Wednesday, October 31, 2012

OCBC (technical)

OCBC - Counter appears to be bottoming out from oversold territory, with Stochastics at Very Oversold Levels. Counter appears to have found some support at the recent low of $9.00. Near-term resistance would be at $9.28-$9.29, which similarly coincides with its 20 and 50 day MA

Olam (technical)

Olam - Indicators appear netural, with RSI and Stochastics at neutral levels after the recent drop. Counter appears to be testing its 20 and 50 day MA at $1.98-$1.99. Further upside is possible if counter could successfully close above these levels.

Dukang Distillers

Dukang Distillers: Technical Buy Call by UOB kay Hian with a potential 15.9% return and $0.40 TP. House note that prices did not fall below the mid Bollinger band in recent trading sessions and are still in the process of forming a rounding bottom. The MACD indicator appears to be hooking up instead of forming a bearish crossover. The RSI has turned up. Stops could be placed at below $0.310. House retail research has a fundamental BUY with a target price of $0.51


YHM yesterday issued 220m new shares at the conversion price of $0.001 per share (vs closing price of $0.019) in Co, pursuant to the conversion of $220,000 in principal amount of the outstanding Loan to the Lender. (Convertible Loan Agreement). Exercise price was as almost 20x below the last price price of $0.019. So would not be surprised if share price reacted negatively to the big discount.


Contel: is unchg today. The big 20% drop on Moday was likely due to share sales by significant shareholders. Tracking the series of announcements on shareholding changes this wk, we note, a) Virago Capital, which owned 41.44% of Contel gave a partial distribution-in-specie of 15.79% of Contel shares to Virago shareholders. b) Virago then sold 3.35% of Contel shares in the open mkt Because of the partial distribution-in-specie by Virago, any minority shareholders of Virago might have received small stakes in Contel, which they would be able to sell in the open mkt without disclosure.

Golden Agri

Golden Agri: OCBC note that Golden Agri may see long-term benefits from major palm oil trader Cargill's plan to achieve 100% sustainable palm oil output by 2015. House don't think at the moment they're at fully sustainable certification yet, but it should be achieved by 2015. Add that near-term, it will still be the (CPO) price that is driving the shares. The UK government and industry has also committed to ensuring CPO used in food and consumer products is sustainable by 2015. CPO futures declined Tue amid concerns about rising inventories; the benchmark January contract at Bursa Msia Derivatives ended 1.8% lower at MYR2,501/ton.


SIA: CIMB maintains Neutral with $11.00 TP. House believe that equity purchase of Virgin Aus formalises the link between the two Co’s which entered into a long-term partnership last year. The benefits to SIA’s bottomline are unlikely to be significant in the near term although it will be gaining a more profitable associate at the expense of a less profitable one (Tiger). House this transaction as SIA’s method of combating the proposed Qantas-Emirates alliance as it is likely to give SIA additional feed traffic in the future for both Europe and Asia. Overall, view this transaction as fairly low risk as it will take up just 3% of SIA’s outstanding cash, leaving room for SIA to make further stake purchases if necessary. However, for house to turn more positive on the stock, SIA has to show it can more effectively combat the low-cost carriers in the region


Broadway: 3Q12 results missed estimates. CIMB downgrades to Underperform with TP $0.27 from $0.46 initially. Weak end demand coupled with inventory adjustment resulted in a poor set of 3Q12 numbers. Given the continuous weakness in the HDD sector, the outlook remains lacklustre until 2H13 Excluding exceptionals, Broadway incurred a loss in 3Q due to a steep decline in both HDD and non component-related businesses. Shipments and sales of HDD components plunged 25% and 30% qoq, respectively as it experienced a sharp cutback in orders in Sept. Non-HDD component sales also fell 27% qoq due to the slowdown in semiconductor-related components. The only bright spot is the foam packaging business where sales inched up 1% qoq due to better automotive component business. Profitability for all three units, however, was hurt by higher costs. Mgt sounded cautious during the post results briefing, which is not surprising in view of the weak outlook for the HDD sector. It plans to downsize its HDD operations and shift more backend assembly work from Shenzhen to Chongqing to improve HDD margins in FY13. It will also streamline its non-HDD operations and expects to add new customers in the next few quarters, which will help to improve capacity utilisation.

Fraser Commercial Trust

Fraser Commercial Trust: CLSA features co. as amongst its 14 co’s present at its Asean Access Day. House note that FCOT has a high quality portfolio spread across SG and Aus, and revealed strong organic opportunities in SG assets, and also hotel redevelopment potential. Sale of Keypoint to third party highlights alignment to shareholder interests, while expansion opportunities exist and the REIT is cheap vs peers at 0.8x NAV


Indoagri: 3Q12 results were in-line. Rev at Rp3,541b, +7.9% yoy and -6.3% qoq and net profit at Rp258b, +22% yoy and flat qoq. Gross margin fell slightly to 30.1% vs 32% yoy. Result brings 9M12 rev to Rp10,521b, +11.7% yoy and net profit to Rp888b, -14.1% yoy. Stronger top line was principally the combined effects of higher sales vol of palm products and contribution from sugar operations. FFB nucleus and CPO in 9M12 growing 7% and 5% yoy to 2,158,000 tons and 639,000 tons respectively. While edible oil business achieved a 6% yoy sales vol increase in 9M12, supported by the expanded refining capacity. 9M12 gross profit declined 6.1% primarily attributable to lower ASP for plantation crops and higher cost of production. The decline was partly negated by higher profit contribution from Edible Oils & Fats Division and sugar operations. On a YTD basis, net profit declined 14.1% yoy mainly attributable to lower gross profit, higher operating expenses and lower foreign exchange gains. Going forward, grp note long term positive fundamentals for palm oil remain supported by consumption growth from emerging Asian economies, coupled with demand for biodiesel driven by govt mandates from Europe, Brazil and Argentina. Overall, expect Indonesia’s thriving food and beverage industry and population growth to sustain domestic demand growth for palm oil products.

Fortune Reit

Fortune Reit: decent 3Q12 results. Revenue and net property income both up 23% yoy to HK$284.7m and HK$199.3m respectively, mainly due to the inclusion of 2 new properties (Belvedere Square and Provident Square) as well as the increase in unit rent of the property portfolio. Income available for distribution was HK$138.7m, +23% yoy. DPU was HK8.16cts, +22% yoy, representing the highest rate of growth in the Reit’s 9-yr history. Portfolio occupancy rates was 96.1% with passing rent at HK$31.62 psf. A 20.1% rental reversion was achieved for renewal leases for the period, among the highest level in years With the drawdown of loan facilities to fully finance the acq of 2 new properties in Feb ’12, the gearing ratio stands at 24.6% vs 18.8% at FY11. The leases that expire in 4Q12 account for 6.9% of Fortune’s portfolio. The Manager will continue to implement effective leasing and tenant repositioning strategies, as well as executing ongoing AEIs to drive revenue growth from Fortune’s retail properties. Expects asset performance to be inline with the mkt. The units trade at 0.7x P/B, vs the retail S-REITS avg of ~1.1x. Annualized 9M12 yield DPU is HK 23.98 cts , which translates to 5.3% yield on last close at HK$6.02. OCBC maintains Buy, raises TP to HK$6.63 from HK$6.49.

Wing Tai

Wing Tai: Solid 1QFYJun13 results. Net profit came in at $72.1m, +187 % yoy, +43% qoq (excl revaluation gains in the last qtr). Earnings growth was attributable to additional units sold in Belle Vue Residences and Helios Residences, as well as progressive recognition of profits from Foresque Residences and L’VIV. In the qtr, Wing Tai launched the second phase of Foresque Residences and managed to sell another 115 units at an ASP of ~$1100 psf. To date, >80% of the 496 unit project has been sold. In Sep, Wing Tai also joined hands with Metro and United Engg to secure a 2.4 ha condo site at Prince Charles Crescent via the Govt Land Sales programme for $516.3m. Breakeven is estimated at ~$1450 psf and ASP at ~$1750 psf. Wing Tai’s 40% stake could translate to an RNAV accretion of 6 cts/sh. Maybank-KE Research says the stock remains attractively valued at 0.6x P/B, 0.5x P/RNAV, underpinned by a forecast div yield of nearly 4%. Reiterates Buy with slightly raised TP of $2.14 (from $2.10), pegged at 40% discount to RNAV.

SIA Engg

SIA Engg: 1HFYMar13 results in line. Revenue was up 6.4% yoy to $585m, but net profit declined 1.5% yoy to $137.2m, impacted by FX loss ($3.7m) and stock obsolescence provision $3.3m). Also 1H12 was inflated by a tax write back of $3.1m. Associate and JV contribution and increased by 1.4% yoy to $78.8m, and accounted for 51% of pre tax profits. Mgt declared an interim div of 7cts, +17% yoy. The group has a net cash position with $432m cash. Mgt guidance for the remainder of the yr re-emphasized that demand for aviation MRO services is expected to be maintained in the near term though macro economic risks remain. Cost control and efficiency improvements remain the key focus area given subdued demand growth expectations. Nomura believes that demand for the group’s businesses will remain stable in the near term. Says relatively stable EBIT margins and revenue growth are indicative of aviation after market demand being sustained, despite high jet fuel prices and macro uncertainties. Nomura maintains Neutral with TP $4.60, says valuation at FY/1314e P/E of 16x / 15.2x and P/B of 3.1x/2.8x is reasonable. OCBC maintains at Hold, raises TP to $4.14 from $4.04.

SG Market (31 Oct 12)

SG Market: Spore shares are likely to trade in a holding pattern awaiting more direction from oversea bourses as Wall Street remained closed for a 2nd consecutive day and there appears some positive developments in Europe. Immediate support for the STI sits at 3020, while stiff resistance is found at 3050-3060 band. Among the latest batch of results SIA Engrg 2Q results came in in line with net profit slipping 5.8% to $67.1m on a 4.4% rise in revenue, while Wing Tai posted a robust 1QFY13 results with net profit jumping 187% to $72.1m as revenue surged 127% to $247m. Fortune Reit too came with a good set of results with 3Q distributable income +23% to HK$138.7m and dishing out DPU of HK8.16¢. Indofood Agri 3Q results is in line with expectations with net profit +23.2% to Rp260.3b on a 8% rise in revenue, mainly contributed by the plantation division.

