Despite the positive close on Wall Street last Thursday, investors could expect a relatively lacklustre opening in Singapore shares today, after US nonfarm payroll employment data for March (released on Friday), came in well below forecasts.
Regional bourses are trading mixed this morning in Tokyo (+0.6%) and Seoul (-0.1%).
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:
*Banks: OCBC secures final regulatory approval from Myanmar to start branch ops this month, while UOB expects final approval for its 1st Myanmar branch in next few months. The branches will provide services such as trade finance and cash mgmt to regional and global companies that are keen to expand their ops in Myanmar. UOB and OCBC were among 9 regional banks in Oct'14 to be granted a preliminary foreign bank licence to operate one branch in Myanmar.
*Property: Developers keep residential land tenders in check as caution sets it. Winning bids sold under Government Land Sales (GLS) programme this year have fallen 3-24% in price versus comparable sites sold in 2013/14. Consultants expects further slide in land price this year in light of prolonged cooling measures and impending interest rate hikes. URA data shows 24,796 residential units (including ECs) are expected to be completed this year and another 25,717 units next year.
*Tee Land: 3QFY15 net profit declined 65.6% to $1.2m on revenue of $8.4m (-46.6%). The decline in revenue was due mainly to progressive revenue recognized for only one development project in the quarter compared to three development projects in the previous year. Gross margin remained unchanged at 24.7%. Bottom-line was weighed by a more than 2x rise in admin expenses and other operating expenses to $2.6m and $0.9m respectively, partially offset by a more than 3x rise in associate contributions to $2.9m. NAV/share at $0.334.
*Sarine: Opening Sarine Loupe Service Centres in LA, California and Hong Kong, in collaboration with Brink’s Global Services.
*Rowsley: Disclosed its decision to not proceed with the proposed JV with Vietnamese partner, Hoang Anh Gia Lai Join Stock Company, for the development of a US$550m mixed-use project in Myanmar.
*AusGroup: Awarded a five-year maintenance services contract with Chevron Australia to provide brownfield maintenance and support services in Western Australian.
*Yong Xin International: Received extension till end-Apr 2015 to make an exit offer to shareholders.
Monday, April 6, 2015
Thursday, April 2, 2015
Tigerair
Tigerair: From a technical standpoint, the stock has just broken past the topside of a triangle formation at $0.335 and appears poised to head towards the projected objective of $0.40 with the 50-dma intersecting the 200-dma in a bullish crossover.
Overall, the majority of the street is still cautious on Tigerair even though its load factors have been improving. 3QFY15 results has finally turned profitable after four quarters of heavy losses. The counter currently trades at post-rights P/B of 3.7x.
Overall, the majority of the street is still cautious on Tigerair even though its load factors have been improving. 3QFY15 results has finally turned profitable after four quarters of heavy losses. The counter currently trades at post-rights P/B of 3.7x.
IPC
IPC: Counter surged to a peak of $0.188 in early trading after majority shareholder Oei Hong Leong launched a mandatory conditional cash offer of $0.17/share.
Oei's stake increased from 29.8% to 30.6%, after he acquired 6.3m shares over the market yesterday (1 Apr), at $0.169-0.170/share.
If the offer turns unconditional, the offer price will include IPC’s FY14 dividend of 0.6¢.
We note that just a couple of days back (30 Mar), IPC disclosed that the group is negotiating to sell its remaining seven hotels in Japan for ~$150m.
If the deal goes through, the $150m would clear IPC's debt of $103m and bring its cash pile to $148m, or $0.1734/share.
Hence, we reckon that shareholders are unlikely to accept the offer.
At the current price, IPC is valued at 24% discount to its NAV of $0.244.
Oei's stake increased from 29.8% to 30.6%, after he acquired 6.3m shares over the market yesterday (1 Apr), at $0.169-0.170/share.
If the offer turns unconditional, the offer price will include IPC’s FY14 dividend of 0.6¢.
We note that just a couple of days back (30 Mar), IPC disclosed that the group is negotiating to sell its remaining seven hotels in Japan for ~$150m.
If the deal goes through, the $150m would clear IPC's debt of $103m and bring its cash pile to $148m, or $0.1734/share.
Hence, we reckon that shareholders are unlikely to accept the offer.
