Friday, May 31, 2013


REITs: Barclays notes that markets concerns about the end of QE3 or the Fed 'tapering' with long-dated government bond yields spiking up has resulted in both high-yield credit and high-yield equities, in particular S-REITs, being sold off. The house believes the concern is premature and do not expect the Fed to cut back its bond purchases until 2014 vs the market's expectation of 2H13. With that in mind, Barclays continues to believe that S-REITs' valuations are not expensive - still above normalised average yield spread with the office sector having bottomed. It prefers REITs that could grow faster even when interest rates gradually move up due to sustainable growth in the U.S. Barclays would accumulate on dips, noting that Keppel REIT and CapitaCommercial Trust, both rated OVERWEIGHT with respective TP of $1.70 and $1.87, are its top picks among S-REITs.

ComfortDelgro/ SMRT

Land Transport/ ComfortDelgro/ SMRT: The LTA recently re-iterated the possibility of introducing competition in the bus services industry. However, as with before, OCBC do not anticipate any changes to the operating landscape in the mid-term unless the government decides how it wants to strike a balance between a free-market and government-assisted model. For the near-term, the street is awaiting the recommendations from the fare review committee and has already factored in some level of increase. That said, any further delays from this committee could lead to continued losses for both transport operators and even asset impairments for SMRT. OCBC downgrade the sector to NEUTRAL in light of this possibility but do not anticipate further deterioration in the share prices for both ComfortDelgro and SMRT at this juncture. Maintain its ratings on both SMRT (HOLD with TP of $1.45) and ComfortDelgro (HOLD with TP of $1.95) although OCBC favour the latter for its more attractive overseas ventures.

Boustead (technical)

Boustead: share price chart looks damaged by today's long black candle. Recent downward momentum on active volume also bodes negatively for near term price action. If support at $1.30 is broken, may see further downside to the $1.25 level, as the weak RSI still has some way to go before hitting oversold levels.


Halcyon: The playup of 8.8% in share price today could have been a result of the 1.8% rise in rubber futures to JPY261.5/kg today at open. The rise would have been due to the depreciation of JPY against USD by 1.4% over the past 3 days. Also taking a cue from Japan-listed Yokohama Rubber, which rose 5.5% in Tokyo trading today. Prices of rubber have recently slumped to the lowest level in four weeks, heading for a fourth monthly decline, as a rebound in Japan’s currency against the dollar reduced the appeal of yen-based futures. Price now of $0.93 is almost double of the recent private placement of 40m shares to Credence Capital of $0.5175. Halcyon stated that gross proceeds of $20.7m will help strengthen the capital base of the Company as well as fund the growth and expansion of business.


Swiber: Operationally, CIMB believe that Swiber is ready to take the next step in going into deeper waters. Though execution in deepwater is still untested, Swiber could use the next 3 years to beef up its crew and expertise while waiting to take delivery of the vessel. Upstream reported that Swiber is preparing to invest as much as US$500m to build a deep-water offshore construction vessel. Management is non-committal on the news but stated that deep-water is an eventuality. The company is only at the preliminary stage of evaluating the newbuild project. If it goes ahead, CIMB believe that Swiber is likely to choose Chinese yards that provide favourable financing with low upfront payment. Assuming tail-heavy payment terms, CIMB views that a cash call is likely in 2015/2016, nearer to delivery. Swiber has a fleet of about 62 vessels currently (12 units under sale and leaseback, 27 units via JVs and 23 units 100% owned). CIMB maintain OUTPERFORM with TP of $0.91.

Del Monte

Del Monte: CIMB notes the possible valuation uplift, maintains OUTPERFORM and increases TP to $1.07. Del Monte is currently on the road promoting its planned dual listing in the Philippines. If successful, its share price could react positively as valuations are favourable and there could be increased interest in the stock. Its share price has gained 14% since its announcement of a dual listing on the Philippine Stock Exchange. The dual listing will likely involve the sale of vendor shares, potentially diluting major shareholder NutriAsia’s stake to 67.01%. This may not immediately help liquidity in Singapore but could lead to greater research coverage and create an additional pool of investors in the Philippines. Its planned dual listing could well be a short-term catalyst, with longer-term catalysts from branded sales growth. While consumer stocks appear to have hit peak valuations, they should continue to attract interest. This is especially so for small-cap consumer stocks with better earnings predictability.


DBS: UOB Kay Hian notes that DBS has not received any official written notification from Bank Indonesia, which the group also has to wait for MAS and Bank Indonesia to commence and conclude their negotiation on reciprocal arrangements. Further delay is likely, creating intractable uncertainties for the acquisition. Management at DBS has stressed that majority control of Bank Danamon is important for branding and integration of IT systems. The deduction to core capital is also punitive under Basel III if DBS only manages to acquire an associate stake. Therefore, DBS is unlikely to proceed with the acquisition if it is restricted to acquire only a 40% stake in Bank Danamon. The deal is subject to lots of uncertainties: i) DBS disclosed that it has not received any official written notification of the above-mentioned approval from Bank Indonesia. It has not made any follow-up announcement. As such, UOB KH believe DBS has not received any official written confirmation yet. ii) DBS is in a delicate situation of having to wait for both central banks, MAS and Bank Indonesia, to initiate discussion. There is no definite time frame to conclude the negotiation. Further delays should therefore not be a surprise. UOB Kay Hian maintains a BUY, with TP of $20.80.


Wilmar: is down 0.9% at $3.28, extending its recent weakness. According to Bloomberg, the EU Commission has on 27 May ’13 put the highest provisional anti-dumping tariffs on Wilmar’s biodiesel sales to the EU at 9.6%. These measures were applied bcs of complaints filed by the European Biodiesel Board, which pointed to prima facie evidence of the dumping of biodiesel. Other Indonesia companies have been slapped with tariffs of btwn 2.8 % to 9.6%. First Resources by the way managed to avoid the duties. DBSV says the affected parties have one-month to respond before the measure are implemented. Wilmar does not disclose its biodiesel segment contribution, but DBSV believes Wilmar should be sufficiently diversified in other markets, such that impact is “insignificant”. The house keeps its Hold rating and TP $3.34. Judging from Wilmar’s price action, other market watchers may not be convinced. Indonesia expects its biodiesel installed capacity to reach 3.6m tons this year, accounting for 9% of worldwide supply, according to the Indonesian Vegetable Oil Refiners Association. Imports from Indonesia have jumped considerably over 2008, with market share rising dramatically from 1.4% to 9.7%, according to EU data. The EU is set to issue a final ruling on whether to turn the provisional duties into permanent levies that may end in 5 yrs after a full investigation is finished in the next few mths.


NOL: Post 1QFY13 disappointing results, CS lower its FY13 and FY14 earnings estimates by 38% and 15% respectively. Volumes and freight rates continue to weaken in most trades routes as over-capacity persists; CS estimates flat volumes for NOL in 2013, with rates up ~6%, largely on account of the revenue weighting that limited Transpacific contract improvements have. Contract setting season for the Transpacific trade lane is almost complete, and it appears that carriers have received ~US$50-100/FEU increase (30% of its proposed hikes). This has a major impact on NOL, which generates 40% of its revenue from this trade lane. CS currently have estimates which are above the street, but maintains UNDERPERFORM with TP of $0.95 for NOL.


A-Reit: HSBC says, on the back of potential un-winding of monetary stimulus and rising interest rates, the long awaited sell-off in the REIT sector has finally arrived. The selldown has been broad-based and even quality REITs have not been spared. The house upgrades A-Reit to Neutral from underweight, with unchanged TP of $2.50. Projected div is 5.8% with 3yr prospective CAGR of 1.9% pa. Likes mgt’s judicious approach to acquisitions.


Rowsley: FYMar13 results inconsequential. Focus will be on the RTO completion by 2H13. Rowsley continued to generate minimal revenue (mainly dividend income), and posted wider net losses of $5.9m, mainly due to impairment and loss on an associate. The group ended the year with cash of $15.1m, which compares with its burn rate (i.e. negative operating cash flow) of $3.2m. The stock trades at 12.1x P/B. The group is working towards the completion of the proposed acquisitions of RSP Artchitects Planners & Engineers and the 9.23 ha land in Msia’s iskandar region. Rowsley will fund the transactions, worth a total of $545m, by issuing an aggregate 3.6b new shares at $0.15/sh. Subject to the acquisitions being completed, Rowsley is also proposing 2-for-1 bonus warrants with exercise price of $0.18/share, to be issued to the existing shareholders. Mgt expects the deal to be completed in 2H13 after regulatory and shareholders’ approval.

Ezion / Ezra

Ezion / Ezra: Ezra will divest its holding of 40m shares in Ezion (4.2% of shares out) for $90m, via a placement today fully underwritten by DBS. Transaction price is $2.25 per sale share, a 5.1% discount to Ezion’s last closing price at $2.37. The divestment is part of Ezra’s ongoing capital mgt efforts, and in line with the co’s initiative to rationalize its non-core assets and continue its focus on execution in its core business. Ezra will realize an est net gain of approx US$65.7m (c.8.4 cts per Ezra share). Sale proceeds will be used for working capital, to reduce debt and fund growth and operations of its core business divisions.


SIA: Massive US$17b order for 60 aircraft planes spread across Airbus and Boeing, for delivery over 2015-2019 period. The 30 planes ordered from Airbus include an option for 20 more aircraft of a larger make. Order of US$17b is among the largest for SIA’s history, as the group strives to retain its industry leading position with the penetration of recent competition arising from its Middle Eastern peers, as well as the low-cost carriers. Average age of SIA’s current fleet at 6.6 years old is among the world’s youngest. An aircraft would typically have a lifespan of between 25-30 years. SIA currently trade at 1.0x P/B, with street estimates for a 12-month TP of $11.41 implies an upside of 5.3%.

Sembcorp Marine

Sembcorp Marine: SMM’s PPL Shipyard has secured a US$220.5m order from BOT Lease Co. Ltd. (BOTL) for a Pacific class 400 jack-up rig. The rig, which will have the capability to operate in water depths of 400 ft and drill high pressure high temperature wells in depths of 30,000 ft, is scheduled for delivery in end-Jan 2015. BOTL is a leasing company under the Mitsubishi UFJ Group. Margins are expected to be high given that the Pacific Class 400 rig is a proprietary design of SMM, and SMM has already deliver 6 rigs of the same design, with 7 currently in construction. Notable points are: 1) Order is 6% higher than previous 3 rigs of the same design (although it excludes cost of BOTL’s project management team and pre-operations cost); 2) A possible revival of orders from Japanese companies, with last orders in May 2005; 3) Russia and Japan have signed a deal yesterday to jointly explore and develop an oil & gas field off Russia’s Far East coast, estimated to hold ~3.4b barrels of oil (60% of Norwegian Barents’ estimated 5.9b barrels of oil) With this new order, SMM’s new order wins for the year now stand at ~$2.7b (54%) vs street’s expectations of $5b. The strong momentum for offshore drilling as oil prices sustains above US$100/bbl, together with rising activity levels in regions such as Mexico and the opening up of new areas to offshore drilling in Brazil, Australia and Indonesia, should continue to drive demand for new-build rigs. Last closing price of $4.37, SMM trades at 16.8x trailing P/E and 3.6x P/B. Street consensus has 12-month TP of $4.86 (implies 11% upside).