Tuesday, October 30, 2012


MTQ: intends to make a conditional offer for all issued shares in Neptune Marine Services, at A$0.032 per Neptune share (33% premium over last traded at A $0.024/sh). The aggregate cash consideration is expected to cost A$47.0m. MTQ intends to finance the offer through a combination of a funding commitment with UOB for up to A$37m, and the remaining from internal sources. Neptune has its HQ in Perth. It is listed on the ASX with a mkt cap of A$43.3m, as at 29 Oct ’12. The group provides engg services to offshore oil and gas, marine and renewable energy industries. These comprise commercial diving, dry underwater welding using its patented NEPSYS technology, hydrographic surveying, positioning and geophysical services, Non-Destructive Testing and inspection services, pipeline stabilization and grouting, Remote Operated Vehicles services, specialist fabrication, subsea and pipeline engg, testing and assembly services and end to end project mgt. MTQ expects oil and gas drilling activities to remain robust with an increasing focus on deep sea drilling which drives demand in subsea services. MTQ anticipates that having control of Neptune will create opportunities for the cross selling of services to each other’s customers and strengthen engagement with common customers. In addition, Neptune is in a net cash position with strong operating businesses and good growth opportunities. The offer price will be a discount of 33% to Neptune’s NAV and a premium of 6.4% to Neptune’s NTA. However, Neptune was recently making large losses. Based on FYMar12 numbers, if MTQ successfully privatizes Neptune, MTQ’s NTA would drop from 80.85cts to 73.07 cts, and MTQ’s EPS of 16.3cts would turn to a loss of 8.85cts. MTQ remains untraded for today; last closed at $0.94. 2QFYMar13 results are due today after mkt close.

Olam Int’l

Olam Int’l: Olam aims to reach its target of 100% sustainable palm oil production in Gabon in 4 years, joining a long list of growers that are producing environment-friendly CPO. The agri-commodities trader expects a Roundtable of Sustainable Palm Oil certification audit to start once its mills commence operations. While, Olam's palm oil production is on a smaller scale than most Asian plantation firms, it sees huge potential in African markets as edible oil consumption per capita is only 10 kg vs 23 kg in Asia. In 2007, Olam secured a 100,000 ha JV plantation land in Gabon. Faced with limited suitable lands and rising land acquisition costs in SE Asia, top Asian palm oil companies such as Sime Darby, Golden Agri and Wilmar have signed deals in West Africa in recent years to expand production. Olam is also keen to explore oil palm cultivation in top producer Indonesia. The company is scheduled to release its 1QFY13 results on 14 Nov with street forecasting net profit to contract to $27.2m from $109.5m in 4QFY12 before rebounding to $148m in 2QFY13. Still, the market remains bullish on the stock with 70% buy ratings and consensus target price of $2.29.

Thai Bev

Thai Bev: newswires say the group is seeking to increase a 5-yr loan to ~$3.3b to replace a shorter term so-called bridge facility of $2.8b. The additional $500m may be used to refinance debt while $2.8b will be used to repay the 12-month loan borrowed in Aug to help finance the purchase of shares in FNN. The banks working on the longer-term loan are said to be HSBC, SMBC and StanChart, which provided the original bridge, and Mizuho, Bank of Tokyo-Mitsubishi UFJ, OCBC and Maybank. The counter is down 1.2% at $0.43.


The share price weakness of Biosensors could be due to continued stock sales by substantial shareholders, Fidelity and private equity firm Ever Union Capital, both of which recently sold down their stakes below 5%, which no longer requires them to declare further divestments. The company will release its 2QFY13 results on 7 Nov.

Eu Yan Sang

Eu Yan Sang: reported 1Q13 earnings of $0.3m, which were down 92% yoy , below expectations. The disappointing set of results was due to: 1) Softer retail sales growth across Hong Kong and Malaysia and a surprise decline in Singapore. Both Malaysia and Singapore also registered a decline in same-store-sales growth of 6% and 18% respectively; 2) Opex costs rose significantly as the Group digested HealthyLife in Australia and from rapid new store openings in China. DMG expects weaker sales from all its geographies, reduces topline estimates by 5% for FY13/14F. Also raises opex assumptions resulting in a decline in net profit margins from 5.7% in FY12 to 3.9% in FY13 and subsequently 5.4% in FY14 as sales gradually ramp up in new stores and in Australia. Slashes FY13/FY14F earnings by 41%/21% respectively. Tips new lower TP of $0.57 pegged to 13x FY14F P/E. Downgrades to Sell . The stock is -3.1% at $0.62.

Geo Energy

Geo Energy: OSK initiates at Sell with TP $0.34, pegged to 4.6x FY13e EV/EBITDA (25% discount to peers). Geo Energy is an Indonesian coal miner operating the PT Bumi Enggang Khatulistiwa (BEK) coalmine in East Kalimantan. GER plans to expand coal production from an annual average of 0.6m tonne during 2009-11, to an annual average of 2.4m ton during 2012-17. The coal mining business will account for 67%-75% of the gross profit during 2012-2014e But the house notes that growth entails significant downside risks. 1) BEK-the only coal mining asset: any disruption in coal production at BEK will significantly lower earnings; 2) policy risk, as GER could be subject to coal export prohibition as almost all coal produced at BEK could be classified as ‘low rank coal’; 3) GER has not signed any fixed price coal sales contract beyond 2012, leaving future coal sales exposed to coal price volatility. The counter is unchg at $0.41.

Keppel Corp (technical)

Keppel Corp: technicals look weak for the counter. The key indicators are all tipped downward, and RSI and Stochastics are oversold and showing no signs of reversal yet. The stock is hovering around the 50% Fibo retracement support level at $10.59, but if this level fails to hold, the shares could move to test the next 62% Fibo support level at $10.35. Would like to see the stock cut back above the 200 day MA, before we consider turning bullish again.

CDLH Trust

CDLH Trust: 3Q12 below OCBC’s expectations. Gross revenue was $36.1m, -0.8% YoY. Net property income contracted 1.1% YoY to $33.6m. CDLHT’s Singapore hotels saw slightly lower revenue per available room (RevPAR) due to a slowdown due to the weak global economic environment, and the fixed rent contribution from the Australia hotels was slightly lower YoY due to translation loss arising from the weakening AUD. 3Q12 average room rates for the Singapore hotels stayed flat at $236 but occupancy fell from 89.5% in 3Q11 to 88.6%. RevPAR declined 0.9% YoY to $209. Income available for distribution per stapled security, after deducting income retained for working capital, declined by 1.8% YoY to 2.72 cents. This translates to an annualized distribution yield of 5.23%, based on last close at $2.07. The units pay distributions semi-annually. Mgt says, with a healthy gearing of 25.5%, it is actively sourcing for acq opportunities in the hospitality in the next 12 mths. OCBC expects 4Q12 to be weak as well, maintains at Hold and says it will be adjusting its current TP of $2.06. At last close, the units trade at 1.3x P/B

Sing Post

Sing Post: 1HFYMar13 results broadly in line. Revenue increased by 7.8% yoy to $305m, with growth mainly driven by acquisition. Mail revenue increased by 12.5% yoy in 2Q13 driven by the consolidation of Novation Solutions acquired in May 2012. This acquisition makes Mail sector to be the main revenue driver despite the continuous decline in letter volumes. The growth in Logistics sector slowed down compared with 1Q. Net profit was $70.9m, +1.6% yoy. Excluding one-off items, underlying net profit was $69m, -0.6%. Despite respectable growth in top line, 1H operating profit increased by only 1.7%. In short term it is very hard to see significant improvement in bottom line likely because SingPost is still investing very heavily now. SingPost declared interim div of 1.25cts, unchg yoy. The co has kept its annual dividends at 6.25cts per year for 6 years, and will likely continue the track record this year. Mgt says the group continues to make in its transformation initiatives, and the necessary resources nad competencies such as talent and technology continue to be put in place to drive the group’s transformation program. At the same time, it continues to explore acq opportunities in Spore and the region to accelerate the transformation. Besides the growth initiatives, the group is also focused on cost mgt and optimization measures to manage cost pressures. It exploring and investing in new technologies and resources to further enhance pdtvity. Notes as it expands into lower margin businesses, profit margins are expected to shift downwards. Maybank Kim Eng has a Hold rating with TP $1.10, pending analyst briefing. The stock trades at 17.1x P/E, 5.4% yield.


GLP: signed a new lease agreement of ~21k sm at GLP Kawasaki in Greater Tokyo to H&M. The facility will be H&M’s first distribution centre in Japan. This is the first leasing agreement btwn GLP and H&M. H&M previously utlilized GLP Kawasaki, through a contract with a third party logistics provider and has now chosen to sign a larger, direct leasing agreement with GLP to facilitate its business expansion in Japan. The high lease ratio at GLP Kawasaki has increased to 99.6% following this agreement. GLP Kawasaki is a 5-storey devt with GFA of 160.3k sm. GLP is +0.4% at $2.55.

SIA / Tiger Air

SIA / Tiger Air: bought 10% of Virgin Australia (VAH.AU) for A$105m in one of three separate deals announced today, as Australia's second-biggest carrier intensifies competition with its main rival Qantas Airways. Virgin Australia said it also agreed to buy 60% of budget carrier Tiger Australia from Tiger Air for A$35m and acquire regional carrier Skywest Airlines (SXR.AU) in a cash and shares offer worth ~ A$95m. SIA says it fully supports the ongoing transformation at Virgin Australia, which has already resulted in a more competitive aviation market in Australia. The deal is a further sign of a strategic shift by SIA as it adapts its business to cope better with the growth of LCCs across Asia and competition from state-backed Middle East rivals. Singapore has also gained a direct stake in Australia's lucrative domestic travel market that has benefited in recent years from the boom in the nation's mining and energy sectors. Virgin Australia said it will issue shares to SIA at A 42.88 cts each, a 6.8% discount to their last traded price of 46 cts, and equal to their 30-day VWAP. The two airlines already have an alliance partnership and it was expected that SIA may want some shares, given Virgin Australia has sold similar-sized stakes in the company to other alliance partners including Etihad Airways and Air New Zealand. Subject to regulatory approval, Virgin Australia will take control of Tiger Australia (wholly-owned subsidiary of Tiger Air) as the budget airline continues to recover from the grounding of its entire fleet last year following safety breaches. SIA currently owns 32.7% of Tiger Airways, which competes directly with Qantas's Jetstar unit. Virgin Australia said it will offer Skywest shareholders A 45 cents per share via A 22.5 cents cash and 0.53 of a Virgin Australia share for each Skywest share. If all three deals are completed, they will boost Virgin Australia's fleet to 139 aircraft from 108 and add 10 new destinations in Western Australia state. Macquarie says the transactions overall represent a monumental shift for Virgin Australia which, if approved, will see a more even playing field in Australian aviation; “they arguably create a replica of Qantas."

Tiger Air

Tiger Air: 2QFYMar13 results. Net loss of $18.3m, narrowed vs the $49.9m loss yoy, underpinned by profits achieved by Tiger Singapore as compared to a loss in 2Q12, and reduced losses from Tiger Australia. Revenue rebounded 78.9% to $197m from the low base of $110m yoy, which coincided with the six-week suspension of Tiger Australia's operations. The budget carrier said the improvement was a result of increased capacity (+42.1%), stronger yield (+21.2%) and higher passenger load factor (+2.9 ppt to 82.9%). Tiger's Australian fleet was grounded in Jul ‘11 for nearly six weeks after two flights flown by the same pilot approached airports in Melbourne below a safe altitude, stoking earlier concerns from Australian aviation regulators about pilot-training and maintenance procedures. The airline said it will continue to focus on returning to profitability. Tiger Singapore will continue to grow capacity at a measured pace through flight frequency increases and this will in turn improve aircraft utilisation. Following the proposed divestment of a 60% stake in Tiger Australia to Virgin Australia, Tiger Australia will be able to leverage the strengths of both shareholders in network planning, operational management, and procurement. The partnership also aims to bring about a more competitive Tiger Australia, and to deploy more low cost capacity and attractive offerings to customers. Completion of the share sale is subject to certain conditions precedent, including appropriate regulatory approvals in Australia by the Australian Competition and Consumer Commission and Foreign Investment Review Board. The shares are halted, likely related to the sale of Tiger Australia to Virgin Australia (see next post). At last close of $0.735, Tiger Air trades at 2.8x P/B.

