Sembcorp Marine: Nomura reiterated Buy on Sembcorp Marine (SMM) (TP: $4.07) due to its higher exposure to potential deepwater rig orders, while its Reduce on Keppel Corp (TP: $7.95) is due to its higher exposure to jackup rig orders.
The active deepwater rig attritions continue to hint at the possibility of a structural rigbuilding upcycle from 4Q15F, if the oil price is to recover h/h as expected, while the jackup rigs’ oversupply situation should worsen.
Assuming SMM’s LOI for a newbuild semisubmersible crane vessel from Heerema Offshore Services recently awarded is a full turnkey project, Nomura estimates the contract value at US$1.1b-US$1.3b, equal to 40-47% of its $3.8b order expectation for SMM in 2015F.
Comparatively, Keppel Corp has secured $330m in 1Q15, which is equal to 8% of its $4.3b order win expectation for this year.
Thursday, April 2, 2015
SG Market (02 Apr 15)
Singapore shares are expected to range trade following the muted close on Wall Street as investors await the key jobs report on Fri.
Regional bourses opened firmer this morning in Tokyo (+1.2%), Seoul (+0.3%) and Sydney (+0.7%).
From a chart perspective, resistance for the STI is tipped at 3,460 while downside support sits at 3,400, with short term Stochastics indicators showing the market losing upward momentum.
Stocks to watch:
*IPC: Oei Hong Leong makes mandatory conditional cash offer of $0.17/share, after obtaining 30.6%. If it turns unconditional, the offer price will include IPC’s FY14 dividend of 0.6¢.
*First Ship Lease Trust: Secured two-year time charter worth US$16.8m with a US domestic oil company for FSL Hong Kong, a 115,000 dwt crude oil tanker.
*IEV: Awarded five new contracts worth US$1.8m, to supply proprietary Marine Growth Preventer products and Oxifree corrosion prevention products.
*CNA Group: Letter of Intent with Vietstar Airlines Multirole Corporation for a US$70m ($95.8m) mechanical, electrical and plumbing contract for a Multirole Terminal Complex in Ho Chi Minh City, Vietnam. Works expected to be completed in ~18-20 months.
*Sincap Group: Terminated the proposed $38.5m acquisition of LTN Land, after the intended fund raising through a placement of $0.10/share lapsed. Separately, group announced a 45-day non-binding MOU for a proposed acquisition of Orion Energy Resources, a mineral trading and logistics management company which supplies weekly shipments of coal to power plants owned by a China SOE.
*Cityneon Holdings: To acquire Victory Hill Exhibitions (VHE) for at least $21m, compared to the indicative fair market value of US$15.4-US$18.4m ($21.1m-$25.2m). VHE primarily develops and produces exhibitions, and has a license agreement with Marvel Characters to provide exhibition services for Marvel. In relation, group proposed a non-underwritten renounceable 1-for-1 rights issue of 88.5m new shares at $0.18 each, to partially fund the acquisition.
*Weiye Holdings: Updated that its proposed disposal of industrial property for $5.3m at Kian Teck Road is still in the process of obtaining approval from JTC Corporation.
*Amara Holdings: Held the soft-launch for its first 250-room hotel in Bangkok, Thailand (Amara Bangkok).
*Singapore eDevelopment: Served a Writ of Summons and a Statement of Claim for a sum of $1.5m, by former executive director, Liew Sen Keong.
*HLH Group: Proposed 20-into-1 share consolidation. Group also disclosed its consideration to enter the mass-market property segment in Myanmar, which may be extended to a slew of other countries. In addition, the board has recommended a share capital restructuring, which involves a capital reduction of $28.6m to set-off accumulated losses.
*Rex: Jointly-controlled-entity Lime Petroleum has signed agreement with Skagen44 AS to acquire an additional 10% stake in licence PL616 in the North Sea, on the borders of Denmark and UK. This increases Lime’s stake to 15%, pending regulatory approval.
*QT Vascular: Distribution partner, Century Medical, has submitted the application for regulatory approval for Chocolate PTA balloon catheter in Japan.
Regional bourses opened firmer this morning in Tokyo (+1.2%), Seoul (+0.3%) and Sydney (+0.7%).
From a chart perspective, resistance for the STI is tipped at 3,460 while downside support sits at 3,400, with short term Stochastics indicators showing the market losing upward momentum.
Stocks to watch:
*IPC: Oei Hong Leong makes mandatory conditional cash offer of $0.17/share, after obtaining 30.6%. If it turns unconditional, the offer price will include IPC’s FY14 dividend of 0.6¢.