SG Market (31 May 13)

SG Market: S’pore shares are likely to creep up in tentative steps following the modest rebound on Wall Street after weaker-than-expected economic data on weekly jobless claims and pending home sales raised hopes that the Fed will not ease off its stimulus measures so quickly. For now, sentiment is expected to swing between the bulls who continue to see central banks pouring liquidity into the rally and the bears, who believe the party is over once the 10-year bond yields spike above 2%. In Singapore, this is compounded by a possible capital flight with funds moving back to US, where 1Q GDP growth of 2.4% outpaces S’pore’s pedestrian 0.2%. The STI has corrected almost 5% from its intra-day peak of 3,465 on 22 May to yesterday’s low of 3,303 but still remains largely in a corrective mode. Look for the index to stabilize above the 3,320 support in the coming days with upside capped at the 3,420 resistance. A break above that would reinstate the short-term uptrend. Stocks to watch for: *Sembcorp Marine: Subsidiary PPL Shipyard has secured a US$220.5m Pacific Class 400 jack-up rig contract from BOT Lease, part of the Mitsubishi UFJ Financial Group with delivery scheduled by end Jan 15. The price tag is 6% higher than the three similar orders This is the fifth jack-up rig order won by the group to-date and brings the total value of contracts bagged so far this year to $2.8b. *SIA: Places US$17b order for 30 Airbus and 30 Boeing aircraft, in its largest ever deal for the carrier. For Airbus, the firm order for 30 A350-900s comes with options for 20 more planes, which can be converted into larger A350-1000s. Delivery is slated from FY16/17. The agreement with Boeing comprises 30 firm orders for the yet-to-be launched B787-10X (longer version of B787 Dreamliner). Delivery for the B787-10Xs starts from FY18/19. The mega order underscores SIA’s determination to stay ahead of the pack as it battles intense competition from both the Gulf premium airlines and regional budget carriers. *Rowsley: Incurred inconsequential net loss of $5.9m for FY13 after accounting for $0.3m dividend income, $3m impairment on financial assets and $1.1m loss from an associate. As a result, NAV dipped marginally to 3.6¢ from 3.72¢ the previous year. Group is still working on the proposed $545m acquisitions of RSP Architects Planners & Engineers and a 9.23-ha land in Malaysia’s Iskandar region with completion of deal expected in 2H13. *SingHaiyi: Reported FY13 net profit of $4.3m on revenue of $17.1m, mainly from progress payments (27% of project value) of its fully sold 21-unit Charlton Residences cluster housing project and fair value gain of $3.7m on its investment properties. Net gearing stood at 0.5x with NAV of 1.21¢. *Second Chance Properties: Proposed acquisition of a 10-storey hotel, Hotel Noble with one retail floor at Jalan Tunku Abdul Rahman Road in Kuala Lumpur, Malaysia for RM46.5m. The group intends to use part of the retail area for its apparel business and lease out the remaining space for rental income.

Thursday, May 30, 2013


Biosensors: CIMB lowers target price to $1.65 from $1.73 and trims FY14 earnings by 7% on lower margin assumptions. House says FY13 revenue grew 15% to US$336m due to a 35% rise in interventional cardiology product sales on organic growth, but was offset by a 29% fall in licensing revenue amid competition in Japan. The firm proposes a dividend of US2¢ or a 31% payout ratio. Management tips 15% revenue growth for FY14 boosted by current products and contribution from the commercialization of 4 new products and the newly acquired Spectrum Dynamics business. CIMB believes that while FY14 consensus estimates will be adjusted down, BIG's distinctively cheaper valuation and mid-term picture auger well for the group and FY15 should see the initial uplift from the commercialisation of new products. The addition of Spectrum Dynamics will further boost earnings.

WE Holdings

WE Holdings: to lift halt at 2pm. WE Holdings has entered into share placement agreements with 14 private investors, and will issue an aggregate 80m new shares at $0.10224 per placement share, worth $8.2m. The issue price represents an 8.7% discount to the counter’s last close at $0.112. Net proceeds from the proposed placement will be used to repay US$5.9m of the co’s borrowings.

TEE International

TEE International: After the successful listing of TEE Land, TEE International will have a $15m receipt from TEE Land, for the repayment of loans as a one of the positive factors from the spin-off. The proceeds will be used to fund its Myanmar cement business, and a special dividend on the remaining. On its Myanmar cement business, TEE International last signed an MOU (9 Nov 2012) with Ayeyarwaddy Cement- a subsidiary of A1 Group, to set up a JV-company to develop and operate a fully integrated cement plant to manufacture portland cement for sale in Myanmar. Group is currently in the midst of technical studies, with the JV to be formed by 31 Jul 2013. Also, group announced previously (3 Apr 2013) that they have entered an agreement with Yongnam Holdings Limited and Samwoh Corporation Pte. Ltd. for the purposes of investing into a consortium with JGC Corporation and Changi Airport Planners and Engineers Pte. Ltd. to jointly participate in the submission of a tender for the construction, management, operation and maintenance of the Hanthawaddy International Airport in Myanmar, of which Yongnam just announced the submission of its proposal to the Myanmar Dept of Civil Aviation yesterday

TEE Land

TEE Land: Final prospectus has been lodged; The offer of 115m shares at $0.54/share comprises of 109m placement shares, and 6m public offer shares. SAC Capital is the issue manager, underwriter and lead placement agent for the IPO. IPO proceeds of $57.8m will be used for new property development projects/ investments ($26m), repayment of loans to TEE International ($15m), repayment of bank loan ($6m) and the balance for general working capital. Home-grown property developer is looking to have a balanced portfolio of projects aross the region and in different segments. Capital value of TEE Land's current proerty portfolio stands at $394.6m, with the completion of 6 developments, the launch of 10 developments which are currently in construction, and an interest in 8 developments that have not been launched. Assuming no exercise of the over-allotment option of 23m shares, the market cap of TEE Land post-IPO will be $241.3m, with parent company TEE International retaining a 70.7% stake. Based on $19.3m earnings and NAV of $75.6m for FY2012, TEE Land will be trading at 12.5x trailing P/E and 3.2x P/B post-IPO. Indicative timetable: 30 May, 9.00am: Opening of public offer 4 Jun, 12.00pm: Closing of public offer 6 Jun, 9.00am: Commencement of trading

Ascendas Hospitality Trust

Ascendas Hospitality Trust: proposes to carry out an equity fund raising (EFR) to raise no less than $200m, by way of: i) private placement of 161.9m new units at an issue price of btwn $0.885 – 0.915, and ii) a pro-rata and non-renounceable 2-for-25 preferential offering at an issue price of btwn $0.88 – 0.905. Proceeds of $192.7m will be used partially to fund the acq of Park Hotel Clark Quay, and $7.3m for the fees and expenses associated with the acq and EFR. DBS and StanChart are the joint global coordinators. DBS, StanChart and UBS are the joint book runners and underwriters. DMG is the co lead manager and sub underwriter. In conjunction, there will be an advanced distribution estimated to range from 0.95 – 0.99 cts per unit.

Keppel Corp (technical)

Keppel Corp: Trading Central sees further downside, with share price capped by the declining 50 day moving avg. RSI has struck against the neutral 50 level, adn is now turning down. With key resistance at $11.15 capping upside, this should maintain the selling pressure on the share price. Eyes a retracement to $10.45 and $10 in extension.


Boustead: Phillip reiterates Buy, lifts TP from $1.80 to $1.935. Boustead’s FYMar13 net profit surged 46% yoy to $81.4m, due to early project completion, non-core invmt gains, writeback of over provision of taxes, all on the back of outperformance in core earnings. Energy and water orders helped make up for some lost ground from the real estate segment, while recurring non-orderbook earnings from the industrial portfolio and geospatial segment continued to grow. Total orderbook backlog stands at $379m. The group declared 7 cts div, which translates to 5.0% yield.


DBS: Investors are betting that Indonesia will drive DBS Group Holdings Ltd. to abandon Southeast Asia’s largest bank takeover. Indonesia’s central bank last week gave approval for Singapore-based DBS, which bid $6.8b for all of PT Bank Danamon Indonesia, to buy only 40% of the company as the regulator pushes for Indonesian banks to have equal access in Singapore. With the agreement expiring in three days, Danamon is trading at a larger discount to its takeover price than any pending deal in Asia larger than $500m, according to data compiled by Bloomberg. While a minority stake in Danamon would cut DBS’s reliance on Singapore, which is Southeast Asia’s least lucrative lending market, Indonesian ownership laws can bar the bank from ever gaining full control. However, a minority stake doesn’t make sense for DBS, without the control to steer the business in the direction they would like. Brokers on the street are saying that the original deal, struck more than a year ago, assumed DBS would buy all of Danamon, and the terms must be changed before a smaller purchase is logical for DBS; or, the other option is for DBS to scrap the transaction altogether.


Vard: rose for a third consecutive day to $1.13 yesterday, gaining 4.6% over the same period where the benchmark STI has lost 0.8%. Macquarie notes most investors it met seem to appreciate that the stock looks quite attractive at current valuations and market expectations have upside risk. Mcq believes that orders will be the trigger and believes a few large ones (involving Petrobras orders and a few OSCV orders) may be announced soon, which should lead to street upgrades of 2014 and 2015 profit estimates. The house keeps its Outperform rating with TP $1.82.

Cache / REITs

Cache / REITs: the Reits sector has been weak since mid May to date. Hawkish posturing by the Fed and rising long term bond yields are the likely reasons for yield plays losing their shine. Reits may be impacted in a rising interest rate environment because: - safer fixed income instruments become relatively more attractive, and - Reits are leveraged vehicles, so the cost of funds can be expected to rise, thereby lowering distributions and Reit yields.


APTT: share stabilization action by JPM yday. 10m units purchased btwn $0.92 – 0.955


Biosensors: disappointing core 4QFYMar13 results; below expectations. Revenue at US$88.8m, flat yoy. Net profit at US$29.6m, +9% yoy, mainly boosted by a tax write back of US$5.9m. Pretax profit was US$23.8m, -20% yoy, largely due to higher operating costs, eg. selling & Marketing and R&D expenses. The group saw revenue growth and gross margin expansion for its core DES business, despite pricing pressures. The China market saw organic revenue growth in FY13 but is experiencing headwinds. Licensing revenue was the main drag, as it continued to decline qoq and yoy, due to lower pricing, loss of mkt share in Japan, and weaker contributions from a depreciating yen. Mgt has guided for a 15% yoy overall revenue growth in FYMar14. Expect more M&A activities as Biosensors seeks to expand its product lines for more growth drivers. The group declared maiden div of US 2cts which translates to a yield of 2.1%. Maybank KE maintains at Hold with TP $1.25 (from $1.28), notes challenges in existing pdt lines, and believes the group needs a stronger (M&A) catalyst for positive re-rating. Deutsche keeps at Hold, with TP $1.30. Nomura maintains Buy with TP $1.80, but still expects negative stock reaction on the lower-than-expected results.

