Thursday, October 31, 2013

UOL (technical)

UOL: Counter testing its 200 MA today. A close above $6.55 could portend an upside towards the next resistance at $6.80, followed by $7.00. RSI and Stochastics suggest more upside. Otherwise, near-term support is at $6.50 followed by $6.35.

Golden Agri

Golden Agri: Counter has broken out of its 200 MA and testing its resistance at $0.59 today. A close above may portend towards its next resistance level at $0.61, while support is at $0.565. This is in line with CPO's price breakout of the 200 MA in mid-October, after its 10% rebound in the past month due to heavy rain affecting US soybeans. Fundamentally, as biodiesel refining gets underway with a push from government policies, subsidies and mandates. Policies at this point are still unclear, but certainly a positive sign since it is equivalent to 3m tons of additional CPO demand in 2014 and will therefore take up the entire (even exceed) 1.5-2m tons p.a. increase in CPO supply expected for this and the following year in Indonesia.

Capitamalls Asia

Capitamalls Asia (CMA): At a post 3Q13 briefing, management highlighted that the upcoming two malls, Bedok Mall and Westgate, have achieved a strong pre-commitment rate of 100% and 85% respectively, are on track to open before Christmas this year. Meanwhile, CapitaMall Jinniu (Phase II) in Chengdu, China, which opened its doors on 29 Sep with over 90% occupancy, has an expected NPI yield of ~7% after its first year of operation. These factors should underpin CMA's FY14 earnings growth and further entrench its leadership position. CMA's healthy portfolio operating metrics validate its mall positioning as well as lease management abilities, with existing malls in Singapore recording 9M13 same-mall NPI growth of 3.8% y/y on the back of tenants’ sales growth of 3.2% psm, while malls in China are operating at a very healthy average occupancy rate of 97.2% and tenants’ sales growth at 9.8% psm y/y. CMA's cash position stands at a comfortable $1.2b, with outstanding commitments of about $930m. Maybank-KE estimate that CMA still has headroom for $500m worth of acquisition before its net gearing reaches 0.5x. One acquisition possibility is Project Jewel, the iconic development at Changi Airport, which the house believe CMA may be offered an equity stake in. Maybank-KE has CMA as its top pick amongst Singapore developers, and had raised its TP to $2.56, pegged to a 10% discount to RNAV. The counter is an attractive proxy to consumerism in the region. Latest broker ratings as follows: Maybank-KE reiterates Buy with TP $2.56 (from $2.51) Religare maintains Hold with TP $2.22 OCBC maintains Buy with TP $2.55 CS maintains Outperform with TP $2.58

Pan United

Pan United: Phillip visited Changshu Xinghua Port (CXP), Pan United’s jewel of an asset that generates >40% EBITDA margins and has capacity breakeven utilization rate of 30%. Besides CXP’s natural advantages in terms of its location, depth and size, mgt is positioning CXP to be a “comfortable port” to enhance customer stickiness by being a one-stop service of stevedoring, and providing a full-range of logistics services and having access to all the requisite govt bureaus. Growth at CXP includes expansion of its warehousing business and diversifying into a 5th cargo unit. Phillip maintains its Accumulate rating with TP $1.27. At the current $0.975, Pan United trades at an attractive 11x FY13e P/E and 4.5% forecast yield.

Airlines Asean / SIA

Airlines Asean / SIA: HSBC recently visited Bangkok, KL and Spore and met up with flag carriers Thai Airways and SIA and low cost carriers (LCCs) AirAsia, AirAsia X, Asia Aviation and NOK Air. All the airlines complained of yield declines from excessive narrow-body aircraft capacity growth and rising market fragmentation. While LCCs seem to be becoming a victim of their own ambitious growth plans, full service carriers (FSCs) like Thai Air and SIA are suffering too, either from LCC presence on regional routes or from the aggressive Middle East competition in long haul markets. The house downgrades Thai Air to Neutral from Overweight, as the planned launch of a new competitor Thai Air Asia X is expected to overshadow the potentially strong 4Q. Trading at an attractive 0.9x P/B, SIA is the only Overweight (TP $12.50) in the Asean airlines space for HSBC.

Keppel Corp

Keppel Corp: BNP notes KEP’s “near customer, near market” strategy has positioned it to win orders in overseas regions with strong demand, such as Brazil, Mexico, Azerbaijan and the Middle East, allowing the rig builder to hold its market shares at 33% in 2011-13 (24% in 2013). Nevertheless the house lowers 2013-14 forecasts by 8% and 4%, due to delayed recognition of new orders, particular from the Petrobras-related semi-sub projects. Following its earnings forecast revisions, the house lowers its SOTP-based TP to $12.50 (from $13), for potential upside of 15%. This equates to a FY14e P/E of 12.7x and 2.1x P/B. BNP maintains its Buy rating.

Sapphire Corporation

Sapphire Corporation: Profit warning for 3Q13 due to the weak demand for steel in China which resulted in overcapacity in the industry with declining steel prices. Current steel prices are reportedly close to break-even levels due to rising costs, and are not expected to improve during the industry's destocking phase. Group provided an update that it is currently reviewing its steelmaking business in China, and had on 9 Oct, entered into a conditional sale and purchase agreement to acquire the entire equity stake in Mancala Holdings Pty Ltd, a specialist mining services company based in Australia.

China Environment

China Environment: Wholly-owned subsidiary, Fujian Dongyuan Environmental Protection, secured five contracts from three customers with aggregate value of Rmb119.1m. The customers include Shanxi Electric and Guangdong Power Engineering Corp, both SOEs, and Anhui Shengyun, a public listed company on Shenzhen Exchange. All five contracts are for the supply of seven units of its hybrid dust collectors for an aluminium company in Shandong province and thermal power plants in Shanxi and Guangdong province. The contracts are expected to contribute positively to the group for FY14, which will have an expected completion by 1H14.

Metax Engineering

Metax Engineering: awarded a tender by PUB worth $6.7m to expand the Greasy Waste Receiving Facility (from 5,500 m3/mth to 11,000 m3/mth) and the Associated Digestion Facility at the Jurong Water Reclamation Plant. The expansion works commenced yday and is expected to be completed by Apr ’15. Mgt says the award is not only a testament to the co’s environmental engineering expertise, but also reflects its long term strategy to bid for significant tenders to expand its business into more challenging wastewater treatment processes. The award will increase Metax’s orderbook as of 30 Jun ’13 from $25.1m to $31.8m.

BH Global

BH Global: 3Q13 net loss decreased to $638k compared to the loss of $3.5m in 3Q12, while revenue ticked up 2% to $25.6m. The stable top line came on the back of a 27% improvement from its manufacturing segment after the delivery of a substantial order of marine switchboard to its major customer in the quarter, which was partially mitigated by 57% slump in revenue from galvanized steel wire due to increased price competition and a 14% decline in its core segment, marine cables and accessories, as a result of the slowdown in the marine sector. Management will continue its focus on expanding its network in the region, in view of a good position upon a recovery

Mun Siong Engineering

Mun Siong Engineering: Reported 3Q13 net loss of $31k, compared to a net profit of $1.2m in 3Q12, while revenue slumped 14.4% to $19.2m. This was mainly due to the completion of work, as well as lower volume of project activities. Operational expenses continued to escalate due to the tight labour market and the foreign workers' levy, which the group faces a challenge in passing the costs to customers. As a result, the group is currently reviewing the possibility of a relocation of certain parts of its operations to Malaysia to lower costs. Mun Siong has a current order book of $38.7m.

Creative Technology

Creative Technology: 1QFY14 net loss increased to US$5.5m from US$4.5m in 1QFY12, while revenue declined 15% y/y to US$30.4m due to the uncertain and difficult market conditions. Gross margin increased 5ppts to 28% on the back of a change in sales mix towards higher margin newer products. Group recorded lower R&D expenses (-16%) due to the divestment of its subsidiary, ZiiLABS Limited, in 2QFY13. Creative expects no major improvements on the challenging market going forward, although sales are expected to be higher q/q on the back of the holiday season, which may result in an improvement in operations.

Tianjin Zhong Xin Pharm

Tianjin Zhong Xin Pharm: 3Q13 net profit fell 6% to Rmb47.6m despite a 10% improvement in revenue to Rmb1,396.2m, mainly due to a 20% drop in contributions from associate Sino-American Tianjin Smithkline & French Lab, as well as the disposal of subsidiary Tianjin Central which the group recognized in 3Q12. Going forward, the company expects to face challenges from the increase in costs of raw materials, energy and human resources, price controls of pharmaceutical products by the govt and relatively high financial costs.

Singapore Post

Singapore Post: 2QFY2014 net profit attributable to shareholders rose 8.5% y/y to $35.7m as revenue spiked 32.6% y/y. Mail revenue, which was up 13.4% saw good growth in volumes of e-commerce packages both locally and internationally, as hybrid mail also saw higher contributions from Datapost and Novation Solutions. Logistics revenue shot up 79.1% on organic and inorganic contributions, with Quantium Solutions showing record growth, on top of contributions from General Storage Company and Famous Holdings which were acquired in Jan and Feb ‘13 respectively. Excluding acquisitions, logistics revenue was up 12.1%. Expenses increased 34.9% y/y to$171.3m mainly attributable to the business model change to a diversified group and growth in lower margin businesses. On the back of this, the Group has been implementing cost management initiatives. Volume-related expenses were up in line with strong international traffic, while finance expenses fell as the Group hard repaid the $300m bond in Apr 2013. The Board declared an interim quarterly dividend of 1.25¢ payable on 29 Nov 2013, which translates to forward yield of 4.8%. NAV is 35.44 cents

Soilbuild REIT

Soilbuild REIT: Reported its maiden 3Q13 DPU of 0.76¢ and distributable income of $6.1m, both 3% above its IPO forecast. Gross revenue of $8.2m and NPI of $6.9m came in higher than expected by 0.8% and 2.0% respectively, on the back of a 7.9% rental uplift from three lease renewals in Eightrium and Tuas Connection. Overall portfolio occupancy rate improved 0.1ppts to 99.8% mainly from an expansion by an existing tenant at Eightrium, while weighted average lease to expiry is at 3.9 years on NLA. Soilbuild REIT's gearing of 29.4% gives it debt headroom of ~$53m on a 35% target gearing ratio, while the average cost of debt is at 3.11% and debt maturity of 2.9 years. NAV per unit remained stable at $0.80, compared to its last closing price of $0.755. Mgmt expects market to remain subdued for the remainder of 2013, on the back of the cooling policy measures and fragile economic outlook.

Tuan Sing

Tuan Sing released 3Q13 results which saw net profit at $5.8m (-52%) and revenue at $54.2m (-35%) For 9M13, group revenue fell 9% to $237.0m, as both Property and Industrial Services revenue fell. Revenue from Property declined vs the corresponding period, where there was a significant contribution from Mont Timah project and a full nine-month rental income from Robinson Towers and International Factors Building.