At the current price, IPC is valued at 24% discount to its NAV of $0.244.
Land Transport
Land Transport: Regarding the taxi fare standardization (where allcomponents of taxi fares will be standardized, except flag down rates), DBSV thinks changes are immaterial and lesser than expected.
Taxi fares continue to remain unregulated and operators need not seek approval for changes. PTC only needs to be kept informed in advance, except for the mandated areas across all taxi companies, the fare components must be implemented by all taxi companies.
DBSV prefers SMRT (Buy, TP $1.60) to ComfortDelgro (Hold, TP 2.89) on the former’s earnings recovery
Taxi fares continue to remain unregulated and operators need not seek approval for changes. PTC only needs to be kept informed in advance, except for the mandated areas across all taxi companies, the fare components must be implemented by all taxi companies.
DBSV prefers SMRT (Buy, TP $1.60) to ComfortDelgro (Hold, TP 2.89) on the former’s earnings recovery
Telcos
Telcos: Maybank-KE factors the potential entry of a fourth mobile operator, as MyRepublic and Consistel signal interest. MyRepublic could participate in the next 4G spectrum auction at end-15 or early 2016, and if successful, it could mark an entry by end 2016/ 2017.
Factoring this, Maybank-KE reshuffles its order preference for telcos. It now favors StarHub, given its strong bundled plans and compelling TV content.
Meanwhile, M1 and SingTel are downgraded in light of their vulnerabilities from having less attractive bundling plans, in which M1 is most at risk.
Aside, the house also highlights that the data monetization theme has already run half its course, and expects tiered data plan users to be 70-75% by year end, and almost all of post-paid users by 2018.
The house also downgrades the telco sector to Neutral citing a lack of immediate catalysts. Telcos are now trading close to 2 SD below their 8-year average yields, while spreads with the 10 year SGS is also close to -2SD
Maybank-KE has the following ratings for telcos:
StarHub: Upgraded to Buy from Hold, TP increased to $5.00 from $4.40
SingTel: Downgraded to Hold from Buy, TP increased to $4.55 from $4.43
M1: Downgraded to Hold from Buy, TP cut to $3.65 from $4.24
Factoring this, Maybank-KE reshuffles its order preference for telcos. It now favors StarHub, given its strong bundled plans and compelling TV content.
Meanwhile, M1 and SingTel are downgraded in light of their vulnerabilities from having less attractive bundling plans, in which M1 is most at risk.
Aside, the house also highlights that the data monetization theme has already run half its course, and expects tiered data plan users to be 70-75% by year end, and almost all of post-paid users by 2018.
The house also downgrades the telco sector to Neutral citing a lack of immediate catalysts. Telcos are now trading close to 2 SD below their 8-year average yields, while spreads with the 10 year SGS is also close to -2SD
Maybank-KE has the following ratings for telcos:
StarHub: Upgraded to Buy from Hold, TP increased to $5.00 from $4.40
SingTel: Downgraded to Hold from Buy, TP increased to $4.55 from $4.43
M1: Downgraded to Hold from Buy, TP cut to $3.65 from $4.24
First REIT
First REIT: Share price steadily climbing, from favourable attention from several brokers. This REIT is also one of the corporates featured in Maybank Kim Eng’s Invest ASEAN conference.
CIMB just did a visit with two hospitals in Indonesia, and cites that equipment are well maintained. Occupancies were healthy at about 70%, despite the two hospitals they chose to visit were relatively new, opening in 2011-12
Otherwise, the house reiterates First REIT is a vehicle to ride on the growth of Indonesian healthcare infrastructure, alongside Siloam Hospital and Lippo Karawaci, and their plans to double beds to 10,000 by 2017
CIMB maintains Add with TP of $1.48
CIMB just did a visit with two hospitals in Indonesia, and cites that equipment are well maintained. Occupancies were healthy at about 70%, despite the two hospitals they chose to visit were relatively new, opening in 2011-12
Otherwise, the house reiterates First REIT is a vehicle to ride on the growth of Indonesian healthcare infrastructure, alongside Siloam Hospital and Lippo Karawaci, and their plans to double beds to 10,000 by 2017
CIMB maintains Add with TP of $1.48
Sembcorp Marine
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.
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.
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