Friday, August 30, 2013

52 wk highs/ lows

52 wk highs: Cordlife, Etika, AV Jennings, Ocean Sky, UE E&C, Ossia, Micro-Mechanics, China Jishan 52 wk lows: SIA, CMT, MINT, United Engineers, Ausgroup, FabChem, Shangri-la Asia, GKE, Aztech


Civmec: is up 25% today at $0.695. There's a positive feature in this week's issue of the Edge (delivered today ), which points to a conundrum that "Civmec shares continue to slump despite rising orders and stronger results". Interestingly, the price and volume spike , which began at 2.50pm, coincides with the approx time that The Edge is delivered to corporate subscribers.

SIA Engineering

SIA Engineering: The recent downtrend started just after the release of its results on 22 Jul, despite reporting steady results and stable outlook. Maybank-KE remain positive on the stock, reiterating that the market has not fully appreciated the hidden value in its key JVs with Rolls Royce, which should benefit from the influx of Trent engines into the market. Management was however cautious on the challenging operating environment with uncertainties facing the global economy. Maybank-KE also highlighted near-term weakness with early retirement of some Cathay Pacific’s B747-400s. Overall, SIA Engineering has a strong balance sheet (net cash of $619m) and provided free cash flow of $88m the previous quarter. Maybank-KE sees the strong balance sheet and cash generating ability of the business should allow the group to payout an increasing level of dividends to shareholders.

ST Engineering

ST Engineering (STE): According to a recent CIMB report on 28 Aug, house see a buying opportunity from the recent pullback of STE’s share price. Business fundamentals remain strong but CIMB see STE benefiting from the strengthening of the US$ with positive translation of earnings. According to CIMB, STE's share price has retreated about 11% over the past two weeks and has been sold down in line with the capitulation of the FSSTI, while US$/S$ has strengthened by about 2% since Jul 2013. STE derives about 30% of its revenue from the US (mostly from Aerospace and Marine). CIMB expect STE to benefit from US$ strength in FY13. With steady earnings growth of 7-10% and strong balance sheet (net cash of $740m), STE delivered the fastest bounceback in share price in any sell-down. The orderbook of $12.8b should also provide some certainty in earnings visibility. Dividend yield has also become more attractive at 4.8%.


JES: entered into a loan and maintenance agreement with an US-based private investment fund. The fund will extend a loan facility amounting to a max of US$20m for a 3-yr period, at a one-time upfront fee of 5% and an annual maintenance fee of 5% pa. JES also has an option for an additional US$20m under the same conditions, subject to approval by the fund. JES expects to utilize the funds for working capital and any potential M&A opportunities that may come along. JES has been continuously seeking new order opportunities in various types of offshore vessels and jack up rigs, while also looking for possible diversification of investment when good opportunities are presented. Mgt highlights a potential invmt in Mineriver, which is in the process of acquiring mining assets in China. JES trades at 0.5x P/B. P/E is not meaningful as the co is loss making.

STI (technical)

STI: the index has rebounded back into the 3,027 - 3,113 trading range, and the RSI surfacing from oversold territory indicates that very near term momentum has turned slighly more positive. Nevertheless, the charts reflect volatile times currently, and the medium term outlook continues to be subdued (declining 20day and 50 day MA, tapering 200day MA). Traders should stay cautious, and stay alert for any dip back below the trading band, which would be a signal for more weakness to come.

Rowsley (technical)

Rowsley: UOB Kay Hian has Technical Buy Call with $0.56 TP. Note that the stock may continue its rebound after its recent retracement found support near its rising 50-day EMA. The stock has also been supported at its rising 100-day EMA earlier. Its MACD indicator appears to have failed to form a bearish crossover and has hooked up instead. Watch to see if the stock could break above $0.485.

Vard Holdings (technical)

Vard Holdings: UOB Kay Hian has Technical buy Call with $0.99 TP. Note that the stock may rebound towards its gap down on 1 Jul 13, which may act as a potential resistance. Its short-term moving averages are turning up as its 10-day EMA looks poised to cross above its 35-day EMA. Its MACD indicator has hooked up and could move above its centreline. Watch to see if the stock could break above $0.90.


Albedo: Perhaps the recent sell down by two substantial stakeholders, its CEO Hano Maeloa and Lim Soon Fang, spooked shareholders after the company made the disclosure last evening. CEO Hano Maeloa sold 41m shares @ $0.051 on 27 Aug, reducing his stake from 5.69% to 2.63%. The share were held through his mother Mdm Oei Sui Hua. In addition on 26 Aug, Lim Soon Fang reduced his stake by 20m shares @ $0.05255 per share, bringing down the stake from 13.38% to 11.87%. Lim Soon Fang further reduced his stake on 28 Aug by 12m shares @ $0.0495 per share. Timeline looks interesting on the recent events: 15 Aug: Lim Soon Fang acquired 8m shares @ $0.021, stake increased from 12.83% to 13.43%. 19 Aug: Counter halted; 20 Aug: Company announced its MOU for a potential RTO with Temasya Cergas Sdn Bhd; 26 Aug and 28 Aug: Lim Soon Fang sold an aggregate 32m shares @ between $0.0495 - $0.05255 per share, brining stake from 13.38% to 10.65%

Thai Beverage

Thai Beverage: CIMB maintains O/p with $0.71 TP. House understand that there will be changes to the alcoholic excise tax policy motivated by the govt’s desire to prevent importers from understating cost. There is little clarity at this stage but do not think that Spirits margins will be adversely affected. In fact, Spirits volume may benefit. There has been no official statement yet but house do not think that these changes will be detrimental to spirits margin. There are no changes to house FY13-15 EPS estimates and SOP-based target price for now. Overall, keep Outperform call and expect re-rating catalysts from further corporate restructuring.


F&N: Announced that it has received a letter from Myanma Economic Holdings Ltd (MEHL) intending to issue a notice of arbitration regarding FNN’s 55% stake in Myanmar Breweries. MEHL is the holder of the other 45% stake in Myanmar Breweries, and claims that the joint venture agreement allows MEHL to give notice to FNN to sell its 55% stake to MEHL. FNN believes that there is no basis for the notice, and plan to resist the claim. Deutsche note tht while the validity and outcome of the claim remains undecided; based on latest disclosures from FNN, Myanmar Breweries accounted for $29.7m of FNN’s FY12 net profit (6.9% of FY12 core net profit, 6.4% of FY13). House estimate that Myanmar breweries accounts for 4.2% ($0.35/sh) of house RNAV of $8.24/sh based on the industry median P/E of 17x. Overall, house maintains its Hold recommendation pending the resolution of the lawsuit and with the restoration of an overhang.

Comfort Delgro

Comfort Delgro: OCBC note that ComfortDelgro was re-awarded the region 4 contract by the New South Wales transport ministry on Thur, and this should remove any negative overhang for the group’s future in one of its key markets of Australia. However, its share price has failed to react to the news and remains weak, which is unwarranted in house view. Although investors may have concerns over rising fuel prices and the potential for rate hikes, CDG is unaffected given its substantial hedge (80%) on fuel requirements for the rest of the year and low gearing position. Therefore, feel that this recent share weakness creates an attractive opportunity for investors to allocate into this fundamentally healthy company with earnings stability. Overall, house upgrade CDG to BUY with an unchanged fair value estimate of $1.95.


Yoma: CS has an unrated report on the co. House met with Yoma management for an update on the company. Note that Yoma believes they are well placed to partner global enterprises now looking to start businesses in Myanmar, but also say real estate will continue to dominate their business mix near term. Yoma suggests they will continue development of their three existing property projects, but are also looking to the development of "Landmark" – a mixed use project in Yangon – for near term growth. SPA, a 20% partner in the project is yet to obtain a revised Master Lease Agreement from the govt., post which Yoma may issue a $100m rights at 38c a share to finance the project.While the grp has been unsuccessful in the recent telecom license bids, it is hopeful of participating in the telecom infrastructure space.


GLP: has signed expansion lease agreements totaling 21k sm with one of the top 3 e-commerce companies in China. The new leases are in Chengdu (GLP Park CDHT) and Qingdao (GLP Park Qingdao Airport West). The customer, one of GLP’s top tenants in China by leased area, operates one of the country’s largest e-commerce platforms, offering an extensive range of products from electronics and home appliances to books and clothing. GLP lists Amazon (5.7% of lease area), VANCL (1.9%) and 360buy (1.4%) as its top 3 e-commerce tenants in China. Mgt notes e-commerce companies are looking for larger, high-quality logistics facilities that enable them to expand their distribution capabilities while improving efficiency. Hence customers increasingly turn to GLP as the preferred facility provider bcs of its flexible national network of best-in-class logistics facilities has been tailored to help customers meet that need. The stock trades at an undemanding 13.4x P/E, 1.2x P/B, given its strong leasing momentum.


Ntegrator has secured two contracts worth ~$6.5m to supply communications to Myanmar and Vietnam from repeat customers, Myanmar Radio and Television and the Viettel Group of Companies, taking its year to date order wins to a record high of $71m. The two new contracts are slated for delivery in the current financial year and are expected to contribute positively to the Group’s financial performance for FY13.


Hankore: Hankore's FY13 earnings declined slightly to Rmb99.5m (-3%), despite a 50% jump in revenue to Rmb369.1m. This was mainly due to a higher value of reversal on impairment of intangible assets and financial assets made in FY12, as well as professional fees for capital activities and employee bonuses paid out this year. Otherwise, core earnings would have improved by 199%. As a beneficiary of China's bid to create a sustainable water environment, Hankore's growth in revenue was due to higher construction revenue of Rmb167.5m (+130%) and an increase in recurring water treatment income of Rmb200.5m (+16.2%) which consists of water discharge fees and finance income from service concession arrangements. Consequently, Hankore recorded higher gross profit margin for both construction activities (+5.3 ppts to 14.3%) and recurring water treatment activities (+5.1 ppts to 70.1%). Upon completion of several phases that the group has undertaken, as well as the increasing approvals from the local authorities to charge higher water discharge fees on its projects, Hankore's revenue will be boosted by increased recurring income on higher water treatment capacity and water discharge fees. At $0.052, Hankore trades at 7.7x trailing P/E.

China Minzhong

China Minzhong: Company reported unaudited 4QFY13 net profit of Rmb162.7m (-5% y/y) while revenue stayed flat at Rmb811m. Although the revenue growth in its processed vegetables (+10%) and beverages (+51%) was due to increased product categories and domestic demands were strong, this was mitigated by a contraction in its fresh vegetables produce (-14%) from lower yielding crops as the weather patterns normalized. For the full year, earnings grew 11.1% to Rmb0.8b while revenue expanded 26.4% to Rmb3.2b, as overall gross margins was brought down by higher processing costs in its processed vegetables segment and new productive farmland for the fresh vegetables segment. Management cites the healthy demand for vegetables in China, buoyed by rising urbanization and change in dietary habits. Also, due to the rising affluence in China, Minzhong is poised to benefit from the increased focus on its higher value products such as edible fungi. For growth, the Group is expanding its industrialized farming footprints in major cities across China. While out of China, Minzhong is actively expanding its market presence through tradeshows, marketing campaigns and the setting up of new sales representative offices across the globe. Due to the positive environment, China Minzhong is paying its maiden dividend of 1¢/share.