King Wan

King Wan: In-line with consensus estimates, 4QFY13 net profit increased to $2.9m compared to a loss of $0.7m a year ago. This brings full year earnings to $6.1m (-10%) due to lower gross profits from its mechanical and electrical (M&E) engineering contracts, lower contributions from its associates, and one-off gains on disposal of investment property the previous year. Revenues of $29.6m for 4QFY13 jumped 123% y/y, mainly due to the higher revenue recognition on its M&E engineering contracts. Full year revenues improved 16% to $66.3m on the overall increase in value of works in progress. Gross profit margins for FY13 might be a concern with 4QFY13 margin of 9.9% dragging the full year’s margin down to 17.1%. This is compared to 16.5% and 23.8% achieved in 4QFY12 and FY12 margins respectively. The decline was due to the completion of a few contracts with better margins in 4QFY12. Orderbook remains strong with M&E engineering contracts worth $166.6m, to be completed over 2013-16. On its entire sale of stakes in King Wan's two Thai associates to KTIS for THB1.2b (S$50.2m), 5% of the consideration would be by way of cash and the remaining 95% shall be by way of shares in KTIS when KTIS has been successfully listed on the Stock Exchange of Thailand (SET). The share sale agreement has been extended to 25 Sep 2013 (extension of 3 months), which allows each party to exercise its option to recover the consideration paid/ shareholdings sold, in the event that listed KTIS shares are not allotted to the group. Barring unforeseen circumstances, the listing of KTIS shares is expected to be in July 2013. The final DPS of 1¢ brings full year to 1.5¢, which translates to a 4.5% yield on a 74% payout ratio based on last close of $0.33. Consensus 12-month estimate TP of $0.40 implies a 21% upside.


Midas: Midas' joint-venture company, Nanjing SR Puzhen Rail Transport (NPRT) has clinched a contract worth Rmb420m for the supply of 56 train cars for Shenzhen Metro Line 4, with a delivery date up to 2014. This contract brings contract wins for NPRT to Rmb1.4b year-to-date, and the growth in orders could potentially see a turnaround in NPRT's losses reported recently for 1Q13 and FY12. Midas has a 32.5% stake in NPRT. Orders for China's high speed trains are known to be behind schedule due to the clamp down on corruption in the ministries. With the new order momentum coming on stream, business prospects for Midas look increasingly positive. Based on its last closing price of $0.49, Midas trades at a forward P/E of 27.9x and P/B of 1.0x, compared to its 10-year average of 22.3x forward P/E and 3.3x P/B. Consensus has a 12-month TP of $0.67, which implies an upside of 37%.


Yongnam: the consortium comprising Yongnam, Changi Airport Planners and Engineers and JGC Corp, has submitted a proposal to the Myanmar Dept of Civil Aviation, to design, construct, and operate Hanthawaddy International Airport and its facilities on the basis of a public-private partnership agreement for a 30 yr concession period, having achieved pre-qualification prior in Feb ’13. This follows an earlier submission in Apr ’13 for the development of the Yangon International Airport. The Myanmar tenders are part of mgt’s planned $1.3b worth of project pursuits for new infrastructure and commercial projects in region, including Singapore, HK, Msia, India, Indonesia and Middle East. The stock trades at 9.6x P/E.


Courts: 4QFY13 results out yday were largely uninspiring due to store rationalization in Msia, nevertheless Maybank KE believes the share price pullback (-7%) has created a good opportunity for investors to accumulate. Notes Courts trades at 11.7x FYMar14e P/E, against regional peers at 16.6x, yet it offers robust regional growth prospects. The house reiterates Buy with TP $1.49. Courts is counting on its big-box strategy of building stand-alone stores to boost growth. It has 72 outlets in Singapore and Msia, and plans to open a 140k sf retail centre in Indonesia next year, its first in the country. After that, the group may seek acquisitions and add a fourth market in possibly Philippines or Vietnam. Courts’ $125m bond sale last mth will help the group expand over the next 3 yrs with “confidence”.

SG Market (30 May 13)

SG Market: S’pore shares are likely to come under continued pressure after Wall Street erased its previous day’s gains amid concerns about global economic growth and the Fed scaling back its stimulus program. The losses came after OECD trimmed its 2013 world economic growth forecast to 3.1% from 3.4% and IMF shaved its projection for China’s GDP to 7.75% over the next two years from 8% this year and 8.2% in 2014. Defensive and high dividend yields stocks were hit as bond yields spike amid growing fears of a liquidity withdrawal, as in S’pore, which saw telecom and Reits bore the brunt of selling yesterday. There appears to be a two-tier market opening up in S’pore with the blue-chips and index-linked stocks being sold down on a possible funds pullout (as evidenced by the weak SGD) but the penny stocks being pushed up by some traders trying to draw investor interest. The big black candle on the STI, which closed below last week’s low, may signal more downside risk with the next support at the 3,320 level. Overhead resistance is at 3,420, represented by the 20-day moving average, which the benchmark index failed to clear yesterday. Stocks to watch for: *Biosensors: 4QFY13 revenue was flat at US$88.8m but net profit of US$29.6m (+9% y/y) masks a 20% earnings drop due to a US$8.4m tax reversal. Excluding exceptional items, FY13 net profit of US$111.6m missed estimates of US$118m. Revenue climbed 15% to US$336.2m on stronger volume growth (+32%), while royalty income shrank (-29%) due to lower DES sales in Japan. Gross margin improved to 81% from 73% in FY12 by virtue of a more favourable geographical and product mix, as well as greater economies of scale. Net cash jumped to US$337m from US$276.5m a year ago. Group is proposing a maiden DPS of US$0.02. *Midas: 32.5% JV Nanjing SR Puzhen Rail Transport Co has been awarded a Rmb420m contract to supply 56 train cars for the Shenzhen Metro Line 4, with delivery slated from 2013 to 2014. The latest order win takes the total value of contracts secured to over Rmb1.4b in the year-to-date. *Yongnam: Following its earlier pre-qualification, the consortium comprising Yongnam, Changi Airport Planners & Engineers and JGC Corp has submitted a proposal to the Myanmar authorities for the Hanthawaddy Int’l Airport (HIA) concession on the basis of a public-private partnership agreement. HIA will be the fourth international airport in Myanmar, after those in Yangon, Mandalay and Nay Pyi Taw. *Oxley: Purchased shell company TCK Capital Sdn Bhd (TCK) with no business operation from two individuals for RM77.9m. TCK, in turn, will be acquiring from the Malaysian government a 99-year land parcel at Jalan Hang Tuah in KL at an agreed price of RM190m tendered in Apr 2011. The 4.73-acre plot is zoned for mixed development. The purchase consideration of RM267.9m or $111m will be funded by internal resources and bank borrowings. *Kingwan: Buoyant 4QFY13 results with revenue leaping 123% y/y to $29.6m and net profit turning around to $2.9m vs loss of $0.7m a year ago. Revenue for FY13 rose 16% to $66.3m but net profit declined 10% to $6.1m on tighter gross margins for its M&E engineering contracts, lower contribution from associates, and absence of one-off disposal gains. Order book remains intact with M&E engineering contracts worth $166.6m, to be completed over 2013-16. Final DPS of 1¢ adds to 0.5¢ interim giving full year DPS of 1.5¢. *Swing Media: Revenue for FY13 rose 5% to HK$904.5m, supported by growth in CD-R sales (+13%) and trading activities (+18%), while DVD-R, which form 70% of sales, was relatively unchanged. Net profit of HK$58m (+15%) was underpinned by a HK$91.7m income from leasing of machinery in Taiwan, maiden contributions from its solar energy business and lower tax expense. Group is paying a first and final DPS of 0.15¢ compared to 0.2¢ in FY12. *Hai Leck: Won a mechanical maintenance services contract following the successful completion of CCD/Chang Chun’s Jurong Island facilities in Mar 13. The contract will require the group to maintain an allyl alcohol plant, cumene plant, acetate monomer plant, tank farm and utilities area. *UE/WBL: UE’s offer for WBL @ $4.50 closes successfully with UE and concert parties taking 96.3% control of WBL. UE does not intend to maintain the listing status of WBL and will not undertake or support any action for the trading suspension of WBL shares to be lifted. *DeClout: Director Winston Koh purchased 1m shares at $0.25 each via married deal and lift his total stake to 4.3% from 3.8%. CEO Vesmond Wong reduced his stake from 34.7% to 30.3% via married deals at $0.25. *Shanghai Asia: Trading will continue till 3 Jun, following which the company will be delisted from the SGX with effect from 4 Jun.

Wednesday, May 29, 2013


Biosensors: is down 2.9% at $1.16, making a new 6 mth low. Bloomberg estimates FYMar13 results to be out today after market . Market watchers may be anticipating a weaker-than-expected set of numbers. The recent yen weakness is likely to reduce royalty contribution Biosensors' Japan unit, even as it contends with increased competition and market erosion from more advanced stents which were recently introduced. FYMar13 results are due today after mkt


APTT / MIIF: APTT will commence trading on a "ready" basis at 2pm today. MIIF shareholders would have received the distribution-in-specie of APTT units and may trade them. The APTT IPO comprises: i) Placement - 530.5m units ; 5.2x subscribed ii) Public Offer - 70m units ; 5.8x subscribed iii) MIIF APTT units - 335.7m units iv) Cornerstone units - 457.5m units v) Sponsor units - 43.1m


Cambridge: the rebound off the $0.79 level suggests that the longer term uptrend is still intact. Watch for a break of the multiyear high of $0.86, which would provide an additional indication for the stock as a bullish breakout play. Nevertheless, the large intraday dip on 23 May on high volume, has introduced a distortion on the charts, and weakened the strength of the existing uptrend. If share price breaks back below the $0.79 support, traders may look to cut positions, in anticipation for continued downward momentum.

OCBC (technical)

OCBC: The long-term incline of OCBC's share price has recently taken a dip below its 20MA. There is however, a slight hook-up of both stochastics and RSI which may indicate a short-term reprieve in its share price, based on historicals. The near-term support is at its 50MA of $10.68, which coincides with its recent low on 23 May. The next support would be at the $10.40 region. Near-term resistance at its 20MA currently at $11.00, before the next resistance at $11.20.

SMM (technical)

SMM: Trading Central notes the stock has bounced off once again from its key support at $4.15, and may continue to post some technical rebounds in the coming days. The RSI has reversed up, and broken above its neutral 50% level, and the 20day moving avg has initiated a positive cross over the 50day one, providing support roles. Believes that as long as $4.15 is not broken, look for a continuation of the rebound toward $4.60 and $4.85 in extension.

Bukit Sembawang

Bukit Sembawang: Though 4QFY13 revenue dropped 9.6% yoy due to lower profit recognition, lower operating costs enabled core net profit to rise 36% yoy. FY13 saw the completion of a no. of projects, including Luxus Hills Phases 2 and 3 and non-landed residential property Verdure. 4Q13 was a non-event , with earnings coming from progressive recognition of the fully sold Luxus Hills Phase 4 and 5 (due for completion in FY14 and FY15) and progressive recognition of sales at The Vermont and Skyline Residences. CIMB expects Luxus Hills Phase 6 and 7 to be launched by year end, at higher ASPs of above $1,600 psf. Expects high end non-landed projects St Thomas Walk and Paterson Collection to be launched in phases beginning end 2013-early 2014. The house continues to like Bukit Sembawang for its strong balance sheet and stock of landed sites, which could last for another 7-10 years. Reiterates Outperform, lifts TP to $7.41 from $7.28.

Jardine Matheson (JM)/ Jardine Strategic (JS)

Jardine Matheson (JM)/ Jardine Strategic (JS): Group’s subsidiary PT Toyota Astra Motor has announced that the govt has signed the regulation on low cost green car. Astra expects to commercially sell the LCGC in Jul 2013 under the brand of Toyota Agya and Daihatsu Ayla. CS have factored this in into its forecast for Astra, and expect Astra to sell around 90,000 units of LCGC in 2H13. FY13E 4W Astra volume is estimated to reach 740,582 units, +22% y/y. CS remains positive on the fundamentals of the group, with JM and JS trading at a discount to NAV of 19% and 29%, respectively, vs their historical average of 26% and 36%. Hence sees limited further upside from narrowing in discount to NAV. CS prefer direct exposure to subsidiaries Astra (OUTPERFORM, TP Rp9,000) and HongKong Land (OUTPERFORM, TP US$8.65), where CS see potential upside of above 20%. Jardine Cycle and Carriage is currently trading at 89% of the market value of its holding of Astra, vs the historical average of 92%.