Starhill Global Reit

Starhill Global Reit: 3Q12 results inline. Revenue at $46.3m, flat qoq, +5% yoy. DPU at 1.11 cts, +2.8% qoq, +11% yoy. The boost came from Wisma, which asset enhancement (AEI) was completed in 2Q12 with all Orchard road fronting stores commencing business. It was officially relaunched on 6 Sep, and enjoyed +2.7% qoq and +18.6% yoy increase in retail revenue on strong rental reversion and full committed occupancy. Avg passing rent is estimated to have risen 2.2% qoq to $35.04 psf/mth this quarter. Wisma’s retail and office occupancy were at 100% / 97.7%, vs 99.5% / 99% last qtr. Ngee Ann City retail maintained at full occupancy, while Ngee Ann City office occupancy remained flat at 98%. On the Toshin rental review, 3 independent valuers are now being designated for the rent valuation. Toshin has exercised its option to renew NAC retail for another 12 yr term, expiring 2025. The next rent review will be in 3 yrs time. Toshin constitutes 85.2% of NAC retail gross rent and is SGREIT’s largest tenant at 18.8% of portfolio gross rent. 3Q12 avg passing rent at NAC retail stayed at depressed levels of an estimated $13.69 psf/mth , with marginal increment expected until the next rent review. Additionally, see yday’s 2.01pm post on sponsor YTL’s intention to expand SGREIT’s presence in China. Maybank Kim Eng Research reiterates Buy with TP $0.85, 5.7% FY13e yield, continues to like SGREIT for the rental upside at Wisma Atra and income stability in Msia and Australia. CIMB maintains Neutral, raises TP to $0.81 from $0.75.


CapitaLand: 3Q12 results improved yoy, but came in below Bloomberg consensus estimates. Revenue rose 12.9% yoy to $686.9m, due to higher takings from its development projects in Singapore, China and Australia, and higher contributions from its shopping mall and property-management businesses. Sales revenue from Spore devt projects rose 7% to $220.1m, mainly from The Interlace and Urban Resort Condo. In China, total revenue was $67.9m, +67% yoy. Revenue from devt projects included that of Ascott Guangzhou which has been sold to Ascott Reit in Sep ’12. Other projects recognized incl Metropolis, Riverside Ville and Beau Residences. Net profit was $148.5m, +85% yoy, due to jump in other income, which included portfolio gains of $79.8m, derived mainly from the divestments of Ascott Guangzhou and Ascott Raffles Place to Ascott Reit, as well as the divestment of the entire 20.8% interest in United Malayan Land to an unrelated party. Net profit was also helped by a low base of comparison in 2011, when CapitaLand had reported a sharp 82.6% plunge in net profit then, due mainly to new accounting practices adopted last year. The new policy requires overseas and certain Singapore projects be recognized only upon full completion. On outlook, in Singapore, the group expects new phases from d’Leedon and Sky Habitat to be released over the remaining year. Does not expect a significant impact from the tightening measures on new home sales in the short term. In China, the group notes buying sentiment has picked up pace since Apr ’12, and has sustained into 3Q12. It targets to release new units for sale from subsequent phases from existing projects, subject to mkt conditions. In addition, the first value housing project in Wuhan , The Lakeside is slated for launch in 4Q12. The group will be seeking opportunities to acq new devt sites to boost its pipeline. The group will continue to evaluate opportunities to originate new private equity funds and real estate financial products to complement its core real estate business in China and SE Asia. CapitaLand trades at 0.93x P/B.

SG Market (technical)

SG Market: Spore shares are likely to face nervous sentiment amid an absence of cues from Wall Street as Hurricane Sandy forced the closure of US exchanges and on worries about 3Q corporate earnings. After A break of the 3030 support may send the STI lower to test immediate support at 3020, followed by firmer 3000 psychological level. Momentum indicators are also turning southwards, suggesting some inherent short term market weakness. Among the few stocks in focus, Capitaland reported an 85% jump in 3Q net profit, which was below expectations (due to low base effect), while Tiger Airways reported smaller net loss of $18.3m as anticipated. SIA mmay also draw attention after taking a 10% stake in Virgin Australlia. SingPost 2QFY13 results was broadly in line.

Monday, October 29, 2012

Keppel Corp

Keppel Corp: Macquarie downgrades to Neutral from Outperform, expecting further upside is limited amid a lack of catalysts and declining earnings. Expects Keppel's earnings profile to decline by 3% over 2011-14 amid a decline in property earnings and a weak OM margin profile. Says, over-reliance on jack-up orders could hurt Keppel amid slowing demand, with its ex-Petrobras orderbook filled with jack-ups. While semisub orders could compensate for jack-up orders' lack, Keppel hasn't won any ex-Petrobras semisubs in four years; while the house believes semisub orders will be back with a bang in 2013, it remains to be seen how much Keppel benefits from that given competition from Korean players like DSME and HHI, and local competitor SMM has stepped up in the last three years. Says Keppel risks empty slots once jack-ups start getting delivered. Macq cuts TP by 3% to $11.60 after lowering 2012-13 earnings forecasts by 2%-3%. Tips switching to SMM on a stronger earnings profile, its venture into the lucrative drillship market, potential margin upside from its new Singapore shipyard, a more-balanced order-book mix, higher chances of a special dividend and as a cheaper and pure sector play. Rates SMM at Outperform with TP $6.00. Keppel loses 3.0% to $10.77; SMM falls 2.5% to $4.73.

Ho Bee

Ho Bee: to lift halt at 4.45pm. Confirms that it has granted an option to LVND Homes to purchase Hotel Windsor for $163m. This compares with Colliers’ valuation of the property at $135.7m. The purchaser has exercised the option to purchase today, and a deposit of 2% of the consideration has been paid. A second tranche of 3% of consideration will be payable in 4 wks, a third tranche of 5% payable 12 wks before completion, and the remaining 90% to be payable on completion which is scheduled on or before 13 May ’13. Ho Bee expects to net a gain of ~$25.9m (7cts /sh). This would boost its NAV/sh to $2.36.

Thai Bev

Thai Bev: Sias technicals says players should wait for ThaiBev to retrace to $0.40 - 0.435 support levels before entering the stock. Notes the doji in the last session suggests the stock's gradual uptrend could be nearing resistance, with volume also shrinking. Says, at best, prices are likely to be range bound over the next few weeks; there are no signs of a downturn, however a temporary correction could be on the cards. Tips further upside will depend on the depth of the correction; mid-term momentum continues to look resilient. The stock is down 2.2% at $0.435.

Suntec Reit (technical)

Suntec Reit: the key moving averages are trending up strongly, while stock price has been making new 52 wk highs; these are strong signs of positive momentum. Nevertheless, RSI and Stochastics are registering very overbought signals, hence we would be cautious of a minor pullback in the near term as share price approaches the two year high and major resistance level at $1.65. A retreat toward the $1.55 resistance-turned-support may provide lower risk entry opportunities.

Ho Bee / Nobel Design

Ho Bee / Nobel Design: both companies are halted today. The Business Times notes that a deal could be in the offing for Ho Bee's Hotel Windsor in the MacPherson area. Negotiations are said to be at an advanced stage, with the price of the freehold asset thought to be ~$163m (or ~$724k per key). This compares with the recent sale of Hotel Grand Pacific along Victoria Street which is estimated to be sold at around $850k – 900k per key. According to mkt talk, the potential buyer is a consortium comprising several players, which may include Nobel Design; Lian Huat Group; Von Lee, chairman of Expand Construction; and Steel Industries boss David Ong. The four are the shareholders of the consortium that developed the One Dusun project in Balestier, which recently sold like hot cakes. Ho Bee paid $41m for the property, formerly known as Great Eastern Hotel, in Aug 1999. At the time, the co that owned the asset was under receivership. Hotel Windsor is on a site zoned for hotel use under Master Plan 2008, but its plot ratio is not stated. BT understands the existing gfa area is 156.4k sf, which works out to 2.87 times the land area of 54.4k sf. The first four levels of the nine-storey property are occupied by a retail podium (~45k sf NLA), while the upper levels house 225 hotel rooms. The property also has 174 carpark lots in the basement. In FY11, the hotel's operations generated gross revenue of ~ $8.1. Market watchers say the hotel's rooms are fairly large compared with newer hotels built in the past few years and hence, there is potential for the new owner to undertake some reconfiguration and increase the number of rooms. In addition, there is potential for strata titling the commercial space and selling it, to tap the current strong demand for such space.


Bumitama: newswires say the co has hired DBS to help it arrange fixed income investor meetings, to be held today in Spore and tmrw in HK.

Starhill Global Reit

Starhill Global Reit: in an interview with Msia’s The Star, group MD Francis Yeoh said the YTL group is eyeing more shopping centres in China to be injected into SG Reit, and hopes that with the latest downward adjustment to China's economic growth, a few good deals could come along for the company. At present, the YTL group only has one shopping mall in Chengdu, China parked under SG Reit. Mr Yeoh's aim is for the YTL group to have its retail footprint occupying a third of the prime streets in every city in China just like it has in Bukit Bintang (Kuala Lumpur), Orchard Road (Singapore) and Perth (Australia). Adds, the YTL group will bank on its close partnership with the three biggest players in the luxury world - LVMH Group, Pinot Noir and Swatch to expand in the premium retail space. Nevertheless, Mr Yeoh of concern is the ongoing QE measures, which have resulted in massive liquidity flooding the system, and could push up asset prices, particularly those in the Asian region. Says the group would need to have the discipline to wait for the right opportunity; overpriced assets will eventually correct. SG Reit's portfolio currently comprises 13 prime retail and commercial properties in Malaysia, Singapore, Australia, Japan and China. These are valued at ~$2.7b. Mr Yeoh’s target is to grow the value of the portfolio by 10 fold. The other Reit under YTL's stable is the Malaysia-listed Starhill Reit whose portfolio comprises prime hotel and hospitality-related properties in Malaysia and Japan as well as newly acquired ones in Australia. SG Reit is flat at $0.785.


