Regional bourses are mixed in Tokyo (-0.5%), Seoul (+0.03%) and Sydney (-0.2%).
From a chart perspective, the STI is likely to drift with no clear direction. Topside resistance is seen at 2,860 (20-dma), while downside support is at 2,670.
Stocks to watch:
*Economy: Sept's PMI of 48.6 contracted deeper than street expectations, down from Aug's reading of 49.3. Factors cited for the drag included declines in new orders, new export orders and production output. Meanwhile, inventory and stockholdings of finished goods continued to expand.
*Sarine Technologies: officially released its new Meteor system, designed to provide faster, cost effective mapping of smaller rough diamonds. The system will allow Sarine’s technology to be more accessible to a wider range of manufacturers especially those focusing on smaller diamonds.
*Sarine Technologies: Profit warning for 3Q15 revenue may plunge 50% y/y, and fall by a third compared to 2Q15, due to lower polished diamond prices and residual inventory overhang. Group expects to record a 3Q operating loss of ~US$1.5m ($2.1m). Conditions may only improve post Diwali holiday in late 4Q15 or 1Q16 onwards.
*Aspial: Acquired a 90% stake in investment holding company World Class Global for $14.4m, as part of the group's restructuring exercise.
*PEC: Existing client Jurong Aromatics (JA) has gone into receivership after its debt restructuring talks stalled. The group provides integrated engineering and maintenance services to JA and is assessing the impact to the group.
*BBR: Awarded a design and build contract for the construction of Wisteria Mall and The Wisteria apartments for $116m by NorthernOne Development. The project comprises 60% residential and 40% retail components spanning ~170,000 sf. Sales of the residential component is expected to be launched in 1Q16 and overall work is expected to be completed by 2Q18.
*Nordic: Secured six new contracts worth $4.3m. This comprises four which requires the supply and installation of hydraulic valve remote control system, tank gauging system and motorised valve, expected for completion by 2Q16, as well as two contracts that involve piping insulation and architectural installation work, expected to conclude by 1Q16.
*S I2I: Distributor of pre-paid air-time cards for Indonesia's Telkomsel has been allotted four clusters for exclusive distribution in the country, down from 12 in the previous two years, as a result of a consolidation exercise by the telco.
Friday, October 2, 2015
Thursday, October 1, 2015
IHC
IHC: According to SGX filings, Oxley's executive chairman and his deputy CEO, Ching Chiat Kwong and Low See Ching Eric, have been buying into IHC, prompting speculations that they could be eyeing IHC's properties.
Between 23 and 29 Sep, Ching and Low acquired an aggregate 135.4m shares via married deals and purchases over the market, bringing their stakes above the 5% mark, to 12.1% and 6.1%, respectively. The shares were acquired between 8.5¢ and 9.4¢ each.
Conversely, substantial stakeholders of IHC including its CEO, have been paring down their stakes since 21 Sep, when share price decimated to the current levels from $0.315, prior to the trading halt on 15 Sep.
The stakes of the founding parties Fan Kow Hin, Andrew Aathar and Jong Hee Sen, has fallen from an aggregate 58.7% prior to 21 Sep, to the latest standing of 35.1%.
After the changes, Fan still remains as IHC's largest shareholder (22.4%), followed by Oxley's Ching (12.1%), Andrew (10.6%) and Oxley's Low (6.1%).
To recap, IHC is in the midst of a proposed acquisition of Healthway Medical Corp via a scheme of arrangement, through a 1-for-4.3 share swap deal.
However during finalisation of the acquisition in mid-Sep, IHC came under probe by SGX on possible share rigging, after a review of trades showed that a handful of connected individuals accounted for over 60% of trades done since Apr '15.
Speculations have been rife with the introduction of the Oxley duo as IHC's majority shareholders.
As a gauge, IHC's 18 properties include:
- 12 freehold fully operational nursing homes across Japan;
- An operational 125-bed hospital in Wuxi, China, currently under expansion for an additional 800-beds, scheduled for completion in 2019;
- A 150-bed specialist hospital and commercial development in Chengdu, China;
- An upscale medical hub and commercial development earmarked for completion in 2018;
- Two office buildings in Melbourne, Australia
- A proposed medical centre in Geelong, Australia
At the current price, IHC is trading at a 44% discount to its NAV/share of $0.1451.
Between 23 and 29 Sep, Ching and Low acquired an aggregate 135.4m shares via married deals and purchases over the market, bringing their stakes above the 5% mark, to 12.1% and 6.1%, respectively. The shares were acquired between 8.5¢ and 9.4¢ each.
Conversely, substantial stakeholders of IHC including its CEO, have been paring down their stakes since 21 Sep, when share price decimated to the current levels from $0.315, prior to the trading halt on 15 Sep.