SPH: With regards to group's REIT listing, DB estimates that SPH is anticipated to receive c.$1.05b in net cash proceeds. This is based on the assumption of: i) an offering size of $540m; ii) a market cap of $2.2b for SPH REIT; iii) SPH REIT debt of $900m, less IPO expenses and amounts due to minority interests, etc; The cash proceeds translate into $0.66 per SPH share. Related to this, SPH has proposed an $0.18/share special dividend (cash) to shareholders, amounting to $290.9m. At current share price, this equates to an additional potential c.4% dividend yield. Post the spin-off of Paragon and Clementi Mall, SPH will continue to receive recurring management fees and dividends from SPH REIT. Based on initial assessment, DB estimate SPH will be able to maintain ~5% ordinary dividend yield by raising its payout ratio and/or with the help of proceeds from the property asset divestment. The underlying SPH stock would essentially be a structurally challenged media asset. Proceeds from the property asset sale could allow SPH to expand its presence in new media, but note the relative difficulty of monetizing such opportunities.

HPH Trust

HPH Trust: CS cut earnings by 12% for both 2013 and 2014 as a consequence of the poor YTD performance and crimped expectations for the balance of the year. The decline in throughput, evident in 1Q13 numbers, has accelerated in Hong Kong (reflecting the impact of the dockworkers’ strike), but also appears to be infecting the formerly growing Shenzhen terminals, where April volumes shrank. CS now forecasts a distribution of HK$0.41/unit in 2013 (down from HK$0.44), which implies a yield of 6.2% based on last closing price of $0.8050. CS maintains UNDERPERFORM, reduces TP to S$0.72 (previously S$0.74), based on a target yield of 7.5%.

Mermaid Maritime

Mermaid Maritime: receives SGX in-principle approval for its previously proposed non-renounceable non-underwritten rights issue and private placement to raise gross proceeds of approx $176.1m.

Global Investments

Global Investments: receives SGX in-principle approval for its previously proposed renounceable non-underwritten 2-for-5 rights issue at issue price of $0.143 per rights share.

Tiger Air

Tiger Air: Australia’s foreign investments regulator has approved Virgin’s purchase of a 60% stake in Tiger Australia, clearing the deal’s last major hurdle. This paves the way for a partnership set to boost rivalry with national carrier Qantas. Nevertheless the tie up “still remains subject to certain conditions”, and Virgin expects the transaction to be completed by mid-July.


SingTel: has started the sale of its Australian Optus Satellite unit and is seeking more than A$2b. KKR, Bain Capital, Carlyle Group and Blackstone Group are among private equity firms evaluating possible bids, sources said. France’s Eutelsat Comms is also expected to bid. The first round bid deadline is set for Jun 14. SingTel acquired the satellite unit as part of its US$9.69b takeover of Optus, Australia’s second-largest phone company, in 2001. SingTel is selling the satellite division as it chases new sources of growth amid slowing sales in Australia and Singapore. Divesting the division, which had revenue of A$319m in FYMar12 (small vs FYMar13 group revenue of $18.2b), would help finance the $2b of acquisitions that SingTel is planning in the digital space, and the $2.5b capex for expansion of the LTE coverage and 3G network enhancements.


Boustead: Group together with consortium partner, GE Oil & Gas, secured contract from Brunei's national power producer, Berakas Power Co, to deliver a combined system that recovers waste heat from gas turbines, converting it into 14MW of extra net electricity without using fuel or water or producing additional CO2 emissions. Further contract details were not provided; Orderbook backlog currently stands at $390m. As of its last earnings report (21 May), Boustead reported order book backlog of $378m. Based on Bloomberg consensus, 12-month TP of $1.80 for the stock implies a 29% upside based on its closing price of $1.3950.


Chasen: Reported 4QFY13 loss of $8.0m compared to a gain of $521k in the previous year following a decline of 16% in revenues to $18.2m. The loss was attributed to its relocation business which saw a 62% reduction in revenue contribution due to a subdued environment compared to the previous year. Its third party logistics business also saw a dip of 7% due to competition. Consequently, Chasen saw its full year earnings plunge to a loss of $6.0m, compared to a gain of $7.3m the previous year, and revenues shrank 20% to $79.4m. The disappointing result was below consensus estimates of $2.9m and $81.7m for earnings and revenues respectively. According to Bloomberg consensus, Chasen has a 12-month TP of $0.30. Amidst its disappointing results, Chasen has bagged 7 new project wins, spanning 3 countries, worth $19.3m in aggregate. In China, the group’s Relocation division secured 3 projects worth Rmb14.6m comprising: move-in of eqpt and related services for an 8.5G TFT/LCD mnftr in Beijing and Shenzhen, and move-in of eqpt for a 6.5G TFT/LCD mnftr in Xiamen. These projects begin from May 2013 and collectively end by Oct ’13. Through the group’s Technical & Engineering division, it has also secured 4 project wins in Singapore and Msia worth $16.4m in total, comprising: i) cyclical replacement of chilled water AHU/CRAUs and fabrication and installation of base frames for ACMV eqpt for comms centres and underground rail stations in Singapore, ii) the construction, completion and maintenance of structural redevt works of a key govt complex and HQ building in Changi, iii) fabrication and supply of metal form curve beams and planter boxes for a general hospital and community hospital in Jurong and iv) construction of 3 storey terrace houses and semi detached houses in Klang, Selangor. These projects will commence from Apr 2013 and collectively end by Aug ’14. Mgt expects these projects wins to have a positive contribution to FYMar14 financials.


Informatics: Full year earnings slipped 5% to $2.9m, as a result of the absence of tax refunds that the group had the previous year. Earnings before tax improved 20% to $3.0m due to the downsizing of employees resulting in lower operating costs. Revenues declined 12% to $28.7m, mainly due to a lower number of students enrolled in UK, Hong Kong, Sri Lanka and Singapore. The decline in the countries except Singapore were attributed to stringent student visa entry requirements, as well as the depreciating pound and the downsizing of Hong Kong and Sri Lanka operations. Informatics intends to introduce competitive pricing in the current quarter in view of widening its market, as well as to offer more market relevant products. At the last closing price of $0.0970, Informatics trading at a high trailing P/E of 48.5x. Compared to private education peer Overseas Education's trailing P/E of 9.3x.

United Envirotech

United Envirotech: record FYMar13 results beats expectations. Revenue more than doubled to $185.0m from $85.3m, while net profit nearly tripled to $29.5m from $10.5m. This was driven by strong improvements in both the engineering business (+132% to $144.5m) and water treatment business (+77% to $40.6m). Mgt intends to continue to invest in more recurring income projects, particularly the higher margin industrial wastewater treatment projects. The group believes there will be extensive opportunities to apply its membrane technologies in tandem with the growing water treatment market in china. Believes in advanced membrane technologies, particularly Membrane Bioreactor (MBR), have a competitive edge in treating wastewater of a greater complexity to meet the stricter discharge limits and also to reclaim the treated wastewater for reuse more effectively and efficiently. The group proposes a final div of 0.5 cts, up from 0.3 cts declared in the previous yrs. At $1.00 last close, the stock trades at 15.5x P/E, 2.2x P/B.


Courts: good 4QFYMar13 results, in line with UOBK’s expectations. Topline rose 9.6% yoy, driven by an 11% yoy rise in sales in Spore, and 6% yoy rise in Msia. During the period, the group opened 5 new stores in Msia and 1 new store in Spore. In addition, Courts also refurbished and relocated a total of 12 stores across Msia and Spore. While ASP in Spore rose 8.2% yoy and in Msia rose 6.3%, gross margins dipped slightly to 31.5% in FY13 from 32.0% in FY12, due to a combination of lower sales of goods on credit (21.9% in FY13 vs 22.7% in FY12) and product mix. For this year, Courts intends to open 2 new stores in Singapore – Courts in Jen (Jun ’13) and Westgate (end 2013). In Msia, mgt is excited over the first “big-box” megastore in Bandar Sri Damansara, Klang Valley in Aug ’13. In Indonesia, mgt expects its biggest store (140k sf) in Bekasi, Jakarta, to be operational next year. Pending an analyst briefing today, UOBK places its Buy rating under review, given the sharp rise in share price that has reached its initial TP of $1.14 (based on 13x FY14e P/E).

Tat Hong

Tat Hong: 4QFY13 earnings grew 66% to $18.6m as a result of a higher gain in disposal of fixed assets, an improved performance of associates and a reversal of loss from its joint ventures. Consequently, full year earnings grew at the same rate to $70.4m. 4QFY13 revenues of $199.6m (+9.7% y/y) bring FY13 revenues to $836.9m (+16.3%). All segments except general equipment rental grew. Most notably, tower crane rental grew by 28% as a result of a larger fleet size coupled with improved utilisation, attributed to a pickup in infrastructure, large commercial and power plant/ station projects in China. The outlook on the group's key markets (Southeast Asia, Hong Kong & Australia) remains positive for FY14, and the management is looking at maintaining its growth across its business segments. The group has proposed a final dps of 2.5¢, bringing full years dividends to 4.0¢, an increase from 2.5¢ in the previous year. At last closing price of $1.51, Tat Hong trades at 13.1x trailing P/E, 1.4x P/B and dividend yield of 2.7%.

SG Market (29 May 13)