*First Ship Lease Trust: Secured two-year time charter worth US$16.8m with a US domestic oil company for FSL Hong Kong, a 115,000 dwt crude oil tanker.
*IEV: Awarded five new contracts worth US$1.8m, to supply proprietary Marine Growth Preventer products and Oxifree corrosion prevention products.
*CNA Group: Letter of Intent with Vietstar Airlines Multirole Corporation for a US$70m ($95.8m) mechanical, electrical and plumbing contract for a Multirole Terminal Complex in Ho Chi Minh City, Vietnam. Works expected to be completed in ~18-20 months.
*Sincap Group: Terminated the proposed $38.5m acquisition of LTN Land, after the intended fund raising through a placement of $0.10/share lapsed. Separately, group announced a 45-day non-binding MOU for a proposed acquisition of Orion Energy Resources, a mineral trading and logistics management company which supplies weekly shipments of coal to power plants owned by a China SOE.
*Cityneon Holdings: To acquire Victory Hill Exhibitions (VHE) for at least $21m, compared to the indicative fair market value of US$15.4-US$18.4m ($21.1m-$25.2m). VHE primarily develops and produces exhibitions, and has a license agreement with Marvel Characters to provide exhibition services for Marvel. In relation, group proposed a non-underwritten renounceable 1-for-1 rights issue of 88.5m new shares at $0.18 each, to partially fund the acquisition.
*Weiye Holdings: Updated that its proposed disposal of industrial property for $5.3m at Kian Teck Road is still in the process of obtaining approval from JTC Corporation.
*Amara Holdings: Held the soft-launch for its first 250-room hotel in Bangkok, Thailand (Amara Bangkok).
*Singapore eDevelopment: Served a Writ of Summons and a Statement of Claim for a sum of $1.5m, by former executive director, Liew Sen Keong.
*HLH Group: Proposed 20-into-1 share consolidation. Group also disclosed its consideration to enter the mass-market property segment in Myanmar, which may be extended to a slew of other countries. In addition, the board has recommended a share capital restructuring, which involves a capital reduction of $28.6m to set-off accumulated losses.
*Rex: Jointly-controlled-entity Lime Petroleum has signed agreement with Skagen44 AS to acquire an additional 10% stake in licence PL616 in the North Sea, on the borders of Denmark and UK. This increases Lime’s stake to 15%, pending regulatory approval.
*QT Vascular: Distribution partner, Century Medical, has submitted the application for regulatory approval for Chocolate PTA balloon catheter in Japan.
Wednesday, April 1, 2015
Yanlord Land
Yanlord Land: S&P has downgraded Yanlord's corporate credit rating to B+ from BB-.
The credit rating agency cited that Yanlord's debt situation is unlikely to improve, and that expected revenue growth and scale expansion will not be sufficient to offset its declining profitability and intended debt increase.
Nevertheless, the counter climbed 1% to a peak of $0.99 in the morning session, on sustained positive momentum after Chinese regulators eased mortgage policies yesterday.
At the current price, Yanlord Land is valued at 0.45x P/B vs its 1-year average of 0.7x. Bloomberg consensus has 1 Buy, 2 Holds and 7 Sells on the counter with an average 12-month TP of $0.89.
The credit rating agency cited that Yanlord's debt situation is unlikely to improve, and that expected revenue growth and scale expansion will not be sufficient to offset its declining profitability and intended debt increase.
Nevertheless, the counter climbed 1% to a peak of $0.99 in the morning session, on sustained positive momentum after Chinese regulators eased mortgage policies yesterday.
At the current price, Yanlord Land is valued at 0.45x P/B vs its 1-year average of 0.7x. Bloomberg consensus has 1 Buy, 2 Holds and 7 Sells on the counter with an average 12-month TP of $0.89.
Valuetronics
Valuetronics: Rhb initiates with Buy and TP of $0.64. The house expects the industrial and commercial electronics segment with higher margins to continue registering strong growth, and believes the successful listing of Philips’ lighting business to bring catalysts. The stock boasts 8% div yield, and is trading at 2.5x ex-cash FY16e P/E.
Keppel Land
Keppel Land: Keppel Corp has failed to hit the compulsory acquisition threshold of 95.5%, after the group revealed that it had garnered a total of 95.1% outstanding Keppel Land shares as at the close of the offer yesterday.
This also means that the final offer price for Keppel Land will be maintained at $4.38, rather than the $4.60 offer price if the threshold was reached. The lower offer price will translate into $155m of cost savings for Keppel Corp.
