares reduces the counter's free float, and moves Simon Cheong closer toward his goal of taking the company private. Also, one cannot rule out the possibility of an eventual partnership between SC Global and Wheelock, to the exclusion of minority shareholders. If the deal falls through, SC Global remains a listed developer, and is subject to financial penalties on units unsold after the 2yrs post TOP. Maybank KE estimates SC Global will lose $71.7m in 2013 for its three projects at Hilltops, The Marq and Martin No. 38, if it does not receive a waiver or extension from the govt.
Yangzijiang: is hovering around a key level at $0.955. Share price has rebounded from the $0.85 low. If the counter can sustain holding above its 20day MA and 50day MA, that would reinforce our positive view of the near and medium term outlook. The indicators point to a similar conclusion, with RSI above neutral and rising, and MACD still in positive territory. In the immediate term, see $1.00 as resistance, and $0.91 as support.
Wilmar: is +2.8% at $3.27 on good volume. Only news flow is that the co reported full redemption of oustanding principal amount of US$571m of bonds , which matured on 18 Dec '12, and accrued interest of 17.78% has been paid. Note that the commodities traders have been underperforming for the longest time, despite the STI charging to new highs. As a laggard, Wilmar may be taking the opportunity to play catch up, particularly as share price of its peer, Noble has also seen a nice bump up over the past couple of days.
BBR: Secured 2 contracts worth $182.9m to build 1,282 HDB flats, a beneficiary of the govt's move to increase HDB build out to boost public housing suplpy. i) 808 HDB flats at Kallang Whampoa and is scheduled to be completed in different phases by end 2015. ii) 474 HDB flats at Sengkang Neighborhood 2, scheduled to be completed in different phases by Apr 2015. With the above contracts, BBR’s order book now stands at $953m, with visibility till 2015. This compares with FY11 revenue at $413.3m, with net margin of 4.9%. The stock, which has a mkt cap of just $75.3m, trades at 5.6x P/E, 0.7x P/B.
Sound Global: recall, the co recently announced a Rmb 2,035m build-transfer (BT) project to construct a water project with 500,000 tons of daily treatment capacity in Changchun City, Jilin province. JPM has an Overweight rating with TP $0.70, notes this is Sound Global’s first significant BT project but believes EPC projects are better. Highlights concern that this BT project may put constraints on Sound Global’s cash flow as the capex will not be recovered until 2015 or later. Believes the winning of this project may be a sign that Sound Global is seeing limited flow of large projects. Believes growth of China’s wastewater treatment sector is slowing and currently prefers the solid waste treatment sector. Tips top pick in the sector is waste-to-energy play China Everbright Int’l (257 HK, Overweight).
Osim: Macquarie downgrades to Neutral with TP $1.82. Says it is time to take a pause and reflect; believes that at current valuations, expectations of ~15% earnings growth in the next 2 years are priced in. Says multiples could re-rate further only if OSIM surprises with higher growth in 2013 or the Chinese consumer plays re-rate strongly next year. Advises stock holders to keep a close watch on 1) quarterly results – to see if OSIM is able to maintain high margins in the core business, 2) Richlife & TWG performance – as they will be the key growth drivers in the next 24 months, 3) any new acquisition announcements – for they could be negative for the stock price.
NOL: Macquarie maintains Underperform, with TP $0.95. Notes difficult conditions in 2013, while supply is set to accelerate in 2013 to 8-10% yoy growth, vs demand growth of 4-5%. Nevertheless, NOL’s recurring US$500m cost savings target appears to be on track. Believes NOL will continue to focus on taking out costs next year to improve profitability. NOL’s fleet renewal program is expected to further transform its cost structure in 2013, while charter-in ratio will drop to 30%, lowering its unit costs and operating lease expense significantly. On rate outlook, Transpacific contract to catch up. The house cuts FY12e net profit forecast from a net loss of US$223m to a net loss of US$289m as 4Q12 volume is weaker than expected, but lifts FY13e net profit estimate from US$58m to US$229m to account for US$196m of disposal gains from the sale of the HQ building but leaves core earnings unchanged.
Olam: There has been much market talk yday on Temasek having raised its stake to 17% from 16.99% after acquiring 200k sh at $1.465/sh. Former Temasek senior MD Michael Dee highlighted that the "minuscule $293k investment by someone of Temasek's size and stature raises more questions than it answers" and questions "when is Olam going to take action itself to alter its strategy, and stop relying on Temasek's small efforts to distract from real issues of governance?". He added that, "Temasek's total invested assets are ~$200bn and their sh of the rights are only ~$150m... therefore, they are only risking 0.075% of their assets" and "investors should consider that Temasek economically is taking virtually no risk in a portfolio context". Overnight, Aranda Invmts, a Temasek unit, announced it entered into a series of transaction to purchase an aggregate 23.9m shares which resulted in Temasek’s deemed interest being boosted from 17% to 18%, of which the last transaction to purchase 1000 shares was the subject of notification. Olam shares closed up 4.4% yday at $1.54.
Noble: Maybank KE upgrades to Buy, raises TP from $1.42 to $1.48, pegged to 12x FY13e, which is still below the historical mean. Sees Noble as most leveraged to an improvement in China’s economic activity in 2013, especially industrial output. Excl the oil & gas business, China is Noble’s single biggest mkt, with an est 30% of total group tonnage. Given the difficult environment in 2012, the house believes profitability is likely not far from structural bottom. Believes Noble should remain resilient with its diversified portfolio and improving balance sheet strength.