SG Market: S’pore shares are expected to get a lift today from Wall Street’s 20th Tuesday winning streak as consumer confidence surged to its highest level since 2008 and housing prices jumped the most in seven years. Sentiment was also boosted after BOJ and ECB reaffirmed their accommodative policies but equities pulled back from session highs after the 10-year bond yield spiked to a one-year high of 2.16%, reviving concerns about the tapering of Fed’s stimulus plan. With the US economy now clearly on the mend and China hitting the economic brakes, the question now is whether funds will pull out of Asia to return to the fast improving US market. And do rising bond yields signal the economic pick-up or the start of a bubble burst? Indeed, GDP growth in S’pore is now slower than in the US as the local economy undergoes a restructuring to wean off foreign labour and inefficiency and the depreciating SGD/USD to $1.27 may be indicative of a funds outflow. Interest may switch towards listed companies with exposure to the US market and cyclicals like oil & gas and commodity stocks. Some of those with limited US exposure would include tech stocks (Venture, Stats ChipPAC) or in properties (OUE, SingHaiyi). For the STI, overhead resistance remains at 3,424 with supports at 3,380 and 3,320. Stocks to watch for: *Tat Hong: FY13 net profit of $70.4m (+67%) is in line but record revenue of $836.9m (+16%) slightly missed estimates. The top-line growth was generated by higher crawler and mobile crane rental (+37%), which in turn lifted the gross margin to 37.6% from 36.5% last year. Net earnings for 4QFY13 jumped 66% to $18.6m, while revenue was up 10% to $199.6m. Group is proposing s final DPS of 2.5¢, bringing total dividend for FY13 to 4¢, up from 2.5¢ in FY12. *Courts Asia: 4QFY13 and FY13 net profit of $12.6m (-19%) and $41.4m (+5%) respectively generally met expectations. Full year revenue grew 10% to $793.8m with S’pore turnover (68% of total sales) expanding by 11%, largely from better same-store sales (+8%) benefiting from broader product range and promotions; soaring online sales, as well as the full operations of its Bukit Timah and Clementi stores. Malaysia’s sales were more subdued (+6%), led by digital products such as tablets and smartphones. Group is proposing a post-IPO final DPS of 1.01¢ based on 30% payout of its 2H net earnings. *Bukit Sembawang: FY13 net profit sagged 37% to $114.6m as revenue dipped 9% to $354.7m due to lower sales recognition of its existing property development projects. Excluding write-backs and one-off gains from disposal of financials assets in FY12, core operating profit of $140.8m would have fallen in line with the 9% drop in revenue and gross profit. NAV climbed to $4.48 per share. Board has recommended a final and special DPS of 4¢ and 11¢ respectively, making a total of 15¢, down from 18¢ in FY12. *The Hour Glass: Delivered flat revenue of $601.9m (-1%) and marginally lower net profit of $52.8m (-3%) in FY13 amid challenging trading conditions marked by strong Asian currencies and weak consumer sentiment with key S’pore and HK markets adjusting to economic restructuring. Hit by rising rentals and increased A&P expenses, gross margin eased to 23.9% from 24.1% in the previous year. DPS has been shaved to 5.5¢ from 6¢ in FY12. *Informatics: Revenue declined 12% to $28.7m as student enrollment at its UK, HK, Sri Lanka and S’pore schools shrank due to tighter student visa entry requirements and depreciating GBP in the UK and downsizing of its HK and Sri Lankan operations. However, a drop in staff and operating expenses led to a smaller 5% dip in net profit to $2.9m. As with FY12, no dividends were declared. *Global Yellow Pages: Incurred a net loss of $124.7m for FY13 due to restructuring costs and goodwill impairment (already reflected in its 3QFY13 results). Excluding these exceptional items, the group would have remained in the black with a net profit of $3.2m vs $4.2m in FY12. Still, revenue slid 18% to $30.2m, mainly due to lower sales of print directories, which were partially offset by higher contributions from S’pore River Water Taxis and River Cruises, which commenced operations in Jan 13 as well as increased revenue from call centre and database marketing services. NAV shrank to $0.12 from $0.38 a year ago. No dividends were declared compared to 0.2¢ in FY12. *SingTel: Bloomberg reported that the group is conducting a review of its Optus Satellite business and may put the Australian unit up for sale at a price tag of A$2b. Bain Capital, Carlyle Group and Blackstone are among private equity firms evaluating and bidding for the potential deal. The divestment would help the group finance its $2b investment plan for its digital initiatives over the next three years. *Boustead: Subsidiary Boustead Int’l Heaters has, together with consortium partner GE Oil & Gas, secured a landmark contract from Brunei’s national power producer, Berakas Power Company to upgrade the Berakas Power Station. The equipment is scheduled to be delivered at end 2014 and commissioned in early 2015. This latest order would raise the group’s order book backlog to $390m. *Anwell Technologies: Granted exclusive rights by two parties to provide an entire range of engineering, procurement and construction services to develop a 10.5MW solar farm in Brazil and a 10MW solar project in Japan. Definite agreements will be executed subject to final negotiations with the customers. *Interra Resources: Jointly controlled entity Goldpetrol has commenced drilling on the infill development well Y3255 in the Yenangyaung oil field in Myanmar. Interra has a 60% interest in the profit sharing contract of the Yenangyaung oil field and also owns 60% of GoldPetrol, the operator of this field. Results of the drilling and completion will be available in approx. six weeks. *Asia Pay TV Trust: Based on the 600.5m units on offer, the IPO is 5.2x subscribed, split between the placement tranche of 530.5m units (5.2x) and the public offer of 70m units (5.8x). Among the placees, Thornburg Investment Management has been allotted 45m units, while Amundi S’pore is taking up 32.1m units. Trading is expected to commence at 2pm on 29 May.

Tuesday, May 28, 2013


Ziwo: Latest was the announcement of its 1Q13 results on 10 May, which saw a net loss of Rmb1.6m (-147%). Revenues slumped 29.4% to Rmb35.9m. The bad results were mainly attributable to the slow down in demand of our products and decrease in selling price due to challenging market condition. The longer shut down during the Chinese New Year holidays than last year has also contributed to the fall in revenue. The group expects the challenging market environment and decrease in demand for its products to continue, and revenues and gross profit margins are expected to continue to come under increased pressure.

Del Monte

Del Monte: Received in-principle approval for its secondary listing on the Philippine Stock Exchange and trading is expected to commence on 10 Jun. No new shares will be allotted and issued in connection with this secondary listing but controlling shareholder NutriAsia Pacific, which owns 78.6% of the pineapple producer, will be transferring 150m vendor shares to the Philippine share register to facilitate trading on PSE. The shares will be fungible between SGX and PSE.


Yoma: OCBC upgraded to HOLD, with TP of $0.87 (previously 0.71). Further catalyst for share price lay in the completion of the Landmark Project acquisition in downtown Yangon, but note that management has raised the possibility of another extension for the deadline. That said, the signing of a Heads of Agreement with the Hong Kong and Shanghai Hotels Group and other preparations by Yoma for site development points to a good level of confidence that they would acquire the site eventually. Management has also reported that they have received verbal assurance from relevant authorities that a new lease would be granted. Sales at launched projects remain firm, with 491 out of total 528 units sold in buildings 3 and 4 at Star City. In addition, management showed a strong deal-making record in FY13 and is in the midst of acquiring more land sites and establishing businesses in tourism, retail, agriculture and automobiles. One significant potential kicker for shareholders is Yoma’s participation (with Digicel and Quantum Strategic Partners) in tendering for one of the two telco licenses awarded by the Myanmar authorities in Jun-13.

Capitaland (technical)

Capitaland: Based on technicals, the sliding RSI seems to suggest possible downside, although Stochastics at oversold levels indicate otherwise based on historical evidences. ADX suggests the recent downtrend have lost some strength as well. Would suggest to hold out for a less conflicting reading on the indicators. The $3.40 region offers some level of support, followed by the $3.10 area. Support-turned-resistance at its recent high of $3.86, followed by $4.05 thereafter.


SIA: CIMB is NETURAL (from underperform), with TP of $10.65. On its post-results, with 4QFY13 core net profit 35% below CIMB's projections, with FY13 earnings 10% under its full-year forecast. The group reported a disappointing operating loss in the period owing to soft passenger and cargo yields. DPS of 23¢ was also lower than estimated. Despite SIA’s legendary brand equity, CIMB think a structural re-rating is unlikely due to competition from Middle Eastern and budget carriers. The disappointment in group's quarter results stemmed mostly from poor yields, which fell by 4%, 1% and 6% at the mainline, SilkAir and SIA Cargo respectively. SIA continues to see challenges ahead. It highlights in its results release that forward passenger bookings are flat yoy, while yields are likely to remain subdued due to S$ appreciation and the weak economy. Cargo will continue to be a soft spot.

Tiger Airways

Tiger Airways: CIMB is NETURAL (from underperform), with TP of $0.66. On its recent results released, Core net loss narrowed from $88m in FY12 to $45m in FY13, as it partially recovered from the devastating impact of its mid-2011 Australian suspension. Tiger Singapore recovered from operating losses of $16m in FY12 to an operating profit of $57m in FY13, with its earlier loss caused by excessive capacity deployment in Singapore after its Australian suspension. CIMB believes the worst for Tiger is likely over, with: (1) its Singapore operations likely to improve further on robust demand; (2) Mandala’s losses expected to narrow with increased synergistic flying into Singapore; (3) the sale of 60% of Tiger Australia almost assured; (4) the completion of its rights issue and capital raising. However, CIMB expect Mandala, SEAir and Tiger Australia to remain loss-making over the next three years, and be a drain on Tiger as it will need to pump in working capital.

Overseas Education

Overseas Education: CIMB initiated coverage on Overseas Education (OEL) with an OUTPERFORM, TP of $0.91. OEL listed to raise proceeds for the financing of land and construction of a new campus in Pasir Ris, which will jack up its student capacity by 22% in 2015. It could take on $72.3m or less of debt to finance this expansion. Other than capacity constraints at its current premises, the new campus will sport newer and better facilities. Capacity expansion is also its biggest re-rating hurdle. Due to resident “activism” in the Pasir Ris area to preserve the woodlands that the new campus will be occupying, there are concerns that OEL's plans could be delayed or jeopardised. Any delay in the new campus would change the timeline for the next step-up in OEL's earnings. Once the campus is completed, capex needs will taper off and there could be room for higher dividend payouts, CIMB believes. Excess cash may also be used to pursue growth opportunities in China where land is more available and the provincial authorities, more welcoming.

Keppel Corp

Keppel Corp: Sales at its Corals at Keppel Bay have been decent. Close to all of the 100 units launched in the initial phase have been sold over its launch last weekend. The development has a total of 366 units. Prices for one- and two-bedroom units were at about $2,160-2,310 psf. This represents a 7-14% premium to the average 2013 transacted price of Reflections, and a 34-43% premium to the average 2013 transacted price of Caribbean. Demand was the strongest for the one-bedroom units due to limited supply in the vicinity, with the buyers an even mix between Singaporeans and foreigners. CS maintain its OUTPERFORM rating on Keppel and TP of $13.70, with the property business representing 19% of its SOTP valuation. This is based on Credit Suisse’s TP for Keppel Land (NEUTRAL, TP $4.10) and Keppel Bay RNAV estimate of $0.13 per share.

CDL Hospitality Trust

CDL Hospitality Trust: CDL H Trust announced a $25m (fully debt-funded) AEI at the Orchard Hotel Shopping Arcade (OHSA). This will add ~10,000 sf NLA and will likely complete by end-2014 (work begins end-13). OHSA accounts for 3% of FY12’s NPI. FY14’s NPI is expected to be impacted by the closure of the mall during the AEI period. However, CS expects the impact to be partly mitigated by the hospitality income across its portfolio. CS maintains OUTPERFORM, with new TP of $2.31 (from $2.30). At current price of $1.93, CS estimates a 6.2% yield.

United Fiber

United Fiber: Earnings increased to US$15.6m, mainly due to a US$16.9m gain from loss of control of subsidiary Poh Lian Construction (placed under judicial management). Excluding the gain, United Fibre made a loss of $US$1.3m.

Technics Oil & Gas

Technics Oil & Gas: The group was awarded $10.6m worth of contracts for the supply of Air Spread Systems from Singapore. This brings year-to-date contracts to $20.8m. The group’s recent dismal set of 2QFY13 results on 25 Apr showed net profit dwindling to near breakeven levels due to the challenging conditions of the global economy. The limited contract wins in 2011 and 2012 would not bode well on the group’s revenues in the upcoming quarters. At its last closing price of $0.85, Technics trades at 10.5x historical P/E and 3.2x P/B. According to Bloomberg consensus (albeit limited), the 12-month TP of $0.64 implies a downside of 25%.

Healthway Medical Corp

Healthway Medical Corp: Announced the placement of 97.5m new shares (4.4% of existing share base) at $0.1026 per share (9.9% discount on last closing price). The net proceeds of the placement ($9.7m if fully subscribed), will be used to fund the group's business expansion plans in China, as well as its obligations in Healthway Medical Development.