The stakes of the founding parties Fan Kow Hin, Andrew Aathar and Jong Hee Sen, has fallen from an aggregate 58.7% prior to 21 Sep, to the latest standing of 35.1%.
After the changes, Fan still remains as IHC's largest shareholder (22.4%), followed by Oxley's Ching (12.1%), Andrew (10.6%) and Oxley's Low (6.1%).
To recap, IHC is in the midst of a proposed acquisition of Healthway Medical Corp via a scheme of arrangement, through a 1-for-4.3 share swap deal.
However during finalisation of the acquisition in mid-Sep, IHC came under probe by SGX on possible share rigging, after a review of trades showed that a handful of connected individuals accounted for over 60% of trades done since Apr '15.
Speculations have been rife with the introduction of the Oxley duo as IHC's majority shareholders.
As a gauge, IHC's 18 properties include:
- 12 freehold fully operational nursing homes across Japan;
- An operational 125-bed hospital in Wuxi, China, currently under expansion for an additional 800-beds, scheduled for completion in 2019;
- A 150-bed specialist hospital and commercial development in Chengdu, China;
- An upscale medical hub and commercial development earmarked for completion in 2018;
- Two office buildings in Melbourne, Australia
- A proposed medical centre in Geelong, Australia
At the current price, IHC is trading at a 44% discount to its NAV/share of $0.1451.
SingTel
SingTel: CIMB opines that there will be minimal negative impact for SingTel despite its Australian arm Optus losing a mobile virtual network operator (MVNO) partnership with TPG Telecom (TPG) to Vodafone.
TPG announced yesterday that it is expecting to migrate 320,000 of its mobile customers over to Vodafone’s network. On top of that, iiNet which was recently taken over by TPG is also likely to port over 167,000 of its mobile customers once its MVNO contract with Optus lapses.
This means Optus is on the brink of losing 487,000 or 5.2% of its current mobile subscriber base of 9.4m. However, from a financial perspective, the impact will be minimal as the house estimates Optus’s EBITDA would be dented by a mere 1.8%.
Moreover, TPG’s mobile subscriber base has been on a downfall, shrinking 13.5% from 370,000 in Jan ’14 to 320,000 in Jul ’15. TPG would also need to provide a new SIM card to its customers for the migration. This additional hassle will buy time and provides an opportunity for Optus to retain the subscribers on its network.
The loss is even more negligible after considering that Optus only contributes 25% to the group’s FY16 estimated earnings.
The telco currently trades at 15.2x FY16e P/E, and the house maintains its Buy rating as well as a TP of $4.30 on SingTel.
TPG announced yesterday that it is expecting to migrate 320,000 of its mobile customers over to Vodafone’s network. On top of that, iiNet which was recently taken over by TPG is also likely to port over 167,000 of its mobile customers once its MVNO contract with Optus lapses.
This means Optus is on the brink of losing 487,000 or 5.2% of its current mobile subscriber base of 9.4m. However, from a financial perspective, the impact will be minimal as the house estimates Optus’s EBITDA would be dented by a mere 1.8%.
Moreover, TPG’s mobile subscriber base has been on a downfall, shrinking 13.5% from 370,000 in Jan ’14 to 320,000 in Jul ’15. TPG would also need to provide a new SIM card to its customers for the migration. This additional hassle will buy time and provides an opportunity for Optus to retain the subscribers on its network.
The loss is even more negligible after considering that Optus only contributes 25% to the group’s FY16 estimated earnings.
The telco currently trades at 15.2x FY16e P/E, and the house maintains its Buy rating as well as a TP of $4.30 on SingTel.
ST Engineering
ST Engineering: DB remains upbeat on the group after its recent visit to ST Electronics found that the subsidiary is well positioned to capitalise on rapidly growing needs from urbanisation, a significant global trend.
ST Electronics accounted for 25% of ST Engineering’s sales and 29% of net profit in FY14, as well as delivered a net profit CAGR of 14% over the past seven years.
The house highlighted that the subsidiary offers technologically advanced products and solutions in the space of satellite & broadband communications, transportation intelligence and advanced electronics, which involves cyber security, data centre & analytic and cloud services.
As UN reported 54% of the world’s population resided in urban areas in 2014 and it should rise to 66% by 2050, ST Electronics is poised to benefit from rising IT solution needs to address urbanisation issues such as higher congestion, wastage and security concerns.The sub-entity will also be able to leverage on the group's global network to capture these opportunities.
Despite its optimism for the subsidiary, the broker suggested that possible downside risks for the group may arise from project execution, USD depreciation and worse than expected aircraft grounding.
However, the group has positive free cash flow, a robust balance sheet and a net cash position to withstand any contingencies. ST Engineering currently trades at 17.7x FY15E P/E.