FNN: Independent financial adviser JPM calls OUE's $9.08/sh offer "not compelling but fair", the same phrase its used on rival $8.88/sh bid by TCC Assets, as on a sum-of-the- parts basis, FNN is worth $8.58-11.56/sh. Independent directors noted that both offers lay at the low end of JPM's valuations, which were conservative; pointed out that co's majority stake in Myanmar Brewery represented exposure to a "unique asset". TCC Assets' offer lapses at close of 2 Jan '13, while OUE's offer will expire on 3 Jan '12; both have until 21 Jan'13 to put forth their final offer.
Economy: Singapore's Trade and Industry Minister Lim Hng Kiang says Singapore needs to brace itself for a challenging year ahead as external conditions remain difficult. The minister said Europe is in recession and Japan's economy is not growing very rapidly. He added that the United States is recovering, but much depends on how the country resolves the fiscal cliff issue. "If you look at the developed markets, the growth is below their potential and if you look at the emerging markets, growth is still holding up but the strength of the developing market cannot counteract the slowdown in the developed markets. So, overall for global growth, the estimate is that it will be below potential," said Mr Lim. The minister added that Singapore also has to make some internal domestic adjustments. These include slowing down labour force growth and concentrating on productivity growth. This would mean making some adjustments in many of the sectors which are behind international benchmarks in terms of productivity. On Singapore's economy, Mr Lim said economic growth in 4Q12 is expected to be about the same as 3Q. Preliminary estimates showed that the Singapore economy grew by 0.3% in 3Q12.
SG Market: S’pore shares are likely to track Wall Street, opening slightly lower after US House Speaker John Boehner's "Plan B" for a fiscal cliff proposal was rejected by President Obama. Global markets were humming along a wave of optimism that US lawmakers are close to striking a deal but markets got nervous as the deadline looms in 2 weeks and the deadlock persists. The STI is struggling to get much above 3170 while support for the index is tipped at 3140 and then 3110. F&N remains in focus after its independent advisors suggest OUE may have to sweeten its offer to make the deal coompelling. Other stocks to watch include Olam, CapitaLand and City Dev. BBR secured 2 contracts worth $182.9m to build 1,282 HDB flats.
Wednesday, December 19, 2012
Yangzijiang: is down 2.6% at $0.945, with the bulk of trading activity and downward price move occuring after 4pm. Today's move is likely trading motivated, given lack of news flow. Nevertheless, we note that industry news flow continues to paint a picture of tough times for Chinese shipyards, given the extended lull period in terms of order flow. Already the industry is experiencing a consolidation phase, with a number of weaker players bowing out. Meanwhile, Yangzijiang has made inroads to venture upstream into rig building. Those that recall Cosco's experience may note concern that Yangzijiang's margins may take a hit as it climbs the steep learning curve.
Geo Energy +7% to $0.535 but OSK-DMG cautions that downside risks to growth persist despite 2012-14 EPS CAGR of 24% on rising coal production. House notes the stock rallied more than 50% after the announcement Jim Rogers was joining the board. While it believes Rogers' strong track record in commodity investing improves GER board's credibility, fact is he has not invested in the company nor has there been a change in the fundamentals. Highlighted downside risks include the single coal-mine asset with low reserves/resources, its low calorific value coal, inducing export-prohibition risks and exposure to price volatility due to a lack of contracted sales. The 9M12 results also seem to suggest the potential risk to mining-segment from higher-than-estimated strip ratios. It cuts its 2012 earnings forecast by 15% after a weaker-than-expected 9M12, but raises its 2013-14 forecasts by 4-5% on a newly announced coal-trading contract. It expects 2013-14 EPS growth of 26-65% on rising coal production and improving realized prices but keeps a Sell call with $0.34 target.
Hiap Seng: its 85% owned subsidiary has been awarded a contract worth ~THB 652m (~$26m) for the provision of Structural Steel Fabrication for an LNG Terminal Project in Australia. Fabrication work is expected to commence in Thailand in 4QFYMar13, and is scheduled for completion by May ’14. The group expects a positive contribution to earnings post FY13. The stock trades at 12.3x P/E, 1.1x P/B.
Chip Eng Seng: receives Australian govt approval for it’s a$170m residential devt located in Melbourne’s CBD. The 71-storey building is named Tower Melbourne, and will have 581 residential units, comprising a mix of 1 to 3 bedroom apts, town homes and penthouses. The project is expected to be complete in 2016. Mgt notes many overseas and local buyers have already expressed strong interest in the project. Tower Melbourne is Chip Eng Seng’s second residential devt in Melbourne. It first, the 388 unit 33M, located on Mackenzie Street, was completed in Oct ’12. Separately, Chip Eng Seng also announced that it has previewed its 66 unit freehold B1 industrial property, 100 Pasir Panjang to selected buyers. The property has a land area of 54.2k sf with a plot ratio of 2.5. The land was acquired in Sep ’10 for $62.8m. The project is expected to be completed in 2014. The stock has been steadily climbing to new multi year highs, likely supported by on going share buybacks. The stock trades at 5.5x P/E, 0.9x P/B.
Cambridge Industrial Trust: enters into a 60/40 partnership to acquire 3 Tuas South Ave 4, its maiden property in the JTC Tuas Biomedical Park. Cambridge’s effective share of consideration is $9m. The purpose built 3-storey warehouse, mnftg and distribution facility, has a gfa of ~316k sf and is situated on land area of 643k sf. Upon completion of acq, the property will be leased to Agila, the specialties division of global pharmaceutical co Strides Arcolab, for a period of 25 yrs. The will raise Cambridge’s wt avg lease expiry (WALE) from 3 yrs to 3.3yrs. The trust offers 7.1% yield, trades at 1.1x P/B.