Hiap Seng Engineering

Hiap Seng Engineering: Group's 4QFY13 net loss of $4.5m doubled y/y from $2.2m, mainly due to cost increases in labour and materials, as well as a reversal from a previous gain on equity of $2.8m which the group previously recognized in 1QFY13 from the step acquisition of its Thai subsidiary. The group reported FY13 earnings of $7.5m (+76.1%), as a result of higher recognition of project revenue and contributions by two new subsidiaries in Thailand and Malaysia. Management's indication of the outlook in the oil & gas and petrochemical industries remains positive, but increasing costs from keen competition and rising labour remains in focus. Hiap Seng has an outstanding order book of $256m. A final dividend of 0.5¢ per share was declared, bringing its total FY13 dividends to 1.0¢. At last closing price of $0.3350, Hiap Seng trades at 13.5x trailing P/E, 1.3x P/B and historical dividend yield of 3%.


KSH: Property development and construction firm KSH posted FY13 net profit of $36.3m (+98.3%), mainly boosted by property development projects and an increase in share of results of associates. The stellar results were 26.5% above consensus earnings according to Bloomberg. FY13 revenues of $231.6m increased 35.8% due to the increase in revenue from its construction business of $206.1m (+41.8%) and sales of development property of $20.0m (+1.2%). Labour costs for the group increased significantly by 76.6% to $10.7m, due to salary increases as well as increases in other staff-related expenses such as CPF contribution, staff training, workers levies and workers accommodation. KSH will continue to see increase in sales and progress in its construction works, supported by the positive performance of the property market. However, management highlights the increasing costs from a labour shortage, rising competition and uncertainties on material prices. KSH has outstanding order book of $446m. A final dividend of 1.15¢ per share was proposed, bringing full year dividends to 2.5¢. At last closing price of $0.5950, KSH trades at 6.3x trailing P/E, 1.4x P/B and historical dividend yield of 4.2%.

Sembcorp Marine

Sembcorp Marine: Sembcorp Marine secures landmark ultra-high spec jack-up rig at US$596m from Noble Corp, and an option for an additional unit. The construction will be based on Gusto MSC CJ70 with an enhanced version of Statoil’s “Cat J” specs, and will have capability of operating in water depths up to 150m in harsh conditions and maximum drilling capacity of 10,000 meters. Rig scheduled to be delivered in 1Q16. This new contract was previously highlighted by UOB Kay Hian last week, estimated at a contract cost of US$690m. However, do note that the average cost of a normal jack-up rig is in the range of ~$210m, and the new order at $596m is one of the larger value orders for jack-up rigs. Contenders for this rig construction contract were Sembcorp Marine and South Korea's Daewoo Shipbuilding & Marine. This order brings Sembcorp Marine’s orders to $2.3b year-to-date, 46% of street estimates for FY13 total new orders of approximately $5b.

SG Market (28 May 13)

SG Market: S’pore shares are expected to be open on an indifferent note with no fresh leads from Wall Street due to Memorial Day holiday and mixed closures on Asian bourses with Japan slumping 3.2%. Comments by Chinese President Xi Jinping about the slowing Chinese economy and concerns over a possible funds outflow from Asia back to US may continue to weigh on sentiment. Immediate support for the STI still rest at the 3,380 level, followed by 3,320, while overhead resistance is tipped at 3,424. Stocks to watch for: *Sembcorp Marine: Secured a landmark US$596m ultra-high specification jack-up rig from Noble Corp, with option for an additional unit. This is probably the largest order for a jack-up rig, costing 50% more than a harsh environment unit and 3x that of a standard one. Delivery is scheduled for 1Q16. SMM is currently constructing six F&G JU300N class jack-up rigs worth a total of US$1.3b for Noble. The latest rig order will bring the total value of contracts bagged so far this year to $2.5b. *SPH: Received approval from SGX to list two of its shopping malls Paragon and Clementi Mall worth $3.1b through a Reit. The Reit could raise $1b, of which $540m could come from the equity offering and the remainder from debt financing. SPH will next seek shareholder approval at an EGM on 18 Jun. The group plans to retain 70% of the Reit ownership and distribute a special dividend of $0.18 to shareholders after the listing, expected in July. *KSH Holdings: Delivered stellar FY13 results with net profit almost doubling to $36.3m on the back of a 42% jump in revenue to $206.1m and a turnaround in associates’ contributions from a $0.1m loss to a $16.6m profit. The construction segment contributed 89% of the group revenue, while progress billings from JV property development projects, The Boutiq, Cityscape@Farrer Park and Rezi 26 boosted its bottom-line. Group boasts an enviable construction order book of $446m. Final DPS of 1.15¢ was declared, bringing full year dividend payout to 2.5¢. *Hiap Seng: 4QFY13 net loss doubled to $4.5m despite revenue climbing 19% to $46.9m, mainly due to labour and material cost increases as well as a reversal of a gain on equity amounting to $2.8m which was recognized in 1QFY13 from the acquisition of additional interest in a Thai subsidiary. But full year earnings swelled 76% to $7.5m, underpinned by higher recognition of project revenue in FY13 and contributions by two new subsidiaries in Thailand and Malaysia. The group has an outstanding order book of $256m. Final DPS of 0.5¢ was declared, bringing total FY13 dividends to 1¢. *Healthway Medical: Placing up to 97.5m new shares at $0.1026 each (10% discount to last closing price) to raise $9.7m to fund the its expansion plans in China and obligations in associate Healthway Medical Development, which is undergoing a restructuring with plans for a listing. The placement shares represent 4.41% of current existing share base. *SIA: SIA Cargo is grounding another B747-400 freighter from Jun 13 till May 14 as it continued to face the squeeze from weak air cargo market and overcapacity putting pressure on rates. This will be the second freighter aircraft mothballed by SIA, the first was in Dec 12 and reduce its cargo capacity by ~8%, leaving the carrier with an operational fleet of 11 B747-400Fs. This comes in the wake of its sub par FY13 results, which saw a 20% drop in operating loss, weighed by a contraction in cargo loads (-6%) and yields (-4.3%). *Technics O&G: Awarded $10.6m contracts for the supply of air spread systems from S’pore. This comes on the back of a series of contract wins this year, including a leasing contract for two gas compressor packages from Malaysia worth $3.6m, and another two contracts for the supply of compressor packages, to be deployed in offshore Vietnam and Thailand, worth a total of $6.6m. *Fragrance Group: Setting up a $1b multicurrency medium term note program arranged by DBS. As at Mar 13, the group had a net gearing of 1.62x with total debts of $1.54b.

Monday, May 27, 2013

WE Holdings

WE Holdings: Company requested for a trading halt at 1:34pm, pending release of announcement. Details are not out yet, will update as soon as available. Highlight from an article on Edge magazine over the weekend, that WE Holdings would invest US$20m in a 20% stake in Dragon Cement, and an option to acquire a futher 20% in future. The initial US$20m from WE Holdings will be used to double Dragon Cement's capacity to 800 tonnes daily. On its previous plans to enter the oil & gas sector, mgmt has stated that plans have not been abandoned. The JV formed with Nay Win Tun is still actively looking for exploration opportunities in Myanmar. Recently on 18 May, WE Holdings signed a deal with Serial System to dispose of its electronics business of US$2.06m- 3.3% of FY13 revenues, and close to FY07 earnings before business deteriorated. Serial System also has an option to buy WE Holdings' inventory, which is carried in its books at US$4.8m.

AIMS AMP Capital

AIMS AMP Capital: OSK DMG has a rpt update on the completion of Phase 2 of 20 Gul Way, expects mgmt to announce its plan for Phase 3 soon. Assuming a successful execution of Phase 3 in 13 months, OSK expect 2015 DPU to jump by 12.3%. AIMS recently announced that URA has approved in principle its application to re-zone the plot ratio at 20 Gul Way from the existing 1.4x to 2.0x. This allows the REIT to develop a further 497,000 sf of gfa at the property. Based on the speculated scenario of the successful execution of Phase 3 of 20 Gul Way, OSK project a DPU of 13.3¢ (+15.3% y/y) in 2015 (from 11.9¢ previously). In addition, with c.50% of its under-utilized plot ratio available for redevelopment, house expect the REIT to announce more upcoming projects in the future. OSK reiterates BUY with TP of $2.10, representing a forecast FY14 dividend yield of 5.3% and a potential upside of 20.7%.

Jardine Matheson/ Jardine Strategic

Jardine Matheson/ Jardine Strategic: StanChart initiates coverage of Jardine Matheson (JM) with an In-Line rating and Jardine Strategic (JS) with an OUTPERFORM. StanChart considers both JM and JS core holdings due to their: (1) focus on the right markets; (2) well-positioned franchises; (3) strong management track record; (4) low risk profile; (5) solid sustainable growth outlook; and (6) reasonable valuations. JM and JS shares have delivered total returns of 132-139% over the past five years versus a 14% return for the MSCI AXJ. Over the past decade, the outperformance versus key benchmarks is more spectacular, at over 1,000ppt, mostly due to underlying profit CAGRs of 20-22% at JS and JM and 15%+ at subsidiaries. Over this period, StanChart estimate management’s strategy of increasing stakes in subsidiaries enhanced JS and JM’s profit growth by more than 50%. However, barring a privatisation or major acquisition, house expect profit growth to moderate but remain quite respectable over the next 3-5 years. StanChart has TP of US$71.50 for JM; StanChart has TP of US$44.75 for JS;

HongKong Land

HongKong Land: StanChart upgrade Hongkong Land to Outperform from In-Line on its more attractive valuation. House continue to expect a recovery in Central office rents in 2H13 given low vacancy across Hong Kong in general, and lower vacancy in key benchmark buildings in particular. New office supply will remain constrained through at least 2015, with only c.1.5m sf GFA expected p.a. versus a 15-year average of more than 2m sf. Importantly, new supply in Central will be limited to redevelopments of smaller floor plate buildings. The combination of low vacancy, low new supply and StanChart’s economist’s expectation of 3.4-4.5% real GDP growth in 2013-15 bodes well for the Central rental outlook. StanChart upgrades to OUTPERFORM, TP of US$8.31.


UOB: From the recent DB Asia Conference 2013 after UOB reported robust 1Q13 loan growth of 7% q/q boosted by one-off benefits related to M&A financing and underlying growth was 3.5% q/q, more consistent with the bank's 2013 guidance for high-single digit growth but still implying upside risk. And like peers, UOB pointed to broad improvement in corporate loan demand, with China customers' appetite for trade finance clearly getting better post-new year. DB expect UOB to update 2013 loan growth guidance at its next quarterly result. The trends noted above suggest an upgrade to guidance is likely. UOB suggested NIM pressures were likely to persist for a few more quarters. DB are forecasting a 2013 NIM broadly in line with the 1.70% reported in 1Q13, implying potential downside to its estimates, although house see steepening yield curves as a potential source of support. Key margin headwinds flagged by UOB were mortgage backbook re-pricing, and tighter corporate loan spreads. Funding pressures have become less of a concern following recent changes to Basel III liquidity requirements. DB maintains HOLD, TP of $23.00.

HPH Trust

HPH Trust: From the recent DB Asia Conference 2013, management highlights that workers on strike at HIT now have fully returned. However, it still takes a few more weeks for volume returning as liners need to reroute their port of calls. 2Q throughput at HIT would be under pressure due to the strike. In terms of trade, cargo going to US has slowed down in recent months in its Yantian ports vs. 5-7% y/y growth in 1Q, the growth during April-May largely remained flat y/y. One possible explanation was that US retailers have built up their inventories in 1Q, which led to slow shipments at the beginning of 2Q. However, mgmt thought that no need to be panic at this point of time. As long as US growth remains on track, flow of trades will come back. The cargo going to Europe remained soft, with no sign of improvement. For DPU, mgmt continues to stick to its guided range of HKD40-44¢. However, given the strike and recent softness in trade, mgmt believes that dividend is more likely to be within the low-to-mid range. Base on last closing price of US$0.81, HPH Trust trades at an implied distribution yield of 5.9% based on a distribution of HKD40¢. DB maintains its BUY rating, TP of US$0.92.