Eu Yan Sang

Eu Yan Sang unveiled 1QFY14 results which was in line, with 1QFY14 typically being the group’s seasonal slowest quarter. Net profit came in at $1.4m (+318% y/y, -69% q/q) and revenue at $79.5m (+13% y/y, +3% q/q). The q/q drop in earnings was largely due to a once-off fairvalue gain recognized in 4QFY13. The group’s top-line was buoyed by a strong performance in its Hong Kong and Australia operations, with revenue for its retail segment at $60.1m (+13%), while revenue for its wholesale segment came in at $14.0m (+15%) largely driven by strong wholesale performance in Hong Kong and Macau. Clinic revenue improved 6% to $4.5m. Gross margins was maintained at a healthy 51%, as gross profit rose in tandem with revenue growth, while operating expenses increased less proportionately than revenue growth, as such operating profit improved 48%, translating to a stronger bottom-line. Going forward, the group expects rising operating costs, especially retail rents to pose a challenge, while tipping its core business to remain profitable and cash flow positive. Aim to pursue other strategic opportunities for growth in new lines of business that complement its existing core. At the current price, Eu Yan Sang trades at a forward 18x P/E, which is in line with its peers simple average. Latest broker ratings as follows: CIMB upgrades to Neutral from U/p with TP $0.75

NOL

NOL released 3Q13 results which were below estimates. Net profit came in at US$20m (-60% y/y and versus a net loss of US$35m q/q), although this was boosted largely by a US$32m worth of forex gains. Without the one-off gain, 3Q13 would have been a loss making quarter, driven by a 5% decline in trade volume and 9% contraction in rates, with revenue coming in at US$2.1b (-10% y/y, -0.1% q/q) While the industry managed to push through a decent amount of peak season rate hike in 3Q13, spot rates have declined sharply in recent weeks post peak season, with rates on the Shanghai Containerized Freight Index (SCFI) now comparable to levels reached in 4Q11, which was a quarter when NOL reported huge losses of US$320m. Due to the cash outlay to fund its ongoing fleet renewal, Maybank-KE estimates that NOL’s net gearing level could reach a high of 1.6x at the end of the quarter, with continued CAPEX spending and sustained pressure on margins. As such the house expects a further increase in leverage, and for NOL to end FY14E with a net gearing of 1.8x. Hence, the house believes that NOL could suspend dividend payments for the next two years and do not rule out a round of fundraising to shore up its weakened balance sheet. Overall, Maybank-KE cut its earnings forecast to reflect the weak rate environment and project another year of losses for NOL in FY14, noting that while ongoing cost cutting initiatives by NOL will lower average slot cost, expected depressed freight rates will likely keep profitability in check. Latest broker ratings as follows: Maybank-KE maintains Hold with TP $1.01 Deutsche maintains Hold with TP $1.03 CIMB upgrades to Neutral from U/p with TP $1.16 UOB Kay Hian maintains Buy with TP $1.30 CS maintains U/p with TP $0.95

CapitaLand

CapitaLand: 3Q13 revenue up 53% y/y to $1.05b led by higher contribution from the group’s devt projects in Spore, China, Vietnam and Australia, as well as higher rental revenue from its shopping malls. Net profit however declined 9% to $135.5m, due to i) a sharp decline in gross margins from 41.5% to 26.1%, as project costs of units sold in quarter were relative higher, and ii) lower portfolio gains (ie gains on asset disposal). In Spore, a total of 468 residential units (3Q12: 70) which amounted to a total sales value of $560m (3Q12: $166m) were sold. Sky Vue, launched end Sep, received strong response. 433 units or 86% of the 505 units released were sold, making it Sep’s top selling residential project in Spore. In China, 707 residential units with sales value of $216m were sold in 3Q13, mainly from The Loft in Chengdu, The Metropolis in Kunshan, Dolce Vita in Guangzhou and iPark in Shenzhen. Going forward, the group will focus on integrated and mixed devts. With a resilient Spore economy and policies to support population growth, the group believes that the demand for new homes and offices will remain positive. It will continue to invest in well-located sites to build up its pipeline of residential and commercial devts. The group is also positive about the property market in China as the outlook for the economy stabilizes. At $3.16, the counter trades at 0.85x P/B.

SG Market (31 Oct 13)

SG Market: Asian markets opened on a slight softer note after US stocks backed down from record highs after a four-day winning streak on profit-taking with the Fed keeping its easy monetary policy in place, citing tight fiscal restraints and elevated unemployment rate. Semtiment is likely to remain lacklustre in S’pore with no standout results from CapitaLand and NOL lastest lackustre results. Expect the benchmarket STI is stay within its 3,150-3,238 trading range in the near term, while broader market remains weak. Stocks to watch for: *CapitaLand: 3Q13 net profit fell 8.7% y/y to $135.5m due to higher project costs which shaved gross margins to 26.1% from 41.5% and lower portfolio gains from asset disposal. Revenue was up 53% to $1.05b led by higher contribution from development projects in S’pore, China, Vietnam and Australia, as well as higher rental revenue from its shopping malls. NAV rose 5.4% to $3.74. The group remains upbeat on the long term prospects of its key markets in S’pore and China although short term performances may moderate due to market curbs and slowing economic growth. *NOL: 3Q13 results came in below estimates with net profit of US$20m (-60% y/y vs US$35m loss q/q) boosted by FX gain of US$31.8m, without which the shipper would have been loss-making. Revenue sank 10% to a 4-year low of US$2.06b, depressed by a 5% decline in container volume and 9% contraction in freight rates. Core EBIT swung around from US$31m loss to US$22m profit (liner: US$3m, logistics: US$19m), shored by operational cost efficiencies and lower bunker prices. CEO highlighted this is one of the weakest peak seasons in recent years marked by weak demand and industry overcapacity. *SingPost: 2QFY14 net profit climbed 8.5% y/y to $35.6m as revenue surged 32.6% to $203.8 driven by growth in e-commerce activities, new logistics acquisitions and increased rental income. Stripping out restructuring costs of an overseas operation, core earnings would be 13.8% higher at $37.3m. Interim DPS of 1.25¢ has been declared. *Tuan Sing: 3Q13 net profit tumbled 52% y/y to $5.8m along with the 35% drop in revenue to $54.2m, bringing 9M13 revenue and earnings to $237m and $26.7m respectively. For 9M13, property sales dipped 13% to $110.2m due to the absence of contributions from Mont Timah, Robinson Towers and Int’l Factors Building, while sales from industrial services (SP Corp) and results of hotel investments (Grand Hyatt Melbourne & Hyatt Regency Perth) came in lower. NAV edged up to $0.624. *Fragrance Group: 3Q13 net profit eased 3.7% y/y to $22.8m, while revenue was lifted by 6.5% to $129.2m. Property made up 88% of revenue with significant contributions from Parc Rosewood, Novena Regency, Wak Hassan, Suites@Bukit Timah, Le Regal and Urban Vista. However, a doubling in finance charges due to drawdown of term loans for hotel division and two new investment properties dragged down its bottomline. Net gearing expanded to 1.57x with NAV of $0.14. *Global Premium Hotels: 3Q13 net profit improved 18.7% y/y to $4.9m as revenue rose 5.7% to $15.7m due to contributions from Fragrance Hotel-Ruby post AEI works. RevPar remained relatively stable at $97.10 with marginal uptick in occupancy rate to 91.6%. End Sep NAV stood at $0.396. *MTQ: 2QFY14 net profit expanded 10% y/y to $5.5m, while revenue leapt 62% to $64.9m, due to the inclusion of Neptune subsea business, which masked weaker oilfield engineering sales. Gross margins remained healthy at 36.6% but sharp increases in staff and overhead expenses, and finance costs cut into its profitability at the pretax level. Interim DPS of 2¢ maintained post bonus issue. *Soilbuild REIT: Maiden 3Q13 DPU of 0.76¢ and distributable income of $6.1m were both 3% ahead of IPO forecasts. Gross revenue of $8.2m and NPI of $6.9m came in higher than expected by 0.8% and 2% respectively, on the back of 7.9% rental uplift from three lease renewals in Eightrium and Tuas Connection. Portfolio occupancy stayed at 99.8% with average lease expiry of 3.9 years, while gearing stood at 29.4% with average debt maturity of 2.9 years and average cost of 3.11%. NAV per unit was $0.80. *China Environment: Secured five contracts worth Rmb119.1m for the supply of its hybrid dust collectors to an aluminium company in Shandong province and thermal power plants in Shanxi and Guangdong province. The contracts are expected to be delivered in 1H14. *Yongnam: Issued a profit warning for 3Q13 as the group expects to record an operating loss, despite a healthy increase in revenue. The loss is due to cost overruns from three on-going projects which pared operating margin to new lows, as well as a significant one-off loss on disposal of fixed assets. *CSE Global: Proceeding with the divestment of its wholly owned UK IT solutions business via a proposed listing of Servelec Group on the mainboard of the London Stock Exchange. For FY12, Servelec recorded revenue of £39.4m and adjusted pretax profit of £11.9m. Full details of the IPO offer will be available on its prospectus to be released in due course. *Eu Yan Sang announced 1QFY14 results which saw net profit at $1.4m (+317%) and revenue at $79.5m (+13%). The stronger top-line was due to a good performance in Hong Kong and Australia, with the Group’s gross margin maintaining at 51%. Operating expenses for the quarter also increased less proportionately than revenue growth, as such operating profit improved 48%, which translated to a strong bottom-line. *Miyoshi Precisions announced 4Q13 results, with the group registering a net loss of -$2.3m (-0.3%) and revenue at $36.6m (-32%). The result brings FY13 net loss to -$ 4.7m (-36%). The drop in revenue was mainly due to the slow down of orders for new consumer Electronics (CE) product, which was launched in 3Q12. Revenue from other segments, namely Data Storage, Medical and Automotive, Microshaft and Others, recorded similar levels as versus the corresponding quarter. *Mun Siong Engineering: Reported 3Q13 net loss of $31k, compared to a net profit of $1.2m in 3Q12, while revenue slumped 14.4% to $19.2m. This was mainly due to the completion of work, as well as lower volume of project activities. Labour costs continued to escalate due to the tight labour market, as well as the foreign workers' levy, which the group faces a challenge in passing the costs to customers. As a result, the group is currently reviewing the possibility of a relocation of certain parts of its operations to Malaysia to lower costs. Mun Siong currently has an order book of $38.7m. *Tianjin Zhong Xin Pharm: 3Q13 net profit fell 6% to Rmb47.6m despite a 10% improvement in revenue to Rmb1,396.2m, mainly due to a 20% drop in contributions from associate Sino-American Tianjin Smithkline & French Lab, as well as the disposal of subsidiary Tianjin Central which the group recognized in 3Q12. Going forward, the company expects to face challenges from the increase in costs of raw materials, energy and human resources, price controls of pharmaceutical products by the govt and relatively high financial costs. *Creative Technology: 1QFY14 net loss increased to US$5.5m from US$4.5m in 1QFY12, while revenue declined 15% y/y to US$30.4m due to the uncertain and difficult market conditions. Gross margin increased 5ppts to 28% on the back of a change in sales mix towards higher margin newer products. Group recorded lower R&D expenses (-16%) due to the divestment of its subsidiary, ZiiLABS Limited, in 2QFY13. Creative expects no major improvements on the challenging market going forward, although sales are expected to be higher q/q on the back of the holiday season, which may result in an improvement in operations. *BH Global: 3Q13 net loss decreased to $638k compared to the loss of $3.5m in 3Q12, while revenue ticked up 2% to $25.6m mainly from a 27% improvement in its manufacturing segment, on a delivery of a substantial order of marine switchboard to a major customer in the quarter. This was partially mitigated by 57% slump in revenue from galvanized steel wire due to increased price competition and a 14% decline in its core segment, marine cables and accessories, as a result of the slowdown in the marine sector. Management will continue its focus on expanding its network in the region, in view of a good position upon a recovery *Metax Engineering: Awarded a tender by PUB worth $6.7m to expand the Greasy Waste Receiving Facility (from 5,500 m3/mth to 11,000 m3/mth) and the Associated Digestion Facility at the Jurong Water Reclamation Plant. The expansion works commenced yday and is expected to be completed by Apr 15. The award will increase Metax’s orderbook as of 30 Jun ’13 from $25.1m to $31.8m. *Sapphire Corporation: Profit warning for 3Q13 due to the weak demand for steel in China which resulted in overcapacity in the industry with declining steel prices. Current steel prices are reportedly close to break-even levels due to rising costs, and is not expected to improve during the industry's destocking phase. Group provided an update that it is currently reviewing its steelmaking business in China, and had on 9 Oct, entered into a conditional sale and purchase agreement to acquire the entire equity stake in Mancala Holdings Pty Ltd, a specialist mining services company based in Australia.