Ezion: CIMB says Ezion could see longer-term capital appreciation from its investment in 44% of YHM for $5.76 m. Notes, the acquisition of what is essentially a shell company allows Ezion to tap the capital markets so that it can extend its range of services for its clients without diluting its core businesses or overextending its resources. Highlights, as Ezion gains traction with clients, it is getting more requests for ancillary-support activities. These requests can be directed towards YHM while Ezion rivets its attention to its two core businesses of liftboats and marine logistics for Australian LNG projects. Expects YHM's business model will be similar and complementary to Ezion's, with the key difference to be for YHM to own a fleet of diverse, customized assets to service oil customers. CIMB expects the deal to have negligible impact on Ezion's business, given the minor dilution and its scale. Keeps Ezion at Outperform with TP $1.64; it doesn't rate YHM. Ezion is down 4.1% at $1.30. YHM is up 60% at $0.18 in strong volume accounting for nearly 46% of shares changing hands on the SGX. The share price action of both counters is reflective of a number of historical M&A situations, in which the target co's shares are bought up, and the acquirer's shares sold down.


Jaya: 24 Oct AGM takeaways by NextInsight. Mgt says it achieved the FY12 targets, which were to grow the ship chartering business (incr utilization of its vessel fleet, expand the fleet and raise revenue), and that its shipyard would build ships for third party customers and cease speculative shipbuilding. Adds it has beefed up its senior mgt with 3 new hires. Explains that the drop in revenue and net profit in FY12 (down 17% and 33% respectively), was due to the shift away from an asset trading strategy, to one which seeks good customers and rentals. Notes the group was in the past priced at a discount to book value, but the market may now be viewing its new business model in a better light. Jaya's share price at 56 cts , is up ~25% ytd, vs the STI's 15%. Meanwhile Jaya's NAV has risen from US 58.7cts to US 64.56 cts. On the ship chartering side, Jaya has built its contracts pipeline to US$198m. Regarding the recent collaboration with IHC Merwede, Jaya clarified that the partnership is only 3 mths old, and has not led to any shipbuilding order yet for Jaya. Adds while there is strong demand for new and high spec support vessels but customers are finding it a challenge to obtain financing amid the economic uncertainty. On dividends, mgt clarified Jaya is under a scheme of arrangement which restricts it from paying a div. The co plans to exit the scheme at some point in the future, given its cash balance of US$200m and gearing of just 9%. The stock trades at 0.7x P/B, 8.1x P/E.


Samko: 20 Oct investor meeting takeaways by NextInsight. Samko is one of the largest plywood manufacturers in Indonesia. Commands ~40% of the market, and has its own "Palem" brand of plywood. While it has never directly owned a forest concession, it buys logs from the open market. ~85% of its logs are from plantations of farmers in Java, rather than from the primary forests of Kalimantan and Sumatra. The remaining 15% of supply comes from state companies in Java. Samko processes 1.5m cubic m of plantation wood/yr, equivalent to 10k ha of plantation forest. ~75% of sales are domestic, with 20% flowing through to its retail stores. Samko has majority mkt share in Japan, and also supplies to Korea, Msia, Spore, US, Europe (Sweden, Netherlands) and the Middle East. Mgt notes its cost leadership, says it is profitable unlike many peers, which need to be supported financially by their logging business, bcs of its energy efficient pdtn process, and strategic location of its processing plants and satellite plants, thereby saving on transport costs. Mgt growth strategy spans these 4 areas: i) Moving upstream -- in Jun '12, Samko acquired 100% of Bioforest for $7.4m via a sh issue to Temasek Life Science Ventures at 13.62 cts/sh. Samko has started planting a few thousand hectares with Bioforest's sampling technology. It takes 5-7yrs for the samplings to be logged. ii) Moving downstream -- Samko has started its own chain of retail stores (32 now and growing) to sell plywood, in addition to its traditional reliance on distributors. Expects profit margins per store to be boosted when the stores expand the pdt range to include finished pdts such as doors, and buildings mat's. iii) Proprietary wood decking -- sales of the branded "Heveatech" wood, warrantied to be free from termites for a lifetime. iv) Pre-fab housing -- Samko's 500 sf pre-fab house (targeted to be used by mining, plan oil companies) sells for the equivalent of $10,000 (ie. just $20 pst, excl land, civil and M&E works). The counter remains thinly traded. At $0.135 last close, the co trades at 28x P/E, 2.8x P/B.

Profit warnings

Profit warnings: a) Anchun -- expects to incur a loss in 3Q12, due to price competition resulting in a decrease in gross margins, and higher operating expenses such as depreciation charges, due to under utilization of pdtn facility. b) Hengxin -- expects to record ~50% lower net profit yoy in 3Q12 , due to a weak mkt demand for RF coaxial cables, the group's main pdt segment. c) Frencken -- expects to report a loss in 3Q12 vs a profit in 3Q11, due to lower margins in the Mechatronics division, and higher pdtn overhead costs. d) BH Global -- expects to report a loss for 3Q12, due to lower revenues and gross margins in the Engg Services division, on the back of weaker Rupiah vs SGD and lower volume of business, and uncertainty of recovery of costs of variation orders arising from delay of a major project.

CapitaLand (technical)

CapitaLand: Trading Central notes share price has just bounced off from both a medium term bullish trend since May '12 and a long term horizontal support at $3.14. The 20 day and 50 day moving averages are heading upwards and are supporting the current bullish trend. Adds, RSI has rebounded on its key horizontal support around the 50% neutrality area, and is confirming a positive outlook. Tips a further advance with targets at $3.45 and $3.58 in extension.

Suntec Reit

Suntec Reit: 3Q12 results in line, taking into account AEI-related disruptions. Revenue and net property income fell 8% and 20% yoy respectively, due to lower income from Suntec City Mall and sale of Chijmes, partly mitigated by higher office revenue. Suntec’s office portfolio continues to perform well with leases at Suntec City secured at $8.96 psf (+2.9% qoq) reflecting the tight supply. Ex AEI, Suntec City Mall’s occupancy was stable at 98.2% although the 193k sf of space under Phase 1 AEI (~23% of total NLA) has been closed. Phase 1 works is on schedule to complete 2Q13 with 71.2% pre-committed (up from 58.5%). Phase 2 AEI will involve a further 380k sf of space. Suntec trades at 0.8x P/B, offers FY13e yield of 5.7%. Deutsche keeps at Hold, given execution and earnings uncertainty with the ongoing AEI at Suntec City Mall, but raises TP to $1.64 from $1.50. Nomura maintains at Buy with TP $1.70. CIMB maintains at Outperform, raises TP to $1.79 from $1.59, says SUntec remains the cheapest large cap S-Reit, with limited DPU downside given buffer from the divestment proceeds from Chijmes.


Osim: despite today’s pullback, the stock continues to feature good momentum, having recently made new 52 wk highs on good volume, and breaking out of the key $1.50 resistance-turned-support. The pullback is not unexpected given that the indicators are displaying overbought conditions. Longer term, technical outlook remains positive with the key moving averages all tilted upward. A break above the near term resistance at $1.60 may see the stock move quickly to test the $1.70 level next.

Cosco (technical)

Cosco: chart not looking pretty. Share price has been on a long term down trend. Indicators are also very weak; while Stochastics and RSI have in oversold territory for an extended period of time, they show no signs of upward reversal yet. MACD continues to slide further into the negative zone. Next support at $0.86, followed by $0.825. Key support-turned-resistance at $0.95.


FCOT: 4Q12 results strong, in line. DPU was up 15% yoy on the acq of an additional stake in Caroline Chisholm and lower interest costs on refinancing. FCOT also surprised positively on good leasing, with 76% of the space left by Marsh & McLennan having been re-leased, with Group M signing a 6 yr lease commencing from 1 Apr ’13. CIMB believes rental reversion is likely positive on effective rents of $7 psf. Alongside the results, mgt announced its successful exit of the Japan mkt with the divestment of assets at a $18m gain. CIMB views positively mgt’s ongoing rationalization of non-core invmts for increased focus on growth in Spore and Australia. In addition, FCOT announced that wef 1QFYSep13, it will make distributions on a quarterly basis. This will bring its payout frequency inline with the rest of its peers. The final semi-annual distribution will be for the period 1 Apr - 30 Sep 2012. CIMB maintains at Outperform, raises TP to $1.37 from $1.21. FCOT continues to charge to new multi year highs at $1.205, +0.4%.


Wilmar: may be in focus after it entered a 50:50 JV with Clariant for production and sales of amines and amines derivatives. OCBC says the JV contributions likely won't come through immediately, but it's a step in the right direction. Notes Wilmar is venturing out of its traditional business and into some of the more higher-value added (businesses); adds Wilmar has been been talking about oil and chemicals for awhile. OCBC notes the release had no mention of expected sales volumes or how big the market is; says the venture is going to be quite specialized. While margins may be quite high, doesn't expect volumes to be there. For the stock's performance, however, the house believes people will still be more concerned about Wilmar's oilseed and grains business, especially crush margins in China. Wilmar is flat at $3.15.


MCT: 2QFY13 results in line; strong operational momentum. Revenue and net property income (NPI) rose 15% on strong reversions in Vivocity and PSA Building (PSAB), contribution from Alexandra Retail Centre (ARC) and rent step up in BOA-ML Harbourfront office (MLHF). Vivo’s operational trends remain firm with 1H shopper traffic +7.5% to 26m (vs 6.5% in 1Q) and tenant sales rising 3.7% (vs 2% in 1Q) despite a no. of tenants fitting out. Firm occupancy at Vivo was sustained at 99.5% while 90% of leases due for expirty this FY have been re-let, highlighting the strong demand for space. Occupancy in ARC has increased from 50% to 64.7%, with an additional 11.2% committed. New tenants incl Bata, Umi Sushi and Inchiban Sushi. Separately, MCT undertook its maiden bond issue of $160m 3.6% fixed rate notes which has extended its debt maturity to 2.9 yrs with a slight increase in finance cost from 1.96% to 2.07%. MCT is currently trading at 1.3x P/B, offering 5.1% yield for FY13. Deutsche keeps at Buy with TP $1.33. Tips MCT as having one of the deepest acq pipelines, with the potential injection of Mapletree Business City (MBC) likely to be accretive, thereby being a catalyst to further boost valuations. CIMB keeps at Outperform, raises TP to $1.39 from $1.14, believes a strong 2H13 is in the bag. Credit Suisse raises TP to $1.38 from $1.20.


NOL: 3Q12 results saw quarterly pickup, but below Street expectations. NOL returned to profit of US$50m in 3Q, vs a net loss of US$118m in 2Q and a net loss of US$254m in 1Q. However the 9M12 net loss of US$321m suggests that NOL is still far from meeting consensus FY12 net loss forecast of US$87m, considering that 4Q is traditionally slower than the peak 3Q period. In 3Q, liner volumes were up only 1.1% yoy, while avg rev/ TEU was up 2.6% yoy. On a qoq basis, volumes were down 1.8%, due mainly to a decline in intra Asia, and avg rev/ TEU was flat, as the rise in Transpacific rates was offset by declines in Asia Europe and intra Asia routes. Mgt says they have achieved US$360m of cost savings ytd 2012 and are on track for their US$500m full target. Nevertheless NOL expects to post a full year loss, thinks that the macroeconomic outlook remains weak and the container shipping industry continues to face overcapacity and high fuel prices. Separately, NOL entered into a sale and leaseback agreement with Fragrance. NOL will sell its Spore HQ building for $380m, with completion of the divestment expected to be end Feb ’13, and NOL will lease back the building until Jun ’14. The net book value of the property is US$108m and the expected profit on sale is US$196m, which translates to 7.5% of NOL’s FY12e book value. Street mostly bearish. CIMB keeps at Underperform, cuts TP to $1.12 from $1.30, on continuing core losses into 2013. Nomura keeps at Reduce with TP $1.00. HSBC keeps at Underweight with TP $0.90, views upcoming rate hikes as unlikely to sustain given weak outlook from industry players. Deutsche however maintains at Buy with TP $1.45, says it is encouraged by the container shipping industry’s recent moves to reduce capacity, which could lead to rates stabilization.

