Singapore shares could open higher, after US stocks held on to their gains, in a session which saw German bunds and US bonds being sold off, and ECB President vowing to keep QE running until Sep ’16.
Regional bourses are trading higher this morning in Tokyo (+0.3%) and Seoul (+0.4%), although Sydney is down 0.6%.
From a chart perspective, the STI is trading below its 200-dma at 3,360, with next level support now tipped at 3,268. Technical indicators are grossly oversold and due for a slight rebound.
Stocks to watch:
*Singapore O&G: Trading debut today with IPO price at $0.25 and total issued shares of 218m. Public (2.2m) and placement (41.4m) tranche of 43.6m new shares were more than 17x subscribed. Under the placement tranche, 7m shares were allotted to Havenport Asset Management which sub-manages Legg Mason Asian funds.
*Q&M Dental: Signed MOU to acquiring a 60% stake in Panjin City Dental Clinics for Rmb10.4m and a 60% stake in Gaizhou City Dental for Rmb2.0m. The acquisition comes with guarantees over a 12-year period that the profit of the Panjin City Dental Clinics shall not be less than Rmb20.3m and dividends paid will be not less than Rmb12.2m; and that the profit of Gaizhou City Dental Clinic shall not be less than Rmb520k and dividends paid will be not less than Rmb312k. Separately, Q&M proposed to enter into a partnership with Liaoning Medical University (LMU) to privatise LMU Stomatology Hospital No.2.
*YuuZoo: SGX reprimands YuuZoo for misusing SGXNET, following the group's recent official release on SGX's website in regards to a positive third-party research report on the group. SGX warned that SGXNET is not a platform for rendering investment advice based on third party expectations. Separately, YuuZoo announced that it has formed a JV in China with XG AMA, a leading provider and organizer of e-sport events and gaming activities. Under the agreement, XG is committed to deliver 5m minimum active paying users and a minimum profit of Rmb1.5m in the first year of operations.
*DBS: Granted approval to conduct institutional banking activities in Australia, which will see the bank open its first branch in Sydney later this month. With the latest entry into Australia, DBS will have a presence in 18 countries globally.
*Serial Systems: Entered into agreement with Ryosan Company, for the sale of the distribution rights of products manufactured by On-Semiconductor in Japan, and customer assignments and business backlogs relating to the products of On-Semi in Japan, for a total consideration of US$3.2m. Assuming the transaction was completed on 31st Dec ‘14, NTA would have risen to 12.84¢ from 12.59¢ and EPS would have risen to US2.04¢ from US1.80¢.
*Raffles Medical Group: Aberdeen Asset Management has ceased to become a substantial shareholder, following the sale of 677,400 shares at an average price of $4.49 per share via open market transaction, reducing its stake to 4.96% from 5.08%.
*Noble: Chairman Richard Elman bought back another 2m shares at $0.7183 share apiece, raising his total stake to 21.09% from 21.06%. Separately, Eastspring Investments has risen its stake to 7.20% from 6.99%, via the purchase of 14.5m shares at an average price of $0.787.
Thursday, June 4, 2015
Wednesday, June 3, 2015
Noble
Noble: Michael Dee (ex Morgan Stanley CEO SE Asia, ex Senior MD of Temasek Holdings) wrote an open memo to Noble Group's employees on 29 May.
"..Iceberg has brought out some serious issues which if not addressed could lead to the collapse of Noble."
The memo is published in the link below:
http://www.sharesinv.com/articles/2015/05/29/open-leter-noble/
"..Iceberg has brought out some serious issues which if not addressed could lead to the collapse of Noble."
The memo is published in the link below:
http://www.sharesinv.com/articles/2015/05/29/open-leter-noble/
Q&M Dental
Q&M Dental:
https://www.youtube.com/watch?v=EPiYEiG4-dw
MaybankTV interviews John Cheong, Investment Analyst at Maybank-KE, who shares his view on Q&M Dental
Overview:
1) Further acquisitions to come from Singapore and China. The group still has $31m cash remaining from the $60 MTN raised this year.