Aspial: proposes renounceable non-underwritten rights offer, on the basis of 1 rights share for every 25 Aspial shares, at an issue price of $0.38, representing a discount of 12.6% to the last close at $0.435. Sees estimated net proceeds of ~$23.3m. Says the rights issue is a strategic initiative to strengthen the group’s financial position. Intends to utilize the funds to finance group’s business expansion as well as for working capital. Recall the co’s most recent other corporate action occurred in mid Nov ’12, when it placed 33m new shares at $0.40 /sh, raising some $13.1m.
Yoma: says the issue price for each Rights Share has been fixed at $0.38 per rights share, ~46% discount to yday’s closing price. Recall the co previously highlighted it would conduct a 1-for-4 rights issue. It expects to raise ~$109.4m from this issue, mainly to fund the acquisition of the land devt rights, over which it intends to build an iconic luxury integrated devt. Based on 1HFYMar13 numbers, NTA will rise to 30.7cts from 23.7 cts; EPS will rise from -0.26cts to -0.23cts. The corporate action is subject to approval by shareholders and SGX. The Offer Information Statement will be issued in due course.
Europe: S&P raises its rating on Greece to B-minus from selective default Tuesday, citing a strong and clear commitment from members of the euro zone to keep Greece in the common currency bloc. Even with the country still facing challenges, S&P placed a stable outlook on the new B-minus rating. That buoys hope that the worst of Greece's problems could be in the past. Greece was downgraded to selective default from triple-C Dec 5, when the country commenced its second debt restructuring of the year. The selective default rating was only temporary and is a typical rating from S&P when a country goes through a debt restructuring. S&P noted that even after the debt repurchase, Greece's debt-to-GDP ratio is more than 160%, among the highest in the world. The rating could be slashed in the future if there is a likelihood of another distressed debt exchange, S&P said. An upgrade could eventually be possible for Greece if it fully follows through on complying with bailout requirements and policymaking helps contribute to a sustained economic recovery. S&P's rating is higher than what competitors Fitch and Moody's rate the country. Fitch has a triple-C rating and Moody's a single-C rating on Greece.
SG Market: S’pore shares may move higher to track the improved sentiment on Wall Street on growing optimism about the baby step progress of the fiscal cliff negotiations and the surprise upgrade of Greece’s credit rating but gains are likely to be capped as technical indicators remain grossly overbought. Resistance for the STI is tipped at 3227 with supports at 3140 and 3110. Commodity and oil-related plays may come into focus on firmer oil prices ahead of US supply data. In other news, the joint bid by SMRT/NTUC Fairprice to manage the retail space in the new S’pore Sports Hub could be the first venture by the transport operator outside MRT stations. Commodities stocks Olam, Wilmar and Golden Agri may also be watched as risk appetite in the region picks up.
Tuesday, December 18, 2012
Ho Bee: CIMB revisits its valuations for Ho Bee. Maintains its Outperform call, raises RNAV for lower cap rates, which increases its TP to $2.21 (30% discount to RNAV) from $1.93. Notes the stock trades at almost 30% discount to book, compared to the long term avg of 10%. Believes 2013 could see a play for quality assets, with Metropolis likely to be a well sought after property. Notes demand for invmt assets and quality office properties with large floor plates places Metropolis in good stead for a potential divestment in 2013. Estimates that 50-60% of space could be pre-committed when leases are signed given the strong interest expressed so far, ahead of the initial target of 25-30%. Highlights potential tenants incl P&G (160k sf), Shell (120k sf), NOL (100-300k sf ), and GlaxoSmithKline (60k sf) out of ~1m sf of leaseable space. Ho Bee is +2.4% at $1.91, with share price likely also partially supported by the on going share buybacks.
Ezion Holdings: EDB Investments is subscribing for 14.3m new Ezion shares, representing 1.07% stake, at a discounted price of $1.3315. The sale and strategic tie-up will raise net proceeds of $18.9m and enable the company to leverage on EDB’s extensive network to further expand its oil and gas business. Ezion currently trades at a forward P/E of 13.7x with 10 Buys and 1 Sell calls centering on a consensus price target of $1.88. Company will lift its trading halt at 1130.
Olam: Morgan Stanley downgrades to Equalweight from Overweight, slashes TP to $1.55 from $2.50. Says higher funding costs to alter growth trajectory. Notes Olam’s trading business depends on short-term funding while its value chain expansion plans hinge on favorable capital market access. Believes a key fallout of recent events is higher cost of capital for Olam, which is likely to stunt its previously forecast growth trajectory. Highlights, Olam’s bond yields remain high, and its recent rights issue is expensive. With an expected increase in cost of capital, thinks inorganic growth plans will need to be cut significantly, while some greenfield projects could be delayed or phased out. Cuts F2013-15E reported net income by 16-43%, driven by lower capex and higher interest costs.
SIA: Nov operating stats were a mixed bag. - SIA pax load factor improved to 77.7% (+2.5 ppts), but is still below historical break even levels of ~80%. Promotional activities and a challenging operating environment continued to be cited as a likely source of downward pressure on passenger yields. - SilkAir’s yoy dip in load factor to 74.4% (-4.6%) however can be attributed to aggressive capacity growth (+19.1%), in line with the group’s push for shorter haul regional expansion. - Cargo load factor remained weak at 66.1%, despite the cut in capacity (-11.4%). Maybank KE maintains its Hold rating with TP $10.50, pegged to 0.9x FYMar14 P/B, citing challenging operating outlook.