52 wk highs/ lows

52 wk highs: Kingsmen Creative, Boustead ETF -- iShares Core S&P 500, Lyxor Nasdaq 100-B , Lyxor MSCI Korea-USD B 52 wk lows: seeing a growing list of penny stocks, as brokerages across Singapore raise their credit shields Fuxing China, Artivision, International Health Corp, Hi-P, Geo energy, Intraco, Swee Hong, CCFH, UPP, Chaswood, PSL, Hartawan, Qing Mei, St James, P99, Seroja Investments, Addvalue Tech, Zhongxin Fruit & Juice, Sitra, Transcu, Sunpower, Progen ETF -- DB X Trackers S&P 500 INV DA

Wednesday, October 30, 2013

Hi-P (technical)

Hi-P: OCBC Technicals sees more downside ahead after the stock violated its $0.66 key support , breaking to a new 52 wk low on heavy trading volume yesterday. MACD is still trending lower persistently, suggesting that the downside momentum remains intact. The house tips Hi-P to slip further and test the next key base at 40.58 (key resistance-turned-support) in the weeks ahead. Advocates a stop-loss exit for short sellers around $0.68, which is slightly above the newly established support-turned-resistance at 40.66.

RH Petrogas

RH Petrogas: OSK-DMG says "be greedy when others are fearful". During last week’s selldown on small-cap stocks, RHP pulled back sharply to "clearly takeover levels". The stock is now trading at a 35% discount to its liquidation value, pricing all its exploration assets at zero and discounting part of its 2C resources. OSK-DMG believes RHP’s latest wells have struck oil, as RHP is currently conducting flow tests in its latest wells. No E&P company would move to the flow-test stage unless there is clear evidence of oil and gas. RHP's recent share placement to long-term investors and management buy-in are signs of confidence. A Malaysian fund took up 25m of the 56m new shares, followed by a large U.K. fund with around 10-20m shares, while other smaller funds bought a few million shares each. Meanwhile, the CEO’s recent exercise of 2m options at $0.59 each as a clear sign of his confidence in the company for the long term. The house maintains BUY, with TP $1.33

Noble

Noble: Reuters says Harindarpal Banga ,who carved out a 20yr career at Noble and last served as its Vice Chairman emeritus, plans a return to the industry in a new trading firm with his two sons. The 63 yr old has amassed a US$1b war chest to splurge on the newly formed Caravel Group while luring 10 to 20 former Noble colleagues to join the venture, including former Noble staff in HK and at its iron ore business in Beijing. Banga will formally launch Hong Kong-based Caravel on Friday. The firm - named after a 15th and 16th century Portuguese exploration and trading vessel - has already set up its headquarters, including trading desks, in a swish building in Hong Kong's Wan Chai district, less than 500 metres from Noble's offices. The move will put Banga - once described as "the heart and soul of Noble" by company founder Richard Elman - in competition with his former employer. Caravel will trade commodities and related derivatives, and will also be active in shipping, asset management and private equity investment. But Caravel would not follow Noble into agribusinesses or investing in commodities assets, Banga said. This is a target growth area for Noble, which has invested in facilities such as oilseed processing plants in China and sugar mills in Brazil. "It will be like the old Noble used to be," Banga said in a phone interview. Caravel will concentrate on trading and shipping commodities such as iron ore, thermal and coking coal, nickel ore and manganese, mainly in the Asia Pacific. Banga still holds ~US$116m worth of Noble shares. He sold 225m Noble shares in Nov '13 for $248m

Indofood Agri

Indofood Agri: CIMB note that 3Q13 earnings were broadly in line with consensus and house forecasts. 3Q13 net profit fell 52% yoy as weaker plantation earnings and higher forex losses overwhelmed maiden sugar earnings from Brazil. The main surprise was a maiden profit contribution of Rp50.2bn from its sugar assets in Brazil, though this was offset by an unexpected forex loss of Rp88.7bn due to a weaker rupiah against the US$. 3Q plantation earnings fell 24% yoy from a 6% decline in FFB production from nucleus estates and a 1% dip in average selling prices achieved for CPO. Its edible oils and fats division also posted weaker yoy and qoq earnings in 3Q as the group cut cooking-oil and margarine prices by 10% in Apr 13. House surprised by its Brazilian sugar’s contributions despite low international raw-sugar prices. This was, however, overshadowed by forex losses and lower FFB production from its nucleus estates. Expect 4Q earnings to be better, led by seasonally stronger plantation production and sugar contributions. As its sugar harvest season starts in May, the bulk of its sugar sales are typically realised in 2H. The house maintains it Underperform Call with $0.81 TP, though may review them after the group's briefing this morning.

Jet Technics

Jet Technics: Typically upon delisting, the company is required to provide a reasonable exit offer to shareholders, and appoint an independent financial adviser to advise on the offer. However in Jet's case, neither the exit offer nor the appointment of an IFA had been met. So Tat Wing, the chairman and managing director, had since been reprimanded by SGX for the non-compliance. Shareholders could either take legal action on a recourse, or wait for SGX to carry out its legal proceedings on the company.

MIDAS

MIDAS: CIMB thinks that Midas 60% market share plus strong track record poises it for a tremendous opportunity in China’s aggressive railway expansion plans. The Chinese Government plans to add 11,200 high-speed train cars and extend HSR railway by 18,000km by 2015, with expected RMB 2.09t -2.16t for spending 2013-15. Taking Midas’ 60% market share, possible wins could amount to Rmb 2.5b – 3.2b by end 2015. CIMB highlighted Midas’ competitive edge: 1) Close relationship with customers 2) Having the capabilities to produce a variety of extrusion profiles 3) strong track record of manufacturing quality products Midas is currently trading at 0.9x P/B, and CIMB thinks the discount is unjustified. The house thinks that Midas can win Rmb545m in next round of procurement, which will provide further re-rating catalyst for the stock. CIMB maintains O/PF with TP: $0.74 (unchanged)

ARA

ARA: On STC’s acquiring of a 20% stake in ARA, ARA believes that STC can act as an alternative funding source for increasingly steep seed capital requirements. StanChart believes that with lower capital required at ARA level, their concerns of periodic equity funding to finance AUM growth is now irrelevant. As AUM growth targets are now more realistic, StanChart upgrades ARA to O/PF with higher TP of $2.04 (from $1.82)

AAREIT

AAREIT: AIMS’ 2QFY14 DPU was up 10% y/y to 2.75¢, in line with consensus, led by income contribution from Phase 2 of 20 Gul Way and improved occupancy at 56, Serangoon North Ave 4. NPI of $18.2m (+3% y/y) was in line with consensus. StanChart highlights that AAREIT offers FY14-16 DPU and EPU CAGR of 5.2% and 7.8% respectively, the highest among industrial SREITs. We expect 103 Defu Lane, Phase 2E and Phase 3 of 20 Gul Way to contribute 12% of portfolio NPI by end-FY14/15. StanChart continues to expect AAREIT to acquire $100m of assets over the next 12 months at average 7% NPI yield, fully utilizing proceeds from its equity raising in April 2013 and raising gearing to 35% from 25% currently. StanChart mentions that AAREIT’s asset portfolio has one of the most underutilized plot ratios among SREITs, and expects management to continue undertaking redevelopment initiatives after its ongoing projects ar completed by March 2015. The house upgrades to O/PF with TP raised by 5% to $1.66

NOL

NOL: 3Q13 results is out tomorrow (30 October) after market, and CS expects a loss of $64m, compared with last year’s pre-ex NPA of US$41m and a corporate-monitored consensus of US$21m Peer Orient Overseas International Limited had a 10% dive in 3Q13 revenues, and CS reckons NOL’s results is not likely better due to the pressure of Industry-wide overcapacity. The house expects positive contribution from logistics business, cost savings from liner segment re-engineering, lower bunker expense and larger vessel efficiencies to provide some offset, but sell-side earnings are expected to trend lower. CS remains U/PF with TP: $0.95, and highlights if NOL cannot make profit in the strongest season, profitability for the year will likely once again elude NOL.

Noble

Noble: Maybank-KE reiterate HOLD with $1.08 TP, based on 0.9x P/BV. In the house view, recent increase in Noble’s share price has reflected a rebound in BDI, sugar and coal prices, and optimism over its upcoming 3Q13 results (to be released on 12 November). But in the long term, not excited on both volumes and commodity prices. Admittedly, valuation looks cheap on a P/B basis. In house view, a BUY rating is unwarranted as ROE is expected to stay depressed relative to its cost of equity till FY15F.

Cacola

Cacola: Entered MOU for a 51% acquisition in Yunxi XingQiang Gold Ltd (YXG), which wholly owns the Hubei Goldmine, for Rmb71.4m. The goldmine, located in Shiyan City, Yunxi County, Hubei Province in China, has a preliminary indicative valuation of not less than Rmb150m according to YXG. The long stop date of the MOU will be on 30 Dec 2013. Separately, the furniture maker had announced that it is still in the midst of finalizing the acquisition of the Guizhou Goldmine, which had previously lapsed on 31 Jul after several terms on the agreement were not met.

Ezra

Ezra: Ezra was awarded several contracts worth an aggregate US$110m. Its subsea services division, EMAS AMC, clinched a SURF type offshore installation project for a national oil company which operates in the Gulf of Mexico, as well as a pipeline repair works project for an oil major operating in Asia. Both projects are scheduled to commence by the end of 2013. In addition, its offshore support services division, EMAS Marine, had been awarded three new charters, with an average tenure of 3.5 years (including options), from a national oil company and oil major in South East Asia for two AHTS vessels and a PSV. After the release of its 4QFYAug13 results last week, majority of the street kept their Sell/Hold rating on the company despite a turnaround in profitability in the subsea segment, mainly due to the continued scepticism on Ezra's execution abilities, as well as its rich valuations. At the current price of $1.29, Ezra trades at a rather steep consensus FY14 P/E of 18.6x, compared to global subsea peers average of 12.6x. Latest broker ratings as follows: Deutsche maintain Sell with TP $1.00 (from $0.70) DBSV upgraded to Hold with TP $1.34 (from $0.90) OSK DMG maintain Sell with TP $0.75 (from $0.70) Phillip Securities maintain Neutral with TP $1.18 (from $1.00) UOB KayHian maintain Hold with TP $1.25 (from $1.07) CIMB maintain Underperform with TP $1.00 (from $0.70) StanChart maintain In-Line with TP $1.15 (from $1.20)

Loyz Energy

Loyz Energy: Draws first oil in North Dakota and Colorado, US, one year after inking its landmark E&P deal. Initial flow tests indicate varying flow rates up to 50 barrels per day at the Schlak #3 well in North Dakota, while in Colorado, group is awaiting flow tests results at the Mansur 33-1-N and 33-1-L well, which indicated potential pay intervals of up to 90 feet in each well. The deal provides the group with a 20% share of net revenue interest for each producing well in the 60,000 acres plains.

ValueMax

ValueMax: Expect strong positive interests in its IPO debut today, after latests stats relvealed that the IPO has drawn strong demand from investor, with the total Invitation tranche (Placement and public offer) for 138m shares, 6.3x oversubscribed. The public offer tranche of 5m shares saw an application for 731.6m shares, indicating a 146x over subscription for the public offer. At the IPO price of $0.51, Valuemax Trade at 16.7x FY12 P/E, versus peers Maxi-Cash at a hefty 44.3x trailing P/E and MoneyMaxat 20.6x. Valuemax has proposed to distribute 50% of its net profit for next three years as dividends. Using FY12 earnings, that would translate to a dividend yield of at least 3% Separately, Voyage research has initiated coverage on ValueMax this morning with an Increase Exposure rating, valuing the co at $0.82 per share.