CDL Hospitality Trust

CDL Hospitality Trust: Announced AEI plans for its Orchard Hotel Shopping Arcade (OHSA), with an approximate cost of $25m, including the loss of rental income during the period. AEI works are scheduled to commence in late 2013, and expected to complete in 12 months. In the group’s latest results for 1Q13, net property income contributed by the Orchard Hotel Shopping Arcade was S$1.1m. Average occupancy rate was 92.1% with an average monthly rental rate of about $7.56 psf. The revamped mall will be re-positioned as a family-centric mall with enhanced retail offerings, catering to a growing captive residential population within the area and vibrant retail activity along the Orchard Road shopping strip. Upon completion of the AEI, the net lettable area will increase to approx. 10,000 sf, with incremental rental income to be more than $2.0m per year, translating to a ROI of 8%. At last closing price of $1.925, CDL H Trust trades at 1.2x P/B, and historical dividend yield of 5.9%.

Stamford Land

Stamford Land: The Australian hotel owner and developer reported FY13 earnings of $31.7m, a decline of 40.6%, mainly due to lower profit recognition from completed sales of properties at The Stamford Residences and Reynell Terraces compared to FY12. Main contribution came from its hotel business, which saw a decline of 4.7% to $227.5m, mainly due to lower exchange rates used for translation, as well as weak performance from its two Adelaide hotels. Property development fell 90.4% to $22.0m due to the completed sales of 16 units, compared to 131 units the previous year. Consequently, revenues declined 45.1% to $266.7m. Going forward into FY14, the group has indicated that its hotel segment will continue to remain strong, with positive signs of recovery seen in its two Adelaide hotels. Increased revenues is expected with the upgrading and reconfiguring of its food and beverage outlets. The property investment segment will be stable, with fixed lease income of A$11m per annum from Dynons Plaza Perth for the next seven years. Group has proposed a final and special dividend of 2¢ and 1¢ respectively per share, implying a FY13 dividend yield of 5.3%. At its last closing price of $0.610, Stamford Land trades at 1.0x P/B.

IHH Healthcare

IHH Healthcare: Reported in-line 1Q13 results for core hospital operations, with 1Q13 earnings increased 4% to Rm127.3m, mainly due to stronger inpatient volumes and improvements in average revenue per inpatient admission, lower losses for Novena and full 3-months consolidation of its Turkish operations. However, overall EBITDA margin fell 0.9ppt y/y due to higher staff and operating lease costs as well as start-up losses at new hospitals. As flagged, the company adopted MFRS 10 reporting standard which consolidated the earnings of Parkway Life REIT (although IHH only owns 35.8% of the entity due to single control model) and equity accounting for its 50% JV stake in Khubchandani hospital in India (vs 100% consolidation previously). Operationally, IHH saw inpatient volume increase of 8%/2%/5% y/y and average revenue per inpatient admission of 3%/11%/-0.5% YoY across its hospitals in Singapore, Malaysia and Turkey. The strong inpatient volumes and sustained average revenue per inpatient admission in Singapore was commendable given the opening of Novena hospital. EBITDA losses at Novena narrowed significantly in 1Q13 to RM3m (vs RM15.6m losses in 4Q12) and management expects the entity generate positive EBITDA going forward. Post the restructuring of debt at Acibadem, the entity now accounts for 17% of PATMI in 1Q13 (vs -1% in FY12). According to DB estimates, IHH is currently trading at 22.8x forward adjusted average EV/EBITDA. At its DCF/SoTP-derived target price, DB value IHH at 25x FY13E adjusted EV/EBITDA, a 23% premium to its Asian peers. The premium is justified given IHH’s stronger EBITDA growth prospects over FY12- 14E (32% vs. peers’ 18%), dominance in its home markets, and its ability to grow through replicating its business model into new markets DB has a BUY rating, TP of $1.88.


Yoma: 4QFY13 earnings increased 452% to $11.5m, mainly due to fair value gains of $9.1m from the consolidation of the group’s Xunxiang (Dalian) Enterprise Co Ltd. Excluding the one-off gain, earnings grew 46% to $3.0m. Full year earnings amounted to $14.4m, an increase of 139%. 4QFY13 revenues increase 26.9% to $20.5m as a result of the increase in sales of residences and land development rights in Myanmar. The group’s full year revenues increased 54% to $60.5m, mainly due to higher selling prices of land development rights. Revenue recognition based on the percentage of completion from its Star City development will see the balance of approximately $55.9m to be recognized over the next 18-24 months. The group’s core business remains as real estate development in Myanmar and Yoma expects business activity will continue to grow in line with the rapid development of the country as a whole. With demand outpacing supply in most areas of residential accommodation, the Group is actively looking at new projects including at the more affordable end of the market. The situation is expected to continue for at least the next 12 months. The Group’s major move into commercial real estate will be signaled by its completion of the acquisition of the Landmark Project in downtown Yangon. The proposed development of the offices, hotels and retail podium on this site is likely to be a flagship development for the Group. Upcoming catalyst include the result of the bidding for a new telecoms licence, expected to be announced before the end of Jun 2013. Yoma declared dividend of 0.5¢ per share, implying a FY13 dividend yield of 0.7%. NAV per share of $0.309, implied P/B of 2.7x.

Global Logistics Prop

Global Logistics Prop: Seemingly robust 4QFY13 earnings of US$224.0m, an increase of 43.1% y/y, driven by a higher contribution from jointly-controlled entities and a net fair value gain of US$71.2m (of which US$69.2m came from its China properties). Finance income of US$12.2m was recorded due to foreign exchange gains from its forward contracts, as well as mark-to-market gains on outstanding contracts. Excluding these one-off gains, 4QFY13 earnings declined 10.2% to US$140.6m. Full year earnings increased 26.5% to US$684.3m. 4QFY13 revenues declined by 18.4% to US$125.1m, mainly due to the sale of 33 properties in Japan to its subsidiary GLP J-REIT in Jan and Feb 2013, as well as a 15% depreciation of the Japanese Yen against the US dollar.This was partially offset by the inclusion of asset and property management fee income from GLP J-REIT, completion of development projects in China with increasing rents, contribution from newly acquired subsidiaries in China, as well as asset management and development fee income from joint ventures in Japan. Full year revenues increased 13.5% to US$642.1m. For FY13, GLP initiated new developments of 22.6m sf in China, and has earmarked an increase of 19.5% (27m sf) in new developments for FY14 at a cost of US$1.2b. Land purchases in China of 45.2m sf increased a significant 213% in FY13, bringing its total land reserve to 113m sf, which provides a strong pipeline for future development. GLP's portfolio in Japan is stable, encompassing 84 completed properties with gfa of 38.8m sf. Lease ratio is stable at 99%, with high tenant retention rate of 80%. Rents are stable at JPY100.6 psf/month. Development starts in Japan of 5m sf was ahead of the group's target, and GLP expects to begin development of approximately 4.3m sf for FY14, with development cost of US$670m. In Brazil, its 100% leased properties has a long weighted average lease expiry of more than eight years. GLP started developments of 1.1m sf in 4QFY13, and targets to initiate 3.3m sf in FY14 at a cost of US$290m. GLP will continue to benefit from the growth of domestic consumption in its key markets, particularly in China and Brazil, while Japan undergoes a reconfiguration of its supply chain towards modern logistics facilities. 84% of its overall portfolio is leased to domestic consumption related customers, as well as a robust demand from 3PL providers and retailers, including e-commerce. GLP recommended a dividend of 4¢ per share, implying a FY13 dividend yield of 1.5%. At its last closing price of $2.86, GLP trades at 1.3x P/B. Broker recommendations: CS maintains OUTPERFORM with TP of $3.15; Nomura remains NEUTRAL with TP of $2.70;

SG Market (27 May 13)

SG Market: Last week’s market about-turn has brought to life the age-old dictum of “Sell in May and go away” and prompted many market watchers to wonder if the sell-off is an overdue technical correction or start of a new trend that will see funds withdrawing from Asia to return to the US. On one hand, there are mounting concerns of a rapid slowdown in China and signs of overheating in some of the emerging economies in Asia, while on the other hand, we see a improving economic recovery in the US. For the STI, immediate support is at 3,380 level followed by 3,320 with overhead resistance now reset at 3,424. Stocks to watch for: *GLP: 4QFY13 net profit surged 43% y/y to US$224m on revaluation gains of US$164m and US$28.8m FX gains from hedging of JPY forward contracts. But revenue slipped 18% to US$125m due to loss of 33 properties that were injected into a J-Reit earlier this year. For FY13, net earnings rose 27% to US$684m on strong development momentum and rental growth in China, boosted by revaluation gains of US$425m from both subsidiaries and jointly-controlled entities. Rents and lease ratios were stable across its portfolio. NAV stood at US$1.77. Group proposed a final DPS of 4¢, 33% higher than previous year. *Yoma: 4QFY13 earnings jumped 452% to $11.5m, mainly due to fair value gain of $9.1m from the consolidation of the group’s Grand Central project in Dalian. Excluding the one-off gain, earnings grew 46% to $3m. Core full year earnings doubled to $12.3. 4Q and FY13 revenues soared 27% and 54% to $4.3m and $60.5m respectively as a result from the increase in the sales of residences and land development rights in Myanmar. NAV rose to $0.309 per share. Group is proposing a final DPS of 0.5¢. *IHH Healthcare: 1Q13 earnings crept up 4% y/y to Rm127.3m, mainly due to Mount Elizabeth Novena Hospital's significant improvement in earnings, partially offset by increasing staff costs and operating lease expenses. 1Q13 revenues grew 29% to RM1.6b as a result of the increased capacity from Parkway Pantai's Mount Elizabeth Novena Hospital, as well as the full contribution of Acibadem Holdings which the group acquired on 24 Jan 12. Operating loss from Mount Elizabeth Novena Hospital has narrowed to RM3m from RM15.6m in 1Q12. *Stamford Land: FY13 net profit fell 41% to $31.7m, in line with the 45% drop in revenue to $266.7m on reduced sales from its hotel segment due to lower FX and revaluation gains and weak performance from two Adelaide hotels as well as lower profit recognition from completed sales of properties at The Stamford Residences and Reynell Terraces compared to FY12. NAV slid 1¢ to $0.60. Group is proposing a final DPS of 3¢, down from 4¢ last year. *CSC: The construction group turned in an expected 4QFY13 loss of $2m as a result of a $3.6m provision made for doubtful debts from Poh Lian Construction. Consequently, full year earnings were pulled sown 72% to $2.8m even though revenue rose 21% to $531.3m due to recent acquisitions and increased business activities. The highly competitive environment exerted demand pressure on tender prices, depressing gross margin to 7.2% vs 9.1% in FY12. Order book stayed at a healthy $220m. Final DPS of 0.06¢ declared, taking full year DPS to 0.1¢ vs 0.17¢ in FY12. *CDL Hospitality Trust: Announced $25m asset enhancement initiative (AEI) for its Orchard Hotel Shopping Arcade, which includes the loss of rental income during the period. AEI works are scheduled to commence in late 2013 and expected to complete in 12 months. Upon completion, the net lettable space of the shopping arcade will increase to 10,000 sf, with incremental rental income of more than $2m per year, translating to a return on investment of 8%. *Oakwell Engineering: Entered into letter of intent to dispose its distribution business (mainly in electrical and mechanical products and accessories and related engineering and assembly services) plus a warehouse in Houston, Texas to logistics and electrical equipment distribution group Sonepar for a base consideration of $70m (book value $28.6m), The transaction price is based on 8x EBITDA multiple and may rise to $74.5m if there are no subsequent write-offs. The proposed disposal will potentially raise its pro forma NAV to 11.6¢ from 4.42¢. Proceeds will be deployed to fund future acquisitions, pare down debt and provide working capital and dividend distribution. *Yongxin: Acquiring Oriental Land (OL) in a $340m reverse takeover (RTO) deal via issue of 601.8m 2-to-1 consolidated shares at $0.565 each. OL is an integrated developer operating in Tangshan city and Inner Mongolia and recorded net profit of Rmb70.4m, Rmb110.4m and Rmb78.8m in FY10, FY11 and FY12 respectively. The transaction will be pegged at 70% of OL’s RNAV as at Jun 13. Meanwhile, the group will sell its existing businesses to its current shareholder for $7.4m cash. Upon completion of the RTO, the vendor will own 84.9% of the group’s enlarged share capital. *China Yuanbang: Proposed disposal of a five-star hotel under development in Nanchang city, Jiangxi for Rmb268m. This is a non-core asset among its many properties owned and developed by the group as part of the Aqua Lake Grand City development in Nanchang. As the book value of this property is Rmb245.5m, the sale will enable the group to reap a surplus of Rmb22.5m. *Hiap Seng: Formed a strategic alliance with Malaysian industrial building system contractor KUB Builders to jointly bid for the Petronas refinery and petrochemical integrated development tank farm project in Malaysia. *Cordlife: Clarifies that the umbilical cord tissue banking services in S’pore announced on 9 May is still under research and clinical trial and not yet licensed by the Ministry of Health. The group is presently only licensed by MOH to provide cord blood banking services for autologous use. *Fabchem: Announced that its Shandong factory will temporarily suspend all operations after the Chinese authorities issued a cease production order on all commercial explosives firms in Shandong province for safety checks with effect from 20 May. This follows a recent explosion accident at an unrelated seismic charge manufacturing plant in Shandong. This does not affect its Hebei ammonium nitrate facilities.

