OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.

Research House: UOB KayHian

Price Call: HOLD

Target Price: 3.86

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OSK

Price Call: HOLD

Target Price: 3.30

Market Compass

17 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

17 Dec 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Keep a cool head and maintain a low profile. Never take the lead - but aim to do something big. - DENG XIAOPING Singapore: The Day Ahead SINGAPORE DAYBOOK :November new home sales show buyers in charge [SINGAPORE] Sales figures for new private homes last month underline a new reality in which location and attractive pricing are the main draws for buyers who are becoming more selective, analysts believe. Data from the Urban Redevelopment Authority (URA) yesterday showed that excluding executive condominiums (ECs), developers moved 1,228 units in November, a 15 per cent increase from the 1,070 in October. This works out to a take-up rate of 95 per cent for the 1,293 new private homes launched last month, and is comparable to the previous month when 1,124 units was released. Buyers have turned more cautious following a total debt service ratio (TDSR) framework put in place in late June; developers sold just 481 private homes in July, less than a third of June's 1,806. But consultants believe that last month's tally shows that there is still interest for attractively priced and well-located projects. Said Christine Li, head of research and consultancy at OrangeTee: "This could imply that there is demand in the market, and investors are simply biding their time." November sales were boosted by strong demand for the Duo Residences in Bugis, where 600 units were sold at a median price of $1,999 per square foot (psf), and Alex Residences at Redhill, where 171 units were moved at a median price of $1,706 psf. The pricing for Duo Residences was seen as particularly attractive by analysts. Successful developers adjusted prices to match current buyer sentiment, said Mohamed Ismail, CEO of PropNex Realty. Alan Cheong, head of research at Savills Singapore, said that the November numbers affirm his belief that the TDSR won't cause a "slash and burn" in the market and will merely slow down the rate of sales. In terms of performance by region, Core Central Region (CCR) saw more homes sold than the Rest of Central Region (RCR) and Outside Central Region (OCR) combined last month. Only two new CCR projects were launched, Duo Residences and Clermont Residence at Tanjong Pagar, but the overall sales of 662 units made up 54 per cent of all transactions. But Nicholas Mak, executive director for research and consultancy at SLP International, said that this was an "unusual" event unlikely to repeat itself often in the near future, as there are not many projects like Duo Residences in the pipeline. RCR sales volume was up 29 per cent from October at 352 units, backed by sales at Alex Residences, while OCR transactions fell 70 per cent to 214 homes, primarily on the lack of new launches. Chia Siew Chuin, director of research and advisory at Colliers International said that homebuyers may be turning to reasonably priced homes in CCR and RCR given the narrowing price gaps between mid-to-high-end homes and mass market homes. She said that some 73 per cent of new homes sold last month were in the range of $1,500-2,500 psf. "This is a contrast from past trends, where the majority of new homes were transacted at below $1,500 psf." The lowest selling price on a psf basis in November was for a unit at The Inflora in Tampines sold at $723 psf, while the most expensive unit was one at Twin Peaks in Leonie Hill that transacted at $3,052 psf, SLP's Mr Mak said. Including ECs, 1,714 new homes were sold last month, 42 per cent higher than the month before. Sky Park Residences in Sembawang and Waterwoods in Punggol were the best sellers for ECs last month. For the first 11 months of the year, 14,678 new private homes (excluding ECs) were sold. Analysts are expecting total sales for this year to be close to 16,000, a significant dip from the record 22,197 last year. Desmond Sim, associate director at CBRE Research, believes that prices will see a "marginal rise of around 2 per cent" on the year. December should be fairly quiet due to the festive season, with sales below 1,000 units, analysts said, and with demand likely to pick up again after Chinese New Year as pending projects hit the market. "Going forward, pricing is key and developers have to price attractively to move units quickly," said Eugene Lim, key executive officer at ERA Realty. Projects that may be launched in the first half of next year include Marina One developed by M+S, City Development's South Beach Residences, The Panorama by Wheelock Properties and Keppel Land's project at Kim Tian Road. Sales could be anywhere from 10,000 to 16,000 units next year, with some consultants expecting prices to be flat or marginally lower. (Source: The Business Times) MARKET SCOOP GLP pre-leases 35,000 sqm in China to Haier Logistics GIC subscribes for US$35m of bonds in Green Dragon Gas M1 in exclusive partnership with music streaming service Deezer Developers