Indofood Agri

Indofood Agri: Announced 3Q13 result which was largely in line with estimates. Net profit came in at Rp 122.9b (-52% y/y, +86% q/q) and revenue at Rp 3,076.3b (-13% y/y, -8% q/q), taking the group’s 9M13 earnings to Rp 295.6b (-67%) The lower y/y sales performance was affected by lower average selling prices (ASP) of key plantation crops, lower bulk oil and copra-based product sales. The lower ASPs also impacted gross margins, which fell 27.2% vs 30.1% further contributed by higher production cost arising from rising wages and from newly matured plantations. The plantation division saw total revenue at Rp 2,042.2b (-12%), reflecting principally lower commodity prices, but on a q/q basis, the division reported a good improvement in EBITDA margins, in line with the recovery in the average selling prices of CPO and palm kernel (PK) of 11% and 16% respectively. The Edible Oils & Fats (EOF) division reported total revenue of Rp 2,185.9b (-6%), with the softer sales attributable to the combined effects of lower sales volume of bulk oil and copra-based products, as well as a 10% price reduction for consumer cooking oil and margarine. On a positive note, the bottom-line’s decline was partly negated by the recognition of a maiden profit contribution from its investment in a joint venture, CMAA of Rp 50b in 3Q13. Going forward, the group expects to see softer commodity prices for the remainder of 2013, which will continue to impact its performance. Note however that its Edible Oils & Fats division continues to deliver positive results, demonstrating the strength of its brand and integrated business model. The group has also commenced its sugar harvest season in May, with contributions expected to be realized in 2H13.

China Minzhong

China Minzhong released 1Q14 results which were below estimates, with net profit at Rmb 48.4m (-89% y/y) and revenue coming in at Rmb 637.8m (+4%). q/q comparisons are not relevant on back of seasonal patterns within the industry. The marginal sales increase was largely due to a high revenue base in 1Q13 which recorded an one-off sales rollover from the previous financial year due a shift in the operating peak season caused by a late winter. Operationally, the Cultivation business segment recorded a 30% growth in revenue to Rmb 341.7m, on back of a 28% increase in cultivation volume and higher mushroom spores sales, while sales in the Processed business segment slipped 16% to Rmb 296.1m, due to a decline in sales of beverages and other processed products. EBITDA margins crumbled to 19.5% vs 33.2% on back of higher operating costs in both the Cultivation and Processed business segments, with the group expecting continued margin pressure due to higher labour costs and average selling prices not rising fast enough to offset higher costs. Going forward, the grp continues to see continue to see rising labour costs as a key challenge to its operations, particularly in the cultivation business. But seess continued expansion into industrialised farming as a step in the right direction.

CDLH Trust

CDLH Trust: reported 3Q13 DPU of 2.64¢ (-3% y/y), which translates to 6.3% annualized yield. Gross revenue dipped 0.8% to $35.9m, mainly due to weaker operating performance from its Spore hotels, dragged by an influx of new hotel rooms and an overall weaker corporate demand environment. For the Spore hotels, avg occupancy rate dipped 0.7ppt y/y to 87.6%, and avg daily rate fell 5.6% to $218, leading to a 6.4% decline in RevPAR to $191. Meanwhile, fixed rent contribution from the Australia hotels also dropped due to the weakened AUD, which negated the $1.9m revenue boost from the recently acquired Angsana Velavaru resort in the Maldives. While Singapore Tourism Board data indicates 8.5% y/y growth in visitor arrivals for Jan – Aug 2013, which has helped in absorbing the supply of >2,600 rooms that have come on stream this year, the uncertain global economic environment, as well as companies and leisure travelers exercising caution in travel expenditure is expected to continue to weigh on the attendant accommodation demand. This may continue to keep the overhang in sentiment on the hospitality sector. CDLH Trust ended 3Q13 with NAV of $1.58, which translates to 1.06x P/B, based on the last closing price of $1.68.

CMA

CMA: 3Q13 net profit inched up 4% y/y to $64.8m, coming in slightly above Bloomberg consensus forecast of $60. 9m, thanks to (1) a decrease in finance costs (arising from higher capitalization of finance costs in properties under devt, partially offset by additional finance costs from issuance of medium term notes in Aug ‘12), and (2)improvement in share of results from associates and jointly-controlled entities (higher contribution by CMT arising from a mall which resumed full operations after major asset enhancements, opening of new malls held by the China funds in China, and profit recognition for units sold in Bedok Residences). Revenue however, dipped 10% to $91.8m, on lower property management fee from China as fewer malls opened in 2013 compared to the previous year. Still, management remains confident that its key markets in Spore, China and Msia will perform well in 2013, on the back of sustained tenant sales growth. In China for instance, NPI of malls grew 12% y/y in 9M13, while total tenants sales on a same-mall basis increased 13.8%. Looking ahead in 4Q13, CMA targets to open two malls in Spore – Westgate and Bedok Mall – which are ~85% and nearly 100% leased, respectively. The group also continues to be on the lookout for good acquisition opportunities in its key mkts. At $2.05 last close, CMA trades at 1.15x P/B, 15.5x annualized 9M13 P/E.

SG Market (30 Oct 13)

SG Market: S’pore shares are expected to remain in the doldrums even as Wall Street surged to new all-time highs after economic data supported views that the Fed will keep its stimulus intact at a FOMC policy meeting on Tue/Wed. The gains also came on the heels of solid earnings boost from Pfizer and a US$15b share buyback by IBM. The latest economic news showed a 0.1% drop in retail sales in Sep, restrained by the big drop in auto sales, while consumer confidence plummeted in Oct as the budget impasse and debt ceiling deadlock took its toll. Weaker-than-forecast factory output and home sales also added to concerns that gowth has slowed. The STI remains trapped within its 3,150-3,238 trading range in the near term with little signs of a breakout. Stocks to watch for: *CMA: 3Q13 net profit inched up 4% y/y to $64.8m, coming in slightly above consensus forecast of $61m, largely due to a decrease in finance costs, and improvement in share of results from associates and JVs. However, revenue dipped 10% to $91.8m, on lower property management fee from China as fewer malls opened in 2013 compared to the previous year. Still, management remains confident that its key markets in S’pore, China and Malysia will perform well in 2013. *CDLH Trust: Reported 3Q13 DPU of 2.64¢ (-3% y/y), which translates to 6.3% annualized yield. Gross revenue dipped 0.8% to $35.9m, mainly due to weaker operating performance from its S’pore hotels, dragged by an influx of new hotel rooms and an overall weaker corporate demand environment. Average occupancy for its S’pore hotels dipped 0.7ppt to 87.6%, while daily room rate fell 5.6% to $218, leading to a 6.4% decline in RevPAR to $191. Fixed rent contribution from the Australia hotels also dropped due to the weakened AUD, which negated the $1.9m revenue boost from the recently acquired Angsana Velavaru resort in the Maldives. The trust ended 3Q13 with NAV of $1.58. *Indofood Agri: 3Q13 results were largely in line with estimates with net profit of Rp122.9b (-52% y/y, +86% q/q) and revenue of Rp3,076b (-13% y/y, -8% q/q). The sales performance was adversely affected by lower average selling prices of key plantation crops, lower bulk oil and copra-based product sales. On a positive note, the profit decline was partly negated by the recognition of a maiden profit contribution of Rp50b from its investment in a joint venture, CMAA in 3Q13. *China Minzhong: 1Q14 results missed estimates with net profit at Rmb48.4m (-89% y/y) and revenue at Rmb637.8m (+4%). Bottomline was hurt by a plunge in EBITDA margins, which contracted to 19.5% from 33.2%, on higher operating costs in the both the cultivation and processed business segments. The group is expected to face continuing margin pressure as average selling prices not rising fast enough to offset higher labour costs. *Yanlord: Acquired a 386,000 sqm GFA prime integrated development site in Nanjing Eco-Island for Rmb2.88b or Rmb7,447/sqm in a public auction. The project will include residential (274,000 sqm), commercial and office space (59,200 sqm) as well as R&D facilities (53,500 sqm) and is well connected to planned key roads and adjacent metro station. *Ezra: Awarded new projects in subsea construction and offshore support services worth US$110m, comprising a SURF type offshore installation project from a national oil company operating in the Gulf of Mexico, pipeline repair works for an oil major operating in Asia and three new charters with a oil major in SE Asia for two AHTS and a PSV vessel. The group’s order book stands in excess of US$2b. *Loyz Energy: Draws first oil in North Dakota and Colorado, US, one year after inking its landmark E&P deal. Initial flow tests indicate varying flow rates up to 50bpd at the Schlak #3 well in North Dakota, while in Colorado, the group is awaiting flow tests results at the Mansur 33-1-N and 33-1-L wells. The agreement gives the group a 20% share of net revenue interest for each producing well in the 60,000-acre concession. *JEP Holdings: Leased a 1,216 sqm plot of land at Loyang Way from JTC to build a new $3.5m manufacturing facility, expected to be operational in 1Q15. Group intends to invest an additional $1.5m to fully equip the facility over the next three years t support its aerospace business and turnkey projects. *Sembcorp Industries: Divested its entire interest in Sembcorp Enviro (India), which owns a 51% stake in SembRamky Environmental Management, a medical waste collection and treatment player in India, to Ramky Int’l for $7.25m. *Cacola: Entered MOU to acquire 51% stake in Yunxi XingQiang Gold (YXG), which owns Hubei Goldmine, for Rmb71.4m. The goldmine, located in Shiyan City, Yunxi County, Hubei Province in China, has a preliminary indicative valuation of not less than Rmb150m. Meanwhile, the group is still in the midst of finalizing its acquisition of Gold Depot Investments, which holds a 90% indirect interest in a Guizhou goldmine. *Asiasons Capital: Entered term sheet with Deepvale Capital for a proposed four-year 6% convertible loan facility of up to $25m with a conversion price of $0.25 each. The facility will be earmarked for private equity investments ($20m) and working capital purposes ($5m). Deepvale is wholly owned by Ng Teck Wah and Jared Lim, both of whom are Directors and controlling shareholders of Asiasons. *OKH Global: In a reply to SGX query, group declared that apart from the completion of its proposed 40/60 joint venture with Pan Asia Logistics, it is unaware of any other information to explain the trading volatility of its shares. *ValueMax: Drew strong demand for its IPO of 138m new shares, which was 6.3x subscribed. The pawnbroker will make its trading debut on the mainboard on 30 Oct. *LH Group: Issues a profit guidance that it expects to continue to incur a loss for 3Q13. Results are likely to be released on or before 8 Nov.

Tuesday, October 29, 2013

DMG's Restricted Stocks list

DMG's Restricted Stocks list - Prohibitions on internet trading and curbs Trading Curbs: - Asiasons - Blumont - LionGold - Skyone Prohibitions on internet trading: - China Environment - Innopac - IPCO - Tritech - ISDN - Mirach Energy - Swee Hong - Chasen

52 wk highs/ lows

52 wk highs: SIIC Energy, C&G Environmental , Micro Mechanics , Sarin ETF -- DB X Trackers MSCI World TRN, Lyxor MSCI Korea USD - B 52 wk lows: CCFH, Hi-P, Progen, Sinjia Land, Plastoform, DeClout, P99, Swee Hong, PSL, PS Group, Geo Energy, APTT, Meghmani ETF -- DB X Trackers S&P 500 INV DA

Guangzhao Industrial Forest

Guangzhao Industrial Forest: has been under judicial mgt and suspended since Sep ’11. The co has received notice from the Exchange for its shares to be delisted. The Exchange will grant the company an extension of time for the co to make a reasonable exit offer to shareholders until 31 Oct ’13, but having regard to the financial position of the co, it is highly unlikely that any return will be derived by shareholders.