Overall, DB maintains a Buy rating with a TP of $3.80 on the counter.
ST Electronics accounted for 25% of ST Engineering’s sales and 29% of net profit in FY14, as well as delivered a net profit CAGR of 14% over the past seven years.
The house highlighted that the subsidiary offers technologically advanced products and solutions in the space of satellite & broadband communications, transportation intelligence and advanced electronics, which involves cyber security, data centre & analytic and cloud services.
As UN reported 54% of the world’s population resided in urban areas in 2014 and it should rise to 66% by 2050, ST Electronics is poised to benefit from rising IT solution needs to address urbanisation issues such as higher congestion, wastage and security concerns.The sub-entity will also be able to leverage on the group's global network to capture these opportunities.
Despite its optimism for the subsidiary, the broker suggested that possible downside risks for the group may arise from project execution, USD depreciation and worse than expected aircraft grounding.
However, the group has positive free cash flow, a robust balance sheet and a net cash position to withstand any contingencies. ST Engineering currently trades at 17.7x FY15E P/E.
Overall, DB maintains a Buy rating with a TP of $3.80 on the counter.
Property
Property: Housing affordability, measured by monthly repayments to income, can deteriorate from the current 43% to 49% if the effective mortgage rate
rises to 3%.
CLSA's channel checks suggest more homebuyers are opting for fixed-rate home loans compared to a year ago despite banks maintaining the credit spreads for their floating packages unchanged.
Tight employment and strong household balance sheets will mitigate price falls.
House believes there is room for the government to ease in 1H16. Top picks are CapitaLand (Buy, TP $3.96), City Dev (Buy, TP $12.16) and Frasers Centrepoint (Buy, TP $2.25).
rises to 3%.
CLSA's channel checks suggest more homebuyers are opting for fixed-rate home loans compared to a year ago despite banks maintaining the credit spreads for their floating packages unchanged.
Tight employment and strong household balance sheets will mitigate price falls.
House believes there is room for the government to ease in 1H16. Top picks are CapitaLand (Buy, TP $3.96), City Dev (Buy, TP $12.16) and Frasers Centrepoint (Buy, TP $2.25).
SG Market (01 Oct 15)
Positive sentiment is expected to spill over to the Singapore market, following the overnight surge on Wall Street due to targeted buying of battered down stocks. However, activity may be limited with the Hong Kong market closed for a holiday today.
Regional bourses all opened higher in Tokyo (+0.6%), Seoul (+0.1%) and Sydney (+0.8%).
From a chart perspective, the respite in STI may continue, supported by oversold indicators. Topside resistance remains at 2,860 (20-dma), while downside support for the index is at 2,670.
Stocks to watch:
*ST Engineering: Appointed current Deputy CEO Vincent Chong Sy Feng as the new President & CEO of the group. Separately, STE acquired the remaining 50% stake in Singapore Precision Repair and Overhaul from Messier-Bugatti-Dowty for $8.2m, to develop a centre of excellence for landing gear maintenance, repair and overhaul in Singapore.
*Guocoland: Virgin Active will become a multi-year anchor tenant at Guoco Tower upon completion of development in mid-2016, with a take up of 31,000 sf of space.
*SBI Offshore: 51%-owned Graess Energy received its first solar power contract in the Maldives. A 20-year power purchase agreement is expected to be signed in mid-Oct which will have an initial generation capacity of 1.5MW which will bring in ~US$550k in revenue annually.
*Global Yellow Pages: Announced a NZ$500m development to build Auckland's Pakuranga Plaza, which will comprise residential, retail and commercial properties.
*Loyz Energy: Terminated an MOU to purchase Primeline Energy Holdings due to the current market volatility. Loyz originally intended to purchase the China-based O&G E&P company for $197m through the issuance of new shares that were priced at $0.11 each.
*IEV: Acquired a 5-year master license for the Oxifree corrosion control technology in India, making it the fifth country that IEV has the exclusivity.
*Roxy Pacific: Acquired a freehold site at Sea Avenue, Singapore, for $21.5m. The 19,474 sf site has an existing plot ratio of 1.4 for residential use.
*SingTel: 21.4%-owned Advanced Info Service in Thailand received an arbitration notice from TOT, claiming for additional ~70b baht payment in relation to a cellular mobile telephone service agreement. The group has submitted a dispute on the case.
*Nico Steel: Proposed issue of 2% redeemable convertible bonds due 2018 of $50m to Value Capital Asset Management's Premier Equity Fund. Proceeds shall be applied towards making investments (80-90%) and for general working capital (10-20%).
*Asia Fashion: Proposed issue of 100.4m new shares (13.5% share capital) at $0.06 apiece (316% above last close) by way of capitalisation, in relation to amounts owed to individual bond subscriber Li Yu huan.