sold 1,228 private homes in Nov: URA Singapore to "shape the taper" in public housing: Khaw China Airlines, Tigerair to set up Taiwan budget carrier Temasek redeems S$500m zero coupon exchangeable bonds due 2013 13 industrial sites for 1H2014, JTC takes over sales of new state land (Source: The Business Times) UOB KAY HIAN says ... SUPER GROUP | HOLD | TP: S$3.86 We spoke with management of Super Group (Super) recently This note highlights the key takeaways and our earnings and target price adjustments After the 3-10% price increases in Oct 13, the initial knee-jerk reaction was a 8% decline in sales volume However, we understand sales volume has stabilised in November Super remains the runaway leader in terms of market share (45-50%) and continues to enjoy early-mover advantages, such as a strong distribution network Nestle, which has been more active in promotions (particularly in Yangon and Mandalay) since 2Q13, has a market share of only 2-3% In terms of competition, we think the group will have a closer watch over local coffee brands, such as Premier (15-20% market share) and Sunday (8-10%) The Philippines remains a very competitive market Super's plan in this market is to focus on product innovation and development with partner San Miguel Otherwise, 4Q13 turnover could also be impacted by typhoon Haiyan which hit Philippines in early-November Consumer branded sales in core markets such as Thailand and Malaysia remained solid with 9M13 turnover up 8% yoy and 7% yoy respectively Singapore sales dipped 3% yoy, attributable to more keen competition in the form of promotions All things considered, management is targeting 2014 sales growth of up to 13% yoy for the consumer branded segment In our view, this should be achievable given its rebranding exercise in 2013 and the normalisation in markets, such as Myanmar We believe Super has had a promising start in China since the launch of its consumer branded segment in Aug 13 (estimated 30-40% yoy rise in 4Q13 sales up to November) Super's strategy in China will be to target the younger and "aspiration/lifestyle" coffee consumers From a low base, we think there is more upside as coffee consumption and Super's brand positioning gain momentum in China In our view, China could form part of its new growth trajectory in the coming years In the medium term, the group's focus for consumer branded will be rebranding and product innovation In our view, these two areas are critical in the face of dynamic consumer markets as well as markets with intensifying competition, such as Myanmar, Philippines and Indonesia For the food ingredient segment, a key area to focus on will be new markets and this has been promising with contributions from new markets, such as the Middle East and Europe In addition, the group's emphasis on product innovation would raise the entry to barrier in the segment We cut our 2013-15 net profit forecasts by 4-18% as we build in more conservative top-line growth in branded consumer (14-15% vs 19-22% previously) Key risks to our view are raw material prices, irrational competition and execution risks in China Maintain HOLD with a lower target price of S$3.86 (previously S$4.50), based on 1.3x PEG, a 20% discount to peers' given near-term challenges We would revisit our call when more positive datapoints from China emerge or if there is a substantial rebound in core markets like Myanmar Possible share price catalysts include recovering branded sales in key markets and positive datapoints from China branded segment OSK DMG Securities says ... RAFFLES MEDICAL | NEUTRAL | TP: S$3.30 Raffles Medical has announced the acquisition of a property at 100 Taman Warna, located at the junction of Taman Warna and Holland Avenue and within the Holland Village enclave, for a purchase consideration of SGD54.8m The 99-leasehold site sits on a land area of 1,942sqm and is adjacent to the Holland Village MRT Station Raffles Medical intends to redevelop the existing property into a 5-storey commercial building with a gross floor area of 67,720 sf On completion, it will lease 2 storeys of the revamped building for its outpatient medical and specialist clinics, while leasing out the remaining space to DBS Bank and other retail tenants With all-in development cost at SGD65m, the acquisition is reasonably priced at S$1036 psf ppr, enabling the group to secure its own medical premises on attractive terms while generating rental income from the excess space Raffles Medical is increasingly spreading its wings into overseas markets In China, it has secured joint venture agreements to develop 2 hospitals this year, the first in Shenzhen to develop a private hospital with the China Merchant Group, and the second one in Shanghai with the Shanghai government to develop an international hospital It owns a majority stake of 70% in both projects, which are expected to cost a total development cost of SGD400m Its Singapore operation, meanwhile, continues to grow steadily, underpinned by operating leverage from its hospital operation We expect robust healthcare demand in Singapore to translate into continuing earnings growth for the group Maintain Neutral with TP of SGD3.30 on valuation grounds