Ezion

Ezion: CLSA maintains its high conviction BUY on the counter with TP of $3.11, pegged to a 9x FY14 PER with 32% core earnings growth over FY14 and FY15. This translates to a 39% upside based on the current price of $2.24. Having recently announced its 9th contract win for 2013, CLSA believes that the company remains on track to meet expectation of 11 new contracts for the year. While there have been recent concerns on rising costs of debt as well as non-core transactions which have led to underperformance, CLSA believe that strong earnings coupled with robust contract win momentum will driver performance over next two quarters.

Cash Up-Front Buying for 11 Counters (AmFraser Securities)

with effect from 29 Oct 2013, Tuesday,  the following counters will be subject to cash up-front buying only, i.e. only clients who have cash in their trust accounts will be allowed to buy the counters. (1)  Blumont (2)  Asiasons (3)  LionGold (4)  LionGold w (5)  Tritech (6)  Mirach (7)  ISDN (8)  Innopac (9)  Skyone (10)  Swee Hong (11)  Hankore there will be no internet trading (buy & sell) for the above counters.

TEE International

TEE International: Voyage notes that the $142m contract that TEE just clinched is their largest single project, after its $109m project at Marina Bay Sands Integrated Resorts and $124m project at Asia Square Tower One. House view the win as a good reflection of TEE’s ability to secure high value engineering projects and helps to restore the company’s engineering order book (excluding associates) to more than $240m. Voyage has an Increase Exposure with TP $0.45.

Grand Banks Yachts

Grand Banks Yachts: Restructured and recapitalized in time to ride the US luxury boat market recovery. Grand Banks posted its lowest loss in four years of $0.6m, as 1QFYJun14 revenue rose 46% to $9.5m, driven by a recovery in the US luxury boat market and the successful introduction of several new Grand Banks’ models. Gross profit climbed 55% to $1.8m. Operating cash flow reversed back to $0.6m, from the negative cash flow of $1.7m a year ago. Net order book stood at $14.2m, 7% higher q/q, due to more orders form the US market which has exhibited good market traction in recent quarters. Grand Banks is positioning itself to tap into the continued US market recovery. For instance, it will be showcasing 6 of its models in the largest boat show in the world in Fort Lauderdale over 31 Oct – 4 Nov – the biggest Grand Banks’ display in the last 10 years. Management reiterates that while its FY13 losses have narrowed compared to FY12, more needs to be done to improve the financial performance in FY14. The group has embarked on a review of its operational structure and processes and will be executing the necessary actions with a view to achieving profitability in FY14, in line with its priority to be removed from the SGX Watch-List. The group has made an application to the SGX for an extension of time beyond 5 Dec ’13 for removal from the Watch-List and is awaiting response from SGX. In Oct, the group completed a 1-for-2 rights issue raising net proceeds of ~$12.3m, which may be deployed toward investment initiatives including new products, yacht inventory, and potential business acquisitions and for general working capital. The group remains on the look out for investment opportunities to widen its market reach and broaden avenue streams. Adjusted for the rights issue, Grand Banks trades at 0.8x P/B. The company boasts a strong balance sheet backed by $25.9m cash ($0.15 per share) and no debt.

SIIC Environment

SIIC Environment: its subsidiary, S.I. United Water has successfully won the open bidding with regard to the acquisition of a 70% stake in Shanghai Qingpu second wastewater treatment plant for consideration of Rmb126.0m. This compares with the independent valuation estimate range of Rmb 97.6m to Rmb 141.6m, and NTA and net profit of the sale equity interest of Rmb131.4m and Rmb9.04m, respectively. The purchase will be funded through a loan from SIHL Finance, a wholly owned subsidiary of Shanghai Industrial Holdings, a controlling shareholder of the company. Based on adjusted FY12 numbers, the acquisition will lift SIIC’s EPC from Rmb2.38 cts to Rmb 2.64cts.

Noble Group (technical)

Noble Group: Counter is still within its short-term positive trend, with support at the $1.00 mark. However, the downward sloping RSI and Stochastics may see its share price testing that level in the near-term. The next support level is at $0.965, followed by $0.95. Resistance level is at $1.065.

Yoma (technical)

Yoma: chart suggests lack of direction in the near term, with share price likely to remain range bound within $0.70 - $0.85 . The key indicators , hoevering around neutral levels, corroborate this view.

Wilmar (technical)

Wilmar: Trading Central notes the stock remains well on the upside following the bullish penetration from its previous declining trend line. Both the 20 day and 50 day moving averages play good support roles and should continue to push prices higher towards $3.75. Rsi remains well-directed, confirming a positive bias.

HK Land (technical)

HK Land: Stochastics seem to be hooking upwards which may see share price following the same trend in the near term, supported by its low RSI. Near term resistance is at $6.20 level, while support is at $5.90.

Restricted Stocks (Lim & Tan)

Restricted Stocks with effect from 29 October 2013:- (Lim & Tan ) Maximum of $30,000 (buy) per counter. • Albedo • Amplefield Ltd • Artivision • AsiaMedic • Asian Micro • Asiasons • A-Sonic • Aussino Grp • Blumont • Cedar Strategic • CEFC International • Centurion • Chasen Holdings • Chaswood Resources • China Environment • China Great Land • China Oilfield • CNMC Goldmine • Digiland • Elektromotive • EMS Energy • HL Global • Infinio • InnoPac Holdings • Ipco Intl • ISDN Holdings • ISR Capital • JK Tech • Koyo • Lereno • Lifebrandz • Lindeteves-Jacob • Liongold • Metech Intl • Mirach Energy • Next-Gen Satellite • OSSIA International • Polaris • Singapore Kitchen • Singapore Medical • Sitra Hldg • Stratech • Sunmoon • SurfaceMT • Transcu • TT International • Tung Lok • Unionmet • United Fiber • Vallianz • W Corp • WE Holdings • YHM Group • ZhongminBH • Zhongxin Fruit&Juice

Sheng Siong

Sheng Siong: On its recent purchase of 6x 99year leasehold units of shop space in Junction 9 totalling 18,611 sq ft at 18 Yishun Ave 9, Daiwa thinks that the acquisition will be positive for Sheng Siong, as it is a positive hedge against potential rising rental costs. Upon completion, Sheng Siong will be the only supermarket inside the Junction 9 mall, and management is optimistic that the store at Junction 9 is poised to benefit from high traffic because it is conveniently located (in line with gov’t’s initiative to transform Yishun into an integrated town centre; the new store is located within the 186-uni residential development Nine residences). Sheng Siong has 2 other stores within the Yishun vicinity. Daiwa thinks that funding for the acquisition isn’t an issue. The house added that this plus the recent $3.5m Toa Payoh acquisition is evidence of a strategy change from being asset-light, and iterated that Sheng Siong’s balance sheet should accommodate strategic space shopping. Daiwa remains Outperform for Sheng Siong with TP: $0.73

First REIT

First REIT: Post-3Q13 results, Voyage believes that First REIT is progressing with its expansion plans of 1) acquiring some of its sponsor’s assets, 2) looking at healthcare related assets in Asia and 3) performing asset enhancement initiatives on some of its hospitals. After experiencing the positive DPU uplift from the recent four acquisitions, House expect to hear something about the new acquisitions over the next six months and asset enhancement initiatives over the next three months, further enhancing its DPU growth over the next six months. First REIT now offers an attractive annualized dividend yield of 6.9%. Voyage maintains Increase Exposure with TP $1.44.

CNMC Goldmine

CNMC Goldmine: Following announcements of record gold dore production of 1,360oz in Jul and 3,420oz in Sep 2013. In contrast, 1H 2013 gold production was only 2,073oz. CNMC’s share price of $0.235 as at 28 Oct 2013 suggests that the market may yet to have fully priced in the growth in CNMC’s production. In addition, there could be some upside risk in the estimation of 3Q net profit as unit costs have most likely been driven lower by economies of scale. CNMC further reported recently that it produced 1,526oz of gold dore in a single gold pour in Oct 2013, suggesting that the strong performance in 3Q is being carried forward into 4Q. House notes that CNMC need only produce another 3,350oz of gold in 4Q to meet its full year forecast of 12,000oz - an achievable target given recent output levels, but subject to weather considerations. Voyage has an Increase Exposure rating, with TP $0.80. This implies a whopping 240% upside on its last closing price of $0.235.

Bumitama

Bumitama: Maybank-KE visited Bumitama’s PT Windu Nabatindo Lestari oil palm estate in Central Kalimantan recently. The 29,472ha estate has its own mill, a R&D centre, a learning centre, a weather station, a school and accommodation for workers. The key takeaways from the visit are that: i) Central Kalimantan is ideal for oil palm planting, given its well-distributed rainfall of 3,000mm a year, 5-7 sunshine hours a day and fertile virgin soil; and ii) Management will focus first on the community – a key source of its labor – to ensure the smooth and successful running of all estate operations. Since 2004, Bumitama has been growing at an impressive rate of ~9700 ha of new nucleus planting each year, hence to address potential labor issues, Bumitama has invested in an in-house learning centre to recruit from the local community and train future workers for its internal requirements. The house maintains Buy with TP $1.24, pegged at 16x FY14e P/E.

Hi-P

Hi-P: OSKDMG maintains Neutral with TP $0.67, based on 0.95x FY13 P/BV (0.5 SD below five-year historical average). Note that Hi-P released negative profit guidance last Friday, citing a drop in orders from one of its existing customers, which may be Apple. Production orders for iPhone 5c have been cut following its disappointing debut. The house slash FY13 and FY14 estimates by 47% and 40% respectively.

Sino Grandness

Sino Grandness: UOB kay Hian maintains Buy with $1.02 TP. The house hosted Sino Grandness’s VP of Investor Relations at a roadshow in Europe. Note that most clients were impressed by the company’s strong earnings track record and outlook, coupled with specific share price catalysts, such as its Garden Fresh listing. Other positive developments include the introduction of a new line of snack foods under its non-beverage division, which could be a positive long-term catalyst. The house TP assumes the listing of Garden Fresh will go through in 2014, a holding company discount of 20% on its stake in GF and 5.0x 2015F PE on its remaining businesses. Believe there could be further upside after the re-rating of its close comparable, Huiyuan Juice.

Petra

Petra: The Business Times picks up from Petra's announcement last week. Petra’s deal to sell its cocoa ingredients business to Barry Callebaut for US$950m (subject to adjustments at completion) may have hit a sour note as the buyer is now asking for a closing price reduction of US$98.3m. This comes after the estimated sale proceeds was already cut to US$860m bcs working capital delivered at completion was lower by ~US$74m. Should Petra be compelled to accept the closing px reduction, it would mean a chunky 20% slice off the original px when the deal was struck in Dec last yr. This could mean a potential estimated net loss per share of US 6¢ from the sale transaction, instead of the net gain per share of US 10¢. This estimated shortfall of 20¢ could prompt analysts to further knock down their avg TP of $4.20.

ST Engineering

ST Engineering: OCBC maintains Hold with $4.11 TP. Note that ST Aerospace, the aerospace arm of ST Engineering (STE), and Jetstar Asia have announced the signing of a three-year line maintenance contract. The agreement covers a full suite of line maintenance support for Jetstar Asia’s existing and future fleet of Airbus A320 aircraft. ST Aerospace has been supporting Jetstar Asia since 2004 for a wide range of maintenance services on their fleet of A320 aircraft. The contract is not expected to have any material impact on the consolidated net tangible assets per share and EPS of STE for the current financial year.