KrisEnergy: announced 2Q13 results, which do not reflect the financial effects of the recent Jul IPO. Revenue and EBITDAX (earnings before interest, tax, depreciation, amortization and geological and geophysical expenses and exploration expenses) in line with mgt’s expectations. Revenue was down 22% yoy to US$36.8m on the back of lower pdtn and sales volumes and a decline in average realized oil and gas prices. EBITDAX declined 42% to US$15.6m, due primarily to the decrease in sales volumes, lower realized ASP and increased general and admin expenses. Operating costs declined only 9.6%, and the group extended its net loss to US$8.7m from slightly below breakeven levels last year. The group’s working interest pdtn from the producing areas in Gulf of Thailand, and in the Glagah-Kambuna Technical Assistance Contract (GKTAC) in Indonesia averaged 2,737 bbls of oil equivalent per day (boepd) in 1H13, declining 24% yoy. The decrease in pdtn is inline with the anticipated decline in the Kambuna field as it approached the end of its economic life. Pdtn ceased in Jul ’13, and the group expects to relinquish its entire interest in the GKTAC by year end. In addition, the producing areas in Gulf of Thailand experience scheduled and unplanned shutdowns, exacerbated by bad weather causing delays to on going work. Still mgt remains confident. Notes as the group nears the end of its 4th yr of business, its portfolio continues to grow and will comprise 16 contract areas. For 2H13, the group has two high-impact exploration wells offshore Vietnam and also seismic programs lined up in Indonesia and in the Gulf of Thailand.


Olam: posted poorer-than-expected 4QFYJun13 results. Net profit plunged 48% yoy to $56.8m, mainly due to higher tax charges and challenging market conditions. Olam booked tax charged of $50.6m in 4Q, representing a tax rate of 38%, compared to a net tax credit of $8.2m in the previous year, partly due to increased contributions from higher tax jurisdictions including the US, Australia, India, Indonesia and Brazil. Revenue however, grew 26% to $6.5b. Volume grew significantly across segments. But margins fell sharply in the Confectionary & Beverage segment (net contribution per ton -42% yoy) due to coffee rust disease across the Central and South American Coffee operations. Margins also declined in the Food staples & Packaged foods segment (-12%), due to continued underperformance of the upstream Dairy business, lower origination margins for grains in Australia and Ukraine, and lower margins in palm in the upstream investments in SIFCA and in the core supply chain trading business. Management declared 4cts dividend, unchg from last year. Olam said nearer term macroeconomic uncertainty and increased volatility could impact the agri sector. At the $1.46 last close, Olam trades at 10.2x P/E, 1x P/B. Nomura says the results are likely partially priced, as Olam shares slid 10% over the past week. Hence any knee jerk reaction to the results would provide investors with an opportunity to accumulate, as there are still significant assets which are gestating and not yielding, which should drive near term earnings growth. The house retains its Buy rating, with lower TP of $2.00 (from $2.30). CIMB upgrades to Neutral from underperform, with TP $1.58 (from $1.56). However, HSBC downgrades to Neutral from overweight, slashes TP to $1.64 (from $2.10). Credit Suisse maintains Neutral with TP $1.50 (from $1.65).

SG Market (30 Aug 13)

SG Market: S’pore shares may inch higher in line with positive US leads although sentiment remains fragile amid lingering worries over the seething Syrian crisis and Fed tapering next month. The prospect of an imminent attack on Syria faded as UK failed to win parliamentary backing for military strikes. Investors thus turned their attention to the better-than-forecast US 2Q GDP growth of 2.5% and 6,000 drop in weekly jobless claims to 331,000. Over in S’pore, focus will be on Olam and China Minzhong, which released results. Overhead resistance for the STI is seen at 3,065 with downside support at 2,990. Stocks to watch for: *Olam: Poor 4QFY13 results, which came in below estimates. While revenue grew 26% y/y to $6.5b, net profit plunged 48% to $56.8m, hit by challenging market conditions and higher tax charges. Without the tax effect, pretax profit rose 25%, in line with topline growth. Similarly, FY13 net profit of $362.6m slid 2% despite revenue gaining 22% to $20.8b, bolstered by a 50% rise in sales volume to 16m tonnes, mainly from the food category (+84%) and industrial raw materials (+18%). EBITDA margin improved slightly to 3.7% y/y but saw a sharp drop from 6.5% in 3Q. Adjusted net gearing climbed to 0.55x vs 0.37x last quarter. DPS of 4¢ maintained. *China Minzhong: Reoprted unaudited 4QFY13 net profit of Rmb162.7m (-5%), while revenue was flat at Rmb811m. Topline growth in its proceessed vegetables (+10%) and beverages (+51%) was was mitigated by the contraction of its fresh vegetables produce (-14%) as a result of lower yielding crops from the normalized weather patterns. For the full year, earnings grew 11.1% to Rmb755.1m while revenue expanded 26.4% to Rmb3.2b. Gross margins from processed vegetables declined due to higher processing costs, while its fresh vegetables segment was affected from lower contribution from new productive farmland. Maiden DPS of 1¢ declared. Company did not issue any new response to the Glaucus report. *Yamada: 4QFY13 net profit broke even at Rmb0.2m vs Rmb19.5m loss in previous year, which was impacted by fair value loss on biological assets, while revenue slid 5% to Rmb55.8m. This brought FY13 earnings to Rmb69.2m (-50%) on revenue of Rmb509.2m (-8%). Bottomline was hit by lower sales volume of self-cultivated mushrooms due to unfavourable weather conditions affecting yields and weak gross margin, which narrowed to 22.2% from 37.6%, as the average selling price of shiitake mushrooms did not keep pace with rising cost of raw materials. DPS of Rmb0.013 proposed. *Hankore: FY13 earnings slipped 3% to Rmb99.5m despite achieving a 50% jump in revenue to Rmb369.1m. This was due to a higher value of reversal on impairment of intangible assets and financial assets made in the previous year, as well as professional fees for capital activities and staff bonuses. Otherwise, core earnings would have surged 199% from higher construction revenue (+130%) and recurring water treatment income (+16.2%). *KrisEnergy: 2Q13 revenue declined 22% y/y to US$36.8m on lower production and sales volumes, and average realized oil and gas prices. The decrease in production is in line with the anticipated decline in the Kambuna field as it approached the end of its economic life. In addition, the producing areas in Gulf of Thailand faced scheduled and unplanned shutdowns, exacerbated by bad weather causing delays to on going work. Operating costs fell by a lesser 9.6%, resulting in a wider net loss of US$8.7m from slightly below breakeven levels last year. *GuocoLand: Booked 4QFY13 net profit of $32.2m (-49%) on revenue of $168.6m (-47%), bringing full year earnings to $40.5m (-36%) and flat revenue of $677.4m. The results masked a $32m fair value gain on its investment properties and a $42m income from forfeiture of of customer deposit for the purchase of certain units in Goodwood Residence. Without these one-off gains, group would have ended up in the red. Overall performance was affected by a change in the main contractor for its Goodwood Residence and Sophia Residence projects, which led to higher construction costs. NAV as at Jun stood at $2.20 and DPS of 5¢ maintained. *Guocoleisure: FY13 net profit dropped 43% to US$44m, while revenue edged up 3% to $380.3m. Excluding the one-off items arising from a US$5.5m royalty settlement, write-back of deferred tax last year and compensation of from a hotel lease termination received this year, core earnings would have seen a smaller decline of 12%. Topline growth in the hotel segment was dampened by volatility in the gaming sector. Lower oil and gas royalties from Bass Strait, coupled with higher staff and operating expenses led to the weaker bottomline. NAV last stood at US$0.84. A DPS of 2¢ was declared, similar to that paid in FY12. *Global Logistic Properties: Signed new agreements to lease another 21,000 sqm of space at GLP Park CDHT (11,000 sqm) in Chengdu and GLP Park Qingdao Airport West (10,000 sqm) to one of the largest e-commerce companies in China. GLP currently counts Amazon (taking 5.7% of leased space), VANCL (1.9%) and 360buy (1.4%) among its top e-commerce tenants. *Ntegrator: Secured two contracts worth $6.5m from repeat customers, Myanmar Radio and Television and the Viettel Group to supply communications equipment to Myanmar and Vietnam, taking its year-to-date order wins to a record high of $71m. Both contracts are slated for delivery in the current financial year and are expected to contribute positively to its FY13 results. *Tritech: Propose to acquirie Anhui Clean Environment Biotech for Rmb10m, which will enable the group to further its venture into the water and waste water business in China by tapping on Anhui's existing licenses, management, track record and clientele. #OKH announced 4Q13 results which saw the group register a net loss of $2.4m versus a net profit of $20.7m, as revenue plunged 98% to $2.1m. Result brings FY13 net loss to $0.9m versus a net profit of $16.2m. The dismal performance was mainly due to lower revenue from its property development division, partially offset by increase in revenue from its construction division.

Thursday, August 29, 2013


FNN: announcement on SGX -- potential dispute relating to Myanmar Brewery (MBL). FNN received a lawyer's letter from its MBL JV partner, Myanma Economic Holdings (MEHL), stating is intention to issue a notice of arbitration in respect of a potential claim relating to FNN's shares in MBL. FNN currently holds 55% stake in MBL, and the remaining 45% held by MEHL. MEHL had purported to rely on a JV agreement, to give notice to FNN to sell its MBL stake to MEHL. FNN maintains there is no basis for the share sale, and has engaged lawyers to resist the claim. FNN remains on trading halt.

52 wk highs/ lows

52 wk highs: AV Jennings, Ossia, Etika, Noel Gifts 52 wk lows: REITS -- Ascott Residence Trust, CMT, CCT, MINT, Soilbuild Business Space REIT , Indiabulls Properties Investment Trust BLUE CHIPS -- SIA, Jardine Matheson OTHERS -- Hong Leong Asia, Dairy Farm, Pacific Healthcare, China Aviation Oil, Civmec, Suntar Eco-City, GKE Corp, Seroja Investments, MYP, Kian Ho Bearings, Jasper ETF -- Lyxor MSCI India, iShares MSCI India

Ocean Sky

Ocean Sky: Sudden surge of buying activity to current price of $0.335. Company will go XD on 2 Sep, paying a dividend of $0.13 per share. The company recently responded to a SGX query on 27 Aug, that they are in discussions with parties in relation to a proposed acquisition of business and a proposed fundraising exercise. Further announcements will be issued by the Company in the event that there are any further material developments regarding the above subject matter.

Noble (technical)

Noble, Technicals are already at Oversold territory, although there is no direct signs of a reversal yet. RSI historically bounces off at the 20 levels and ADX appears toppish, which could signal that the current downtrend could be exhausting soon. The recent highs of $0.845 would act as the near-term reisistance, followed by the 20 day MA of $0.865

Ascendas REIT (technical)

Ascendas REIT - Technicals appears to be consolidating at current levels, although the preference is for some upside given that Stochastics is already at Oversold territory. The 20 and 50 day MA at $2.25 would be the key resistance level to watch.

Etika (technical)

Etika: Sam Goi's counter has sprung back to activity the past week, gaining a respectable 25% since 21 Aug on good volumes. Technically, the counter is testing the resistance at $0.50, before its 3-year high of $0.52.