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: M1
Company Name: M1 LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 3.70

Market Compass

11 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

11 Dec 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Those who deny freedom to others deserve it not for themselves. - ABRAHAM LINCOLN Singapore: The Day Ahead SINGAPORE DAYBOOK :Stable bottom line for local telcos next year PROFITABILITY for the telco sector in Singapore is set to remain stable, with data revenue cushioning the bumps on the road ahead, according to the Fitch Ratings 2014 outlook report for telcos in the region. While revenue from text messages and international service will fall, a 20 per cent increase in mobile data revenue will offset the declines, resulting in a flat topline for the industry. "Data revenue will increase as a greater portion of users move to tiered data bundles, currently around 25-30 per cent of the overall subscriber base," the report said. "The data pricing structure has improved as customers now have to pay for incremental data use above 4 gigabytes (GB) per month; previously, users had a fixed monthly allocation of 10GB.". (Source: The Business Times) MARKET SCOOP Lum Chang incorporates two subsidiaries; buys UK property Far East Organization unit tops bids for Gambas Crescent Parcel 3 S'pore market offers 'safer path to growth' : Credit Suisse No TPP breakthrough after all, ministers to try again next month (Source: The Business Times) NOMURA Securities says ... M1 | BUY | TP: S$3.70 M1 will double its excess data usage charges from SGD5.30 to SGD10.7 per month per GB from 1 January 2014 Also for excess outgoing local voice calls, there will be a minimum one-minute charge and they will be billed per second thereafter At face value, the data re-pricing could boost revenues and EBITDA by 1-3%, but... 1) there could be some customers who may migrate to higher plans (especially if their excess usage is more than 2GB, we think customers could even become more vigilant towards their usage patterns, and cut back on usage As of Sept-13, M1 had 32% of its post-paid subs on tiered plans (or 322k subs), and around 16% were exceeding data bundles (or 52k subs) This is yet another attempt by the Singaporean operators to reprice data up, which is a positive for ARPUs SingTel also doubled its excess usage charges in September this year We maintain Buy on M1 - it is a simple story with simple catalysts There is a lot of focus on ARPUs since the operators moved away from 12GB to tiered pricing plans At a reported level, we haven't seen much improvement yet but a majority of this is attributed to falling roaming rates, which are still around 10-15% of wireless revenues we understand We think the Singaporean telcos missed out on a perfect opportunity to increase the base-line prices for all plans when 4G/LTE was launched - initially the operators intended to charge another SGD10/mth for 4G VAS, but it was waived during the promotion period, which seems to be continuing still This could potentially be introduced, and may provide a further boost to ARPUs Valuation Methodology Our DCF-based target price of SGD3.7 uses a WACC of 7.3% and terminal growth rate of 2%, with cashflows discounted to FY16F The benchmark index for this stock is MSCI Singapore Risks that may impede the achievement of the target price 1) More aggressive competition in Singapore; 2) limited ability to offer fixed-mobile bundles; and 3) a macro slowdown in Singapore OCBC Securities says ... COMMODITIES | NEUTRAL | As expected, the commodities sector performed relatively poorly against the broader market for most part of 2013, after we maintained our Underweight rating from 2012 Against the STI's 0.4% showing until 6 Dec 2013, the commodities stocks under coverage fell by an average of 6% They had also fallen by as much as 19% at their lowest versus the STI's 6% slide before staging a recovery in late 2H13 Part of the recovery was buoyed by news that economies are slowly recovering, led by the US According to its latest World Economic Outlook (WEO) report out in Oct, the IMF (International Monetary Fund) now expects World Output to grow 3.6% in 2014, up slightly from the likely 2.9% growth in 2013. However, it warns that downside risks remain Some of the "fresh" risks include slowing growth in China, which may affect many other economies, notably the commodity exporters among the emerging and developing economies However, IMF believes slower near-term growth is a worth-while trade-off as there will be positive net effects in the longer term, which should lead to more stable demand for commodities While market sentiment may remain somewhat cautious until investors get a better handle on the magnitude and extent of the Fed tapering (widely expected to take place sooner rather than later), we believe that further signs of a firmer recovery in the US economy could lead investors to adopt a more "risk on" approach And with the valuations of some of the commodity plays still looking relatively inexpensive, we could see potential upgrades for some of them if there is an over-correction in the market Hence we also upgrade our rating from Underweight to NEUTRAL OCBC Securities says... MIDAS HOLDINGS | BUY | TP: S$0.64 We expect firm earnings rebound for Midas in FY14F as high speed railway (HSR) contracts roll in Midas won its first HSR contract (Rmb168m) in over two years in October, as China resumed its HSR development programme, with more likely to come We believe the Group could win a substantial order arising from the recent second rolling stock tender for 314 train sets, or about 2,500 train carriages Over the next two years, we believe a further 700 over train sets could be tendered for, resulting in further wins for Midas in the HSR segment At the same time, we expect (PRC) metro orders to continue flowing in, and overseas orders, which have grown substantially in 2013, to continue to be robust as Midas looks to maintain a more diversified earnings base Maintain BUY, with our 12-month TP raised to S$0.64 (Prev S$0.60), based on 1.2x FY14F P/BV We believe current valuations are attractive for a stock whose earnings are poised for a strong rebound into FY14F and FY15F