Shareholders who have not accepted the offer (non-assenting shareholders) have a right to require Keppel Corp to acquire their shares at the base offer price of $4.38 in cash per share, by serving notice within three months after the Form 58 is dispatched.
Trading in the counter has been suspended.
This also means that the final offer price for Keppel Land will be maintained at $4.38, rather than the $4.60 offer price if the threshold was reached. The lower offer price will translate into $155m of cost savings for Keppel Corp.
Shareholders who have not accepted the offer (non-assenting shareholders) have a right to require Keppel Corp to acquire their shares at the base offer price of $4.38 in cash per share, by serving notice within three months after the Form 58 is dispatched.
Trading in the counter has been suspended.
COSCO Corp
COSCO Corp: A client of COSCO Corp has requested to push back the delivery for two rigs by nine months, on the back of the deteriorating oil market.
The US$380m contract for two LeTourneau Super 116E jackup drilling rigs was announced in Nov '13, with delivery expected in 1H16 and 2H16 respectively.
Despite higher sales in its recently released FY14 results, the group saw lower gross profit after making inventory write downs and allowances for expected losses on construction contracts.
In addition, net gearing spiked to 1.5x (3Q14: 1.2x), due to increased loans for working capital, while operating cashflow was a negative $1.4m for the year.
The street still remains extremely bearish on the counter, rated with 13 Sells, 2 Holds and zilch buys. The average 12-month TP of $0.44 is 14% below the last traded price.
Current valuation of 0.82x P/B is significantly lower than its 3-year average of 1.3x.
The US$380m contract for two LeTourneau Super 116E jackup drilling rigs was announced in Nov '13, with delivery expected in 1H16 and 2H16 respectively.
Despite higher sales in its recently released FY14 results, the group saw lower gross profit after making inventory write downs and allowances for expected losses on construction contracts.
In addition, net gearing spiked to 1.5x (3Q14: 1.2x), due to increased loans for working capital, while operating cashflow was a negative $1.4m for the year.
The street still remains extremely bearish on the counter, rated with 13 Sells, 2 Holds and zilch buys. The average 12-month TP of $0.44 is 14% below the last traded price.
Current valuation of 0.82x P/B is significantly lower than its 3-year average of 1.3x.
Sg Market (01 Apr 15)
Singapore shares are expected to open lower after Wall Sreet gave up almost all of Mon’s window dressing gains, with some market watchers blaming the sell-off on reduced expectations for 1Q earnings.
Regional bourses are trading lower this morning in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (-0.2%).
From a chart perspective, resistance is tipped at 3,460 while downside support sits at 3,400.
Stocks to watch:
*Land Transport: LTA and Public Transport Council will implement in 2H15 standardisation in parts of taxi fare structure to prevent taxi fares from becoming even more complicated in future. Fare structure has 4 main components: flag-down fare, unit fares, surcharges, booking fees. Taxi companies will be required to standardise the last 3, while larger taxis will be required to standardise fee levied for additional passengers beyond the 4th passengers. To allow for competition, different taxi companies can still charge different unit fares.
*Keppel Land: Parent Keppel Corp has obtained 95.1% acceptances for its voluntary unconditional cash offer. Shareholders who accepted the offer will receive $4.38/share. Trading in the counter will be suspended. Under Section 213(3) of the Companies Act, remaining shareholders who have not tendered have a right to require Keppel Corp to acquire their shares at $4.38 in cash.
*Cosco: To push back the delivery of two jackup drilling rigs by nine months. The US$380m contract was announced in Nov '13 from a Bermuda company, which also secured options for two additional rigs.
*Yanlord Land: S&P downgraded corporate credit rating from BB- to B+, as a reflection of the unlikely material improvement of group’s leverage. The credit rating company cited that Yanlord’s expected revenue growth and scale expansion will not be sufficient to offset its declining profitability and intended debt increase.
*Mapletree Logistics Trust: Entered agreement with Nippon Express for an AEI at Moriya Centre in Ibaraki at an estimated cost of ¥1.4b ($16.2m) to cater for the business growth requirements of Nippon Express. The AEI works are scheduled to commence in Apr ‘15 and complete by Mar ‘16. Upon completion, Nippon Express will lease the new warehouse space with an annual rental escalation till Dec ‘21.
*GLP: Leasing 190,000 sqm to JD.com in China. The ecommerce player is one of GLP’s largest clients.
*Polaris: SoftBank Group has acquired a 19.9% stake in associate Trikomsel, a leading retailer and distributor of mobile communication products in Indonesia. Polaris remains the largest shareholder with 44.88% stake.