2) Q&M’s market share is still low in Singapore. Even after completing its four proposed acquisitions, the group’s market share by number of dentists is estimated to only climb to 13% from 10%, providing ample room for growth.
3) Downside risks include the digestion of the two major acquisitions in China made in 2014, although this could be mitigated by profit guarantees and long-term service agreements. Moreover the interests of the Chinese parties are aligned with Q&M, given that they remain as substantial shareholders in the company and are working towards the a potential listing of Q&M’s Chinese assets.
4) Potential TPs:
- Assuming Q&M acquire $31m worth of assets, TP will be at $1.11
- Blue sky scenarios where Q&M acquires $142m worth of assets, TP will be $1.43.
The video can be accessed via the following link below:
https://www.youtube.com/watch?v=EPiYEiG4-dw
https://www.youtube.com/watch?v=EPiYEiG4-dw
MaybankTV interviews John Cheong, Investment Analyst at Maybank-KE, who shares his view on Q&M Dental
Overview:
1) Further acquisitions to come from Singapore and China. The group still has $31m cash remaining from the $60 MTN raised this year.
2) Q&M’s market share is still low in Singapore. Even after completing its four proposed acquisitions, the group’s market share by number of dentists is estimated to only climb to 13% from 10%, providing ample room for growth.
3) Downside risks include the digestion of the two major acquisitions in China made in 2014, although this could be mitigated by profit guarantees and long-term service agreements. Moreover the interests of the Chinese parties are aligned with Q&M, given that they remain as substantial shareholders in the company and are working towards the a potential listing of Q&M’s Chinese assets.
4) Potential TPs:
- Assuming Q&M acquire $31m worth of assets, TP will be at $1.11
- Blue sky scenarios where Q&M acquires $142m worth of assets, TP will be $1.43.
The video can be accessed via the following link below:
https://www.youtube.com/watch?v=EPiYEiG4-dw
Ezra
Ezra: Daiwa notes that the group has proposed to issue renounceable rights of up to 2.03bn new ordinary shares in the capital of Ezra (200 rights shares for every 100 existing ordinary shares). It is also looking to issue fixed-rate convertible bonds, due 2020, at an aggregate amount of up to SGD200m. The total proceeds from this exercise should amount to USD300m. The proceeds will be used to repay SGD225m Fixed Rate Notes die Sep 2015 and SGD150m perpetual securities, callable also in Sep 2015.
The house cautioned on Ezra’s high net debt/equity ratio of 1.15x, as at 28 Feb and sizable debt due in Sep, along with its limited internal resources for repayment. The house reiterated their UNDERPERFORM rating and lower TP from $0.40 to $0.35.
Also, OCBC has downgraded their rating to SELL on valuation grounds with a lower fair value estimate of $0.26, down from $0.47.
On the other hand, UOB Kay Hian has given a HOLD rating (TP: $0.54)
The house cautioned on Ezra’s high net debt/equity ratio of 1.15x, as at 28 Feb and sizable debt due in Sep, along with its limited internal resources for repayment. The house reiterated their UNDERPERFORM rating and lower TP from $0.40 to $0.35.
Also, OCBC has downgraded their rating to SELL on valuation grounds with a lower fair value estimate of $0.26, down from $0.47.
On the other hand, UOB Kay Hian has given a HOLD rating (TP: $0.54)
Yangzijiang
Yangzijiang: Deutsche reiterated their Buy rating on Yangzijiang (TP: $1.90).
House reckons consolidation within the shipyard industry in China should accelerate under the current deteriorating conditions, underpinned by weak new orders (-56% year-to-date) and lower newbuilding prices (-2%).
Yangzijiang is expected to be one of the winners as the industry evolves to look more like the landscape in South Korea where only a few major yards dominate.
Following the surge in China-listed shipyard stocks which resulted in valuations of ~5x P/B, Yangzijiang's stock price appears to lag with valuations at 1.2x P/B, and may be positively re-rated as the market searches for related laggard names.
Yangzijiang's US$4.6b orderbook for 114 vessels should keep its yards busy for the next 24 months.
