| Singapore Stock News |
CapitaLand (CAPL SP), CapitaMalls (CMA SP): CapitaLand-led group incl. CapitaMalls Asia, Singbridge Holdings sign agreement to develop retail, residential and hotel complex in China; project will cost ~S$4.3b. CapitaLand cut to sell from hold at RBS
City Developments (CIT SP): Downgraded to sell from buy at RBS
Food Junction (FOOD SP): Plans to open 2 restaurants this month.
Kian Ho Bearings (KH SP): Expects "significant drop" in FY profit on weaker demand
Lian Beng (LBG SP): 1H net income rises 33% Y/y to S$30.1m
Singapore Press (SPH SP): 1Q profit falls 4.7% Y/y to S$97.5m
TEE International (TEE SP): 2Q net income drops 5.5% Y/y to S$3.68m
Thai Beverage (THBEV SP): Says stockholder Maxtop buys 1m shrs at 25.398 Singapore cents
Tiger Airways (TGR SP): Dec. passengers down 12% Y/y to 481,000
UMW Holdings (UMWH MK): Ex-div
Wee Hur Holdings (WHUR SP): Gets S$35m contract to manage office building at Changi Business Park
Tuesday Recap
DMG downgrades Singapore Exchange (S68.SG) to Sell from Buy and cuts its target price to S$5.40 from S$6.20, following recent lacklustre securities average daily turnover. The house attributes the weakness in ADT to "negative investment sentiment due to slowing global economic growth" and tips 4QCY11 net profit of S$65 million, which represents a 26% on-quarter decline. The house expects ADT to remain weak in 1QCY12, and cuts its SGX FY12 ADT forecast to S$1.36 billion from S$1.66 billion, and FY13 ADT forecast to S$1.60 billion from S$1.78 billion resulting in 19%/18% cuts to its FY12/FY13 net profit forecasts to S$288 million/S$320 million. Taking a regional view, DMG says expectations of more HKEX (0388.HK) listings could lead to outperformance of HKEX's share price over SGX and says "a pair trade may be rewarding." The house has a Buy rating on HKEX with a HK$146.40 target price, pegged to 28X FY13 EPS, similar to its 10-year historical P/E ratio. SGX shares are up 0.7% at S$6.16.
HSBC initiates Hyflux (600.SG) at Neutralwith blended DCF- and P/E-based target price of S$1.40. It says Hyflux "has a strong record and product portfolio in a growing industry," operating in high-growth, water-scarce regions such as China, India, MENA, and ASEAN. However, it says near-term growth is curbed by its financial capacity to take on big projects and the house expects tepid order flow in the next few quarters. Valuation-wise, the house says, "Hyflux looks cheap on historical profit multiples, but less so on cash flow multiples." The shares are up 1.6% at S$1.24.
HSBC upgrades Singapore Airlines (C6L.SG) to Overweight from Neutral, citing "compelling value as momentum starts to turn." It says SIA is well-positioned, but the relatively strong SGD and European exposure "help to generate underperformance." The house says valuation is compelling with "little downside' to 2009 lows, while the key share performance indicator of earnings momentum is turning. It maintains SIA's S$12.50 target price, implying 1.1X 2012E P/B. The shares are up 0.8% at S$10.41.
CIMB maintains its Underweight stance on Singapore with a STI target of 2680, due to the island nation's small open economy status and high external exposure. It says "a global slowdown would impact on export-related stocks, impact office demand and other cyclical sectors such as the offshore marine sector negatively." It adds, the key property sector has also been plagued by a string of government cooling measures with a large supply stream upcoming, while in light of the recent transport price hikes, still high residential prices and relatively tight labor market, inflation is another variable that may remain stubborn for a large part of 2012." It notes, while STI valuations remain inexpensive, with P/B trending close to 2 SD below 2003-09 full cycle mean levels, "this market has remained weak for some time." The house adds, Singapore's ROE trend remains lackluster and the house is also forecasting marginal 4% earnings growth for 2012, with a bigger 14% pick up only in 2013. The STI is +1.0% at 2716.76.