OKP

OKP released a weak set of 3Q13 results with net profit at $0.3m (-88%), despite revenue rising 8% to $30.7m. The higher revenue was due to recognition from the group's key construction projects as well as existing and newly-awarded maintenance contracts. The rise in revenue was however outweighed by higher cost of works arising mainly from increases in sub-contracting, labour and additional costs for certain sewage-related projects. As such, gross margins slumped to 6.5% versus 22.6% y/y. Going forward, the grp guides that current market conditions are challenging but believe its business remains resilient. Ytd the grp has secured about $70.4m worth of new projects and its current order book stands at ~$447.0m, stretching earnings visibility over the next 3 years.

Healthway

Healthway: Released 3Q13 results which were largely propelled by a one-off item, as net profit came in at $10.1m (+846% y/y, -56% q/q) and revenue at $20.4m (+3% y/y, +1% q/q). The result brings the group’s 9M13 earnings to $34.6m (+619%). The sharp improvement in the bottom line for the quarter was mainly due to a 703% surge in operating income to $24.2m, on back of the disposal of available-for-sale financial assets, which was reclassified from equity. Total operating costs meanwhile surged 57% to $33.5m, mainly due to an impairment loss of $13m recognized for loan receivables, as the amount was deemed to be impaired in view of the existing operating conditions in China. The increase was offset slightly by a decrease in other operating expenses, due to lower rental costs and administrative fees paid, as well as decrease in consumables and laboratory expenses. Going forward, the group notes that its specialist clinics continue to show steady growth due to expansion of patient base, and will continue to open more new clinics in the primary care sector. Apart from streamlining its operations, aims to leverage on IT to automate and improve operational efficiency and process flow. At current price, valuations are undemanding with Healthway trading at an annualized 3.2x FY13 P/E, with net gearing at a relatively low 20.4%.

TEE International

TEE International: Announced that it has signed a conditional letter of intent with Hyundai Mechanical and Construction Co., Ltd to deliver a S$142m Mechanical and Electrical (M&E) Package for the Marina South Mixed Development Project. The package is expected to have a duration of 28 months. OCBC see this as a positive development which would significantly replenish the group’s order book. Together with the Marina One Package, the group’s current outstanding order book would stand at approximately $317m.

Great Eastern

Great Eastern: Overall, 3Q13 net profit was 54% lower y/y, as there was a one-off post-tax gain of $421.6m from the stake sale of APB and FNN last year. Excluding the one-off gain, core net profit would be 43% higher y/y on better profit from insurance business. In 3Q13, the group recorded operating profit from insurance business of $138.6m, +26% y/y, built on better underwriting performance and higher net invmt income across all insurance funds. Total weighted new sales rose 38% y/y to $274.7m, led by the continued growth in Spore and Msia operations. The group’s new business embedded value (NBEV), a measure of its long term economic profitability, increased 18% y/y to $100.8m, reflecting stronger sales performance. Meanwhile, the non-operating profit from insurance business rose by 27% y/y to $91.1m, largely contributed by unrealized mark-to-market gains brought about by the partial recovery in financial markets following the US Fed’s Sep ’13 decision to maintain its QU programme. This resulted in a decline in interest rates, as well as other market factors such as the narrowing of credit and swap spreads. Capital adequacy ratios of the group’s insurance subsidiaries in both Spore and Msia remained well above the min regulatory ratios of 120% and 130% in the two countries respectively, reflecting the strong capital position of the group. Counter trades at 1.7x P/B, 12.1x annualized 9M13 P/E.

Straits Trading Company

Straits Trading Company (STC): STC will acquire a 20.1% stake in ARA Asset management for $294.4m from Cheung Kong Investment company, translating to $1.7326/share, at a slight discount to its last close of $1.75. Post purchase, STC will become the largest shareholder in ARA, followed by ARA's CEO John Lim (19.25%) and Cheung Kong Investment (7.84%). Separately, STC will set up a 90/10 co-investment company, Straits Real Estate (SRE), with ARA's CEO, John Lim. SRE will have an initial capital commitment of $200m and eventually boast up to $950m. SRE will have a mandate to invest in real estate and real estate-related opportunities and help STC transform its low-yielding assets into potentially higher-return assets. Meanwhile, STC's existing property assets will come under ARA's management in a separate account arrangement. These include the Straits Trading Building, nine good class bungalows (GCBs), 13 units of Gallop Green, and 14 units of The Holland Collection. This strategic alliance in real estate will enable STC to unlock value from its property business and create new avenues to expand and diversify its real estate portfolio. UOB KayHian maintains a HOLD rating with TP $1.91.

SG Market (29 Oct 13)

SG Market: S’pore shares are expected to drift in directionless market after Wall Street closed narrowly mixed in lacklustre trading as investors were hesistant to take big bets following a batch of mixed earnings reports and ahead of the Fed’s two-day policy meeting starting today although most traders are not expecting any change in its monetary stance. On the exonomic front, industrial production rose 0.8% in Sep, looging its largest increase in seven months but pending home sales plunged 5.6% for its fourth monthly decline. While the STI managed to eke gains yesterday, the underlying broad market was weak with losers overwhelming gainers. With technical indicators exhibiting signs of deterioration, the index is expected to head towards its downside support at 3,150 with the 200-day moving average at 3,238 posing as stffl resistance. Stocks to watch for: *Straits Trading/ARA: Straits Trading is acquiring a 20.1% stake in ARA Asset management from ARA CEO John Lim and Cheung Kong for $294.4m or $1.7326/share with the aim to seed and expand its property business in the longer term. Post transation purchase, Straits Trading will become the largest shareholder in ARA, followed by John Lim (19.25%) and Cheung Kong (7.84%). Separately, it will set up 90/10 co-investment company, with initial capital commitment of $200m that may rise up to $950m. The new vehicle will have the mandate to invest in real estate and real estate-related opportunities in SE Asia, Australia and China and help Straits Trading transform its low-yielding assets into potentially higher-return ones. *ST Engineering: Signs three-year line maintenance contract to support Jetstar Asia’s existing and future fleet of Airbus A320 aircraft. The group has been supporting Jetstar since 2004 for a wide range of maintenance services. *SGX: Launches Asian foreign exchange futures from 11 Nov, starting with six currency pairs – AUD/USD, AUD/JPY, USD/SGD/ INR/USD, KRW/USD and KRW/JPY. In addition to these Asian FX futures, SGX was the first central counterparty in Asia to clear OTC non-deliverable FX forwards in seven Asian currencies and interest rate swaps. *Boustead: Awarded design-build-lease contract for integrated maintenance repair and overhaul remanufacturing and office facility at Tukang Innovation Park. To be completed in 1Q15, the facility will have a gross floor area of 24,800 sqm and will be the group’s fourth industrial facility added in the past three months and 13th industrial leasehold facility, taking its portfolio size to over 152,000 sqm GFA. *TEE Int’l: Signed letter of intent with main contractor Hyundai Engineering & Construction to deliver a $142m M&E package for Marina One, a landmark mixed development project in Marina South by M+S, a JV between Malaysia’s Kazanah Nasional and S’pore’s Temasek Holdings, within 28 months. The project will take its engineering order book to $317m *King Wan: Secured five new M&E engineering contracts in S’pore worth $26m between Aug-Oct period for Alexandra Echelon condominium, Tampines HDB project, Overseas Family School, Buangkok Jewel condominium and Water Woods EC. To be completed by 2016, the latest projects will bring its order book to $168.9m, stretching till 2016. *OKP: Weak 3Q13 results with net profit of $0.3m (-88% y/y) despite revenue rising 8% to $30.7m, which was weighed by poorer pricing for new and current projects, rising manpower and sub-contracting costs as well as cost overruns on some sewer-related projects. Gross margins shrank to 6.5% from 22.6% in 3Q12. As of Sep, order book grew to $447m, lasting till 2015, with free cash of $32.2m and NTA of 30.2¢. *Healthway Medical Corp: 3Q13 net profit of $10.1m was boosted by a $22.4m gain on distribution-in-specie of HMI, while revenue held steady at $20.4m (+3.3%). At the operating level, HMC recognized an impairment of $13m for its loan receivables in China, which resulted in a core operating loss. Management will continue its focus to open new clinics in the specialist sector, as well as the primary care sector. *Grand Banks: 1QFY14 losses narrowed to $0.6m compared to $1.4m in prior year. Revenue rose 46.3% y/y to $9.5m amid signs of a recovery in the US luxury boat market and the successful introduction of new boat models, while gross profit margin improved 1ppt to 18.6%. Group's net order book expanded 7% q/q to $14.2m on the back of better market traction in recent quarters. Its recent rights issue proceeds of $12.3m will be used to strengthen the group's financial position, as well as its investment initiatives for its business operations. *Great Eastern: Booked lower 3Q13 net profit of $282.8m as last year’s results was lifted by a $421.6m gain from sale of APB and F&N. Excluding the one-off gains, core net profit would be 43% higher on better profit from insurance business and higher net investment income across all insurance funds. Total weighted new sales rose 38% to $274.7m, led by the continued growth in S’pore and Malaysia operations. *Genting HK: 37.7% owned Norwegian Cruise Line 3Q13 results showed total revenue +18% y/y to US$797.9m and EPS +17% to US$0.84. Passengers carried rose 12% to 449,615, while occupancy edged up 1.2ppt to 114% even as capacity days expanded 15% to 2.8m. *BH Global: Issued profit warning for 3Q13 mainly due to FX losses from the significant depreciation of IDR against SGD, resulting in a net loss.

Monday, October 28, 2013

Tritech

Tritech: In a reply to SGX's query on with regards to its trading activity in the morning, Tritech has stated that the company is not aware of any information which might have caused the activity. Tritech has clarified that the group is still in the midst of its proposed restructuring and the spin off listing of its limestone business on Hong Kong Exchange. Separately, Tritech's wholly owned subsidiary, Qingdao Terratech Resources, has announced four contract orders worth an aggregate Rmb88.5m (S$18m) for the sale of marble and marble related products to individual property development companies in China. Delivery will be progressive, starting from mid-2014. Counter will resume trading at 4.45pm.

DBS (technical)

DBS: Trading Central notes the stock is supported by a short term rising trend line, which has played as a key support since Jun ’13. RSI has reversed up and stands firmly above its neutral area at 50. As long as $15.80 holds on the downside, look for a continuation of the rebound to $17.40 and $17.90 in extension.

Sheng Siong

Sheng Siong: is acquiring a 6 units of properties with combined estimated area of 18,610 sf at 18 Yishun Ave 9, from private developer CEL Devt, to expand its supermarket count in Spore to 34. The space is part of a new mixed 14-storey devt comprising retail and residential components, with expected TOP by Jun ’17. The price works out to $2950 psf, in line with current mkt prices. Maybank-KE says the new site looks promising, as it will be in the heart of Yishun with easy access to the MRT and good human traffic. Mgt notes also there are no other supermarkets in walking vicinity, and there will be access to a multi-storey carpark. Still contribution is too far out to make any substantial impact to earnings forecasts. The house maintains its Sell call with TP $0.54 (18.5x FY14e P/E), noting that Sheng Siong’s shift away from its asset-light model is negative, as i) it will likely impact the co’s ability to sustain its 90% payout ratio, and ii) is a signal that the co will continue to face challenges in securing immediate sites for rental, which will limit growth.

RH Petrogas

RH Petrogas: Counter seems to be affected by the penny decimation this morning as well. Latest was UOB KayHian's initiation on counter on 21 Oct, with a Buy rating and TP of $1.60. House note that RH Petrogas is the most balanced upstream O&G company listed on SGX. In a blue-sky scenario, RHP could be worth $2.02 in 2014 and $3.21 in 2015. House also present alternative valuation method for RHP in 2014 and 2015, by valuing RHP’s assets individually, as its share price would likely rerate upwards if its exploration and development initiatives are successful.

Mirach Energy

Mirach Energy: Counter also down to a day low of $0.140. We highlight similar investors who took up the recent placements in both Tritech and Mirach.