ASL Marine

ASL Marine: FY13 core profit was below consensus, due to the higher tax rate of 18%, otherwise on a normalized 10% tax rate, it would have met expectations. ASL declared dividend of 2¢. ASL’s yards are operating at close to full capacity, with order book at $370m, and $250m to be recognized in FY14. Enquiries for OSVs and hybrid terminal tugs (higher-value vessels) remain strong. In view of the bottomed out vessel prices in the AHTS market, ASL has entered the build-to-stock model to expand its shipbuilding margins. It will start with 4 generic AHTS vessels (6k bhp and 8k bhp) and one maintenance work vessel, costing $85m in total, and will be financed through ASL’s $170m bonds. Construction will begin in 1QCY14 and is expected to be completed by 1QCY15. AThis could be a game changer for its shipbuilding business as a successful sale of these vessels can fetch net margins of 30%. The stock trades at 0.7x P/B (1 s.d. below its 5 yr mean). CIMB maintains its Outperform rating and TP $0.86.


F&N: CIMB maintains O/p with $6.61 TP. As expected, management gave little away during the briefing on when and by how much its free float will be restored. Synergies with its Thai shareholders in F&B and property were discussed. These drew some positive guidance. But beyond that, it’s business as usual, for now. House expect more corporate actions to form the share price catalysts. Meanwhile, house retain Outperform call with unchanged TP of $6.61 (still on 20% discount to property RNAV). Estimate the current share price of FNN implies a 34% discount to RNAV for FCL (in line with the sector average), backed by $3.3b of unbooked presales and a low pro forma net gearing of 36%.

ST Engineering

ST Engineering: CIMB maintains O/p with $4.70 TP. House see a buying opportunity from the recent pullback of STE’s share price. Business fundamentals remain strong but see STE benefiting from the strengthening of the US$ with positive translation of earnings. Dividend yield has also become more attractive at 4.8%. Given expected earnings growth of 10% for FY13, house view the current valuation of 17.5x as unjustified as it is below its pre-GFC range of 20-22x (with steady earnings growth of 11%). Key catalysts include sustained US$ strength and stronger margins from aerospace. House advises investors to accumulate on recent weakness. With steady earnings growth of 7-10% and strong balance sheet (net cash of $740m), STE delivered the fastest bounce back in share price in any sell-down. The orderbook of $12.8bn should also provide some certainty in earnings visibility.


Starhub: UOB Kay Hian maintains Buy with $4.60 TP. House note that StarHub has distinguished itself through its Hubbing strategy of bundling multiple services. It continues to maintain leadership and differentiation in pay-TV through producing local content and delivery through multiple platforms. While competition remains tough, StarHub has done well to maintain revenue contribution for broadband. House see new CEO providing leadership for continued growth.


Aussino: Reported FY13 net loss of $8.1m on the back of a 27% fall of revenue to $34m. On 23 Aug, Aussino submitted its application to SGX for a time extension for the company to be removed from the Watch-List (entered watch-list on 6 Sep 2011). Aussino is approaching the end of 24 months since 6 Sep 2011 when it was placed on the watch-list. Upon a non-approval by SGX on its time extension, SGX may suspend trading of Aussino, with a view of removing the counter from the official list.

Sino Grandness

Sino Grandness: On 27 Aug, Alan Wang Yu Huei from Asdew Acquisition bought 1.76m shares, increasing his stake from 6.67% to 7.27%, done at an average price of $1.0642.


Ramba: The Akatara-2 appraisal well (within the Lemang Block) encountered 20 potential reservoir layers (total sand thickness in excess of 1700 feet and a Net to Gross Ratio of 35%), with approximately 800 feet of hydrocarbon column, which includes hydrocarbon shows in the Crystalline Basement. The Company will prepare for a full comprehensive testing on the Akatara-2 well, as well as the remaining potential reservoir layers on the Akatara-1 well and Selong-1 discovery wells. In addition, the Company will seek approval from the relevant authorities for a potential immediate field development. Ramba holds a 51% working interest in the Lemang block.


Oxley: 4Q13 net profit skyrocketed to $38m (+2178% y/y) compared to a $1.7m achieved in the previous corresponding period, on the back of a 640% surge in revenue to $277.3m. This brought FY13 earnings to a record $69.1m (+309%), beating street estimates by 55%, while revenue shot up 187% to $457.7m. The sterling results were attributable to revenue recognition from 12 of its ongoing property development projects: namely Oxley Bizhub 2, Arcsphere, Viva Vista, RV Point, Loft@Holland, Vibes@Kovan, Devonshire Residences, Suites@Braddell, Vibes@East Coast, The Promenade@Pelikat, Vibes@Upper Serangoon and Presto@Upper Serangoon. Full year rental income of $7.6m (+21%) was boosted from The Corporate Office (the site of the future Oxley Tower) at Robinson Road and McDonald’s Place (site of the future KAP / KAP Residences) at King Albert Park, where lease obligations were in place prior to their acquisition. Going forward, 16 of Oxley’s developments launched to date have been fully sold and the group expects progressive revenue contribution from its projects under construction to be sustained. In addition, a good number of Oxley’s sold residential developments, as well as its 728-unit industrial development, Oxley BizHub, are expected to obtain TOP in FY2014, and should thus contribute positively to the Group’s financial performance. The Group is also exploring ways to maximize plot potential of its Malaysian and Cambodian land parcels, while monitoring the Singapore market closely for an opportune time to launch its five remaining pipeline projects located at Oxley Rise, Joo Chiat, Stevens Road, Cactus Road and Tampines Industrial Crescent. NAV jumped 56% to 8.1¢; P/B of 4.3x Final dividend of 0.6¢ compared to 0.47¢ in FY12; implied yield of 1.7%

Forterra Trust

Forterra Trust: following completion of a share sale transaction, the Nan Fung group has emerged as the largest unitholder of the trust, with effective control over 29.98% of the issued units. Accordingly, the board welcomes Mr Vincent Cheung and Mr Eric Chung, both from the Nan Fung group, to replace Mr Richard Barrett and Mr Rory Williams as new non-Independent non-Executive Directors. Management recognizes the market’s positive response to the transaction, represented by a ~32% increase in Forterra’s unit price since the first announcement on 22 Jul 2013, and will continue to work towards delivering stable unitholder distributions no later than 2015.

Fortune Reit

Fortune Reit: will purchase Kingswood Ginza Property, comprising the Kingswood Ginza Mall, other retail, kindergarten, parking lots and ancillary spaces, for HK$5.85b, on par with independent valuations. The transaction constitutes a major acquisition, representing ~49% of Fortune’s mkt cap. The property is located in Tin Shui Wai, Yuen Long, New Territories. The property generated net property income of HK$110.4m for the 6mths ended Jun ’13. Gross rentable area is 665.2k sf, with mthly rental of HK$27.4 per leased sf. Occupancy rate is 95.5%. Mgt will finance the acquisition by drawing down ~HK$4.9b under the term loans, and using ~$HK950m out of the net proceeds of the unit placement.

Sin Heng

Sin Heng: Concluded the year with a robust set of results, as FY 13 net profit rose 47.4% to $13.8m on back of a "broad-based improvement across geographical markets and business segments". Revenue was up 44.3% to $186.5m. Revenue from its trading segment increased by 49% to $133m mainly due to the higher volume of cranes traded, while revenue from its equipment rental segment improved by 33% to $53.5m due mainly to an increase in revenue from its expanded fleet size. Sin Heng continues to expand to new markets like Indonesia and Myanmar, and has introduced its complementary business of rental and trading to its overseas subsidiaries. Going forward, the co.says that it is ready for new potential growth ahead and I encouraged by the active participation of its shareholders in its recent rights issue.

China Minzhong

China Minzhong: Mgt refutes allegations in short-seller Glaucus’ report. Says it has done a preliminary review and notes that most of the issues raised with regard to the company’s financials were “nothing new” and arose out of a “complete lack of understanding of the company’s business model as well as the operating environment in China”. Adds, it will not hesitate to take legal action to defend its rights and reputation. The company is in process of collating the relevant supporting documents and preparing its response, which is expected to be released before the end of the week. Accordingly, the company will extend its trading halt to 5pm, 30 Aug, Friday. Also, China Minzhong has changed its timing for the release of its FYJun13 results from this morning to later this evening. This is to facilitate the verification and confirmation of certain issues highlighted by Glaucus, and to ensure the consistency of information to be set out in the response and the full year results.

SG Market (29 Aug 13)

SG Market: S’pore shares may get a small technical bounce after US stocks rebounded following a two-day slump as oil prices surged to a two-year high and energy shares. The market is reflecting growing anxiety over a potential Mid-East crisis as US war drumbeats grew louder over Syria. Over in S’pore, the STI bounced off the 2,990 support level yesterday, which represents 50% Fibonacci retracement of the run-up from Dec 2011 to May 2013. After its steep 100-point drop over the past three days, the key index is likely to close the gap at 3,028, before resuming its downward trend. Stocks to watch for: *China Minzhong: Management refuted the allegations by short-seller Glaucus Research, noting that the issues arose out of a complete lack of understanding of its business model and the operating environment in China and reiterated that its financials are sound and that there were not fabricated sales or cover up. Company delayed the release of FY13 results till this evening in order to prepare a detailed response to the report. Accordingly, it will extend its trading halt to 5pm, 30 Aug. *ASL Marine: FY13 net profit of $45.3m (+40%) beat estimates on revenue of $465.4m (+19%). Revenue for 4QFY13 jumped to $149.5m (+28% y/y, +4% q/q), with growth coming from shipbuilding (+76%) due to more OSVs being constructed and maiden engineering sales but offset by slower shiprepair/conversion and charter businesses. Bottomline of $15.2m (+83% y/y, +58% q/q) was boosted by other operating income of $12.1m, mainly from FX and gain related to partial disposal of a subsidiary. Prospects supported by a $370m shipbuilding order book and long term shipchartering contracts worth $74m. Final DPS raised from 1.75¢ to 2¢. *Memstar: FY13 net profit slid 6% to Rmb56.9m despite higher revenue of Rmb220.9m (+20%). Gross margin widened 4.7 ppt to 60.7% as the group focused on expanding higher margin membrane business (+29%). As a result, pretax profit improved 24% to Rmb87.8m. However, a three-fold jump in tax charge due to deferred tax liabilities over temporary timing differences in accounting led to the weaker bottomline. No dividends declared this year compared to 0.05¢ paid in FY12. *Sin Heng: 4QFY13 net profit rose 16% to $4.4m, while revenue jumped 60% to $61.9m. Full year earnings of $13.8m (+47%) was more in line with revenue of $186.5m (+44%). The better performance for both 4Q and FY13 was attributable to an expanded fleet size and higher volume of cranes traded as a result of strong demand in the domestic and regional markets. Gross margin was relatively stable in FY13 over FY12 but softer in 4Q due to higher repair and maintenance costs. Final DPS of 0.45¢ proposed, taking full year dividends to 0.8¢. *Oxley Holdings: 4QFY13 net profit soared to $38m vs to $1.7m a year ago on the back of a 640% surge in revenue to $277.3m. This brought FY13 earnings to a record $69.1m, beating estimates on 187% jump in revenue to $457.7m. The sterling performance was achieved on the back of 12 ongoing property development projects. Rental income of $7.6m (+21%) was boosted from The Corporate Office at Robinson Road and McDonald’s Place at King Albert Park, where lease obligations were in place prior to their acquisition. Accordingly, NAV jumped 56% to 8.1¢. *LC Development: FY13 net profit plunged 98% to $1.4m, while revenue slid 3% to $57.7m, with the results skewed largely by one-off exceptional items of $78.1m in FY12. Without the one-off gains, operating profit jumped 41% to $5.9m. The hotel segment continues to be the main revenue contributor to top-line at $45.9m (-3%) while revenue from service residences was flat and leisure and others segment was 9% lower due to a drop in the group's entertainment business. *United Environtech: Awarded a Rmb90m contract to upgrade a 100,000 m3/day industrial wastewater treatment plant in Nantong, China. Work will begin immediately and the project is expected to be completed by end 2013. *Fortune Reit: Acquiring Kingswood Ginza, comprising a mall, other retail, kindergarten, parking lots and ancillary spaces, in Yuen Long, Hong Kong, for HK$5.85b. The property has gross lettable area of 665,200 sf, with monthly rental of HK$27.40 psf, occupancy of 95.5% and generated net property income of HK$110.4m for the half year ended Jun 13. *Hiap Hoe: Obtained approval for the Foreign Investment Review Board of Australia for it’s a$28.8m acquisition of 6-22 Pearl River Road in Melbourne, paving the way for its maiden development in Australia. The group is now seeking regulatory approval to develop the waterfront property into a mixed use development, comprising two high-rise residential blocks with 428 units and a 300-room hotel tower. *Lum Chang/Ryobi Kiso: Both parties have initiated arbitration proceedings over the construction of the Bukit Panjang station and tunnels for Downtown Line Stage 2. Lum Chang is claiming $32m from Ryobi Kiso for breach and default of subcontract while the latter is counter claiming $19m for sums owed. *Ramba: Akatara-2 appraisal well in the Lemang block encountered 20 potential reservoir layers with approximately 800 feet of hydrocarbon column. Group will now mobilize a smaller rig for a full comprehensive test on the Akatara-2 appraisal well and the remaining potential reservoir layers on the Akatara-1 well and Selong-1 discovery wells. Ramba holds a 51% working interest in the Lemang block. *Sino Grandness: Substantial sharehlolder Alan Wang of Asdew Acquisitons purchased 1.75m shares @ $1.0642 in the open market on 27 Aug, raising his stake from 6.67% to 7.27%. *Stamford Tyres: Sold a retail shop at Balestier Towers for $6.3m or $4,093 psf. Group will book a net gain of $5.5m over the book value of the property, raising NTA by 2.4¢ to 53.4¢. Proceeds will be redeployed to fund investments in distribution and warehousing as well as for working capital purposes.

