Hiap Hoe

Hiap Hoe: Group acquired 88.3m shares (14.9%) in Ley Choon for $14.5m through a placement issue of $0.1642 per share, 11.2% discount from the last closing price of $0.185. Hiap Hoe intends to enlarge and diversify its revenue streams over the next few years as the integrated property developer seek synergies and cost efficiencies in Ley Choon's underground utilities infrastructure and construction materials business. Notably, Ley Choon recently completed its second asphalt premix plant, which is the largest in Singapore by production capacity. Hiap Hoe currently trades at 6.3x trailing P/E and 1.1x P/B.

Advance SCT

Advance SCT: Entered into framework agreement with several individuals for the disposal of assets worth an aggregate $9.2m, with the intention to ease its tight cashflow situation to repay short term loans, as well as to focus on trading in higher value scrap metals. Net proceeds will be used to repay debts ($4.4m), general working capital ($3m), investment in wastewater treatment plant ($1.5m) and acquisition of remaining shares in NTY ($0.3m).

Cacola

Cacola: Proposed acquisition of Guizhou goldmine had lapsed as the company remains in ongoing discussion with Gold Tycoon Limited on the terms of the agreement. Group first announced the MOU on 4 Jun earlier this year which saw its share price rocketed 42% till date. The move was due to the group facing a challenging furniture industry in China, with the decrease in the number of sales orders as well as the increase in operating costs. This was despite the management's lack of expertise in the gold mining industry.

Gallant Venture

Gallant Venture: 2Q13 net profit turnaround to $8.5m from a loss of $3.5m in the previous year, revenue shot almost ten-fold to $559.2m (+987.8%). This was largely due to the consolidation of PT Indomobil Sukses (IMAS) results. Excluding the $516.8m revenue from IMAS, Gallant's revenue declined 17.5% due to nil recognition of property development sales, lower rental income (-2%), lower utilities revenue (-1.8%) and lower resorts revenue (-15.5%) in Bintan. Group expects continued positive contributions from IMAS with the increasing GDP per capita in Indonesia. In contrast, its industrial park and utilities business remain in a challenging environment as the increasing costs impact its margins.

Civmec

Civmec: Announced that it has been awarded a number of new contracts. The value of the combined contracts is in excess of $100m. As at the end of July 2013 the company order book is approximately $190m, if you compare this to their revenue, this streches its earnings visibility to only 2 quarters. Overall demographics for the industry does not look too good, recall Australia's new Prime Minister Kevin Rudd, recently cautioned that the China's resource boom is over, and called for a new productivity pact to boost Australia's competitiveness. Unless Civmec continues announcing new order wins to top up its order book, most investors would still avoid the stock.

DBS

DBS: Announced 2Q13 results which was in-line with street estimates, as net profit came in at $887m, (+10% y/y, -7% q/q) versus street estimates by Bloomberg of $883m. The result brings 1H13 net profit to $1.8b (+5%). Total income came in at $2.3b (+19% y/y, flat q/q), on back of stronger y/y contributions from non-interest income. Net interest income at $1.4b (+4% y/y, +4% q/q) was buoyed by underlying customer loans growth, which rose 14% to $234.8b, while net interest margins (NIMS) was largely stable, dipping 2 bps q/q to 1.62%. Non-interest income came in at $927m (+49% y/y, -6% q/q) buoyed by fee income of $477m (+26% y/y, -6% q/q), as all fee segments grew by double-digit percentage terms on a y/y basis, boosted by stronger contributions from the group’s wealth management and transaction services. Other non-interest income advanced to $450m (+86% y/y, -7% q/q) led by higher trading income, although compared to the previous quarter non-interest income fell as less favorable market conditions resulted in a decline in market-related fee income and market volatility in June resulted in lower trading gains. Overall, DBS fundamentals remain strong with capital adequacy ratios (CAR) maintained at 12.9% (Tier 1 ratio) and 15.5% (total CAR), above MAS’ minimum requirements. Separately, DBS announced that its attempt to buy Bank Danamon Indonesia has failed, the offer lapsed today. Not really surprising as a majority of the investors were already touting for the deal not to go through, with Bank Danamons share price dropping to a 14mth low yesterday. Most analysts are expecting muted response by the markets to the latest news, as most had already discounted the probability of the deal taking place. The question now is whether DBS would explore another asset in the region. Compared to the other SG banks, DBS is still lacking sizeable presence in Asean, esp in Indonesia and Msia. But at least for now, the end of the deal removes uncertainty over capital and could result in potential higher dividend payouts going forward. HSBC expects the stock reaction to be positive, noting that the proposed acquisition of Danamon would have had a negligible impact on DBS’s EPS and RoE in the short term without taking into account merger costs or synergies. With the current volatile economic conditions in Indonesia, believe the market will be relieved that this proposed takeover has lapsed. At current prices, DBS trades at 1.25x P/B