Thursday, May 23, 2013

EU NetWorks

EU NetWorks: According to Dow Jones new wires, euNetworks Group has announced it has signed a new agreement with Hudson Fiber Network (HFN), the leading US based transport and Internet Protocol (IP) service provider specialising in delivering network solutions to the financial community. Under the terms of this new agreement, euNetworks is delivering its euTrade service portfolio to HFN, with ultra low latency connection between an exchange in central London and an exchange in Slough, to the west of London. Hudson Fiber Network, established in 2002, is headquartered in Paramus New Jersey, delivering data transport solutions to its growing customer base. With an increasing number of its US clients needing to access trades in the European equity markets, HFN was looking to partner with a European bandwidth provider with considerable technical expertise and understanding of the needs of this important bandwidth consuming community.

King Wan

King Wan: OSK has a short note on KWAN's upcoming results release next week (estimated 29 May). House raises 4QFY13 earnings by 9.6% given its strong core business. KWAN's healthy order book of $183.6m is equivalent to three years of revenues, supporting the forward dividend expectations of a 1.5¢ dividends semi-annually. In addition, its Thai associate Kaset Thai Industry Sugar (KTIS)- a sugar mill, is set to go on IPO in mid-July, and KWAN would be expected to recognize profits on the sale of its KTIS stake in 2QFY14. OSK expects a final 1¢ dividend to be declared at its 4QFY13 results, followed by an interim dividend of 1.5¢ in 2QFY14, as well as a 1.5¢ dividend semi-annually thereafter. Based on the expected dividends on KWAN's current share price of $0.300, the 12-month forward yield is at 8.3%, following by a FY14 yield of 9.7%. Any stock price correction due to a poor y/y comparison on KWAN's 4QFY13 financials would present a clear over-reaction and an opportunity to accumulate- as KWAN's Thai associates no longer contribute to its financials. OSK maintain BUY with a TP of $0.400 (implies 33% upside from current price of $0.300).

Global Premium Hotels (technical)

Global Premium Hotels: UOB Kay Hian has Technical Buy Call with $0.35 TP. House note that the stock has made a higher low and its 10- day moving average has crossed above its 35 day moving average, suggesting its recent retracement towards $0.25 could be reversed. Its MACD indicator has formed a bullish crossover and has crossed above its centerline, while its positive directional indicator appears to be positively placed. Watch to see if the stock could break above its all-time high of $0.305.

KSH Holdings (technical)

KSH Holdings: UOB Kay Hian recommends taking profit from previous Technical Buy Call. House note that the stock was featured as a technical BUY when it opened at $0.475 on 10 May 13. It has since returned 27.4% on closing prices, with an intraday high of S$0.61 in the last trading session, which has exceeded the initial target of $0.56. Some profits could be taken off the table should the stock fail to close above S$0.65. Watch to see if its MACD indicator could form a bearish crossover.


Healthway - Healthway said in an after-market announcement that shareholders at its EGM yesterday approved the further distribution of up to 675,324 shares, or a stake of 3.38%, in Healthway Medical Development (HMD). HMD is the medical asset development company that is undergoing a restructuring, with plans for a listing under the name of International Healthway Corporation (IHC). Earlier this month, Healthway said that the additional distribution was a way of rewarding shareholders for their continuous support of the group. It also serves to mark a significant milestone in the grp's investment in HMD and the submission of a pre-admission notification to the SGX-ST for the proposed listing of IHC, adding that the move was also in line with its intention to divest its entire stake in HMD with minimal costs. Healthway first announced its plans to restructure its interest in HMD in 2011. It said then that it would distribute up to a stake of 10% in HMD, representing about 40% of its then 25% HMD shareholding, to Healthway shareholders for free. It would then hold the remaining 60% of its shareholding, or a stake of 15%, in HMD for divestment. Late last year, Healthway sold a 1% stake in HMD to third-party investors, trimming its 15% holding in HMD to 14%. In its recent announcement, Healthway said that with the further distribution in specie, the company would have declared dividends of up to $14.815m representing a stake of up to 13.38 equity interest in HMD. This will leave Healthway with a stake of 10.62%.


ComfortDelgro: Counter declined 10.5% to $1.95 today. Perhaps resulting from the sale of long-term shareholder Singapore Labour Foundation, selling $262m worth at close yesterday. The discount on the block trade was between 6.9% ($2.03) - 11% ($1.94) on yesterday’s close of $2.18, which attracted over 50 investors. The seller offered to dispose of 170m shares, accounting 2/3 of its holdings and 8.1% of the company. Deal was comfortably covered and attracted a good balance of long-only accts and hedge funds. The deal was fully covered by investors based in Asia, but complemented with orders from US.


MCT: During the DB conference, mgmt stated that no major AEI plans for VivoCity are ear-marked, however, incremental zone-by-zone improvements can be done to improve performance (eg. tenant remixing, reconfiguring layout, changing trade mix etc). This has helped MCT achieve its 33% rent reversion in FY13. MCT remains active in its search for acquisitions, focusing on both retail and office assets in Singapore. DB note that MCT’s pipeline is one of the deepest amongst peers and acquisitions could provide a medium-term boost to growth. DB has a HOLD rating, TP of $1.46; MCT trades at a forward yield of 4.7%.


Starhub: Management stated that broadband pricing competition is currently driven by smaller new entrant operators. But STH's strength lies in its ability to complement the broadband offering with content. Management also highlighted that STH's investments in international bandwidth should position the company well versus the competition. Service margins for fibre broadband would be lower versus cable broadband (e.g. the cable network is fully depreciated), but pointed out that a fibre broadband adoption grant from the government would support up to 2015. Management expressed optimism about the mobile business, which is benefitting from relatively rational competition. It expects the positive impact of tiered pricing to materialise in 2H13. DB views that the mobile sector dynamics will continue to improve, with better data monetisation and lower handset subsidies, potentially lifting sector margins over the near term. DB has a SELL rating, TP of $3.83; Starhub trades at forward yield of 4.6%.


SGX: During the DB conference, group's derivatives business was in focus- in which SGX believes its recent growth trends in derivatives revenues and turnover can be continued in the near term. Its fast-growing derivatives business now account for more than 40% of gross trading revenues, up from 33% in FY11. Its key competitive advantage against peers are its primary focus on regional equity indices as opposed to single-stock options – to which SGX plan to launch in the coming months. It currently has an agreement with MSCI for the ownership of derivatives on 14 further MSCI indices, with the launch of MSCI Philippines by year-end. On its securities segment, SGX plans to boost the average daily turnover by targeting retail participation, which accounts for 40% currently. Group plans to reduce minimum board lot sizes from the current 1,000 to encourage both retail and high-frequency trading (HFT), which could happen in the next 12-15 months. This could promote a significant improvement in liquidity, especially as the cost of buying blue chips is simply too high for many local investors. Lastly, group stated that IPOs are expected to pick up over the coming months; the pipeline has been healthy for a while but companies are waiting for market conditions to improve. DB has a HOLD rating, TP of $7.90; SGX trades at 26.7x trailing P/E, has long-term average P/E of 24.1x. (+1 s.d. of 29.3x)


Noble: Macquarie maintains Neutral but cuts TP to $1.15 from $1.30. Note that Noble’s headline P/B multiple looks cheap, but need a good quarter for the Agri division before turning positive. Still see the Agri space as most challenged within the SG index based on an earnings perspective.


CMA: Morgan Stanley maintains O/w and lifts TP to $2.50 from $2.40, calling stock the top pick of its sector and prepares investors to be positively surprised. Mgt’s net profit guidance and consensus expectations are too low, as consensus has cut 2013 net profit estimates by 8% since 4Q12 result. House raise 2013 forecast by $48m to $294m (including $27m from Bedok Residences); 22% and 28% ahead of consensus for 2013 and 2014 core net profit, respectively. Note that its too early to blow the whistle on soft China operating metrics, as same mall tenant sales growth was strong at 16%, and management says 2Q13 growth is tracking in the mid- to low teens in 2Q13. Valuation is attractive at 0.9x 2013 P/B.


Midas: NRA capital met up with mgt and note that: 1) the bulk of the Q1-2013 loss came from its associate Nanjing SR Puzhen Rail Transport Co - similar to its loss in Q1-2012 and was due primarily to fewer trains being delivered. 2) Midas has a healthy order book of more than RMB8b of which RMB1.5b is its own and another RMB7b from its associate Nanjing SR Puzhen Rail Transport Co. In 2013 alone, Midas has secured about RMB400m in new orders while its associate has secured contracts of about RMB1b. 3) A typical contract for Midas and its associates lasts about 24 months - so we can expect better revenue and profit in the coming quarters. 4) Current utilisation is around 40% which gives Midas the much needed capacity to accept and deliver new high speed train orders as and when they are tendered out. 5) Midas continues to wait for the release of high speed train orders which are long overdue and behind schedule. The delay is linked to the formation of the new Ministry of Transport and also that new China President Xi Jinping is more concerned with tackling corruption which may in the short term slowdown its pump priming activities. House conclusion is that there is no change in the reasons and rationale for recommending Midas which remains undervalued. The 1Q13 results although reflecting a loss does not detract from its growing and more healthy order book which should start to kick-in in 2H13.