Wednesday, August 28, 2013

DBS (technical)

DBS: Trading Central notes share price recently confirmed a bearish reversal following the downside breakout of its 50day MA. The short term moving avg is also turning down, and the daily RSI is heading down wards, calling for further decline. The house believes as long as resistance at $17 holds , look for a new pullback to $15.20 followed by $14.30 in extension .

Gold (technical)

Gold - While still trending upwards, caution that prices are fast approaching Overbought levels, with RSI, Stochastics and ADX all testing Overbought territory.

SPH (technical)

SPH: trading at the lower end of the $3.90 - $4.20 band. The indicators are showing preliminary signs of an upward reversal , suggesting a possible rebound taking place in the near term, though a better confirmation signal would come in the form of stochastics rising above the current oversold levels. On a rebound , share price may see a test of the initial $4.10 resistance. Cut loss on a breach of the $3.90 support.

Sembcorp Industries (technical)

Sembcorp Industries: Technicals do not look positive with RSI and Stochastics heading downwards toward the oversold region. A close below $4.575 could indicate further downside towards the next support level at $4.78.

Sembcorp Marine (technical)

Sembcorp Marine: The long-term downtrend is still intact; Technicals do not look positive after counter broke below its support at $4.19 today. A close below could indicate further downside towards its next level of support at $4.11.

OUE Hospitality Trust

OUE Hospitality Trust: CS and DB initiated on OUE H Trust, both with a BUY call and TP of $1.04 and $0.94 respectively. OUE Hospitality Trust (OUEHT) offers unique exposure to prime hospitality and retail in Singapore through Mandarin Orchard (MOS), the largest hotel on Orchard Road, and the adjoining Mandarin Gallery (MG). Growth is supported by the MOS refurbishment and reversions at MG, a visible sponsor acquisition pipeline and recovery in prime retail rents in the longer term. DB forecast DPU growth of 2.0% in FY13 and 5.3% in FY14. For MOS, the additional 26 rooms and refurbishment programme should help boost room rates and narrow the RevPAR gap to the sector. Average rents at MG are expected to register a two-year CAGR of 5.4% following the first renewal cycle last year, supported by above-average shopper traffic (+7.7% in FY12) and tenant sales (+5.1%) with longer-term cyclical recovery potential. OUEHT’s hotel master lease agreement and rental for MG together account for 71% of FY13E NPI. Leasing risk for MG is limited with 0.9% and 19.8% of NLA expiring in 2013 and 2014; 47% of leases have step-ups, with a weighted average step-up of 5.5% p.a. OUEHT has a right of first refusal (ROFR) over the Sponsor’s hospitality assets. Three assets have been identified that could double OUE’s room stock. Crowne Plaza Changi Airport could be the first to be acquired, which could result in 1-3% accretion to its FY14E DPU. The Sponsor has a good track record in repositioning and growing assets. OUE H Trust has an attractive 7.6% FY14E yield implies a 490bps spread over the 10-year government bond.

Sino Grandness

Sino Grandness: Maybank-KE reiterating its Buy Call and $1.89 TP. Note that in the light of the recent shortseller’s attack on China Minzhong, Sino Grandness’ management has been very responsive and open in dealing with investors’ concerns and readily agreed to hold a conference call with house clients yesterday despite the extremely short notice given to them. In all, the concall was organised within 90 minutes and 20 clients participated. Think the information shared by management was helpful and informative, and should go a long way to calming investor concerns. In house view, the share price drop in the past two days was purely due to fallout from the Minzhong shortselling incident. Fundamentals are still firm and the biggest catalyst, the Garden Fresh IPO, still lies ahead.


Olam: IFC approves a 5-yr US$120m loan for Olam to finance upgrades and expansion of five food processing facilities in Nigeria and India. The projects will benefit local communities by generating rural employment and creating new opportunities for small-scale farmers to sell their crops. IFC financing will support activities such as sugar milling, spice processing, flour milling, mechanical cashew processing and sesame hulling. Management notes, the IFC’s endorsement represents a vote of confidence for Olam, given the IFC’s rigorous environmental and social review of a range of Olam’s policies, procedures and management initiatives.

Mirach Energy

Mirach Energy: The company announced oil discovery in its newly drilled Kampung Minyak (KM) oil field, at KM607 well with “surprisingly high pressure” from a untouched layer of oil reserve called S8. Mirach is currently performing a series of tests and perforations to optimize production. Though no statistics were available, Voyage Research believe oil production from KM607 should be around 150 barrels per day and oil reserve of KM oilfield may be adjusted upward. According to Voyage, the discovery at KM607 is likely to exceed previous estimates of about 40-50 barrels per day for each new well. Mirach is going to drill a total of 12 such wells in the KM oilfield till end of the year and is likely to exceed house previous target of 400 barrels per day output by 2H 2014. House now expect the company to produce about 600 barrels of oil per day in 1H 2014. Mirach intends to apply to Pertamina to drill new wells deeper than 1000 meters in KM. In view of the oil discovery and the company’s intention to explore the deep zone, Voyage are revising its previous valuation method for the KM oilfield (both the shallow and deep zones) from reserve based to production based. House project 600 barrels of daily crude oil output in 2014 and 3350 barrels of daily crude oil output in 2018. Voyage has a TP of $0.75 for Mirach Energy.


GLP: Leased 32,000 sqm at GLP Park SND (Suzhou) to new customer Yunda Express, one of China's largest express delivery companies, for the establishment of a sorting and distribution centre in Suzhou and Wuxi, due to the growing demand for e-commerce related services. At $2.72, GLP trades at 1.2x P/B, just under one standard deviation above its historical average of 1.1x P/B, and 12% discount to consensus RNAV of $3.03.


Ausgroup: 4QFY13 net profit decimated 94% to A$0.5m y/y, as a result of lower gross margin (-1.5 ppts), a share of loss from a joint venture and increased finance costs. Revenue sank 22% to A$137.6m as the group was impacted by decreased activity in the resource sector. This was due to major resource companies scaling back capital expenditure in response to volatility in commodity prices as well as customer delays in awarding contracts in the oil and gas sector. For FY13, earnings crumbled 58% to A$9.7m while revenue dipped 8% to A$582.7m mainly from lower contributions from integrated services to A$160.1m (-50%). Notably, Ausgroup had a negative cash from operations of A$27m compared to A$37.1m achieved in the previous corresponding period, which could portend a potential cash raising in the year ahead, having just A$11.7m cash left in its books. Consequently, the decreased activity and cash drain resulted in a full cut in dividends for FY13, compared to the total dividend of 1¢ in FY12. Recently, Ausgroup made a sale-and-leaseback on its fabrication facility in Singapore for A$33m. The sale is expected to complete in Sep, subjected to conditions which include the approval by Jurong Town Corporation. Ausgroup expects revenue to continue on a slide due to the downturn in the iron ore and coal sector, as well as the delay in award of contracts within the oil & gas sector. The group intends to focus on lowering its cost structure, to extend its services in the oil & gas market and maintenance services. The group currently has order book of A$200m. At the last closing price of $0.35, Ausgroup trades at a steep 15.2x trailing P/E, almost double compared to its closest peer Civmec of 8.8x. Investors could expect a negative share price reaction for Ausgroup, due to the current wide valuation gap between the two companies.


ISOTeam: maiden FY13 earnings double to $6.0m, on the back of a 36% rise in revenue to $48.2m, underpinned by contribution from Neighbourhood Renewal Programme (NRP) projects. These projects included NRP work for the town councils of Marine Parade, Tampines and Chua Chu Kang along with Repairs and Redecoration (R&R) work for the Pasir Ris-Punggol Town Council. The group also recorded a one-off gain of $4.2m from the disposal of its leasehold property at Kaki Bukit, which was sold in Jan ’13, which more than offset the $1.1m in IPO-related expenses. While gross profit increased 28% to $8.2m, margins narrowed to 17.0% from 18.1% a year ago, due to the higher sub-contracting costs. The group declared a final dividend of 1¢, which translates to a yield of 2.6%. Going forward, the group expects a general increase in demand for public sector upgrading, retrofitting and maintenance work in Spore. Underscoring this, the group recently clinched 3 contracts worth $10.9m to provide R&R works to 59 blocks of HDB flats across Ang Mo Kio, Bukit Batok West and Pasir Ris estates. Orderbook as at 14 Aug ’13 stands at $81m, which will be delivered over the next two years. At last close of $0.39, the counter trades at 7.6x P/E.

IHH Healthcare

IHH Healthcare: UOB Kay Hian note that 1H13 earnings rose 29% y/y and represents 44% of consensus estimates. Near-term risks are amplified on the back of the uncertain macroeconomic picture. Execution of its pipeline poses key challenges for the group. Currency volatility could impact bottom-line. Overall, house maintains SELL with a revised target price of $1.43.