House reckons consolidation within the shipyard industry in China should accelerate under the current deteriorating conditions, underpinned by weak new orders (-56% year-to-date) and lower newbuilding prices (-2%).
Yangzijiang is expected to be one of the winners as the industry evolves to look more like the landscape in South Korea where only a few major yards dominate.
Following the surge in China-listed shipyard stocks which resulted in valuations of ~5x P/B, Yangzijiang's stock price appears to lag with valuations at 1.2x P/B, and may be positively re-rated as the market searches for related laggard names.
Yangzijiang's US$4.6b orderbook for 114 vessels should keep its yards busy for the next 24 months.
SG Market (03 Jun 15)
Singapore shares could open weaker, following the weaker close on Wall Street as the street remained cautious ahead of Fri’s jobs report and a looming deadline for Greece and its lenders to find a solution to the debt crisis.
Regional bourses are trading lower this morning in Tokyo (-0.6%) and Sydney (-0.4%), while Seoul is up 0.1%.
Index stocks Jardine Matheson and Jardine Strategic could continue to be weighed by FTSE Russell’s new liquidity rules, which could potentially exclude both Jardine companies from the STI in the Sep index review.
Stocks on the STI reserve list, UOL, CCT, Suntec REIT and Yangzijiang may see interest on the back of potential inclusion into the benchmark index.
From a chart perspective, the STI yesterday broke its 200-dma at 3,360, with next level support now tipped at 3,268.
Stocks to watch:
*Economy: S’pore May PMI came in at 50.2 versus 49.4 in Apr, representing its first expansion for the first time in 6 months, led by growth in new domestic orders, production output and inventory. Economists highlight that the turnaround is not convincing, with electronics contracting further and weak manufacturing and exports performance across Asia raising questions over global demand. Another month of data is needed to confirm the turnaround.
*Economy: S’pore new Manpower Minister, Lim Swee Say, does not intend to relax foreign-worker policies to let in more foreign workers, nor reduce the foreign-worker levy. Instead the minister wants businesses to work with the government and unions to make the economy manpower-lean, boost S’pore core in the workforce and upgrade existing pool of foreign workers.
*Global Invacom: Buying US satellite terminal manufacturer Skyware Global for up to US$11.6m to position the company as a world leader in satellite communications equipment. Skyware develops designs and manufactures very small aperture terminals and will add to the company's manufacturing presence in China, Israel, M’sia and UK. While Skyware is loss-making, Global Invacom is confident of returning it to profitability through synergies, cross-selling and increasing efficiencies. Global Invacom will issue 28.0m treasury shares worth US$6.6m treasury shares to the vendor at $0.3185/share, representing 9.9% of its issued share capital. The 2nd part of the consideration will be made in cash through an earn-out model.
*Lian Beng: Entered into agreement with 247 Collins Investments, for the proposed acquisition of property units at Collin Street, for A$24.9m. The freehold property has a total site area of ~478 sqm and building area of ~2084.4 sqm. Lian Beng views the purchase of the property as an investment opportunity for both potential long-term capital appreciation and rental yield.
*Bukit Sembawang: Aberdeen Asset Management has ceased to become a substantial shareholder, following the sale of 1m shares at an average price of $3.97, via a married deal, paring its stake down to 4.81% from 5.2%.
*GLP: Signed new lease agreements totalling 146,000 sqm with six leading third-party logistics providers in China, of which five were with repeated customers. As of Mar ’15, GLP’s US$28b property portfolio consists of 41m sqm of logistics facilities across China, Japan, Brazil and the US.
Regional bourses are trading lower this morning in Tokyo (-0.6%) and Sydney (-0.4%), while Seoul is up 0.1%.
Index stocks Jardine Matheson and Jardine Strategic could continue to be weighed by FTSE Russell’s new liquidity rules, which could potentially exclude both Jardine companies from the STI in the Sep index review.
Stocks on the STI reserve list, UOL, CCT, Suntec REIT and Yangzijiang may see interest on the back of potential inclusion into the benchmark index.
From a chart perspective, the STI yesterday broke its 200-dma at 3,360, with next level support now tipped at 3,268.