Cosco: has secured a US$370m contract from a European customer to construct an FPSO unit with storage capacity of up to 400k bbls of oil. Delivery is scheduled for Jun ‘15. The customer is believed to be Dana Petroleum of UK, and the FPSO could be used for devt of its US$1.6b Western Isles project in the North Sea. The FPSO is a Sevan Marine-design cylindrical FPSO. With this new contract, YTD contract wins should reach ~ US$1.6b. Cosco was previously hopeful of securing about US$2.0b for FY12F. Maybank KE maintains its Sell call with TP $0.73, on lower than expected order wins, weak shipbuilding outlook and low profitability on offshore projects.
Keppel Corp: talks about its China strategy during an interview with Bloomberg. Keppel says it may consider buying a yard in China as the nation boosts offshore drilling to meet rising energy demand. Keppel, which already has one yard in China making parts for oil rigs, says it will seek out acquisitions if the government opens offshore projects by state-owned enterprises to foreign companies. Keppel is targeting emerging markets including China, West Africa and Mexico, as oil producers expand in new areas to offset waning reserves. Keppel, which operates yards in its home city as well as in the U.S., Qatar, Brazil and Indonesia, is seeking to move closer to its customers with new locations. The possible expansion in China comes as the govt encourages local shipyards to move into the offshore business. The country is targeting 20% of the global market for rigs, production facilities and other offshore products by 2015. Meanwhile, Chinese shipyards Yangzijiang and Jinhai Heavy Industry both announced their first offshore orders this month, helped by lower prices. Yangzijiang’s US$170 m order for jack-up rig announced on Dec. 3 was lower than a similar order Keppel secured in Apr for US$205m. Keppel notes lower prices are squeezing the profit margins of existing yards, including those operated by Keppel. Says it must find new ways to compete, new battlefields that it can win, but it can choose its battlefield. According to Bloomberg, Keppel has won $9b worth of new orders this year through Nov. 26, helping increase its order book to $12.2 b. The co expects to deliver a record 21 rigs next year, exceeding its previous high of 14 in 2009. The rig-maker has climbed 17% this year, vs the 19% advances for the STI and its biggest rival, SMM.
Wilmar: Fortune Oil has conditionally agreed to inject its natural gas business into China Gas (384 HK) for a total consideration of US$400m. Wilmar, the 15% shareholder of Fortune’s natural gas business will also be transferring all of its stake to China Gas on substantially the same terms. Newswires note Wilmar will be paid US$30m cash, and a further US$30m as deferred consideration, with an option to be paid in the form of a max of 37.5m China Gas shares. While positive that Wilmar is able to monetize a non-core asset, the transaction is small at just 0.3% of its mkt cap.
SG Market: S’pore shares are likely to mark time despite the rebound on Wall Street following signs of progress in the US budget talks as technical landscape for the STI is heavily overbought after a relentless 6-week rally. Resistance for the benchmark index is seen at 3227 with supports at 3140 and 3110. F&N remains in play on expectations of a bidding war with the Thai consortium reportedly approaching some fund managers with a $9.60 offer. Cosco Corp may see buying interest after bagging a US$370m FPSO contract from an European client. Property developers CapitaLand, City Dev may face some profit-taking after latest URA data showed private residential sales hit a 2012 low.
Monday, December 17, 2012
Comfort DelGro: is 3.9% lower at $1.72, the worst-performing STI component. Three analysts note there's no specific news driving the share. "It's coming off a 52-week high on Friday. It could be some profit-taking there," one analyst says. Another analyst adds, "investors might be thinking it's a bit overpriced and they're starting to sell it down," noting last week's gains came after OCBC upgraded the stock to Buy.
CapitaLand: has pulled back after earlier touching its 52 wk high at $3.77. The black marubozu intraday candle bodes negatively for near term price action, if it is confirmed at the end of the day. The indicators have been overbought for some time, and are beginning to hook down, which further suggests the time could be ripe for a slight consolidation. See support at $3.52 (the 0.62 Fibo level). Nevertheless, the stock has been in a longer term uptrend. A break above the recent $3.77 high could see momentum drive the stock toward the next resistance at $3.88.
FNN / Thai Bev: Newswires say Thai billionaire Charoen Sirivadhanabhakdi offered to buy a stake of ~10% in FNN from at least two funds as he competes for control of the company. The deal was not completed. Charoen, who already owns ~ 35% of F&N, enlisted Citi to help boost its stake. Citi contacted institutional investors starting Dec 14, offering to buy 144m F&N shares at $9.60 apiece. That’s 8% over Charoen’s earlier $8.88 bid for the co. The attempt would have raised Charoen’s stake in F&N to ~45%. Thai Bev and Citi have declined to comment on the attempted acquisition. Note 198,000 FNN shares crossed at $9.60/sh at 9.56am, accounting for 13.6% of then volume of 1.5m shares. FNN shares are now +0.4% at $9.61, with 2.2m shares traded.
Far East Orchard: the technicals for this counter looks highly favorable, from a 5 yr perspective , and even better on a 1 yr horizon, as prices have been steadily trending upward, supported by the rising key moving averages. Near term however, the psychological resistance at $2 may put a cap on stock price, particularly as MACD shows signs of a downward reversal. RSI and Stochastics have also been overbought for an extended period. A pullback toward $1.90 could provide accumulation opportunities, though $1.80 is a firmer support level. The stock is a potential break out play if it crosses the $2 barrier.