Good pack

Good pack: FY13 results were in-line with expectations. Revenue grew by a smaller 7.7% y/y to US$190.9m while net profit improved 13.4% y/y to US$51.3m as its cost saving initiatives helped to offset higher depreciation and financing costs from a larger fleet and increased borrowings respectively. Similar to last year (FY12), management declared a final dividend of 2 S cents and a special dividend of 3 S cents. OCBC lower revenue forecasts for FY14, but still expect growth improvement following the commencement of key clients’ synthetic rubber (SR) operations in Singapore and a new SR contract in Russia. In terms of margins, only expect a small drop-off as continued cost saving initiatives should keep a lid on logistic and handling expenses. In light of its unchanged fundamentals and recent share price correction, house maintain BUY on Goodpack with a slightly lower fair value of $1.69.


Dukang: Raked in another set of very strong 4Q13 results, with net profit coming in at Rmb79.2m (+221%) and revenue at Rmb622.9m (+37% y/y) The result brings FY13 net profit to Rmb 389.7m (+79%). The improvement in sales was achieved on the back of higher sales volume and rising average selling price for products under the Dukang brand, in particular ‘Luoyang Dukang’ which saw sales volume rising 125% to 33,910 tons for FY13. The improvement in sales was achieved on the back of higher sales volume and rising average selling price (ASP) for products under the Dukang brand. Sales volume of Luoyang Dukang rose 125% y/y to 33,910 tons for FY2013, leveraging on a successful brand building and penetration into the high-end baijiu market, while the ASP for Luoyang Dukang improved 9.0% y/y to RMB55.7 per kg for FY13. As a result, sales of products under the “Dukang” brand, which accounted for 78.4% of the overall sales for FY2013 versus 61.4% for FY2012, increased 68.2% yoy to RMB1,887.1 million from RMB1,121.9 million a year ago. Going forward, the grp note that despite the stellar growth recorded by the Group, China’s baijiu industry has entered a period of adjustment, the curb on the Chinese government public spending will inevitably restrict the development of high-end baijiu segment.

Wing Tai

Wing Tai: 4QFYJun13 results ahead of consensus, on strong devt profits and one-off gains. Net profit was $275.8m, +72% yoy, driven by devt profits, as profits were recognized from additional units in Helios & Belle Vue, Verticas (all profits were booked upon TOP this FY), Foresque and L’VIV. Wing Tai declared a total dividend of 12¢ (including 9¢ special), implying 5.9% yield. For FY13, Wing Tai sold 538 units in SG, Msia and China, with total sales value of $885m (vs 463 units in FY12 with sales value of $725m). Occupancy for Wing Tai’s invmt properties improved yoy (97% in SG). Balance sheet remained solid with gearing declining to 0.15x. Wing Tai has sold 65% (220 units) at Tembusu at $1,550 psf and aims to launch the Prince Charles Crescent site at yr end. Nevertheless, mgt remains cautious on the residential outlook, saying it could shy from bidding in new state land tenders in 2H, given that the property cycle in Singapore is in its 8th or 9th year of upcycle. Valuation are undemanding at 0.6x P/B and 41% discount to Deutsche’s RNAV, but the house believes Wing Tai remains vulnerable to a slowdown in the residential market and its wider-than-avg NAV discount could persist with activity likely to remain muted, particularly with its depleting landbank. Deutsche keeps its Hold rating with TP $2.24 (from $2.19), based on an unchg 35% discount to RNAV.

SG Market (28 Aug 13)

SG Market: S’pore shares are headed downwards for a breakdown after Wall Street ended sharply lower amid mounting worries of a US-led military action against Syria and a potential spillover to the rest of Mid-East. Oil surged to a 18-month high, bonds rallied and gold jumped 2% to US$1,420/oz as investors flocked to safety. Adding to the selloff, US Treasury Jack Lew warned that the government would hit its debt limit by mid-Oct. But the market brushed aside economic reports on consumer confidence, home prices The STI has broken below its monthly uptrend since its low in Mar 2009 and is poised for further downside with immediate support at 2,990, near the psychological 3,000 level and topside resistance at 3,108. Stocks to watch for: *Property: Property market may cool further after government tightened loan limits and restrictions on PRs on purchases of HDB resale flats. With immediate effect, HDB will shorten the maximum loan tenure to 25 years from 30 years and cut the mortgage servicing ratio limit to 30% from 35% ofgross monthly salary. PRs now have to wait three years before being allowed to buy a resale flat. *F&N: Plans to spin off its property business via distribution-in-specie of 2 Frasers Centrepoint (FCL) shares for every F&N share held, which will be listed on SGX, targeted for Nov/Dec. FCL owns $9b worth of property assets as end Jun 13, and is currently in talks to potentially acquire and manage TCC's hotels outside Thailand. Post exercise, F&N's remaining key businesses will be F&B, printing & publishing, and the group will have net cash of $903m vs $1.2bn net debt pre-deal. *Wing Tai: 4QFY13 net profit surged 72% y/y to $275.8m, taking FY13 earnings to a whopping $531.1m (+102%), while 4Q revenue of $307.8m lifted full year revenue to a record $1.3b (+113%). The sparkling performance was attributable to progressive sales recognized from Foresque Residences, L’VIV in S’pore and Verticas Residences in Malaysia. The group also booked fair value gains of $52.1m vs $15.7m last year as well as higher share of associate contributions from Wing Tai Properties in HK. Net gearing dipped to 0.15x from 0.17x, while NAV climbed 27%% to $3.62. Group is proposing a DPS of 12¢ or 71% higher than the 7¢ in FY12. *Dukang: Reported scintillating 4Q13 results, raking in net profit of Rmb79.2m (+221% y/y) and revenue of Rmb622.9m (+37%). This propelled FY13 earnings to Rmb389.7m (+79%) on Rmb2.4b (+32%). The improvement in sales was achieved on the back of higher sales volume and rising average selling price for products under the Dukang brand, in particular ‘Luoyang Dukang’, which saw sales volume soar 125% to 33,910 tons in FY13. *Goodpack: FY13 results beat estimates with net profit of US$51.3m (+13.4%) on revenue of US$190.9m (+7.7%) as a result of new customer conversion and increased demand from existing clients in the non-rubber and synthetic rubber sectors, which grew by 18% and 13% respectively. Ebitda margin expanded to 46.7% from 43% but bottom-line earnings was dampened by a 112% spike in finance costs to US$12.1m. DPS of %¢ maintained. *AusGroup: 4QFY13 net profit dived 94% y/y to $0.5m as revenue sank 22% to $137.6. Consequently FY13 earnings missed estimates, sagging 58% to $9.7m on lower revenue of $582.7m (-8%). The dim full year results were attributed to reduced integrated services sales due to scaling back of capex by the resource sector, thinner gross margins, increased overhead costs and lower contributions from a JV. No dividends declared for FY13 compared to 1¢ paid in FY12. *Sim Lian: FY13 net profit came in 27% lower at $166.9m, while revenue dipped 3% to $742.2m due to lower sales from its property development division (-2% to $586m) as the UB.One industrial development was almost fully sold and booked while its construction division (-19% to $128.3m) suffered from fewer projects undertaken during the period. There was also a margin squeeze arising from higher contract costs (+15%). End Jun NAV stood at $0.854. FY13 DPS cut to 4.6¢ from 7.5¢ in prior year. *ISOTeam: Maiden FY13 earnings double to $6.0m, on the back of a 36% rise in revenue to $48.2m, underpinned by contribution from Neighbourhood Renewal Programme (NRP) projects for town councils of Marine Parade, Tampines, Chua Chu Kang and Pasir Ris-Punggol. The group also recorded a one-off gain of $4.2m from the disposal of its leasehold property at Kaki Bukit, which more than offset the $1.1m in IPO-related expenses. Margins narrowed to 17% from 18.1% a year ago, due to the higher sub-contracting costs. Final DPS of 1¢ declared. *Global Logistic Properties: Leased 32,000 sqm of space at GLP Park SND in Suzhou, China to new customer Yunda Express, one of China’s largest express delivery companies. Yunda will establish a sorting and distribution centre at the facility to meet increasing e-commerce delivery services in Suzhou and Wuxi, two major consumption centres in eastern China. *KSH Holdings: Awarded a $98.94m construction contract from Oxley Holdings for the construction of NEWest, a mixed-use development located at West Coast Drive. Construction is expected to commence in Sep 13, with completion expected within 30 months. Year-to-date, KSH has won construction projects amounting to $301.1m in S’pore and Rmb157m in Beijing, China, lifting its order book to $478m. *Mirach Energy: Struck a new untapped oil zone, below its old production oil layer at its Kampung Minyak oilfield in Indonesia. With the success of shown by the KM-607 well, group intends to apply to Pertamina to drill deeper wells to confirm other potential pay zones. *China Aviation Oil: Leasing storage facililties at Jurong Island from Horizon S’pore Terminals to expand its fuel oil business. Under the terms of the agreement, CAO will lease five storage tanks with a combined capacity of 174,000 m3 for a period of three years wef Sep 2013. *Olam: IFC approves a 5-year US$120m loan for Olam to finance upgrades and expansion of five food processing facilities in Nigeria and India. The projects will benefit local communities by generating rural employment and creating new opportunities for small-scale farmers to sell their crops. IFC financing will support activities such as sugar milling, spice processing, flour milling, mechanical cashew processing and sesame hulling. Management notes, the IFC’s endorsement represents a vote of confidence for Olam, given the IFC’s rigorous environmental and social review of a range of Olam’s policies, procedures and management initiatives.

Tuesday, August 27, 2013

Ocean Sky

Ocean Sky: In a reply to SGX, co. note that it is in discussions with parties in relation to a proposed acquisition of business and a proposed fundraising exercise involving the Co’s securities. Further announcements will be issued by the Co in the event that there are any further material developments regarding the above subject matter. In the meantime, shareholders of the Company are advised to refrain from taking any action in respect of their shares in the Company which may be prejudicial to their interests, and to exercise caution when dealing in the shares of the Company.

City Developments (technical)

City Developments, Techicals are trending in Oversold territory, although based on historical RSI readings, one should not be surprised if there is still a bit of downside left. The first resistnace level could be seen at $10.20, followed by the 20 day MA of $10.51

OKH Global (technical)

OKH Global: Do bear in mind that the technicals might not be accurate, as there is very little historical data having being recently listed in May. The strength in the uptrend remains intact, supported by the ADX of 25. The average volumes traded have also been increasing slowly, which could imply improving visibility and trading liquidity going ahead. The RSI and Stochastics have not shown any signs of weakness, although staying at the overbought levels. Share price could see support at $0.54 in the near-term, followed by $0.53. A close above $0.575 could see further upside in the near-term.

Ezion (technical)

Ezion - Technicals appears to be trending downwards with RSI and Stoachstics all heading down. share price apepars to have broken past the 20 day MA at $2.35. The 50 day MA at $2.27 will serve as the next support levels.

Yangzijiang (technical)

Yangzijiang - Technicals appears to be supportive of further uspide, with RSI and Stochastics all trending upwards, while the counter is being supported by the 20 day MA at $0.94, which will be the critical support.


Ezion: UOB Kay Hian maintains Buy with $2.85 TP. House note that channel check revealed: a) competition is still muted, b) while potential demand for liftboats in Asia remains large, real demand is contingent on Ezion’s ability to convince Asian oil companies on liftboats’ superior productivity, and c) local banks – faced with declining demand for housing loans – are flushed with liquidity. The cost of debt for Ezion’s new projects remains at 5% p.a.