S’pore Market (01 Aug 13)

S’pore shares may rise today, taking cue from slight gains in the US and Nikkei futures this morning, after the Fed pledged to maintain its US$85b in monthly bond purchases, noting that while economic growth is picking up, persistently low inflation may hamper the recovery. The FOMC statement however, continues to leave open the prospect for Fed tapering to take place once the economy improves sufficiently. Expect intraday volatility, with a slew of economic releases, namely PMI data, due from China and the EU countries later in the day. Near term, the STI looks to be supported at around the 3,214 level, marked by the convergence of various key moving averages. On a rebound, any gains may be capped at the recent high of 3,278. Stocks to watch for: *DBS: Has walked away from US$6.5b deal to buy PT Bank Danamon Indonesia, after allowing the agreement to lapse. We do not think this is a surprise, given the numerous regulatory hurdles that DBS has faced along the way. Some market watchers expect the market to be relieved, given concerns about potential earnings dilution had the acquisition taken place. Separately, DBS reported 2Q13 net profit that rose 10% y/y to $887m, in line with street estimates. *ParkwayLife Reit: Reported 2Q13 DPU of 2.63¢, +6.1% y/y, aided by its Japan net income hedges. Net property income dipped 2.9% to $21.1m, due to the depreciation of the yen, but was partially offset by the full quarter contribution from the Malaysian properties acquired Aug ’12 and higher rent from Singapore properties. Gearing stands at 31.2%, with an effective all-in cost of debt of 1.52%. ParkwayLife trades at an annualized yield of 4.2%, 1.6x P/B. *Civmec: Has been awarded a number of new contracts, with combined value in excess of $100m. As at the end Jul ’13, the company’s order book stood at ~$190m. *Genting HongKong: Plans to divest up to a 5.6% stake in its Nasdaq-listed Norwegian Cruise Line for as much as US$352m. The maximum sale price is set at US$30.65 a share, which compares with the US$29.76 at the last close. Post sale, Genting HongKong will see its stake in NCL fall to 37.7% from 43.4%. *Hiap Hoe: Has acquired 88.3m shares (14.9%) in Ley Choon for $14.5m through a placement issue at $0.1642 per share. This represents a 11.2% discount from the Ley Choon’s last closing price of $0.185. Hiap Hoe intends to enlarge and diversify its revenue streams over the next few years, and seeks synergies in Ley Choon's underground utilities infrastructure and construction materials business. *Ley Choon: Bags an aggregate $63.9m of contracts from LTA for the maintenance of roads and expressways. The two contracts will span two years and commence Jul 13. This brings Ley Choon’s order book to $219.7m. *Europtronic: Plans to acquire a 100% stake in China's Gold Impact, a gold miner and explorer, for $160m in a reverse takeover deal. *Cacola: Proposed acquisition of Guizhou goldmine has lapsed as the company remains in ongoing discussion with Gold Tycoon Limited on the terms of the agreement. *Advance SCT: Entered into framework agreement with several individuals for the disposal of assets worth an aggregate $9.2m, with the intention to ease its tight cashflow situation to repay short term loans, as well as to focus on trading in higher value scrap metals. Net proceeds will be used to repay debts ($4.4m), general working capital ($3m), investment in wastewater treatment plant ($1.5m) and acquisition of remaining shares in NTY ($0.3m).