Mermaid Maritime

Mermaid Maritime: its 33.8% associate, Asia Offshore Drilling ("AOD") has signed a drilling contract, whereby AOD's first backup drilling rig AOR-1 will be leased to a reputable client. The charter has been entered into and will be managed by Seadrill, on behalf of AOD. The contract duration is a min of 3 yrs plus a 1 yr option. The potential revenue for the 3 yr period are ~US$197m (US$182k/day) plus a US$39.5m mobilization fee. The rig is currently under construction with Keppel FELS. Delivery is expected in Mar '13, and the rig is scheduled to start operations in Jun '13. CIMB says the subsea contract underscores the division's turnaround, as turnover from the contract alone accounts for 45% of its FY13 subsea sales projection, offering upside to its estimates, possibly leading to a stock rerating. Nevertheless, it remains neutral on the contract overall as Seadrill intends to take over AOD at US$5/sh (vs Mermaid's cost of US$4.73/sh). CIMB keeps its Outperform rating with TP $0.44, says at 0.5c CY13 P/B, Mermaid is trading at near distress levels, and investors could be getting AOD for free.

Koh Brothers / Metax

Koh Brothers / Metax: both companies to lift trading halt this morning. Koh Bros enters into a proposed subscription of 155m new shares in Metax Engineering for cash consideration of $8.2m, or $0.053 per Metax share. In addition, Metax will issue 165m free detachable, non-listed and non-transferable warrants to Koh Bros for nil consideration. Each new warrant has an exercise px of $0.053 with a life of 3 yrs. As at 25 Oct '12, Metax has 223.4m shares out, 40m existing non-listed, non-transferable warrants ($0.105 ex px) and 40m referral non-listed, non-transferable warrants ($$0.048 ex px). With the invmt, Koh Bros will own ~41% / 34% of Metax shares out assuming the existing and referral warrants are not exercised/ exercised. If Koh Bros chooses to fully exercise its new warrants, it will own ~59% / 51% stake assuming the existing and referral warrants are not exercised / exercised. The proposed issue is subject to Metax sh/h approvals, and obtaining a whitewash resolution to exempt Koh Bros from making a general offer for the remaining Metax shares, and other conditions which must be satisfied or otherwise waived within 3mths. Koh Bros sees this as a strategic invmt, given growth potential in Metax's business and the possibility of synergies with the group. Believes with Metax's 35 yrs of experience in providing EPC serves to the water and wastewater sector, this is an opportune time for the group to further broaden its capabilities. Post transaction, Koh Bros plans to review Metax's business and operations with a view to identify areas for synergistic benefits and to enhance Metax's strategic direction, business strategy and options. Adds it will continue to explore and evaluate earnings accretive options, both organically and through M&A, to grow the group. Based on FY11 numbers, Koh Bros expects its NTA/sh to drop from 38.63 cts to 35.78cts, and EPS to drop from 4.19cts to 4.01cts.

Singapore market (29 Oct 12)

Singapore market: may open with mild gains, taking cue from the flattish close in Friday’s US market, and slightly positive trading in the KOSPI and Nikkei this morning, both approx +0.5% at 8.18am. Corporate results over the long wk end mainly came from the Reits sector (ie. CCT, MCT, FCOT, Suntec) -- largely in line to above expectations. NOL results however disappointed. Some expectations for Singapore market may pull back later when the HK market opens. Sentiment on HK’s property counters may be impacted after HK introduced new property measures which involves higher selling stamp duty (+5 ppts across all categories) and a 15% buyer stamp duty on foreigners’ purchases. Technically, the STI remains range bound btwn 3028 – 3088.

Thursday, October 25, 2012

Ezion / YMH

Ezion / YMH: Ezion announced that it has entered into a subscription agreement with YHM Group, Sunshine Capital Group and Stone Forest Corporate Advisory, in which Ezion shall subscribe for 3.2b new ordinary shares in YHM at the issue price of $0.0018; and an option agreement, in which YHM shall issue 3.96b share options, with each Option carrying the right to subscribe for one new ordinary share in the capital of YHM at the issue price of $0.0018. YHM, formerly known as China EnerSave Limited, is engaged in the scaffolding business catering to the construction and marine industries.The aggregate consideration of $5.76m will be satisfied by allotment and issuance of 4.63m Consideration Shares, at an issue price of $1.2454, a discount of 10% to vwap of $1.3838 for trades done on 23 Oct12. The Consideration Shares represent approximately 0.54% of the total enlarged issued share capital of the Co. Upon completion of the Subscription, Ezion will hold approximately 44.1% of the total enlarged share capital of YHM (assuming no Options have been exercised), and is required to make a mandatory general offer for all the remaining YHM Shares. Ezion does not intend to apply for a waiver from the Securities Industry Council. Both Co’s are of the view that the Subscription is in the best interest of the Co’s as YHM will be entering into oil and gas related projects which are complementary to the existing business of the Group. This represents an opportunity for synergy and both co’s stand to benefit from each other’s growth in their respective areas.


Ezion: Theoretical share price of Ezion after new shares issuance to acquire stakes in YMH, appears to have have minimal dilution impact on Ezion pricesim: calculations as per follow: ($1.36 * 851.47mil shares) + ($1.245*4.63mil new shares) = $1158m + $5.76m = $1163.76m Theoretical Ezion share price post new share issuance, based on last closing price = $1163.76m / 857.23mil shares = $1.358


FNN: continues to bob merrily above the $8.88/sh takeover bid from TCC Assets, trading up 0.7% at $9.26, even as the Thai group said it was extending its offer period to Nov 8 from the original Oct 29 deadline. The move might seem incongruous, with the Thai bid already meeting a tepid response, viewed as "not compelling" by F&N's financial advisors, and in the face of a potential competing bid. But the Thai group may want F&N's share price to remain supported if property company OUE , controlled by Indonesia's Riady family, decides it won't start a land war for the Singapore conglomerate. Through ThaiBev and TCC Assets, Thai billionaire Charoen Sirivadhanabhakdi controls 35.68% of F&N, including acceptances, setting a high bar for any competing bid. Volume is strong, with $25.5 m worth of shares changing hands, boosted by a block of 1.0 m shares changing hands pre-open at $9.226. F&N appears unlikely to rise to test its $9.49 all-time high, while this week's low at $9.16 might offer some support.


Ezra: Announced FY12 results, slightly short of estimates, although the highlight could be the turning of its subsea division into the black again. 4Q12 rev at $326.3m, +49% yoy, while net profit at 7.2m, -41% yoy. Gross margins improved however at 22.3% vs 14.2% yoy . Result brings FY12 rev to $984.2m, +76% yoy and net profit to $64.9m, +63% yoy. Surge in revenue was largely led by grp’s subsea services division, which trebled its turnover to US$551.6m in FY12 from US$179.5m yoy. The subsea services division achieved a milestone, reporting a profit from operations of US$30.7m against a loss of US$18.3m in FY11. This was accomplished in just a spam of 18mths. Grp note that going forward, Ezra will remain focused on its core divisions to deliver growth and boost the Group’s operational efficiency. On prospects for the coming year, add that demand for subsea and offshore support services remains firm, underpinned by growth in capital expenditures by the energy majors, with the grp currently bidding for up to US$7b in projects globally. Shareholders of Ezra also recently benefited from the scrip dividend in specie of TRIYARDS, which made its debut. Through a 67% stake in TRIYARDS, Ezra will continue to gain from the co’s rapid development as it establishes itself as a leading fabrication yard for self-elevating units (SEUs), specialised offshore equipment and sophisticated offshore support vessels in Asia.

Venture Corp

Venture Corp: UOB Kay Hian upgrades to Buy and lifts TP to $9.30 from $7.60. House note that an accelerated transfer of production from Shenzhen to Penang for Oclaro will boost contribution from Networking & Communications. Visibility has improved with production of MEMS-based mobile printer and bi-directional fibre optics components scheduled to commence in 3Q13. Conlude that Venture has a resilient business model focusing on high-value, high-mix products with high engineering and design content. The business provided positive free cash flow and a strong balance sheet with net cash at $227.4m or $0.83/share. Mgt intends to maintain a dividend payout at 55c /share for 2012. The stock provides a lucrative dividend yield of 7.1%. It is a potential beneficiary of yield compression due to its resilient business model and stable and attractive dividend yield.


Gaylin: may see a solid first day pop, tracking some recent debutantes, including Declout Tuesday and Triyards and Geo Energy last week, amid players' recent exuberance for small-caps. The offshore O&G rigging and lifting service provider may also benefit from buoyant sector sentiment as the E&P pace remains healthy. Also offering a fillip, Gaylin has committed to an at least 30% dividend payout ratio for FY13-14 based on the FY12 post-offer EPS of 3.2 cts from its prospectus, a FY12 dividend would have been around at least 0.96 ct, or an around 2.7% payout. The offer appears fairly priced at 10.9X FY12 P/E, based on the FY12 post-offer EPS; a recent Maybank-Kim Eng report indicated Singapore-listed small-to-mid cap OM plays were trading around an average 10.3X current P/E and 13.5X historical. Gaylin offered 110 m new shares at $0.35 each the $35.4 m est net proceeds are earmarked for expanding into Asian and other markets by setting up new facilities, acquisitions, JVs or strategic collaborations and to expand its Malaysian operations and for general working capital.


BioSensors: Deutsche has results preview. House anticipate market share erosion for Nobori in Japan is likely to trigger reduction of royalty income for the group and stent tender delays could push pricing pressure back for at least two qtrs, which may partially offset royalty weakness. Accordingly house trim revenue/EPS estimates to US$87.6m/US¢1.7 and US$357.6m/US¢7.1 for 2Q13 and 2013, respectively, vs consensus of US$84.6m/US¢1.8 for 2Q13 and US$372.5m/US¢7.3 for 2013. Overall, reiterate Buy but lower TP to $1.40. Royalty remains the largest profit growth driver; Nobori losing market share The co reported US$80.8m royalties in FY12, which contributed 28% of the group’s revenue and represented 370% YoY growth. However, as there is unlikely any costs associated with royalty, it is likely to represent an overwhelming proportion of the US$101m reported non-GAAP profit.


Osim: SCB reiterate Outperform rating on OSIM International with a new price target of $2.02 (vs $1.70 earlier), offering 32% potential upside. Grp is house top pick among ASEAN Emerging Companies Believe investors have overlooked OSIMs robust cash flow, with the stock priced for ex growth based on DCF. OSIM trades at 12x 2013E PER with a 3% yield.