Silverlake: secures 3 new software and services contracts and one ongoing contract expansion totaling ~RM 135m. i) to implement an integrated Islamic Banking System for a new Islamic banking customer, ii) to carry out a new software and service for one of the largest credit card issuers in Thailand, iii) to provide an Integrated Provident Fund System for a new customer in Ghana, the group’s first contract in Africa, iv) contract expansion for an existing customer implementing the integrated banking system’s core banking solution in SE Asia. The contracts are expected to contribute positively to the group’s financial results in the current and next financial yrs. The stock trades at 15.1 x P/E. The counter has been trending up steadily over the past one year, and continues to make new 52 wk highs.
CapitaLand: to sell its 100% stake in Beijing CapitaLand Xin Ming Real Estate Development Co for Rmb 502m (~$97m), which owns a residential site under devt with gfa of 14.4k sm in Beijing’s Dong Cheng District. The sale is made as part of the group’s ongoing strategy of capital productivity. The consideration was arrived at taking into account the agreed value of property at Rmb 770m less settlement of outstanding liabilities of up to Rmb 268m. The carrying value of the stake was Rmb 199m. This will result in CapitaLand recognizing a net gain of ~$46m. CapitaLand continues to march to new 52 wk highs. It trades at 1.07x P/B.
ST Engg: to acquire 100% stake in Volant Aerospace for US$13.1m, subject to post closing adjustments. The acquisition is in line with STE’s strategic initiative to develop the cabin interior engineering, manufacturing and repair capabilities for its aerospace sector. An industry-leading provider of commercial aircraft interior reconfiguration and modification services, Volant will strengthen the aerospace sector’s cabin refurbishment business. The acquisition will not have any material impact on the consolidated NTA and EPS of STE for the current FY, but nevertheless highlights the group’s push towards growth in the MRO segment. The stock continues to charge towards its all time highs. The blue chip counter trades at 20.6x P/E, offers 4% yield.
Sound Global: together with China Railway 18th Bureau, jointly won the bid for No. 6 Water Treatment Plant Project in Changchun City, Jilin Province, China. The long term designated water supply capacity of the project is 500k cubic m / day, with the near term capacity at half of that. The project requires a total invmt of ~Rmb 2.04b, which will be invested, built and transferred as a BT project. The project is expected to commence construction in 2013 and to complete in 2015. Incidentally, the stock has already moved up by 12% month-to-date, which may suggest that positives from this news may be some what priced in. The stock trades at 8.2x P/E, 1.45x P/B.
United Engineers: to acquire the commercial property known as 79 Anson Road from the CPF and 79 Anson Pte Ltd for $410m, or $2,029 psf NLA. This compares with Colliers recent valuation at $430m. The property is a Freehold 23 storey building with 202k sf located within the CBD. It was completed in 1992 and renovated in 2010. The property is currently 99% tenanted, and its anchor tenant is Kellogg Brown & Root Asia Pacific. UE will rename the property to UE BizHub Tower. The acq is inline with UE’s strategy to build on a more stable base of rental income to smoothen its fluctuating development profits. Based on FY11 numbers, the acq will be slightly earnings accretive, lifting EPS to 98.3cts from 97.3cts. Incidentally, Maybank KE initiates at Buy with TP $4.18, a 25% discount to RNAV. Notes UE is a long undervalued company, with an invmt property portfolio worth $1.7b, and could now be on the brink of a major transformation to unlock shareholder value. Major sh/h OCBC owns a 24.5% stake in UE, and OCBC in recent months has been active in realizing value from its other invmts in FNN, APB, and potentially WBL. All eyes are now on UE, which is the last remaining piece of the OCBC jigsaw. Other catalysts incl redevelopment of its key asset UE Square, and possibly a sale of its hospitality assets.
Olam: update to the renounceable rights issue of US$750m in principal amount of 6.75% bonds due 2018 in denomination of US$1, with detachable warrants with an exercise price of US$1.291/sh. SGX has granted in principle approval. Note the entitlement will be 313 bonds and 162 warrants for every 1000 Olam shares. The ex-entitlement date is 28 Dec 2012. Other key dates as follows. Market watchers have likened Carson Block’s attack on Olam, to him taking on the Singapore govt (and Singapore Inc). Temasek is standing behind Olam, putting its own reputation as one of the world’s savviest investors on the line. When Olam said two weeks ago it would sell as much as US$1.25b in bonds and warrants to existing sh/h, Temasek, agreed to buy any rights not taken by other investors, meaning it could end up owning as much as 29% of Olam. Temasek said it is “comfortable with Olam’s credit position and longer-term prospects, and pleased to have another opportunity to invest in the company, alongside other shareholders”.
SG Market: S’pore stocks are expected to consolidate their gains following soft close on Wall Street and almost uninterrupted 223-point rally on the STI since mid Nov. The market advance may also be capped by the steeper-than-expected 2.5% contraction in non-oil exports for Nov after a 7.9% rise in Oct as electronics shipments remained in the doldrums. Momentum indicators are also heavily overbought with RSI entering the 80 zone and stochastics pushing above the 90 mark. Immediate Supports for the STI is seen at 3140 followed by 3110 with resistance at Aug 11 peak of 3227. Focus will likely be on stocks with exposure in China following signs that China's economy may found a bottom. CapitaMalls Asia, CapitaLand, Global Logistic Properties and Yanlord may continue to see follow-through interest from last week. Sound Global may see further buying interest after nagging a jpint bid with China Railway Bureau to build a 500,000m3/day water treatment plant in Changchun, Jilin in China costing Rmb2b.