F&N: Analysts are positive on a potential hospitality REIT by F&N, noting that creating a hospitality Reit makes sense for F&N, which already has listed trust structures for retail and commercial and office properties through Frasers Centrepoint Trust and Frasers Commercial Trust. If the Reit is created, F&N would probably inject its serviced apartments portfolio into the vehicle, which are located in Singapore, Australia, London, Scotland, China, Indonesia and the Philippines.TCC also has the Intercontinental Hotel, and other hotel assets. It also gives a positive sign that F&N is also actively looking to integrate F&N into its existing stable of businesses. But listing a Reit at the moment could be delicate, with the expectations of rising interest rates depressing Reit valuations. If you can package a pan-Asia Reit with more diversified profile and higher yields, that might appeal to the investor.

China Minzhong/ SIno Grandness/ Yamada

China Minzhong: Given the sell off in CMZ, we caution investors to exercise caution on peers SIno Grandness and Yamada Green Resources

Genting SP

Genting SP: CS maintaining its OUTPERFORM Call on Genting, in anticipation of a stronger 2H13. Note that Japan is a potential wildcard, management is optimistic on a first step in casino gaming legislation by year end. The market is sceptical about Japan but should there be progress on gaming legislation, believe GENS’ stock price could benefit. GENS’ track record in Singapore and its strong balance sheet put it in a good position to compete in new markets, in house view. The Singapore VIP gaming segment has seen a strong rebound in volumes YTD 2013 (+34% YoY). Unfortunately, the 1H13 win rate was exceptionally weak. House expect the VIP win rate to normalise in 2H13 and drive a meaningful half-on-half recovery in EBITDA. Historical average EV/EBITDA valuations suggest 26% potential upside to GENS’ stock price. GENS is also trading at a 25% discount to the FY14E Macau average EV/EBITDA of 13x.


SPH REIT: Credit Suisse initiating coverage on SPH REIT with a NEUTRAL Call and $1.05 TP. Supportive sector fundamentals should continue to underpin rental growth, with healthy income growth (low unemployment) as well as a manageable supply outlook. Two Orchard Road malls, completing this year, are already 80-100% pre-leased; Clementi Mall is supported by a strong catchment and good transport links. Further, growth is likely to be driven by acquisitions. SPH REIT has ROFR for SPH's (sponsor) Asia Pacific retail-focused assets. The Seletar Mall may be in SPH REIT's future pipeline. SPH REIT has the lowest gearing among SG-dominant retail REITs, at 27%, implying S$1 bn debt headroom assuming 45% gearing. SPH REIT trades on 5.5% FY14 yield (5.3% ex. income support).

China Minzhong (CIMB)

China Minzhong: CIMB ceases coverage, as house shares Glaucus Research’s concerns about MINZ’s reliance on capital markets for cash generation and ballooning receivable days. House note that it has been have been sharing Glaucus’s concerns for some time. Minzhong had issued new shares (98m) to Indofood on 15 Feb 13, at $0.915 apiece or 0.7x its FY12 book value. It soon followed this up with an unsuccessful attempt to issue bonds on 8 Mar 13. House found this intensive capital-raising worrying. The co’s willingness to dilute EPS at such an unfavourable price suggests the desperate need for cash when this shouldn’t have been the case. Capex was supposed to be lower this year (according to guidance) with positive free cash flow anticipated by us. Further, Olympus Capital, one of its major shareholders before IPO, had disposed of its remaining 10.3% stake on 6 Dec 12. It is hard to believe management was not aware of both Indofood’s and Olympus Capital’s intentions, considering their transactions were back-to-back. If Indofood’s expertise had been what MINZ was solely after, mgt could have arranged for Indofood to take over Olympus’s stake. Pressure from investors to pay dividends probably weighed on the co. House also worried by its spiking receivable days. FY12 receivable days were 85, up from 45 in FY10 and 43 in FY11.

Koon Holdings

Koon Holdings Limited slipped into red for 1H13 with a net loss of $10.1m from a net profit of $0.5m in the previous year, despite a 41.1% increase in revenue to $126.4m. Revenue growth in 1H13 was largely driven by the Construction division. A few key projects including construction of container berths and yards at PSA’s Pasir Panjang Terminal 2 and construction of Seawater Intake Facilities contributed to the increase in revenue from this division. However, the group’s performance was marred by construction project delays and relocation of its precast facility. Gross profit decreased by 79.5% to $2m in 1H13 mainly due to losses from its Construction and Precast divisions. On the outlook, the group aims to reduce production costs from the contribution of its precast yard in Batam, Indonesia, through a recently-established JV. Overall, amidst the sustained demand, the industry will continue to face margin pressure from the tight labor supply and volatility in material costs. Koon's construction and precast division had an outstanding order book of approximately $87.7m and $87.9m respectively.


Civmec: 4QFY13 net profit improved 9.7% y/y to $9.2m due mainly to a government R&D tax incentive of $1.2m. Otherwise, earnings would have came off 5%. Revenue plunged 30% to $79.4m due to the timing of revenue recognition from engineering projects. Overall FY13, net profit rose 18.9% to $36m while revenue gained 23.5% to $405.9m. Civmec's Oil & Gas segment achieved a 81% surge to $143.6m for FY13, while mining and others were stable at $262.3m (+5%). Managment's outlook on the O&G and mining sector in Australia remain positive, while demand for infrastructure projects remain steady. Civmec's NAV per share improved 23% to 21.99¢ The group increased final dividend to 0.7¢, from the 0.6¢ the previous year. Valuation wise, Civmec trades at 9.2x trailing P/E compared to Ausgroup's 8.4x.

China Minzhong (Glaucus)

We believe that Minzhong, like Chaoda, has so significantly deceived regulators and investors about the scale of its business and its financial performance that we expect trading in its shares to be halted and its shares to be worthless. 1. Fabricated Sales. Publicly available filings indicate that Minzhong fabricated sales figures to its top two customers. a. Top Customer Incorporated After The Track Record Period. Corporate registry records show that a Taiwan-based food distributor, which was supposedly Minzhong’s largest customer in the pre-IPO track record period (2007-2009), was only incorporated in November 2009, suggesting, in our view, that Minzhong simply fabricated the sales figures in its Prospectus. b. SAIC Filings Indicate Faked Sales. SAIC files show that Minzhong’s second largest customer, which purportedly accounted for RMB 142 million in sales in 2009, had zero revenues and zero COGS in 2009. c. Undisclosed Related Party. Minzhong reported in its Prospectus that its top customers were independent third parties. But SAIC filings show that Minzhong’s second largest customer was not only co-founded by Company Chairman Mr. Lin Guo Rong but that Lin Guo Ping, who served as a legal representative of a Minzhong subsidiary, simultaneously served as the supervisor of the Minzhong customer. It appears that Minzhong failed to disclose such material connections to investors. 2. Top Supplier’s Business License Revoked pre-IPO. SAIC filings show that Minzhong’s largest supplier during the pre-IPO track record period, which purportedly accounted for 18% of the Company’s total purchases in 1Q2010 and was the Company’s primary source of mushroom spores (reportedly its best selling product), was deregistered and stripped of its business license for violating PRC law in February 2010, a mere two months before Minzhong’s April 2010 IPO. In our opinion, the implication of this deregistration is that the supplier was not a major operating business and that Minzhong fabricated payments to its largest supplier. 3. Attempted Cover Up? After a wave of accounting scandals and de-listings among other SChips in early 2011, it appears that Minzhong doctored the historical financials of certain subsidiaries in their respective SAIC filings to make them appear consistent with Minzhong’s Singapore-filed financials. Prior to the apparent cover up, SAIC filings suggest that Minzhong’s assets and earnings were a small fraction of what the Company claimed in its Singapore-filed financials. 4. Suspicious Capital Expenditures. S-Chips and US-listed reverse mergers engaging in fraud often overstate reported capital expenditures to mask fake sales on the balance sheet. In FYs 2011 and 2012, Minzhong claims to have spent around RMB 1.2 billion on the construction of a new industrial park in Putian. Yet SAIC filings show an increase of only RMB 203 million in PP&E during the same period. More suspiciously, the industrial park was not pledged as collateral for the Company’s bank loans; instead, Minzhong’s creditors sought personal, unsecured guarantees from the Company’s Chairman and its suppliers. We believe that this is further evidence that Minzhong vastly overstated its capital expenditures. 5. Reinventing the Wheel. The Company’s business model is as old as agriculture itself, yet it so vastly outperforms other fresh produce growers that its reported financial performance defies credibility. a. EBITDA. Minzhong’s reported EBITDA margins on fresh produce, its most profitable segment, averaged an absurd 66% during the past five years. b. Ballooning Receivables. The Company’s receivables have skyrocketed of late, despite the fact that its credit terms have not changed. We believe that the persistent and unexplained growth in receivables is caused by the need to account for fake income on the balance sheet. c. Negative Free Cash Flow. Since its IPO, Minzhong has generated negative free cash flow of RMB 1 billion. Much like other S-Chips which have been delisted under suspicion of impropriety, the Company relies on debt or equity financing as its primary source of cash generation. 6. Valuation. As of March 31, 2013, Minzhong had approximately RMB 1.1 billion of onshore liabilities outstanding, including bank loans and trade payables due to unsecured onshore creditors in the PRC. In a liquidation scenario, the holders of onshore liabilities have historically taken priority over offshore equity holders. Because we believe that the Company has significantly overstated its sales and its capital expenditures, we doubt the authenticity of its reported receivables, cash balance and PP&E. Given the limited offshore assets available for seizure (cash denominated in USD, SGD, or Euro was limited to RMB 8 million as of 6/30/2012) and the difficulty recovering onshore assets (property and equipment) from alleged fraudsters under China’s byzantine judicial system, we put a price target on Minzhong’s shares of SGD 0.00.


GLP: Leased 9,400 sqm space at GLP Guarulhos to Atlas Transporte & Logistica, one of Brazil's largest third-party logistics provider, for the establishment of its main distribution center in Brazil. The new lease at GLP's facility in Sao Paulo will bring its leasing occupancy to 100%. Separately, news reports in China from unknown sources are citing that the Chinese local governments are looking at raising the land prices, to relieve its pressure from debt repayment. This could potentially benefit GLP's massive land reserve of 11.9m sqm, compared to 7.4m sqm in its development pipeline and 7.6m sqm of completed gfa. In Japan, GLP reiterated their support for GLP J-Reit through possible divestments with no firm confirmations on a timeline. CLSA estimates US$400m size divestment this year. In terms of cap rate compression, management remains optimistic that cap rates in Japan can tighten slightly further from current levels. GLP feels that only 2 competitors in Japan pose some level of competition given the full scaled operations. Lastly, GLP is cautiously optimistic that Japan will deliver some rental growth in future. At $2.66 compared with the average street RNAV of $3.03, GLP trades at 1.2x P/B, just under one standard deviation above its historical average of 1.1x P/B.


Cordlife: Announced a strong set of results which was at the top end of estimates as net profit at $13.5m, +95% y/y, while revenue at $34.7m, +15% y/y. The increase in revenue was due mainly to an increase in the number of client deliveries, from approximately 7,200 in FY12 to 7,700 in FY13. The increase in client deliveries was due to increased awareness as a result of an increase in educational programs undertaken by the Group.Bottom-line was also aided by a $2.7m gain in the disposal of its 10% stake in China Stem cells. Going forward, the grp remains cautiously optimistic that its strong market position and brand equity, coupled with favourable industry factors, will benefit the Group in the next 12 months. Maybank-KE maintains Buy and raises TP to $1.47 from $1.29. House continue to like the co as it delivers attractive results and embark upon its multi-product expansion across Asia, where a good market mix of high penetration rate with stable earnings and high birth rate with high potential can be found.