Citigroup raises Neptune Orient Lines (N03.SG) target price to S$1.05 from S$0.90 and keeps its Sell rating.Its new target is based on 0.8X 2012E P/B, or 1 SD below its historical mean, "in line with valuations seen during periods of weak (but not extremely depressed) profitability set against a weak global macro backdrop." The house uses a USD/SGD exchange rate of 1.27. It says NOL may dip into losses in the coming quarters on the back of weak freight rates, and shares may not have factored in earnings disappointments. "While valuations are already below the historical mean, we see further downside as book value deteriorates on multiple quarters of losses." On a broader sector view, Citi says it expects a low-rate environment in 2012 with high volatility. The house recommends a bottom-up stock picking approach, and prefers small- over large-caps on compelling value. Its top pick is Pacific Basin Shipping (2343.HK), rated Buy with a HK$4.40 target price. NOL shares are flat at S$1.165.
CIMB downgrades CSE Global (544.SG) to Neutral from Outperform saying "CSE's business diversification, quality management and strong focus on ROE and FCFF have shone through. We find it opportune to take some profits." The house notes the stock outperformed the STI by 27% in December (it upgraded the stock to Outperform on Dec. 6), but taking a leaf from the recession in 2009, it expects earnings growth to slow and says "we believe this business cycle has peaked for CSE." It tips a 3-year earnings CAGR of 8%, compared to 30% for the boom years of 2006-08. The house adds, on a rolling forward core P/E basis, the stock is trading above its 5-year mean and a premium gap with the small- to mid-cap industrial average has opened up (CSE typically trades at a discount); "with limited catalysts on the horizon, we believe CSE will at best perform in line with the market." CIMB raises its target to S$0.88 from S$0.76, based on 7X CY13 earnings, one SD below its 5-year mean. The stock is last +3.5% at S$0.89.
Ezra Holdings (5DN.SG) is +3.4% at S$0.920, outperforming a broadly higher O&M space after saying its subsea division, EMAS AMC, has won two contracts from Statoil for mooring chain and riser replacements in the North Sea. The total contract value is about NOK425 million (around US$70.5 million) and could rise to NOK600 million with options. OCBC notes execution risk should be lower as EMAS AMC has done similar work for Statoil previously in 2009; the house estimates Ezra's subsea order book has now exceeded US$800 million, nearing its US$1 billion short-term order book target. It keeps its Buy call with a S$1.36 fair value estimate. However, some analysts remain cautious on the stock, which fell 53% over 2011; DMG says despite the impressive order wins it remains lukewarm on Ezra, citing higher costs incurred by the company to strengthen its global presence. It notes subsea margins remain difficult to predict and it sees risks of further fund raising to beef up its balance sheet. DMG stays Neutral with a S$1.06 target.
(Dow Jones News)
Asia Stock News
Asian stocks rose, with a regional benchmark index climbing the most in a week, on stronger U.S. and Australian economic reports and speculation that slowing China trade boosts the case for easier monetary policy.
China Merchants Bank Co. led mainland lenders higher on speculation the government will take action to stimulate the economy amid slower exports. James Hardie Industries SE, an Australian supplier of building materials, climbed 3.1 percent after a report that construction permits increased. Honda Motor Co., which depends on North America for 44 percent of sales, advanced 1.4 percent in Tokyo.
The MSCI Asia Pacific Index rose 1.2 percent to 116.04 as of 7:38 p.m. in Tokyo, with almost three shares rising for each that fell. The gauge advanced 0.9 percent last week as manufacturing growth from China to the U.S. bolstered confidence in the global economy.
Commodity News
Gold futures closed at the highest price in four weeks as a weaker dollar bolstered demand for commodities. The greenback retreated for the second straight day against a basket of currencies amid signs that European leaders are taking more steps to stem the region's debt woes. The MSCI All- Country World Index of equities rose as much as 1.6 percent, and the Standard & Poor's GSCI Spot Index of 24 raw materials advanced as much as 1.5 percent, the fifth gain in six sessions."The dollar is selling off, benefiting gold and commodities," Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail. "Risky assets have been well bid in 2012 on the heels of relatively solid economic news in the U.S. and the belief that much of the bad news out of Europe has been priced in."
Oil rose for the first time in four days on renewed concern that Middle East tension will disrupt supply and as equities advanced, raising economic optimism. Crude gained 0.9 percent as the European Union moved up a meeting to discuss an oil embargo against Iran by a week to Jan. 23 and Iran announced another step in its nuclear program. "There is no way traders are going to short oil if there is potential for some fighting," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "People are feeling a little bit better about the economy." Crude for February delivery climbed 93 cents, or 0.9 percent, to settle at $102.24 a barrel on the New York Mercantile Exchange. West Texas Intermediate oil traded on the Nymex has surged 20 percent in the past three months.
Source Bloomberg |
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