Friday, December 14, 2012
Elektromotive: proposes to sell its 55% stake in its UK subsidiary, EUK to Chargemaster for a cash consideration of $10.8m. Calvey Taylor Haw, MD of EUK who owns a 42% stake in EUK, has also agreed to sell his stake to Chargemaster. EUK designs and installs technology for recharging EVs, such as the “Elektrobay”, which is a recharging station for on-street or multistorey carpark installations. After the sale, Elektromotive will receive a royalty free license to use the various legacy technologies and solutions developed by EUK in the past. The group will retain the rights to use legacy charging technology in Asia and Australasia, excl Japan. Mgt notes with the disposal, its war chest will be significantly strengthened to pursue EV-related business opportunities in various fast growing Asia markets, particularly China. Says part of the proceeds will also go towards rewarding sh/h via dividends and the implementation of a share buy back plan. The sales proceeds of $10.8m represents 86% of Elektromotive’s $12.6m mkt cap, based on the counter’s last traded at 0.3cts/ sh. As at 30 Sep ’12, the group has borrowings of $1.5m, Following the sale, the group’s net cash position is expected to exceed $10m. There is no indicative date for completion of transaction. Sh/h approval at an EGM is required, amongst other conditions precedent to completion.
Gallant Venture +3.6% to $0.29 despite acquiring a 52.4% stake in Indon-listed autoparts company Indomobil Sukses Internasional , which is alien from its current resorts, property and utilities businesses and funding its US$809.3m purchase via a 1-for-1 rights issue. But the deal may be a sweetheart offer priced at only 1.3% premium above Indomobil's closing price and shifts the bulk of one of Indon's major auto-parts players to S’pore, giving local investors an alternative to Jardine C&C to play on Indonesia's growing auto sector. While the rights price of $0.28 each offers no discount from Gallant's previous close, it could improve Gallant's liquidity as more than 77% of Gallant's shares are currently locked up by its top 2 shareholders, Salim and Sembcorp Industries With Salim Group controlling 53.4% of Gallant and at least 18.1% of Indomobil, the deal also puts Indomobil's ownership a full circle post Asian Financial Crisis. Recall the Indon govt sold off Suharto-linked Salim's Indomobil stake in 2001 as repayment for bailing out Salim's then crown jewel Bank Central Asia, which was nationalized in 1998.
Olam: drops 3.5% to $1.365, its lowest since Mar 2009, with several large trades suggesting institutional action, with peer Noble is up 1.3% at $1.145, bringing its week-to-date gains to more than 7%. An analyst says there's nothing specific on either company. "A lot of people are getting out of Olam, cutting their losses. We're now in the vacuum stage for these things and people are just taking stock of what they've got". Notes recent analyst downgrades of Olam, reflective of the general malaise surrounding that name. Adds, traders may be covering shorts on Noble, but says uncertain if traders are switching into Noble from Olam.
GLP: recently signed new leasing agreements totaling ~44k sm in Eastern China. Notes the leases, at three separate parks, demonstrate the continuing strong demand for GLP’s modern logistics facilities. The leases are for, - 19.5k sm leased at GLP Park Jiaonan in Qingdao, Shandong Province, to Haier. - A total of 15k sm leased to Dingtong Logistics, a subsidiary of Itochu Corp, and Master Kong Food. One of the leases was a 11k sm lease agreement at GLP Park HEDA in Hangzhou, Zhejiang Province, while the other was for 3.4k sm at GLP Park Qingdao Airport (East) in Qingdao. - 9.5k sm leased at GLP Park Laogang in Shanghai to Senlan Environmetnal Protection (Shanghai), a local waste mgt co. GLP is +2.95% at $2.79, the biggest contributor to the STI today.
Noble: Trading Central notes the stock has surpassed a resistance area around $1.085 and the 20day SMA is reversing up. Adds RSI is surging and has broke above a declining trend line. Moreover the widening of Bollinger bands indicates an increase in the intensity of the short term trend. Now expects a continuation of the rebound, with TP at $1.16 and $1.21 in extension, as long as $1.085 holds on the downside.
TT Int says it has entered into an invmt agreement with Prima BB and Utraco Invmt for a combined financial commitment of $92m to develop Big Box, an iconic mega warehouse retail project in Spore. Under the agreement, - TT Int will first assign all its interests in the proposed 8 storey project to be built on a 5.6ha plot of land for $95m, in exchange for 5.1m shares in the BB SPV and record liabilities to TT Int of $89.9m. - Prima and Utraco will then subscribe for 0.65m and 1.05m preference shares in BB SPV and extend unsecured loans amounting to $34.4m and $55.9m respectively. The total cash and loans of $92m will be used to fund initial devt costs. - BB SPV will also grant options for Prima BB and Utraco to subscribe for 1.22m and 1.98m in preference shares. These options can be exercised in the 3mths after the 2nd anniversary of the agreement, subject to the project receiving all regulatory approvals from EDB, JTC and the High Court by 12 Mar ’13. - Assuming full exercise of options, the equity holders of the BB SPV will comprise TT Int (51%), Prima (18.6%) and Utraco (30.4%). TT Int says it has received commitment for project financing amounting to $125m for the project, which will have 1.3m gfa. Big Box will be the last and largest of the 4 warehouse retail projects approved by EDB under the Warehouse Retail Scheme. The other three projects are IKEA, Courts and Giant. Upon completion of construction of the project, Big Box is expected to contribute positively to the financial performance of TT Int. The co has been loss making over 1HMar13, has negative NAV of 13.4cts/sh. The stock is in top volume, +17.6% at $0.174. Prima BB is held by the Prima Group, which has feed milling, food manufacturing, and restaurants businesses. The Utraco Group was started by Dr Tan Ta Sen in 1967 as a water well drilling and installation co. Its business has since diversified to incl contracting, construction and engineering.