Stocks to watch:
*Economy: S’pore May PMI came in at 50.2 versus 49.4 in Apr, representing its first expansion for the first time in 6 months, led by growth in new domestic orders, production output and inventory. Economists highlight that the turnaround is not convincing, with electronics contracting further and weak manufacturing and exports performance across Asia raising questions over global demand. Another month of data is needed to confirm the turnaround.
*Economy: S’pore new Manpower Minister, Lim Swee Say, does not intend to relax foreign-worker policies to let in more foreign workers, nor reduce the foreign-worker levy. Instead the minister wants businesses to work with the government and unions to make the economy manpower-lean, boost S’pore core in the workforce and upgrade existing pool of foreign workers.
*Global Invacom: Buying US satellite terminal manufacturer Skyware Global for up to US$11.6m to position the company as a world leader in satellite communications equipment. Skyware develops designs and manufactures very small aperture terminals and will add to the company's manufacturing presence in China, Israel, M’sia and UK. While Skyware is loss-making, Global Invacom is confident of returning it to profitability through synergies, cross-selling and increasing efficiencies. Global Invacom will issue 28.0m treasury shares worth US$6.6m treasury shares to the vendor at $0.3185/share, representing 9.9% of its issued share capital. The 2nd part of the consideration will be made in cash through an earn-out model.
*Lian Beng: Entered into agreement with 247 Collins Investments, for the proposed acquisition of property units at Collin Street, for A$24.9m. The freehold property has a total site area of ~478 sqm and building area of ~2084.4 sqm. Lian Beng views the purchase of the property as an investment opportunity for both potential long-term capital appreciation and rental yield.
*Bukit Sembawang: Aberdeen Asset Management has ceased to become a substantial shareholder, following the sale of 1m shares at an average price of $3.97, via a married deal, paring its stake down to 4.81% from 5.2%.
*GLP: Signed new lease agreements totalling 146,000 sqm with six leading third-party logistics providers in China, of which five were with repeated customers. As of Mar ’15, GLP’s US$28b property portfolio consists of 41m sqm of logistics facilities across China, Japan, Brazil and the US.
Tuesday, June 2, 2015
NOL
NOL: (S$0.98) Selldown on completion of APL Logistics sale
NOL tumbled to a low of $0.975 (-3.9%) at mid-day, steeper than the average 1% loss for regional liner peers.
The weak performance came on the back of new vessel orders by German firm Hapaq-Llyod as the world's fourth largest ocean carrier continued the fight for market share.
Separately, NOL completed the sale for APL Logistics to Kintetsu World Express for an estimated US$1.2b, subject to adjustments for net cash and net working capital of the logistics business.
Post-sale, NOL's net gearing is expected to halve from a staggering 2.2x to 1.1x, but still above peers' average of 0.58x.
However, prospects remain grim as overcapacity in the liner industry is expected to continue in 2015 and amid a competitive freight rate environment even as bunker prices stabilise.
With the recent sell-off wiping out 19% of its market cap since 28 Apr, NOL is now trading at a 24% discount to the street's 12-month average TP of $1.22.
Bloomberg consensus has 8 Buy and 10 Hold ratings on the counter.
NOL tumbled to a low of $0.975 (-3.9%) at mid-day, steeper than the average 1% loss for regional liner peers.
The weak performance came on the back of new vessel orders by German firm Hapaq-Llyod as the world's fourth largest ocean carrier continued the fight for market share.
Separately, NOL completed the sale for APL Logistics to Kintetsu World Express for an estimated US$1.2b, subject to adjustments for net cash and net working capital of the logistics business.
Post-sale, NOL's net gearing is expected to halve from a staggering 2.2x to 1.1x, but still above peers' average of 0.58x.
However, prospects remain grim as overcapacity in the liner industry is expected to continue in 2015 and amid a competitive freight rate environment even as bunker prices stabilise.
With the recent sell-off wiping out 19% of its market cap since 28 Apr, NOL is now trading at a 24% discount to the street's 12-month average TP of $1.22.
Bloomberg consensus has 8 Buy and 10 Hold ratings on the counter.
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