Super

Super - No co. specific news on Super's drop, although note that share price had a good run from the last two weeks, coming up from a low of $3.90. So do not rule out some profit taking on the counter. Maybank-KE currently has a Buy call on Super with a TP of $6.00, highlighting that while China branded consumer sales currently account for less than 5% of Super’s total revenue (largely through instant cereal), this huge market has the potential to become a significant contributor over the next two to three years. Super recently expanded its product offering in China, with the launch of coffee products in Aug. According to management, sales orders and reception to its new coffee products were very positive in a trade fair attended by more than 1,000 regional distributors. While China is still predominantly a tea-drinking country, coffee consumption has been picking up, driven mainly by a younger generation influenced by the Starbucks culture and constant marketing. The coffee segment is expected to grow at a healthy 12% clip on average over the next five years, and the time is ripe for Super to capitalize on this expected growth without overinvesting.

Sky One

Sky One: Latest news was released on 25 Sep when the group extended the long-stop date of its proposed acquisition and disposal agreement to 30 Jun 2014. Recall, the proposed acquisition of Energy Prima via the issue of 1,600m new shares at $0.25/share would result in a RTO, transforming the group into a coal mining player. The proposed disposal is the sale of the company's existing transport and logistics business at a 10% discount to NAV to controlling shareholder and CEO, Dicky Suen. The non-binding MOU on the proposed acquisition and disposal was initially signed on 10 May 2012.

Rowsley

Rowsley: Counter down 5% to $0.30 this morning, possibly over the new property tightening measures announced over the weekend at Malaysia's 2014 Budget. The measures were widely anticipated, mainly to curb excessive speculative activity. Briefly, the three measures were: i) Real property gains tax to be increased to 30%, 20% and 15% for disposal within 3, 4 and 5 years. Foreigners will have to pay a flat 30% RPGT for disposal within 5 years effective 1 Jan 2014. ii) Raise the minimum price of property that can be purchased by foreigners from Rm0.5m to Rm1.0m. iii) Developer Interest Bearing Scheme (DIBS) is no longer allowed. Market watchers feel that to mitigate this, developers may instead opt to offer credit notes or cash rebates to subsidize interest during the construction period. Technically, support for the counter is at the psychological $0.30 level.

ValueMax (IPO)

ValueMax: Phillip Securities' initiation on MoneyMax provides color on the Spore pawnbroking segment. The industry has seen an increase in the number of pledges received from 2.8m in 2009 to 4.0m in 2012, at a CAGR of 13.0%. The amount of loans given out by pawnshops in value has more than doubled since 2009 with a 3-year CAGR of 52.2%, from $2.0b to $7.1b by CY12. Loans given out by Pawnbrokers have grown at a CAGR of 19.7% in the last ten years. ValueMax IPO closes today noon, will commence trading 30 Oct, 9am on SGX Mainboard.

MoneyMax

MoneyMax: Phillip Securities initiates at Buy with TP $0.48, implying 21.8x FY13e P/E, 2.7x P/B. MoneyMax is one of Singapore’s largest pawnbroking chains with 29 outlets located island-wide, operating under the brands of “MoneyMax” and “Cash Online”. MoneyMax also provides retail and trading business of pre-owned gold, jewellery and watches. The house notes the rising New Age for pawnbrokers. Sees higher cash needs from tighter loan regulations, reducing social stigma on stronger branding and better quality of service, as key factors lifting demand for pawnshops. The business itself, because of its collateralized financing nature, is inherently lower risk. Phillip believes all three pawnshop chains are expected to experience increase in their pawnbroking profits. Nevertheless, MoneyMax may have a higher growth potential from existing outlets as compared to ValueMax. Moreover MoneyMax’s current P/E valuations lower, more attractive than Maxi-cash.

Guocoleisure

Guocoleisure: 1QFY14 net profit slumped 29.3% y/y to US$16.4m, while revenue edged up 3.2% to US$107.8m, mainly on higher revenue from property development segment. There was a one-off gain from the sale of a casino licence by Clermont Leisure amounting to US$0.8m. However, volatility in the gaming sector affected overall revenue performance. Income from Bass Strait fell 5.7% on lower crude oil prices and lower oil production. Expenses were generally higher this quarter, resulting in the lower bottomline. Management guided that London hotels are coping with the need to absorb a significant increase in the new supply that came onto the market prior to the 2012 Olympic Games. However, there is a general increase in travel with visible signs of economic recovery. They also added that these plus current transformation initiatives is expected to support the UK based business. NAV was US 89.1₵, this translates to 0.8x P/B.

Wing Tai

Wing Tai: While 1QFY14 core earnings dipped to $24.5m (-66% y/y, -92% q/q), Maybank KE sees it as a non-event with fairly successful launch of The Tembusu yet to contribute to earnings. Shareholders are still eligible for the 12 cts/sh dividend (3 cts ordinary, 9 cts special) before the stock goes ex-div on 5 Nov. The house also estimates that of the 217/337 units sold at The Tembusu, another 10-15 units may have been sold since then, with ASP remaining at around $1,500 - 1,600 psf. Due to the early stages of construction, Maybank KE expects The Tembusu to begin earnings contribution only in late FYJun14. Wing Tai’s Prince Charles Crescent (PCC) site is expected to be launched in 4Q13 or 1Q14. At an estimated breakeven cost of ~$1,450 psf, house estimates an ASP of $1,750 psf. Meanwhile, SingLand is likely to launch its own 495-unit project nearby called Alex Residences in the coming weeks with a slightly lower estimated breakeven of $1,400 psf. The pricing and demand for Alex Residences will provide further benchmarks for Wing Tai to price the PCC project. Maybank KE remains Buy with higher TP: $2.80 (previously $2.78), pegged to a 30% discount to RNAV. Balance sheet remains remains rock solid with a net gearing of just 0.13x, and the house firmly believes that its 0.6x P/B valuation is unjustified

Tat Hong/ Boustead/ CSC Holdings

Tat Hong/ Boustead/ CSC Holdings: Wholly-owned subsidiary of CSC Holdings, L&M Ground Engineering, entered into a JV formed with Tat Hong International, AME Land Sdn Bhd and Boustead's BP Lands Sdn Bhd, for a mixed property development at six parcels of vacant land in Nusajaya, Iskandar, Malaysia. Total paid up capital breakdown as follows: L&M Ground Engineering will take up 5% stake for Rm0.5m Tat Hong International will take up 25% stake for Rm2.5m AME Land will take up 35% stake for Rm3.5m BP Lands will take up 35% stake for Rm3.5m Recent developments have resulted in a change in dynamics in the Nusajaya area. Both THI and L&M's land parcel(s), located adjacent to each other and coincidentally acquired in 2011, had become incompatible with its original intention as a storage facility, due to a rise in the market value of the land. The six parcels are approximately 29.5 acres, or 1.3m sf, in size and is in close proximity to residential, commercial, educational and medical facilities. Both Tat Hong and CSC considers the JV as a good avenue to realise a more efficient use on its land(s) to create further value for shareholders.

Rex

Rex: to lift halt at 8.30am this morning. Appointed PrimePartners and UOB Kay Hian as co-placement agents with regard to its non-underwritten proposed placement of 70m new shares to institutional and accredited investors at $0.755 a piece. Of the $50.5m net proceeds raised, ~35% will be used for exploration and drilling activities in new opportunities in the Asia-Pacific region, ~33% will be used for exploration and drilling activities in new opportunities in geographical regions, including the Middle East, Norway and Western Europe, and the remainder for business expansion in the oil services sector using well stimulation technology. In conjunction, Rex will also issue 4.5m new shares to Fram Exploration ASA at $0.83 per share, in relation to the acquisition of an additional 12.2% stake in Caribbean Rex, and another 15.8m new shares to Swiss firm Ogsonic AG at $0.787 per share, as consideration for half of its 66.7% stake in a JV co to be named Rexonic AG. Rex will pay the remaining half stake with US$10m cash. Rexonic will own the world’s first environmentally-friendly, high-power ultrasound technology for commercial oil well stimulation that has shown to increase oil pdtn from 30% to 380% both onshore and offshore. The proprietary, patented technology is highly efficient in cleaning the production well bore from typical oil production inhibitors such as wax, paraffin and salt deposits, thereby significantly increasing the flow of oil into the well bore at low cost. Rexonic’s operating business models will include the servicing and licensing of the technology to oil production companies and oil service companies. Upon completion of the above exercises, Rex will have 1.095b shares out.

GMG Global

GMG Global: 3Q13 net profit dwindled 87.4% y/y (+31.3% q/q) to $1.5m, while revenue slumped 19.9% y/y (-6.4% q/q) to $243.7m as a result of a 3.6% drop (+6.2% q/q) in tonnage of 78,732 tons sold, and 16.9% decline (-11.9% q/q) in rubber prices to $3,096. Management expect 4Q13 natural rubber prices to remain range-bound at the current price of $2,842. GMG has NAV of 10.72¢ per share and a net debt to equity of 0.16x. As a result of its diminishing earnings, GMG Global now trades at a steep 40.8x trailing P/E versus its 3-year historical average of 18.6x, and downstream peer Halcyon Agri's 15.8x.

First REIT

First REIT: 3Q13 DPU rose 16.7% y/y to 1.96¢ on the back of a 30.4% increase in distributable income to $13.8m. This brings 9M13 DPU to 5.55¢, which translates to an annualized yield of 6.6%. NPI surged 53.4% to $21.7m, while gross revenue accelerated 60.7% to $22.8m mainly due to the full quarter contributions from four newly acquire properties: Siloam Hospitals Makassar, Siloam Hospitals Manado & Hotel Aryaduta Manado, Siloam Hospitals Bali and Siloam Hospitals TB Simatupang. Group has stated its intentions for asset enhancement initiatives at three of its Indonesia properties. Gearing is at 32.9%. First REIT recorded NAV per unit of 90.55¢. Bloomberg has consensus 12-month TP estimate of $1.32.

Starhill Global REIT

Starhill Global REIT: Announced 3Q13 DPU of 1.21¢ (+9% y/y) with distributable income of $26.1m (+20.8%), in line with street estimates. Excluding the one-time payout of 0.19¢ from Toshin's accumulated rental arrears in 1Q13, Starhill recorded a 9M13 DPU of 3.58¢, translating to an annualized yield of 5.8%. NPI improved 4.4% to $38m, while gross revenue increased 5.5% to $48.8m on the back of full-quarter contributions of the 6.7% rental uplift and 10% increase in base rent from master tenant Toshin and the ongoing asset repositioning of Wisma Atria. Overall portfolio occupancy improved 0.1ppts to 99.7% with average lease term of 6.6 years by NLA. At a gearing of 30.6%, Starhill has a debt headroom of $450m before hitting 40% leverage. Overall average interest cost is at 3.02%, with weighted average debt maturity of 3.4 years. StanChart reckons central area retail rents may start to outperform suburban retail rents, given significantly lower supply in the pipeline and healthy demand from robust tourism arrival growth. Orchard retail rents are still 12% below 2008 levels, while suburban retail rents are back at 2008 levels. As at 30 Sep, Starhill reported a NAV per unit of $0.87. At $0.82, StanChart estimates that Starhill trades at 13% discount to RNAV. Latest broker ratings: StanChart upgraded to Outperform with TP $0.91 Daiwa has an Outperform with TP $0.87 UOB KayHian has a Buy with TP $0.93

Raffles Medical Group

Raffles Medical Group released 3Q13 results which were largely in line. Net profit at $13.9m (+10% y/y, -4% q/q), in tandem with revenue which came in at $85.1m (+8% y/y, -2% q/q). The result brings the group’s 9M13 net profit to $41.7m (+14%) For the quarter, revenue from Hospital Services and Healthcare Services divisions increased by 9.4% and 5.7% respectively facilitated by increased patient load, while operating profit came in at $16.8 (+11%) on back of improved operating efficiencies. Going forward, RafflesHospital continues to see strong demand for all its hospital services, which is expected to contribute positively to the Group’s performance. The Group is also working with the relevant Government authorities on the extension of the Raffles Hospital premises at North Bridge Road. RafflesMedical clinics saw an improved performance with new corporate clientele, and the stronger performance is expected to carry through into the final quarter of 2013, with new branches opening in major shopping and population regions and continued growth in corporate sales. Going forward, the group guides that with new public and private hospitals being developed in Singapore and the region, the healthcare landscape will remain competitive. The more measured pace of economic growth in China and Singapore may have a dampening effect on healthcare demand. Barring any unforeseen circumstances, the Group is optimistic that it will continue to grow for the rest of the year. At current price the group seats on a net cash position of $146.1m, representing 26.8¢ per share, and trades at 30x ex-cash annualized P/E.