Ezion: SCB raise TP to $1.80 from $1.39 as house factor in an expected re-rating from 9x to 12x 2013E P/E due to the robust backlog, forecast of a 33% EPS CAGR over the same period and good execution. House raise gross profit forecasts to reflect recent orders but lower EPS estimates as house reclassify the dividend from the perpetual securities as an expense. In view, there are significant growth opportunities for liftboats in Southeast Asia and the Middle East given limited market penetration; liftboat usage in North America is 10x higher than in these regions.

IHH Healthcare

IHH Healthcare: Nomura initiates coverage with Reduce Call and TP RM2.81. House note that while it likes IHH’s diversified and growing franchise, losses from Mount Elizabeth Novena, the drag from its aggressive expansion and a rich valuation are likely to undermine its share price performance. At FY13F P/E of 41x and EV/EBITDA of 18x, believe that IHH is expensive. Add that IHH is apt to see drags from its aggressive expansion, especially with losses from Mount E Novena likely to continue into 2014F. With high mkt expectations built into IHH’s consensus earnings forecast and share price, think any disappointment could undermine the share price. House TP is below consensus of MYR3.39. Based on FY13F EBITDA estimate (adjusted for a 60% stake in Acibadem), IHH’s share price implies an EV/EBITDA multiple of 21x. This is compared with an average 15x for healthcare service providers in emerging markets and 6-9x in developed markets.


Midas: Over the weekend, China's Xinhua Agency reported that China National Devt and Reform Commission (NDRC) had called on the Govt to meet its railway investment target for 2012. For 2012, China has only invested about 68% of its planned RMB500b rail budget. On a medium term basis, the outlook is more promising - China planned to have 40,000km of high speed rails by 2015. As at Jul12, it has only constructed about 13,000km. A couple of problems have inhibited the roll-out leading to a possible delay in meeting their 40,000km target. The announcement by NDRC is another confirmation that the Chinese Govt will resume rail and rolling stock construction soon. NRA note that while conservative investors would wait for the China Govt elections in early Nov to confirm the resumption of rail contracts, less conservative investors may consider accumulating Midas shares at the current level, as the news so far is pointing to a positive 2013. Deutsche expect more new railyway projects to start construction in 4Q. Note that 22 new railway projects will start construction in 2012, more than expected According to the Economic Information Daily, 22 new railway projects will start construction in 2012 (vs. the original plan of nine new projects with Rmb162b total investment that the MoR announced at the beginning of 2012). There is no detailed information on the investment in the 22 new projects. This now is the second time ytd that the MoR has increased the number of new projects. In mid-Sept, based on MoF data, the number of newly-started railway projects was increased from nine to 19, including the Mengxi- Huazhong coal line. In addition, based on yesterday’s news, MoR has started making monthly checks on construction progress rather than quarterly ones, in order to fulfill the new recently-revised 2012 railway investment plan. Overall, house still positive on the railway sector (especially constructors) due to the accelerating investment in railway infrastructure over the rest of this year and a better outlook for 2013. Potentially higher-than-expected subway spending might further support the sector. CRC and CRG are the biggest beneficiaries in the sector in the short term.

Dukang Distillers

Dukang Distillers / China Liquor: Last week, following a major alcohol and confectionary trade fair in Fuzhou, over 8,000 co’s attracted around 100,000 visitors. It is quite clear that the resulting rally in F&B stocks listed in China last wk was in large part due to the upbeat sentiment and widespread industry attention given the listed firms displaying their goods at the Fujian Province exhibition. Not only did the F&B sector put in the best performance last week among all A-shares, but the heaps of positive attention helped attract the above-mentioned one billion yuan in capital – not a bad return on investment for listed exhibitors, to be sure. The F&B sub-index rose an impressive 4.5%, pushing its average P/E ratio to 25.4x. (Dukang stands at 6.45x) And judging by the looks of the stocks drawing the most investor attention amid this latest sudden influx of capital, it looks like a lot of folks are thirsty for some healthy returns. The 15 firms most prominently on the radar include Anhui Golden Seed Winery (SHA:600199), iconic Chinese liquor distiller Kweichow Moutai (SHA:600519), spirit-making rival Wuliangye Yibin (SZA: 000858), peer Luzhou Lao Jiao (SZA: 000568), Jiugui Liquor (SZA: 000799) and the capital’s top beermaker Beijing Yanjing Brewery (SZA: 000729). The above firms excluding Yanjing Brewery, each saw over Rmb 100m yuan in new investment, signaling that the sector is ready to get frothy. Recall also earlier in Oct, that Wuliangye Yibin, one of China's top liquor makers, forecast a nearly 90% surge in net profits in 3Q12 over strong sales and price rises.

Sheng Siong

Sheng Siong: 3Q12 results at the upper end of estimates. Rev at $169.7m, +16% yoy and +15.5% qoq, while net profit at $9.8m, +48.1% yoy and +40% qoq. Gross margins flat at 23% yoy. Strong rev was on back of new stores openings and higher comparable same store sales. In 2012, Grp opened 6 supermarkets, namely in Toa Payoh, New World Centre, Geylang, Bukit Batok, Bedok North and Yishun Central, boosting the total retail area to approximately 391,000 sq ft. by 3Q12. Comparable same store sales grew 4.3% yoy for 9M12 due to marketing initiatives and improvement of population numbers and profiles in matured housing estates. Consequently, qoq rev/psf grew 8.8% to $434 in 3Q12 Going forward, grp aims to expand its network across SG and nurture growth of the new stores as a priority for the Grp. In 4Q12, 2 new stores located at Ghim Moh (3,500 sqft.) and Clementi (5,300 sq ft.) are slated to begin operation. The stores will boost the Group’s retail area to around 400,000 sq. ft. by the end of 4Q2012, representing a 14.9% yoy in 4Q11. Grp’s fundamentals remain strong, with no borrowings and a net cash position of $107.2m (7.7c/share) At current price, grp trades at 14.6x P/E and an ex cash basis of 12.3x.

First REIT

First REIT: Good set of 3Q12 results which was in-line, with NPI at $14.2m, +5.2% yoy and +2.2% qoq, while DPU at 1.68c, +6.3% yoy and -12.9% qoq. Annualized DPU translates to a 6.7% yield and 1.35x P/B. Strong performance led by contributions from its Sarang Hospital in South Korea and higher rental income from its properties in Indo and SG, whereby the Trust recorded a 3.7% increase in gross rev from higher rental income from all its properties. Distributable amount also boosted by other gain distribution on the divestment of the Adam Road property. Going forward, grp note that Indo’s healthcare market continues to present many opportunities, boosted by the country’s fast-growing middle class and a shortage of hospital beds, particularly for private hospitals of international standards. While in SG, First REIT’s new 5-storey extension block for The Lentor Residence, undertaken as part of its asset enhancement strategy for its properties, will be completed in 4Q12.

Cache Logistisc Trust

Cache Logistisc Trust: Good set of 3Q12 results which was in-line. NPI at $18.1m, +12.9% yoy and +8.4% qoq, while DPU at 8.53c, +2.6% yoy and +7.0% yoy. Annualized DPU translates to a 6.8% yield. Performance mainly driven by additional rental income from upward rental adjustments and acquisitions of investment properties, namely the Pan Asia Logistics Centre and Pandan Logistics Hub. Going forward, grp remains optimistic, citing Colliers, who expects industrial rents to grow, albeit at a slower pace, of up to 1.5% in 4Q12. This growth will be supported by lease renewals, and to a lesser degree, co’s relocating or expanding their premises. We note that overall grp’ fundamentals remains strong, with an aggregate leverage of 27.5% and interest coverage of 7.5x. Wale stands at 4.4 yrs and at current price, grp trades at appox. 1.3x P/B.


Gaylin: debuts on SGX Mainboard today. IPO of 110m new shares priced at $0.35/sh was 5.5x subscribed.


Boustead: to invest $20.1m in a consortium developing a mixed-use project in Beijing’s Tongzhou district, marking its frist foray into commercial and retail devts in China. The consortium incl PCRT, BreadTalk, in partnership with a Beijing real estate developer. The project will have retail, office, and residential components, with ~402k sm total gfa and is expected to be completed in 2016.


SIA: announced a US$7.5b list price order for the parent airline and another with a min list price of US$4.9b for its long haul low cost subsidiary Scoot. The first of these aircraft for Scoot deliver from 2014, and SIA’s aircraft delivery is from 2017, hence near term financial impact is not meaningful. However the deal requires Airbus to re-purchase SIA’s remaining A340-500 from next yr, which will see it moth-ball non-stop business class only services from SIN to EWK and LAX, which have been suffering from poor loads, fares and the high cost of fuel. Credit Suisse sees the route cancellation as a tacit admission of the difficult trading conditions that will be evident in SIA’s 2QFY13 numbers on 2 Nov, particularly given its premium mkt exposure. The house keeps its Neutral rating and TP $11.40.


ARA: may be hit by weak sentiment after announcing its decision to suspend Dynasty REIT's $956m IPO due to “weak market conditions”. In Feb, Maybank-Kim Eng had tipped the listing as a share catalyst, viewing it as critical to unlocking the value for ARA's Asia Dragon Fund investors. Separately, ARA says it sold Manulife Tower in North Point district in Hong Kong for HK$3.3b, or an avg of HK$8,594 psf. Prices of Manulife Tower have reportedly risen 47% since ARA bought the building in Jun ’10 for HK$2.25b. ARA yday closed down 1.3% at $1.555.

Triyards / Sheng Siong Result

Triyards: announces maiden results for FYAug12. Revenue at US$366.9m, +223%, net profit at US$44.1m, +421% yoy. Sheng Siong: Good set of 3Q12 results at the upper end of estimates. Revenue at $169.7m, +16% yoy, net profit at $9.8m, +48% yoy.

HPH Trust

HPH Trust: 3Q12 results below expectations. Revenue rose 2.6% yoy to HK$3.3b, but net profit was down 15% yoy to HK 602m, on higher costs of service and FX losses. Mgt guided for a cautious 4Q outlook, but maintained its DPU guidance of HK51.24 cts, which will translate into a yield of 8%.

Singapore market (25 Oct 12)

Singapore market: may open flattish to slightly weaker, taking cue from the US market overnight. While the Fed decided to keep things par for course at the latest FOMC meeting, its comments about slowing growth may lead to some cautiousness in sentiment. Singapore market sentiment may also be weighed by yday’s decision to suspend Dynasty REIT's $956m IPO due to weak market conditions, denting Spore’s ambitions to position itself as an alternative to Hong Kong in the growing offshore-RMB market. The dual RMB- and SGD-denominated REIT would have been the largest IPO in Spore this year. In the region, Nikkei and KOSPI open at -0.1% and -0.4% respectively. Nevertheless, moves are likely to be muted ahead of the holiday-extended wkend. Technically, the STI is trading range bound in the near term. The key indicators have flattened out, offering little guidance for near term direction. See support at ~3025 and resistance at ~3087.