*SingHaiyi: Proposed to dispose 90%-owned Corporate Residence, the developer for 56-unit residential property City Suites, for $16.4m. Group is of the view that the move is in its best interest, as the 90% unsold development is close to being required to pay a levy as a result of the Qualifying Certificate requirement. The main contractor, ACG Construction, has expressed an interest to buy the Balestier Road development.
*PEC: Granted option to purchase to WIT Engineering, for the sale of 27 Tuas Avenue 3 for $7.1m, excluding GST. The property is no longer required by the group following the shift of operations to the current Benoi property.
*Wee Hur: Acquired three plots of land totalling 16,946 sqm at Wooloongabba, Brisbane for A$51.3m, as part of its strategy to venture into overseas property development.
*Ascendas REIT: Divesting 26 Senoko Way for $24.8m, or a 60% premium to its original acquisition price in 2007.
*Manhattan Resources: Acquisition of Singxin Water extended to 1 July.
*Zico Holdings: Acquisition of Stamford Law extended from 31 Mar to 30 Apr.
*Epicentre: Extended its proposed RTO with Healthtrends Medical Investments from 31 May to 14 Apr.
Regional bourses are trading lower this morning in Tokyo (-0.2%), Seoul (-0.2%) and Sydney (-0.2%).
From a chart perspective, resistance is tipped at 3,460 while downside support sits at 3,400.
Stocks to watch:
*Land Transport: LTA and Public Transport Council will implement in 2H15 standardisation in parts of taxi fare structure to prevent taxi fares from becoming even more complicated in future. Fare structure has 4 main components: flag-down fare, unit fares, surcharges, booking fees. Taxi companies will be required to standardise the last 3, while larger taxis will be required to standardise fee levied for additional passengers beyond the 4th passengers. To allow for competition, different taxi companies can still charge different unit fares.
*Keppel Land: Parent Keppel Corp has obtained 95.1% acceptances for its voluntary unconditional cash offer. Shareholders who accepted the offer will receive $4.38/share. Trading in the counter will be suspended. Under Section 213(3) of the Companies Act, remaining shareholders who have not tendered have a right to require Keppel Corp to acquire their shares at $4.38 in cash.
*Cosco: To push back the delivery of two jackup drilling rigs by nine months. The US$380m contract was announced in Nov '13 from a Bermuda company, which also secured options for two additional rigs.
*Yanlord Land: S&P downgraded corporate credit rating from BB- to B+, as a reflection of the unlikely material improvement of group’s leverage. The credit rating company cited that Yanlord’s expected revenue growth and scale expansion will not be sufficient to offset its declining profitability and intended debt increase.
*Mapletree Logistics Trust: Entered agreement with Nippon Express for an AEI at Moriya Centre in Ibaraki at an estimated cost of ¥1.4b ($16.2m) to cater for the business growth requirements of Nippon Express. The AEI works are scheduled to commence in Apr ‘15 and complete by Mar ‘16. Upon completion, Nippon Express will lease the new warehouse space with an annual rental escalation till Dec ‘21.
*GLP: Leasing 190,000 sqm to JD.com in China. The ecommerce player is one of GLP’s largest clients.
*Polaris: SoftBank Group has acquired a 19.9% stake in associate Trikomsel, a leading retailer and distributor of mobile communication products in Indonesia. Polaris remains the largest shareholder with 44.88% stake.
*SingHaiyi: Proposed to dispose 90%-owned Corporate Residence, the developer for 56-unit residential property City Suites, for $16.4m. Group is of the view that the move is in its best interest, as the 90% unsold development is close to being required to pay a levy as a result of the Qualifying Certificate requirement. The main contractor, ACG Construction, has expressed an interest to buy the Balestier Road development.
*PEC: Granted option to purchase to WIT Engineering, for the sale of 27 Tuas Avenue 3 for $7.1m, excluding GST. The property is no longer required by the group following the shift of operations to the current Benoi property.
*Wee Hur: Acquired three plots of land totalling 16,946 sqm at Wooloongabba, Brisbane for A$51.3m, as part of its strategy to venture into overseas property development.
*Ascendas REIT: Divesting 26 Senoko Way for $24.8m, or a 60% premium to its original acquisition price in 2007.
*Manhattan Resources: Acquisition of Singxin Water extended to 1 July.
*Zico Holdings: Acquisition of Stamford Law extended from 31 Mar to 30 Apr.
*Epicentre: Extended its proposed RTO with Healthtrends Medical Investments from 31 May to 14 Apr.
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