Olam: we highlighted previously that the break of the $1.525 support-turned-resistance was a strong negative signal and could lead to sustained weakness. We see $1.40 as a weak support level, hence on a downward break, the counter could see further declines toward a firmer support level at $1.17 (drawing reference to the Mar 2009 lows). RSI and Stochastics, while oversold, show no signs of reversing back up yet.
Bukit Sembawang: stock is +6.7% at $6.72. Significant sh/h Aberdeen recently raised its stake from 9.98% to 10.02% via open market purchases last wk. The property sector is seeing a good run today, likely spurred by renewed interest in the SC Global privatisation play after Wheelock's competing purchase of SC Global shares via the open mkt.
IHH: CIMB reiterates Outperform with TP $1.53. Says IHH ability to make profits in desperate times cannot be ignored, when growth is hard to come by. Notes, as winter months approach Turkey in 4Q12, patient admissions and revenue are expected to see seasonal strength. Adds, the commencement of operations at its Ankara Hospital late last mth should also lift bed capacity. Meanwhile, Acibadem is going to repay US$257m or 55% of its USD borrowings and also other short term loans, resulting in interest saving of RM 11m. Believes there is no shortage of catalysts for the group, as revenue intensity is increasing in Spore and Msia, as a result of more complex cases and stretched public systems, along with price increases to compensate for cost inflation. Sees possible bump up from any success in tendering for the building of new private hospitals in HK, with announcements, if any, to come in late Dec ’12 or early 1Q13.
SC Global / Wheelock: SC Global shares are +8.8% at $1.98, with the spike likely due to Wheelock upping the ante in Simon Cheong's bid to take SC Global private. Wheelock announced yday that it had acquired 1.066m SC Global shares from the open market at ~ $1.81/ sh, 1ct higher than Mr Cheong's offer price. The acquisition takes Wheelock's stake in SC Global to ~16.09%. Wheelock says, in its assessment, the current share price represents a discount of some 40-50% of RNAV, and it would be unable to buy property assets directly at anything like these prices. The group added that it has appointed Goldman Sachs as its financial adviser in relation to Mr Cheong's voluntary unconditional cash offer. However, some market watchers note that Wheelock's move to buy more SC Global shares reduces the counter's free float – and moves Mr Cheong closer towards his goal of taking the company private. Once the free float falls below 10%, the counter is vulnerable to delisting. In a separate announcement, SC Global said that it had appointed PrimePartners Corporate Finance as independent financial adviser to advise the company's independent directors on the offer. Mr Cheong controls 55.06% of SC Global. As at 5pm yesterday, aggregate holdings of the offeror and parties acting in concert have risen to 60.74% after he had acquired or agreed to acquire shares representing ~ 5.68% of the co.
Australand: rejected a bid from GPT Group for its industrial and commercial property assets and development business, saying the offer “does not provide a compelling value proposition”, and doesn’t pay a sufficient premium or compensate security holders for the transaction costs and risks involved with the deal. GPT’s offer involved Australand, controlled by Capitaland, keeping its residential business and remaining a listed entity. Australand’s industrial and office investment properties were valued at A$2.3 b at June 30. GPT offered a premium of A$140 m to the assets. Australand said its board doesn’t plan to engage with GPT. Australand shares jumped 6.3% on Dec 10 to A$3.21, the highest close since July 2008, and were last at A$3.20.
CapitaLand: StanChart has a 2013 Asia equities outlook. Amongst the Singapore stocks, only CapitaLand makes it to the house’s top stock ideas. SC expects CAPL’ s earnings to bottom in 2012 before growing at a 25% CAGR in 2012-15E as residential projects in Singapore and China are completed. This marks the strongest EPS CAGR among the property companies under its coverage. Also expects CAPL to be a secondary beneficiary as its 65%-owned CMA begins divesting China assets annually to recycle capital. Notes CAPL’s valuations remain attractive at 0.8x its $4.52 RNAV estimate. Tips Outperform with TP $3.85.
CMA: Credit Suisse follows up on its positive China shopping malls sector report published a few wks ago. Notes that in Tier 2 cities, shopping malls (retail sales +15% yoy) are also outperforming department stores (retail sales -10% yoy) and taking market share. Highlights CMA’s recently opened Raffles City Chengdu has managed a near 100% occupancy quickly, with relatively strong foot traffic and sales. Believes the success of Raffles City Chengdu is also an example that shows that 2013 may be the harvesting period for CMA, as many newly opened malls should start contributing strong rental income. Keeps CMA at Outperform, with RNAV at $2.51.
Biosensors: Credit Suisse assumes coverage with an Outperform rating and TP of $1.80, based on 20x FY13e P/E. Notes Biosensors redeemed 3 tranches of bonds of $48.75 m on 20 Nov 2012, two weeks before the maturity date. The covenant of the bonds has negative pledge. CS believes the urgency of mgt’s decision to redeem the bonds highlights the possibilities of a larger size of debt, and could be a signal of imminent acquisition. Recall, mgt said that they are seeking sizable acquisition targets (could be a few small ones combined). CS expects the first deal to materialise by 1H13, even 1Q13, which would become a big catalyst. Biosensors has around US$350 m cash. CS estimates the size of deals combined of over US$150 m during FYMar14, which can potentially enhance FY14/15E EPS by 10-30%. KELive notes that Street recommendations on Biosensors have been gaining momentum over the past two wks. OCBC tips technical upside to $1.30, with a fundamental Buy rating and TP of $1.69. Maybank KE has a Buy with TP $1.38. Tips more upside ahead. Nomura has a Buy with TP $1.80. Says recent M&A concerns overdone. Barclays initiated at Overweight with TP $1.50.