Wednesday, October 24, 2012

HPH Trust (technical)

HPH Trust: UOB Kay Hian has Technical Sell call with US$0.775 TP. House note that the stock is likely to retrace after the formation of the bearish engulfing candlestick pattern formed in the last trading session, potentially towards the 50% Fibonacci retracement which is also near its mid Bollinger band. The Stochastics has formed a bearish crossover. Stops could be placed at above US$0.87. House institutional research has a fundamental BUY with TP of US$0.89.

Lion Gold (technical)

Lion Gold: the charts suggest a favorable outlook over the longer term, supported by the rising 200day MA. However note that the stock is not for the faint hearted given the bouts of volatility. Near term , the RSI and MACD have been flattening out , while Stochastics is approaching overbought levels, creating some uncertainty. Given the current lack of direction, watch for cues such as a break above the $1.10 near term resistance of $1.10, or a break of support at $1.05, before taking action.

Japan’s Croesus Retail Trust (IPO)

Upcoming IPO: Newswires say Japan’s Croesus Retail Trust, which has Marubeni Corp and Daiwa House Industry as strategic partners, is seeking to raise ~ $800m through an IPO. The trust, which owns shopping malls in Tokyo and Osaka, Tuesday began testing investor appetite for the listing with an aim to list on SGX by the end of Nov. The IPO, if successful, will be the first Japanese company focused on retail property to list in Singapore, and second Japanese company after Saizen REIT which listed its residential properties in a 2007 listing that raised ~$197m. Croesus, which takes the name of an ancient king who is synonymous to great wealth, is also in talks with cornerstone investors for potential investment prior to the IPO. The trust is seeking to offer a yield in the high 7.0% range for FY13 and in the low 8.0% for the following fiscal year. Citi and DBS are joint global co-ordinators.


A-Reit: UEM Land has entered into a 40/ 60 JV with Ascendas Group to develop a 519 acre freehold integrated eco-friendly tech park in Gerbang Nusajaya (total land area of 4500 acres), within the Nusajaya regional city in Iskandar Msia. The devt has a projected invmt value of RM 3.7b. Citi notes this could be long term beneficial for A-Reit, whose sponsor is Ascendas, as it not only provides a potential asset pipeline but also aids in A-Reit’s ability to evolve alongside the potential growth of Singapore industrialists’ footprint and allowing it to cater to the industrial needs of user across the entire value chain. Citi has a Buy rating with TP $2.68 on A-Reit, after its 1H12 results last wk came in within expectations.


OKP: 3Q12 results weaker but inline with OCBC’s expectations. Revenue at $28.5m, +12% yoy, due to lower contribution from both the construction and maintenance segments. The lower construction revenue was due to relatively lower % of revenue recognized from a newly awarded design and build related construction projects during 9M12. The lower maintenance revenue was due to the completion and substantial completion of existing projects, coupled with a reduced % of revenue recognized from a few newly awarded maintenance projects secured during 9M12. Gross margins fell to 22.6% from 32.4% yoy, largely due to lower profit margins for new and on-going projects and cost overrun on some sewer related projects, arising from unfavorable ground conditions which required additional unforeseen works. Net profit at $2.4m, -50% yoy, due to lower gross margins and higher operating expenses (+29% yoy at $3.7m). Orderbook stands at $346.1m, vs FY11 revenue at $110m, with visibility stretching till 2015. In Jun ’12, the group made its maiden foray into property devt via a $0.1m invmt for a 10% minority stake in property devt co, CS Amber Devt. Mgt notes with the pipeline of transport infrastructure projects, it will tender actively and continue to build on its civil engg core competencies in the public infrastructure space; says govt projects will continue to be a key part of its business. But notes labor shortage and higher labor cost are key risks. OKP trades at 1.8x P/B. With 9M12 EPS at 2.8cts (-52% yoy), this translates to the stock trading at annualized 14.3x P/E. OCBC keeps at Hold but has its TP $0.53 under review pending analyst briefing.


Gold: Gold has proven to be a major disappointment over the last month though its short- to medium-term bullish view remains intact, and risk is skewed to the downside, SEB says; while QE3 reduces the downside risk for gold prices next year, current conditions appear unable to decisively return gold to its bullish long-term trend. The house maintains its 4Q and 1Q13 gold price outlook at $1,800/oz, but raises its 2H13 forecast by 3% to $1,700/oz. Before any additional catalyst comes into play, gold will also be very sensitive to risk aversion. Spot gold is at $1,710.43/oz, up $1.73 from its previous close.


Biosensors: announces the 5-yr results from the LEADERS trial at a symposium in The Netherlands, showing improved long term clinical outcomes for BioMatrix Flex, Biosensors’ Biolimus A9-eluting stent system with a biodegradable polymer coating, compared to Cypher Select, a competing product by Johnson & Johnson.


MegaChem: announces strategic partnership with Japanese trading co, Chori, for mutual expansion of both parties’ chemicals business through the tapping of respective marketing expertise and network. MegaChem’s agreement with Chori will focus mainly on Chori’s chemical pdts segment, catering to increasing demand for chemicals in Asia. Chori says it will acquire 29.99% stake in MegaChem, without disclosing the acquisition price. MegaChem last closed at a 52 wk high of $0.28. The stock trades at 9.9x P/E. NRA has an Overweight call with TP $0.34.

Heeton / KSH / Tee Int’l

Heeton / KSH / Tee Int’l: Unique Realty, a consortium comprising Heeton, KSH, Tee Int’l and Zap Piling has soft launched its latest residential devt, Sky Green, to strong response. The 176 unit freehold devt has sold ~80% before its official launch, which is slated for next wkend. The units were sold at an ASP of $1,502 psf, with buyers mainly Singaporeans. Sky Green, which occupies 71.3k sf at the start of MacPherson Road, comprises two 16-storey blocks holding 172 one-to-four bedroom apts ranging from 441 – 1496 sf, and 4 penthouses ranging from 2207 – 2906 sf. The project is expected to receive TOP by 2016. Heeton trades at 4.5x P/E, 0.5x P/B. KSH trades at 6.1x P/E, 0.9x P/B. Tee Int’l trades at 7.5x P/E, 1.6x P/B.


IPO debut: DeClout commences trading on Catalist today at 9am. Its invitation of 31m new shares was fully placed out at $0.25, raising gross proceeds of $7.75. The new shares represent 15.2% of post-IPO shares out. The proceeds will be used to capture a share of the fast growing SE Asian online games market through the Games Cloud, as well as to grow its profitable IT infrastructure services business. DeClout is a provider of a full suite of ICT (Information and Communications Technology) solutions.

KSH & Tee International

KSH & Tee International: Sky Green condominium, located in along MacPherson Road, has seen about 80% of the 176 units available at the freehold development have been sold during its soft launch, according to the consortium behind the project. The consortium comprises Heeton Holdings, KSH Holdings, TEE International and Zap Piling. The consortium said the units were sold at an average of $1,502 psf and the buyers were mainly Singaporeans. The official launch of the development will take place next weekend. Sky Green is expected to be completed in 2016.


Yanlord: Peter Lim reduced his deemed interest from 6.03% to 5.85%, via sale of 3.5m shares from Terzetto capital.


Ascott: 3Q12 results which was in-line with estimates. Rev at $77.4m, +6% yoy and -2% qoq and DPU at 2.24c, flat yoy and -5.9% qoq. Result brings 9M11 rev to 227.9m, +7% yoy and DPU at 6.76c, flat yoy. Rev increased was mainly due to the contribution from Citadines Shinjuku Tokyo and Citadines Karasuma-Gojo Kyoto. Stronger performance from Ascott Reit’s serviced residences in China and UK also contributed to the increase in rev and RevPAU. Going forward, expect earnings to further improve following the addition of three prime assets to its portfolio, namely Ascott Raffles Place SG, Ascott Guangzhou and Madison Hamburg. Grp will continue to focus on yield accretive acquisitions in countries where it operates and explore opportunities in Asia as well as London, Paris and key cities in Germany. At current price, grp trades at 7.0% yield and at 0.95x P/B. Balance sheet healthy with a gearing at 40.6%, well within the 60% guideline and interest coverage at 3.9x. Grp’s debt maturity age stands at 3.2yrs. Ratings as follow: CIMB maintains Neutral with $1.38 TP CLSA maintains O/p with $1.35 TP


Osim: Good set of 3Q12 results which was above expectations, in a seasonally weak 3rd qtr. Rev at $142.3m, +15% yoy and -8.2% qoq while net profit at $19.6m, +49.3% yoy and -12.9% qoq. Gross margins improved 2% to 69.7%, driven by a better product mix. Strong performance was led by strong sales and with more new products being introduced. Consumer demand continues to grow with OSIM products like uDivine App, uPhoria, uSoffa Runway, uPixie, uCozy, uRelax, uPebble, uHug, uBio and nutritional supplements like Taut Whitening, Zhi, Stem C and Liver Protector. North asia continues to lead sales, with 53% of rev from North Asia and 39% from South Asia. In China, grp is in 45 cities with 274 OSIM outlets. During the qtr grp focused on raising productivity per outlet and per man and increasing profitability. Add that Grp’s 207 GNC outlets are doing well. Overall, grp is focused on growth through innovation and productivity and growing brands and outlets. Grp fundamentals remain strong, with a net cash position of $37m and fixed income investments of $32m (total $69m) At current price, grp trades at 12.7x P/E (Ex cash basis at 11.9x). Co is recommending an interim dividend of 1c per share. Maybank KE maintains Buy, lifts TP to $2.10 from $1.90. CS maintains Buy with $1.90 TP.


MINT: 2QFYMar12 results inline to slightly ahead. DPU was 2.29 cts, +12% yoy, +1% qoq, driven by revenue and NPI increase of 15% and 17% respectively. Underlying trends were firm, with portfolio occupancy stable at 95% (vs 94.9% in 1Q), and rent reversions continued to be strong, up 8-23% across all segments, with the largest increase for flatted factories. Retention rate also rose from 71.1% to 85.1% with no discernible signs of tenant distress (arrears ratio at 0.2-0.3%). Average funding cost declined from 2.5% to 2.3% in spite of the extension of debt maturity profile to 3.2yrs. On outlook, mgt expects rents for generic industrial space to be relatively flat near term with downside pressure on business park rents. While enquiries have slowed, mgt sees pockets of demand in precision engg, biomedical & data centres. Deutsche maintains Buy, raises TP to $1.50 from $1.48. Credit Suisse keeps at Neutral, raises TP to $1.46 from $1.24, says yields look attractive at 6.4%. CIMB maintains Neutral, raises TP to $1.51 from $1.40, believes current P/B at 1.4x (highest in sector) has likely priced in growth potential.