SG Market (28 Oct 13)

SG Market: S’pore shares are likely to remain in cautious mood despite Wall Street closing at a new record on solid corporate earnings from Amazon, Microsoft, and UPS, while a drop in consumer confidence added to hopes that the Fed will delay scaling back monetary stimulus. The STI is expected to stay within its 3,150-3,238 range with its 200—dat avarege providing still resistance and technical indicators pointing to a downward bias in the near term. Stocks to watch for: *Wing Tai: 4QFY13 net profit dropped 66% y/y to $24.5m, while revenue slid 10% to $222.8m. Topline contributions were from progressive sales recognized from Foresque Residences, Le Nouvel Ardmore and L'VIV, additional units sold in Helios Residences in S’pore, and Jesselton Hills in Malaysia. Share of profits from associates slumped 80% to 7.9% as the group booked one-off gains from the disposal of an apparel business in HK and office units by a JV in S’pore last year. NAV stood at $3.62 as at Sep. *Guocoland: 1QFY14 net profit soared more than eight-fold to $84.7m (+825%) on revenue of $233.9m (+29%), driven by sales recognition of completed units of Seasons Park in Tianjin, China, handed over to buyers in Sep 13. Bottomline was propelled by a 1379% surge in other income to $110.9m, mainly due to a gain from sale of a Rmb1.2b land parcel in Nanjing. NAV lifted to $2.27 as at Sep. *Guocoleisure: 1QFY14 net profit slumped 29.3% y/y to US$16.4m, while revenue edged up 3.2% to US$107.8m, mainly on higher revenue from property development segment. There was a one-off gain from the sale of a casino licence by Clermont Leisure amounting to US$0.8m. However, volatility in the gaming sector affected overall revenue performance. Income from Bass Strait fell 5.7% on lower crude oil prices and lower oil production. Expenses were generally higher this quarter, resulting in the lower bottomline. *Raffles Medical Group: 3Q13 results were largely in line with net profit at $13.9m (+10% y/y), risng in tandem with an 8% rise in revenue to $85.1m. Revenue from hospital services and healthcare services divisions increased by 9.4% and 5.7% respectively, facilitated by increased patient load and improved operating efficiencies. *GMG Global: 3Q13 net profit dwindled to $1.5m (-87.4% y/y, +31.3% q/q), while revenue slumped to $243.7m (-19.9% y/y, -6.4% q/q) following a 3.6% drop (+6.2% q/q) in tonnage sold to 78,732 tons (+6.2% q/q) and 16.9% decline in rubber prices to $3,096 (-11.9% q/q). Management expects 4Q13 natural rubber prices to remain range-bound around the current price of $2,842. *Mercator Lines: 2QFY14 net loss widened to $5.4m compared to $0.3m a year ago. Revenue sank 40% to $21.4m, due to a fall in spot rates, termination of vessel, disposal of vessels and new contracts at lower than previous rates. *Starhill Global: 3Q13 distributable income rose 20.8% to $26.1m, lifting DPU by 9% to 1.21¢. NPI improved 4.4% to $38m, while gross revenue increased 5.5% to $48.8m on the back of full-quarter contributions from the 6.7% rental uplift and 10% increase in base rent from master tenant Toshin and the ongoing asset repositioning of Wisma Atria. Overall portfolio occupancy improved 0.1ppts to 99.7% with average lease term of 6.6 years. Gearing of 30.6% has an average interest cost of 3.02% and weighted average debt maturity of 3.4 years. NAV as at Sep stood at $0.87. *First REIT: 3Q13 DPU rose 16.7% y/y to 1.96¢ on the back of a 30.4% jump in distributable income to $13.8m. NPI surged 53.4% to $21.7m, while gross revenue accelerated 60.7% to $22.8m mainly due to the full quarter contributions from four newly acquired properties - Siloam Hospitals Makassar, Siloam Hospitals Manado & Hotel Aryaduta Manado, Siloam Hospitals Bali and Siloam Hospitals TB Simatupang. Gearing stood at 32.9% with NAV of 90.55¢. Group is planning AEIs for three of its Indonesian properties. *Ascendas India Trust: 2QFY14 distributable income grew 8% y/y to $11.2m butl DPU slipped 8% to 1.1¢. Revenue in rupee remained stable but fell 9% to $28.9m on SGD appreciation. NPI fell 14% to $16.4m due to higher fuel costs. Occupancy stood at a healthy 97%. Gearing was 0.2x with NAV at $0.57. Management highlighted that focus remains on distinguishing themselves from competitors, while maintaining financial discipline. *Boustead S’pore: Sets upJV with AME Group (35%), Tat Hong (25%) and CSC 95%) to develop six parcels of vacant industrial land, totalling 1.3m sf, in Nusajaya, Iskandar. *ISOTeam: Group awarded seven new contracts worth $19m comprising repairs and redecoration (R&R) works for 10 blocks of HDB flats ($8.1m) and three private projects ($0.6m), neighbourhood upgrading and electrical works ($10.3). The projects are expected to be completed between Nov 2013 and Oct 2015, and will bring the group's post-IPO contract wins to $29.9m. *Sheng Siong: Acquired six units costing $54.9m at upcoming development, Junction 9 for a new supermarket. The 99-year leasehold units have a total space of 1,729 sqm and is part of a 14-storey mixed use development comprising retail and residential components, with an expected completion date in Jun 2020. *ASL Marine: Proposed listing of 36%-associate, PT Capitol Nusantara Indonesia (CNI) on Indonesian Stock Exchange. CNI provides ship chartering and management services. *SCI: commences commercial operations of a $30m expansion to its Sembcorp Woodchip Boiler Plant on Jurong Island. The expansion triples the output of the plant – which produces renewable energy from woodchip, a sustainable alternative fuel derived from waste wood – to 60 tph of steam from its initial of 20 tph capacity. The new enlarged woodchip boiler plant will use around 400 tpd of woodchip processed from construction and demolition waste collected by Sembcorp’s solid waste management operations, the largest operator in S’pore. *Rex Int’l: Proposed placement of 70m new shares to institutional and accredited investors at $0.755 a piece. Of the $50.5m net proceeds raised, 35% will be used for exploration and drilling activities in new opportunities in the Asia-Pacific region, 33% will be used for exploration and drilling activities in new opportunities in geographical regions, including the Mid-East, Norway and Western Europe, and the remainder for business expansion in the oil services sector using well stimulation technology. *Ezion: Received a letter of intent with contract value of up to US$65m over a three-year period to provide a service rig to be used by an oil major to support its oil & gas activities in SE Asia. The service rig is expected to be deployed by late 3Q15. *UOL: Entered into a conditional 20/80 JV agreement with Shwe Taung Junction City Co (STJC) and City Square, to develop and manage a 348-room hotel situated in the Junction City mixed use development along Shwedagon Pagoda Road in the prime city centre of Yangon, Myanmar. *Triyards: has secured two contracts worth an additional US$59m, comprising its 10th self-elevating unit (SEU) order from an Asian-based client, and the construction of a turret for a floating storage offloading (FSO) in Indonesia. This boosts Triyards’ order book to ~US$276m, underpinning revenue through to 2015.

Friday, October 25, 2013

United International Securities

United International Securities: UOB , as the 45.2% controlling shareholder, has requisitioned for an EGM to consider a members' voluntary liquidation of the investment holding company. UIS shares are up 23% to $1.385, gravitating toward its $1.49 NAV/sh, likely on expectations of a return on capital. Yesterday, UIS also released 3Q13 results, with net profit up 4-fold to $1.6m, boosted mainly by higher dividend income.

OKH Global

OKH Global: Since its RTO in May with an opening price of $0.305, price has ballooned to a high of 156% at $0.78. Won't rule out the possibility of profit taking on the counter that is trading 9.1x higher than its NTA post-divestment of $0.08.

DeClout

DeClout: its 1-for-2 rights issue at $0.11 each has been 149% subscribed. Up to 70% of the $11m net proceeds will be used to fund the group's M&A expansion plan, which may take the form of invmts of acq in similar businesses. Previously, DecLout expanded into the US via the acquisition of 50.1% of Procurri LLC. The funds raised will allow DeClout to expand into other target markets such as Europe and North Asia. Voyage Research expects DeClout to post a rebound in 2H13, on the back of full contribution and synergies from Procurri LLC. Demand is also likely to be seasonally stronger in 2H13 as customers tend to utilize the balance of their IT budgets before the end of the year. The house maintains Overweight with TP $0.28. Likes the stock for its attractive risk-reward profile at current levels.

Singtel (technical)

Singtel - Technicals appear to be heading down, with RSI and Stochastics all reversing downwards. The counter appears to have broken past the 20 day MA at $3.74 today, although a close below these levels would be needed to confirm the trend. The next support level would be $3.67-3.77, which coincides with the 50 and 200 day MA

EZRA

4Q net profit of US$10.0m (+20% y/y) and revenue of US$419.2m (+28%) brought full year earnings to US$53.6m (-19%) and revenue of US$1.3m (+28%), above street estimates. The strong top line was due to good performances across its three segments, as revenue was contributed from the inclusion of new vessels, an increase in the number of projects undertaken as the division continues to grow and leverage on its platform towards scale, as well as the completion of three offshore support vessels and the commencement of the construction of three self-elevating units as compared to FY12 where the revenue contribution were from projects at different stages of completion. Ezra declared a 0.5¢ dividend for FY13. Separately, Ezra has appointed a new CFO to the group, Eugene Cheng, which has previous stints with JP Morgan's Corp Finance and M&A functions, as well as Citigroup's Investment Banking arm.

Mapletree Commercial Trust

Mapletree Commercial Trust: DPU for 2Q14 was 1.801¢ (+16.5% y/y, +2.9% q/q) while distributable income was $37.m (+29.1% y/y, +2.75% q/q) Gross revenue was $65.8m (+27.1% y/y) with increase mainly due to higher gross revenue from VivoCity and PSAB as well as positive rental reversions. Correspondingly, NPI grew to $47.9m (+31.4% y/y). Portfolio occupancy was 98.9% (+0.6ppt) while 87% of the leases expiring FY14 have already been re-let/renewed. Vivocity which contributes >62% of income had strong reversions with fixed rents rising 37%. Gearing seems relatively high at 40.8% although 74.5% of debt is fixed. At NAV of $1.07, MCT trades at 1.17x P/B, with 2Q14 annualized yield is 5.72%.While Credit Suisse highlights MCT as a good proxy to Singapore’s resilient retail sector, CIMB thinks there’s limited upside in positive rental reversions and tough M&A market, aside from valuation and negative interest rate outlook over the next 2 years. Latest broker calls as follows: CS: maintains O/PF, TP: $1.45 CIMB: downgrade to U/PF, TP: $1.28 Deutsche: maintains Hold, TP: $ $1.40