Gallant Venture: lifts trading halt this morning. Gallant will buy a 52.35% stake in Indonesian automotive retailer and distributor PT Indomobil Sukses Internasional (IMAS) for ~US$809.3 m. Gallant will fund the purchase mainly with a 1-for-1 rights issue at $0.28/sh, which will raise ~S$675.5m. The rest of the funding comprises S$128.2 m from borrowings from financial institutions, S$80 m from a convertible bonds issue and S$104.7 m from a non- convertible bonds issue. Upon completion of the proposed acquisition, Gallant would be obliged to make a mandatory tender offer for the remaining shares in IMAS. The proposed acq requires sh/h approval at an EGM. The Salim Group, which has an aggregate interest of 53.4% in Gallant has undertaken to vote in favor of the proposed transactions. Incidentally, PT Tritunggal Intipermata, which owns 18.1% of IMAS, is also a member of the Salim Group. Gallant says the acq will result in the group becoming an even more substantial and diversified conglomerate. The group’s current core businesses include utilities, industrial parks, resorts, property development and mining in Indonesia and property development in the People’s Republic of China. Believes the purchase will enhance its portfolio of investments and allow it to tap the growing Indonesian economy. The acq is also expected to be earnings accretive. IMAS is listed on the Indonesia Stock Exchange with a mkt cap of ~S$1.8b. It is an integrated automotive business group, one of the two largest automotive groups in Indonesia. Its primary business line includes vehicle sales distribution, after sales service and vehicle ownership financing, managing brands including Audi, Nissan, Renault, Suzuki, Volkswagen, and Volvo. Gallant trades at 0.54x P/B, though P/E is not meaningful bcs of minimal profit. IMAS trades at 3.0x P/B, 10.6x P/E. The price per sale share of Rp 5420 is a premium of 1.3% over IMAS’ last closing px of Rp 5350. Attached is the 52 wk share px chart of IMAS.
Singapore market: may take a breather this morning, after US stocks retreated last night following a standoff in the Fiscal cliff negotiations. In the region, Kospi and Nikkei are -0.7% and -0.4% at 8.31am this morning. The technical outlook for the STI continues to look promising, following the breakout above the 3,111 resistance-turned-support. Nevertheless, the RSI and Stochastics indicators are starting to look very overbought, hence a slight pullback could be healthy and pave the way for a later upside move. Near term, see the STI moving within the 3,111 – 3,208 band.
Thursday, December 13, 2012
GLP: Macquarie starts GLP at Outperform with TP $3.05. Says GLP is the largest logistic warehouse landlord by a considerable margin in each of the markets within which it operates: China, Japan and Brazil. GLP has arguably been able to take advantage of the weakness of its peers as they struggle with de-leveraging and restructuring to aggressively build a portfolio of high quality investment properties and a market leadership position with relationships with tenants and capital partners that can be leveraged in existing and new markets to drive growth. Notes mgt has accelerated the funds' management platform development, attracting high quality third-party capital partners, which should allow GLP to recycle capital and create an asset-light business model, boosting Return on Capital Employed; highlights a key step of this process is currently underway with the attempted listing of a J-REIT. The stock is up 0.7% at $2.71.
Noble: is up 2.2% at $1.14, extending Wednesday's 3.2% rise. NRA thinks there could be some switching out of Olam into Noble. Says some investors may be positive on the commodities segment, but may be uncomfortable with Olam's gearing. The house is of the view Olam needs to divest some of its assets to reduce the gearing. Olam is flat at $1.44.
Far East Orchard +0.5% to $1.92, not reacting much to news it signed an MoU with Australia's Toga Group to explore an Australian JV to own 5 hotels and a hotel management business comprising 6,700 rooms across more than 50 hotels. Concerns over the Australian hospitality business may be an overhang and with the uncertainty of the final price tag. Other S’pore companies such as Ascendas Hospitality Trust have not turned in big success stories there. Another restraining factor is that the counter is not very liquid as 60% is still owned by the parent, Far East Organization. Resistance seen at $1.94, which is the top-end of its recent trading range.
Petra: is +4.5% at $3.46, extending its price run after the co announced plans to divest its cocoa ingredients business for US$950m (14x EBITDA, 1.7x P/B) to focus on its branded consumer arm. Petra expects to book a US$106m disposal gain, with the deal expected to close in Jun ’13. (See our 10.38am post yday). CIMB has an Outperform rating, lifts TP to $3.77 from $1.92. Views the deal positively, as it crystalises latent value from Petra’s business portfolio and offers potential special div of up to $0.60/sh, and removes overhang from a structural decline in grinding margins due to oversupply. Believes Petra’s valuation multiples should drift higher, as consumer stocks trade at an avg P/E of 21x. Notes cocoa traders like Guan Chong and JB Foods trade at just 4-6x P/E. OCBC maintains Buy, tips TP of $3.57 from $3.12 previously. Factors in higher growth rate of 15% and improved margins for the remaining Branded Consumer division. Notes Petra will funnel ~US$300m from its cash proceeds into this unit.