SG Market (27 Aug 13)

SG Market: S’pore shares are expected to take cover after Wall Street turned lower in final hour after US edged closer towards taking military action against Syria, which might draw Iran and Russia into a wider Mid-East conflict. Investors could also spooked by a WSJ report that suggested the US government would hit its debt limit by mid-Oct. Stocks traded higher for most of the session amid thin volumes as durable goods orders fell 7.3% in July, compared to forecast for a 4% drop, prompting hopes that the Fed would not commit to a large scale reduction in its bond purchases. Markets in Asia opened slightly weaker with Nikkei -0.7% and ASX -0.4%. Yesterday, the STI backed away to close lower after bridging the breakdown gap at 3,108, suggesting the bearish trend is still intact. Immediate downside support is at the 3,065 with resistance at 3,108, followed by 3,180. Stocks to watch for: *Cordlife: Stellar FY13 results slightly above estimates with net profit of $13.5m (+95%) on revenue of $34.7m (+15%). The better performance was driven by an increase in the number of client deliveries, which rose from 7,200 in FY12 to 7,700 in FY13 owing to greater awareness. DGross margin expanded from 71% to 73% in FY13. The bottom-line was also aided by a $2.7m gain in the disposal of its 10% stake in China Stem Cells. Final DPS of 1¢ proposed, taking full year dividend payout to 2¢ *Silverlake: FY13 results spot-on with net profit coming in at RM196m (+21%) on flat revenue of RM398.6m. Growth was underpinned by high margin business activities, namely software licensing and maintenance and enhancement services but dampened by poor project and product sales. Gross margin improved to 64% with change in product mix. Including the final DPS of 1.1¢, total dividend for FY13 will amount to 3.1¢, 63% higher than the 1.9¢ paid in previous year. *Civmec: 4QFY13 net profit rose 10% y/y to $9.2m but revenue tumbled 30% to $79.4m due to the timing of recognition from ongoing projects and new start-ups. For FY13, earnings grew 19% to $36m, driven by a 24% expansion in revenue to $405.9m on higher activity levels in the oil & gas, mining and other segments. Gross margin slid to 17.2% from 18.5% in FY12 (4Q13: 18.7%) but bottom-line benefited from a R&D tax incentive. As at July, order book totalled $190m. DPS of 0.7¢ declared. *FJ Benjamin: FY13 net profit slumped 89% to $1.6m as sales of its timepieces declined in North Asia on slower economic growth in China. The results included a $2.8m gain from sale of properties in HK and fair value gain of $2.4m on an investment. Revenue dipped 5% to $373.4m due to 22% drop in timepiece sales to $109.9m with HK -26% and China -47% but Indonesia +13%. Sales from fashion business ticked up 4% to $262.9m. Net gearing jumped to 53% from 39% in FY12. DPS slashed to 0.5¢ vs 1¢ prior year. *Global Logistic Properties: Leased a second completed building (9,400 sqm of GFA) at GLP Guarulhos in Sau Paulo to new customer Atlas Transporte & Logistica, one of Brazil’s largest third-party logistics providers. The building was completed in May 2013 and is now fully leased. GLP Guarulhos is part of GLP Brazil Development Partners 1, in which GLP holds a 41.3% stake. The development will be constructed over four years and will comprise 17 buildings with a total GFA of up to 390,000 sqm when completed. *KS Energy: Setting up JV with Pertamina to own and operate drilling rigs in Indoneisa. Both parties currently jointly operate two high specification land rigs for an oil major (US$98m contract) and an offshore jack-up rig in West Madura oilfield (US$87.6m contract). The new JV will take over the two contracts and tender for new ones in the Indonesia. *Scorpio East: Entered into MOU to acquire KOP Properties subject to an agreed price via an issue of consideration shares at a post 2-into-1 consolidation price of $0.21 each. KOP is involved in the development, management and marketing of residential and commercial properties, as well as the management of hotels, resorts and yachts in Asia and Europe. The reverse takeover is also conditional on the approval of a whitewash resolution to exempt the vendors from having to make a mandatory general offer.

Monday, August 26, 2013

ST Engineering (technical)

ST Engineering: Near-term strength from the increasing ADX could see counter trade downwards toward the $3.83 support level. The next support level is at $3.62. The near-term resistance is at $4.16 level.

Noble (technical)

Noble - Technicals appears to be trying to trend upwards, although RSI has just hooked back down. Would wait for a break above the 20 day MA at $0.875 before entering for further upside.


CNA: A close above the $0.260 resistance level could indicate potential near-term upside, at the upper bollinger band and 3-year high coincide. Rising RSI and Stochastics also suggest a potential near-term upside, further bolstered by the increasing volumes. Near-term support at $0.230 followed by $0.200.

UOB (technical)

UOB - Tehnicals appears a tad neutral, with RSI and stochastics showing mixed signals, although share price is also testing its 50 day MA today at $20.88. Would wait for a close up/below these levels to reconfirm the trend.

DBS (technical)

DBS - Technicals appears to be trending upwards, with RSI and stoachstics all hooking upwards from Oersold territory. Share price is testing the 50 day MA at $16.38, a close above these levels could see further upside.


Jaya: has secured a $20m contract to charter its new platform supply vessel for two years (plus charterer's options) in the Indian Ocean, offshore Mozambique in East Africa. With the delivery of the vessel in Sep, Jaya will have 7 new builds remaining in its current shipyard order book.


KrisEnergy: CLSA initiate coverage with a BUY and a DCF-derived TP of $1.58, implying a 22% upside. CLSA see near-term upside to production from two key projects in the Gulf of Thailand. These assets could lift net production by more than 8,000 boepd of mainly liquids. House don’t expect full production from these projects until 2016/17, but there is upside risk to timelines. In addition, two exploration wells are being or are just about to be drilled in the large prospective resource of blocks 105 and 120 in Vietnam. Keppel Corp has bought three chunks of KrisEnergy since 2012 and is the most likely buyer of additional stakes as First Reserve might seek to exit. CLSA questions if KrisEnergy could morph to become the oil and gas division of Keppel Corp, with a possible whitewash resolution of the takeover and merger rules that typically require a general offer, Keppel could acquire more stock. The stock has edged higher since its IPO and is trading close to its current underlying NAV. Further upside will come from exploration success and the timing of new production.

SMM (technical)

SMM: Trading Central notes the stock has reversed down following the downside breakout of its 50day moving average. The 20day MA is also turning down, and now acts like a resistance role. Furthermore the RSI is bearish, calling for a new decline. Says as long as $4.60 is not surpassed, look for a new pullback to $4.15 and $4 in extension.


CPO counters are all up significantly today. This is after on On Friday, the Indonesian government announced plans to reduce oil and gas imports by raising the proportion of biodiesel in fuel from 7.5% to 10% while also making the blending of fuel mandatory. This measure is aimed at reducing the country’s current account deficit. This is positive for the biodiesel industry in Indonesia and CPO price. CIMB note that we are looking at a 1.26m tonnes increase in Indonesia’s consumption of CPO if the 10% blend is implemented. According to a USDA report, Indonesia consumed around 670m litres of biodiesel in 2012, equivalent to 3.93% of total diesel used by the transportation sector. House estimate that if the blend is successfully raised to 10%, usage of biodiesel in transportation sector alone will increase to 2b litres, equivalent to around 4.5% of Indonesia's annual CPO production. Add that this news could help catalyse the languishing CPO price.

WE Holdings

WE Holdings: The $20m acquisition in Dragon Cement had been further extended from 23 Aug to 22 Sep. This is the second extension for the proposed 20% share acquisition which was originally slated to complete on 16 Aug. The non-binding agreement with Dragon Cement was initially proposed on 16 May, in line with group's intention to diversify and broaden the group’s revenue stream and would allow the group to tap on the growth opportunities from the increased infrastructure development and construction in Myanmar. Dragon Cement is principally engaged in the business of manufacturing cement in Myanmar. With the acquisition, the plant’s production capacity is targeted to double from 400 to 800 tonnes a day. WE intends to fund the proposed 20% stake through its recent rights cum warrants issue.

Sabana REIT

Sabana REIT: has proposed to acquire Advanced Micro Devices’ (AMD) light industrial building at 508 Chai Chee Lane for $67.2m (~$205m psf inclusive of upfront land premium of $7.7m). The building is a 7-storey light industrial facility with gfa of 327,571 sf and has a remaining lease tenure of 46.5yrs. AMD has committed to leaseback at least 50% of the property for a period of 10 rs, with options to renew for a further 11 yrs. UOBK estimates that the rentals AMD will be signing are btwn $2.50-3.00 psf pm, implying a 5% initial cap rate though this would rise to 7-8% upon fully leasing out the remainder of the facility to third party tenants. The house notes the acquisition will be yield accretive by about 3-5% if fully funded by debt though this will increase Sabana’s gearing from 37.1% to 40.5%, leaving little further headroom for further acquisitions. UOBK keeps its Hold rating but raises TP slightly to $1.29 from $1.27.


Silverlake: OSK-DMG reiterates Buy with TP $0.82. Says the recent correction below the recent placement price of $0.75 presents a good buying opportunity. Expects the upcoming 4QFY13 results to be stellar. Tips the group to generate ~RM55-60m net profit (+26% yoy) on the back of strong project revenue recognition, healthy recurring income from licensing and maintenance, and additional profit contribution from newly acquired businesses. Sees a further dividend hike to 1.2¢ (+0.04¢), translating to an attractive FY13e yield of ~4.5%.


Cedar: has effectively revised the transaction structure of the RTO of the Hua Cheng group announced in May ’13, by terminating the original RTO agreement, and entering into a new agreement to acquire only certain assets in the Hua Cheng group that have been assessed to be of better value and development potential. Under the new agreement, Cedar has proposed the acquisition of all shares of Trechance Holdings for consideration of Rmb 22.5m, to be satisfied by i) issue of 128.6m new Cedar shares at issue price of $0.007 each, and ii) a $3.6m, 5% bond due 2015. Trechance, owned by Mr Ji Yu Dong and his daughter Ms Ji Lei, is involved in property development and property invmt in the PRC. Trechance (and its subsidiaries), is itself currently undergoing a restructuring exercise such that Trechance will own certain property development and property management and leasing businesses in Guizhou province (belonging to the Hua Cheng group). The assets, with an estimated gfa of ~270k sm under devt and/or held for future devt, have an NTA of ~Rmb 20.5m as at Jun ’13.


PCRT: announced the official opening of its Perennial Jihua Mall (PJM) in Foshan, Guangdong on Friday, 23 Aug. The mall is part of PCRT’s IPO portfolio of assets, and also PCRT’s first 100% owned operational asset. ~280k shoppers thronged through the mall’s doors on the first three days of business. To-date, PJM has achieved a committed occupancy of 93%, underpinned by anchor tenants Yonghui Superstore supermarket and Jinyi Media Corp Cineplex, and international brand names such as Massimo Dutti, Bershka, Stradivarius, Oysho, Monki, Asobio and Daiso. PCRT offers 7.4% FY13e consensus yield.