*QT Vascular: Successfully defended against a patent lawsuit filed by AngioScore, which would allow the group to continue to make and sell its Chocolate Balloon Catheter in the US.
*Ramba: Requested for extended trading halt till 5pm on 2 Oct, as it is still in the process of negotiating and finalising a potential agreement.
*Civmec: In relation to a media report, Civmec clarified that it would invest A$30m in infrastructure facilities, only, if it was confident about securing a contract to build new submarines in Australia.
*Hong Leong: Expects to incur a 3Q15 loss due to increased losses from its consumer products unit due to weak sales, as well as lower contributions from other business units.
Regional bourses all opened higher in Tokyo (+0.6%), Seoul (+0.1%) and Sydney (+0.8%).
From a chart perspective, the respite in STI may continue, supported by oversold indicators. Topside resistance remains at 2,860 (20-dma), while downside support for the index is at 2,670.
Stocks to watch:
*ST Engineering: Appointed current Deputy CEO Vincent Chong Sy Feng as the new President & CEO of the group. Separately, STE acquired the remaining 50% stake in Singapore Precision Repair and Overhaul from Messier-Bugatti-Dowty for $8.2m, to develop a centre of excellence for landing gear maintenance, repair and overhaul in Singapore.
*Guocoland: Virgin Active will become a multi-year anchor tenant at Guoco Tower upon completion of development in mid-2016, with a take up of 31,000 sf of space.
*SBI Offshore: 51%-owned Graess Energy received its first solar power contract in the Maldives. A 20-year power purchase agreement is expected to be signed in mid-Oct which will have an initial generation capacity of 1.5MW which will bring in ~US$550k in revenue annually.
*Global Yellow Pages: Announced a NZ$500m development to build Auckland's Pakuranga Plaza, which will comprise residential, retail and commercial properties.
*Loyz Energy: Terminated an MOU to purchase Primeline Energy Holdings due to the current market volatility. Loyz originally intended to purchase the China-based O&G E&P company for $197m through the issuance of new shares that were priced at $0.11 each.
*IEV: Acquired a 5-year master license for the Oxifree corrosion control technology in India, making it the fifth country that IEV has the exclusivity.
*Roxy Pacific: Acquired a freehold site at Sea Avenue, Singapore, for $21.5m. The 19,474 sf site has an existing plot ratio of 1.4 for residential use.
*SingTel: 21.4%-owned Advanced Info Service in Thailand received an arbitration notice from TOT, claiming for additional ~70b baht payment in relation to a cellular mobile telephone service agreement. The group has submitted a dispute on the case.
*Nico Steel: Proposed issue of 2% redeemable convertible bonds due 2018 of $50m to Value Capital Asset Management's Premier Equity Fund. Proceeds shall be applied towards making investments (80-90%) and for general working capital (10-20%).
*Asia Fashion: Proposed issue of 100.4m new shares (13.5% share capital) at $0.06 apiece (316% above last close) by way of capitalisation, in relation to amounts owed to individual bond subscriber Li Yu huan.
*QT Vascular: Successfully defended against a patent lawsuit filed by AngioScore, which would allow the group to continue to make and sell its Chocolate Balloon Catheter in the US.
*Ramba: Requested for extended trading halt till 5pm on 2 Oct, as it is still in the process of negotiating and finalising a potential agreement.
*Civmec: In relation to a media report, Civmec clarified that it would invest A$30m in infrastructure facilities, only, if it was confident about securing a contract to build new submarines in Australia.
*Hong Leong: Expects to incur a 3Q15 loss due to increased losses from its consumer products unit due to weak sales, as well as lower contributions from other business units.
Wednesday, September 30, 2015
Biosensors
Biosensors: Following a regulatory approval obtained in Aug-15, Biosensors announced that they will commercialize its BMX-J drug eluting stent (DES) system in Japan from 1 Oct 15.
The BMX-J is an OEM version of the Nobori DES, which includes a biodegradable polymer and Biosensors' proprietary drug, Biolimus A9.
OCBC understands that the technology is already well accepted by cardiologists in Japan. Keeping in mind that the contractual agreement between Biosensors and Terumo is slated to end in 2016, Biosensors has been expanding its distribution reach across Japan, and they will continue to expand their channels to increase coverage.
House maintains HOLD with TP of $0.63.
The BMX-J is an OEM version of the Nobori DES, which includes a biodegradable polymer and Biosensors' proprietary drug, Biolimus A9.
OCBC understands that the technology is already well accepted by cardiologists in Japan. Keeping in mind that the contractual agreement between Biosensors and Terumo is slated to end in 2016, Biosensors has been expanding its distribution reach across Japan, and they will continue to expand their channels to increase coverage.
House maintains HOLD with TP of $0.63.
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