SG Market (24 Oct 12)

SG Market: S;pore shares are likely to open in the red after Wall Street's sharp plunge on earnings concerns, but is not likely to match the magnitude of the US losses. Traders highlighted that for the rally to sustain, apart from asset reflation via central bank easing, corporate earnings as well as macro fundamentals will need to improve, which on the contrary have been disappointing thus far. The STI is likely to slide to the lower end of its 3020-3050 trading range. F&N will remain in focus, with OUE still mum about its plans for a counterbid although it has appointed Credit Suisse to look into a possible M&A and financing deals. Ascott Residence Trust 3Q12 results was in line with expectations with DPU +0.4% to 2.24¢. Mapletree Industrial Trust FY2Q13 results was slightly above par as DPU rose 1.3% to 2.29¢. Osim 3Q12 results came in above expectations as net profit surged 49% to $20m. GLP signed 2 leases for a total 55,000sqm, in Xian, China, with its first development there fully leased upon completion. Games cloud provider Declout will make its trading debut today.

Tuesday, October 23, 2012

Dynasty Reit/CRCT

Dynasty Reit/CRCT: Lim & Tan is advising that based on yield alone, investors should stick with well-tested CapitaRetail China Trust rather than subscribe to the Dynasty Reit offering from ARA and Li Ka-shing. House notes CRCT's 3Q12 dividend suggests a 5.9% yield, in line with HK-listed Hui Xian, which was ARA and Li's first Rmb-denominated REIT. Hui Xian is still trading around 20% below its IPO price. Ditto another of Li’s IPOs – S’pore listed Hutchinson Port. Dynasty is tempting investors with an indicative yield of 6.8-7.1% for 2012 and 7.0-7.3% for 2013. But that is because of the rental support which will come from the IPO proceeds (ie investors are being paid their own money). Without the support, the yield would be 3.2% and 4.2% respectively. Dynasty is best-suited for investors sitting on surplus Rmb deposits. It begins trade on Oct 30.

Ezion (technical)

Ezion: OCBC notes a key resistance has been broken, says Ezion could see further recovery after rebounding off its upper channel boundary recently; this was followed by a strong bullish break above the $1.36 obstacle on heavy volume yday. Sees MACD is on the brink of a bullish crossover now; this suggests that the upside momentum is building up again. Eyes a test of the next key psychological resistance at $1.60 in the weeks ahead. Tips immediate support at $1.36, and a stop-loss exit around $1.33. OCBC currently has a fundamental Buy rating on Ezion with TP $1.53.

Asiasons (technical)

Asiasons: Counter appears to be testing its all time high again of $0.685. Prices have been extremely well supported the whole year, and could possibly close as one of the better performing stocks for the year. : Counter appears to be testing its all time high again of $0.685. Prices have been extremely well supported the whole year, and could possibly close as one of the better performing stocks for the year.

OUE (update)

OUE: Newswires say OUE has hired Credit Suisse as M&A advisors as it considers a potential bid for FNN shares. CS is also expected to be involved in the arranging and part financing of any subsequent debt and equity package for FNN.

Golden Agri (technical)

Golden Agri: UOBK Technicals notes that the stock has been consolidating. Currently it has formed a "tweezer bottom" near $0.62, and prices have moved above its middle Bollinger band while trading between $0.625 and $0.645. Volume is relatively low and this provides a scope for a break above the trend line resistance near $0.65, especially since its MACD has reversed. The house recommends accumulating the stock at $0.625-0.645; adds a break above $0.65 could see the stock rising towards 50%FR at about $0.70. Stops could be placed at below $0.615.

Thai Bev (technical)

Thai Bev: a rounded bottom (bullish) chart pattern is emerging, as share price climbs back to $0.43, just a shade below the $0.44 all-time high. The rising key indicators and key moving averages also point to positive near term momentum. Stock is a potential breakout candidate if the $0.44 level is breached. Support at $0.39.

CapitaMalls Asia

CapitaMalls Asia: CMA is among the best performing STI components +2% to $1.825 boosted by CapitaRetail China Trust 3Q12 results, which saw the China mall operator dishing out a 14.2% improvement in DPU to 2.42¢. CMA owns 30% of CRCT and its results are due Thu. The stock has reached its highest level since Apr 2011. Sister company CapitaMall Trust is up 2.8% to $2.19, after posting its results last Fri.


F&N/OUE: in a similar vein to an earlier Stanchart report, DMG opines that a successful acquisition of F&N would fit in well with OUE's existing businesses, enabling it to scale up its fledgling property arm and providing a well-diversified income stream from various property segments, rather than its current high reliance on hospitality earnings. The house highlights that the latest turn of events is likely to complicate the Thais' efforts to secure majority control of F&N and reckons the OUE consortium will have to offer a decent premium to have a fair chance of succeeding. It estimates that a 10% premium to the Thai group's $8.88/share bid, or around $9.80/share would cost OUE $8.4b after stripping out the APB sale proceeds. As OUE would be financially stretched to make an offer, it could tie up with a partner as there are no lack of suitors for F&N's attractive F&B assets. OUE could hive off its Mandarin Orchard hotel and Mandarin Gallery retail property for as much as $1.5b to interested buyers, and recycle capital from the proceeds into a property portfolio with scale and breadth.

Yanlord (technical)

Yanlord: Recognia has Technical Buy Call. Note that prices has entered Wave 3 of its Elliott Wave cycle. This bullish signal indicates that the price may rise from the previous close of $1.28 to the next Elliott Wave target price of $1.35. Wave 3 of the Elliott Wave cycle is the third and typically the most powerful move in the five wave trend. This move is in the direction of the overall market trend (either bullish or bearish). By definition, Wave 3 cannot be the shortest of the three impulsive waves and should as a rule have greater volume then either Wave 1 or 2. For stocks, Wave 3 is usually the longest and most trade-able wave in the Elliott Wave cycle. The Wave 3 target price is determined using Fibonacci ratios and should typically be 1.618 or more times the movement of Wave 1.

Sheng Siong (technical)

Sheng Siong: UOBK has an unrated report. Notes the group has opened 6 new stores ytd, increasing its total retail area by 43k sf to 391k sf (+12.4%), exceeding mgt’s target of 10% growth in store space. Tips more stores to be rolled out in 4Q12 and early ’13. Highlights Sheng Siong’s gross margin has recovered from 20.8% in 1Q12 to 21.9% in 2Q12, on the back of easing competitive pressure. Sees further room for margin expansion, as Sheng Siong embarks on the following initiatives, i) increasing the mix of higher margin fresh produce, ii) raising direct procurement of fresh produce from suppliers to 80% from 50% currently, iii) increasing the range of higher margin house brands (avg margin of ~28%). But valuations are higher than peers (Sheng Siong at 18.1x FY13e P/E, vs peers’ 9.7x P/E, though consensus forecasts FY13e dividend yield of 4.9%. Technically, UOBK notes the stock is currently forming higher lows and a break above $0.49 points to potential test of resistance at $0.55.

Yoma Strategic

Yoma Strategic: OCBC note that Yoma reported a negative 2QFY13 PATMI of $4.2m, mostly due to a $5.4m one-time non-cash share based payment to the CEO, partially offset by increased sales of residences and land development rights. Accounting for non-operating expenses, net operating profit attributable to equity holders would have been S$1.7m – up 22% YoY – which house judge to be mostly in line with expectations. 2QFY13 gross margins were somewhat higher than forecasted as mgt took a one-time reversal of construction costs of $1m during the quarter, though this was offset by higher admin costs than expected. 1HFY13 net profit, ex-non-operating expenses, now constitutes 61% of house annual FY13 forecast, which house keep intact. Continue to be positive on the long term outlook of Yoma as the Myanmar economy continues to open up, but view Yoma’s shares to be fairly priced at current levels based on its fundamental valuation. Maintain HOLD with an unchanged fair value estimate of $0.51.

Olam, Noble, Wilmar

Commodities Traders results preview by Goldman Sachs: Olam (Buy, TP $2.50): Seasonally weak qtr, lowering earnings 1Q13 is seasonally weak (net profit typically 7-12% of the full year), and market expectations are low, but earnings could surprise if cotton procurement picks up in Australia. Still, we may not see bumper cotton margins in FY2013E as expected previously. Even if deferred FY12 farmer sales are booked in FY2013E, forward sales may not revert to prior levels due to weak demand. House lower Olam’s FY13E EPS by 14.3% on more normalized cotton margins, but 2013E- 2014E forecasts are still 11.3%-12.4% ahead of Bloomberg consensus. Noble (Buy, TP $1.65): Agriculture rebound expected, Energy may disappoint. 3Q12 Agriculture earnings may surge as Brazil’s sugar harvest goes into full swing (harvest typically in 2Q12 but delayed on adverse weather). Industry soybean crush margins in Argentina and China have improved, but seaborne Coal prices have declined 5% QoQ, to the point of production cuts from high cost producers. Noble’s Coal business is relatively resilient, supported by long term contracts, but margins could still be under pressure. House remain positive on Noble and would Buy on any weakness. Wilmar (Neutral, TP $3.25): Market expectations are low, Palm & Laurics trading conditions have improved & Oilseed margins remain challenged, but believe that the worst is over and in fact China industry crush margins have shown QoQ improvement in 3Q12. Also believe that trading conditions in Palm & Laurics have improved considerably with the recent CPO (crude palm oil) price selldown due to: a) Contango in the CPO futures curve, b) Wide CPO discount to soybean oil (good for demand), c) High biodiesel margins. 2H12 earnings could also be boosted by seasonally high Sugar earnings. Overall believe that consensus expectations are too low and Wilmar could potentially surprise on the upside.


Sakari: the stock has been suspended as the public float has fallen below 10%. From the latest announcement , it appears that the Offeror, PTT Mining, has control over 90.36% of shares out.

Asia Medic

Asia Medic: Announced that it is looking into collaborating on health care opportunities in Myanmar with Asia Merit, an unrelated third party. The two co’s have inked a non-binding MOU to define the framework of cooperation. Under the MOU, AsiaMedic and Asia Merit will assess the feasibility and develop a business plan for both parties to jointly provide mgt services in the areas of planning, setting up, branding and mgt of health care related facilities in Myanmar.

First Resources

First Resources: UOB Kay Hian maintains Buy with $2.30 TP. Note that FR has acquired two land parcels with a total of 23,800ha in Riau and West Kalimantan. These acquisitions come with planted areas and a mill, which could make marginal contributions to FR’s 2013 earnings. FR is paying about US$3,436/ha and US$8,914/ha for the Lynhurst and GSI acquisitions respectively. These prices are higher than the recent US$2,091/ha acquisition by Bumitama Agri in West Kalimantan. However, both Lynhurst’s and GSI’s land are located near to FR’s existing area and comprise mature palm oil areas which would contribute to FR’s bottom line immediately. Also, Lynhurst owns a CPO mill. House expecting marginal earnings enhancement of 0.4-2.0% in 2012-14, coming only from GSI as the bulk of the planted area is still young where earnings contribution will be negative as operating cost for trees aged 4-5 years is higher than revenue. Also, the area is not well managed by the previous owner and it takes about 2-3 years to see higher productivity from a rehabilitated estate. Expect another good set of results in 3Q12, supported by strong production growth, drawdown of inventory and prices slightly cushioned by higher ASP locked in earlier. Maintain BUY. Target price: S$2.30.