Tiong woon

Tiong woon: Register a robust set of FY13 results which was above estimates, as net profit came in at $17.6m versus a net loss of $4.8m y/y, driven by a 36% increase in revenue to $200.5m, as the group experienced a substantial improvement in revenue across most of its different business segments in particular, the heavy lift and haulage division (+35%) and the engineering services division (+121%) The Heavy Lift and Haulage division rose 35% to $154.4m, contributing 77% of revenue, mainly attributed to higher equipment utilisation rate and an increase in the number of heavy lift and installation projects undertaken by the Group in the region. The Engineering Services division’s turnover grew 121% to S$23.3m, due mainly due to higher percentage of completion of the Tuas New Yard Phase 1 project and the Tuaspring Desalination project. Similarly, the Trading division registered a strong 97% increase in turnover to $12.2m. Going forward, the Group expects business conditions to be challenging due to uncertainties in the world economy, higher labour and other operating costs. Singapore will continue to remain the key contributor due to sustained demand from public sector infrastructure projects. In ASEAN and the Middle East, the Group will focus on oil & gas and petrochemical, infrastructure development and construction opportunities. Overall, we note that given peer Tat Hong’s recent woes, investors could perharps see some rotation of funds into Tiong Woon. Lim & Tan also upgraded the counter to Buy on Friday, where the house expect a strong finish for 4Q13 thereby meeting streets expectations for abt $5m profit, vs a net loss of $5m last yr, reflecting the strong recovery of the O&G and petrochemical markets in SG, Middle East and Msia. Tiong Woon is also in the midst of increasing their capacity by another 20-25% over the next 2 yrs to meet demand and will benefit from SG plans to expand more MRT lines, build newers flats and infrastructure, as well as increased regional construction works.

Sound Global

Sound Global: 1H13 revenue was up 25% YoY and recurring earnings rose 1.8% YoY. Its earnings came in within expectation and were dragged down mainly by higher financing costs resulting from its USD 150mn senior notes. Gross profit margin (GPM) remained steady at 30.1%, similar to its historical average. Net gearing was 10.1%, within management’s comfort level. The EPC order book remained stable in 1H13, and SCB expect more contribution from the BOT/O&M segments, which could push margins higher, in the range of 50-60%, in our view. In June, SGL’s chairman submitted a letter of intent to delist the stock from the Singapore Stock Exchange, which we view as a positive. Trading at 8x 2014E PER, its valuation appears undemanding compared with peers. SCB believe SGL’s expansion into the BOT segment could act as a catalyst. Overall, house maintains Outperform with $0.86 TP.

SG Market (26 Aug 13)

SG Market: S’pore shares may regain some temporary composure as US stocks edged higher on Fri after new home sales plunged 13.4% in July to 394,000 units, well below expectations, easing concerns that the Fed might slow down its massive stimulus next month. Yields on US Treasuries traded lower but still near two-year highs, while gold rallied and the USD weakened. In Europe, Gemany reported that its economy grew 0.7% in 2Q, while Britain revised it growth rate upwards. Emerging market equities gained for the first time in seven days. The Nikkei and ASX also opened slightly in the positive territory. Near term, the STI may attempt to close the breakdown gap at 3,108 set on 22 Aug but upside will be capped given the uncertainty over interest rates, capital outflows and economic growth. The key index is also trading well below its 20, 50 and 200-day moving averages, which reaffirms the bearish sentiment. Immediate downside support is at the 3,065 level. Stocks to watch for: *Sound Global: 2Q13 net profit slipped 4.3% y/y to Rmb111.9m even as revenue rose 29% to Rmb955.3 as certain BOT projects started operations and on higher turnkey sales. Gross margin was relatively stable at 28.6% but declined 4.3 ppt sequentially. Other income jumped 93% to Rmb21.69m but this was marred by a Rmb33.6m loss blamed on currency forward contracts and interest rate swaps as well as a doubling in finance costs to Rmb66.4m due to USD senior notes issued in 3Q12. Meanwhile, controlling shareholder and Chairman Wen Yibo is still in discussions with financiers and regulators over a possible exit offer and delisting of the company. *Amtek Engineering: 4QFY13 net profit jumped 25% y/y, 146% q/q to US$10.9m, aided by US$6m gains from disposal of assets and properties, while revenue slid 7% y/y but +9% q/q to US$160.7m. The results brought FY13 earnings to US$26.9m (-20%) and revenue to US$626m (-7%). Apart from its casing products and tooling sales, group suffered from weak end market demand in other segments, lower capacity utilization and high fixed cost. In view of challenging market conditions, group is cutting its final DPS of 2¢, taking FY13 DPS to 3.3¢, down from 4.5¢ in previous year. *Tiong Woon: Robust FY13 results, turning around from a loss of $4.8m to a net profit of $17.6m, driven by a 36% y/y rise in revenue to $200.5m, as the group saw substantial sales improvement across most of its business segments, in particular, the heavy lift and haulage division (+35%) and the engineering services division (+121%). *Raffles Education: FY13 net profit turned around to $26.7m from a loss of $66.3m in prior year but revenue eased to $128.4m (-2%). The weaker top-line was due mainly to a decline in PRC revenue but offset by an increase in Asia-Pacific sales, which saw a steady rise in student enrollment. Earnings masked a $14.6m gain from sale of land in OUC (China), $7.3m government grant, $37.6m net reversal of provision for land restructuring cost and $41.7m fair value gain recognized on Raffles Education Square ($1.4m), Iskandar land ($1.7m) and OUC ($38.6m). Stripping these out, the group would have remained in the red. *CWT: Proposed acquisition of Sinsenmoh Transportation for $19m. Sinsenmoh is an established chemical logistics player in S’pore that will bring strategic competencies and expanded customer base comprising chemical and petrochemical companies. The acquisition is part of CWT’s ongoing efforts to enhance its chemical storage, handling and transportation capabilities and will be funded by borrowings. Excluding short term trade financing of $702m as of Jun, group has negligible net gearing. *Interra: Commenced drilling on the development well TMT-56 at the Tanjung Mining Timur field in South Sumatra, Indonesia. Group has a 100% operating interest in the tehnical assistance contract of the TMT field and estimates that results of the drilling should be available in eight weeks. *PCRT: Announced the official opening of its Perennial Jihua Mall (PJM) in Foshan, Guangdong on 23 Aug. The mall is part of PCRT’s IPO portfolio of assets, and also PCRT’s first 100% owned operational asset. To-date, PJM has achieved a committed occupancy of 93%, underpinned by anchor tenants Yonghui Superstore supermarket and Jinyi Media Corp Cineplex, and international brand names such as Massimo Dutti, Bershka, Stradivarius, Oysho, Monki, Asobio and Daiso. *Cedar Strategic: Terminated the original RTO agreement with the Hua Cheng Group (HCG) and entering into a new deal to acquire only certain assets in HCG. Under the new agreement, Cedar has proposed the acquisition of all shares of Trechance Holdings for Rmb22.5m, via issue of 128.6m new Cedar shares at $0.007 each plus a $3.6m, 5% bond due 2015. Trechance, owned by Mr Ji Yu Dong and his daughter Ms Ji Lei, is involved in property development and property invmt in the PRC. Trechance (and its subsidiaries), is itself currently undergoing a restructuring exercise such that Trechance will own certain property development and property management and leasing businesses in Guizhou province (belonging to the Hua Cheng group). The assets, with an estimated gfa of ~270k sm under devt and/or held for future devt, have an NTA of ~Rmb 20.5m as at Jun ’13.

Friday, August 23, 2013


Silverlake: OSKDMG recommends buying into weakness. House note that impacted by the recent market weakness, SILV’s share price has corrected below the recent placement price of 0.75, presenting a good buying opportunity. House expect the upcoming 4QFY13 results to be stellar complimented further by a dividend hike. Reiterate BUY, with an unchanged DCF-based TP of $0.82 (WACC: 5.5%, terminal growth rate: 0.0%). SILV recently acquired Cyber Village (CV), a mobile financial services solutions provider. The acquisition price was fair at 6.6x FY12 P/E, which is considered attractive for software companies. Notably, CV secured a new contract not long after the acquisition, namely implementing a new Internet banking system for Bank Rakyat, Malaysia’s biggest Islamic cooperative bank. CV will, subsequently, provide maintenance services as well. Similar to SILV’s earlier acquisition of insurance software companies, we expect all these new businesses to drive the company’s profit growth and sweeten its product suite. SILV has successfully placed out 150m shares to large institutional investors (50m vendor, 100m new) at a price of $0.75 per share, raising around $73.1m in the process. The net proceeds will be able to refill its mergers and acquisitions (M&A) war chest and expect the group to make more earnings-accretive acquisitions. As such, believe that the placement price of $0.75 will provide support and, with the share price trading below this threshold currently, this presents a good buying opportunity for investors.


Mirach - Besides a drilling update on Kampung Minyak Oil Fields and the co's recent 2Q13 results where net profit came in at US$43,000 versus a net loss of US$1.4m, there is no other co. specific news to highlight on the counter, who has of late been subjected to high volatile intra day swings. Note that its hard to talk much about fundamentals for Mirach, given that the stock has no earnings and already trades at more then 8x P/B, with the share price having rose by more then 500 - 600% last since the start of the year. Recall that interests in the counter has been pretty strong after the grp proposed a private placement of 152m new shares to 10 individuals at $0.1242 each or double the price traded in May. Part of the $18.1m proceeds (net of 4% referral commission) will be used to redeem its $16.9m 3% senior convertible bonds due 2014. At the same time, the group has granted a two-year 7% convertible loan of up to $36m to six of the above individuals. It is intriguing why the group would want to replace a 3% convertible (@ $0.12) with a more expensive 7% convertible (@ a slightly higher price of $0.1242). We know of no fundamental reason why the stock has sky-rocketed more than six-fold in the past six weeks.


CMA: technical outlook is weak, with share price extending its slide, and the indicators tipped downwards. RSI and Stochastics have just dipped into oversold territory, and have not shown signs of reversal. Expect any upside to remain capped, as the shares trade below all three moving averages. See resistance at $1.90 (50day MA). On continuation of the negative momentum, the counter may see further downside to the $1.70 support level.


European telco / EuNetworks: Newswire say, China Mobile is preparing to award European telco equipment suppliers a third of a huge project to roll out high-speed wireless data service across the company's network. That project is among the biggest equipment supply opportunities to hit the global market in years. It would mean at least hundreds of millions in added revenue for Ericsson, Alcatel-Lucent and Nokia Siemens Networks, the three major European companies. Reportedly, the deal is worth US$7b in equipment sales in 2013 alone, much of it on 4G "base stations," the devices that help broadcast mobile phone signals. The three European companies will each receive 11% of the deal. While, the people familiar with the matter cautioned that the decision isn't final and must still be finalized by Chinese authorities, if successful, it could possibly lead to positive spillover sentiment in SGX-listed EuNetworks, a bandwidth infrastructure provider, which owns and operates fibre based metropolitan networks across European cities. Meanwhile, the broader macro recovery in Europe paints a positive backdrop for companies with European exposure. Notable institutional investors in EuNetworks include: - GKG Investments (of GK Goh fame), 12.4% - Columbia Eun Partners, 9.0% - Mackenzie Financial Corp, 9.0% - Fortress Partners, 8.4% The stock recently underwent a 50-into-1 share consolidation.