SG: MARKET PULSE: CDL Hospitality Trusts (5 Dec 2013)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 1.84

MARKET PULSE: CDL Hospitality Trusts

5 Dec 2013

KEY IDEA CDL Hospitality Trusts: Proposed acquisition of Jumeirah Dhevanafushi CDL Hospitality Trusts (CDLHT) has entered into conditional land and business sale agreements with Xanadu Holdings Pvt Ltd for the acquisition of Jumeirah Dhevanafushi in the Maldives at US$59.6m (~S$74.8m). Based on the purchase price and assuming that CDLHT owned the property from 1 Jan 2013, the pro forma annualised net property income yield of the property for the nine months ended 30 Sep 2013 would be 6.2%. While management indicated that the 4Q13 and 1Q14 performance for its Singapore hotels is still lackluster, this is within our expectations. We roll over our DDM model to FY14 numbers. Despite using a more conservative risk free rate of 3.0% (instead of 2.4% previously), our FV increases from S$1.83 to S$1.84 and we maintain our BUY rating on CDLHT. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks ended mostly lower on Wed, with the S&P 500 and the Dow Jones Industrial Average extending their losing streak to four straight sessions. - Singapore's economic growth will stay strong in the next two years relative to the other countries in Asean, the Centre for Economics and Business Research has predicted. - SGX and Hong Kong Exchanges & Clearing said they have agreed to cooperate in various areas, including developing yuan-denominated products jointly. - Genting Hong Kong and other shareholders have agreed to sell up to 25.3m shares in Nasdaq-listed Norwegian Cruise Line Holdings in a secondary public offering. - WE Holdings is acquiring Hong Kong-based electronics distributor Everbest Industrial (International) for US$7.4m. - Swissco Holdings has placed orders to add S$42m worth of vessels to its fleet, while Cosco Corporation has secured a US$54m contract. - Yoma Strategic Holdings has unveiled plans for a joint-venture company to build and operate a steel mesh products manufacturing plant in Yangon, Myanmar.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: SELL

Target Price: 0.43

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.02

Market Compass

04 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

04 Dec 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : An advertising agency is 85 percent confusion and 15 percent commission. - FRED ALLEN Singapore: The Day Ahead SINGAPORE DAYBOOK : Property fuels surge in S'poreans' net wealth. MAS review shows household debt rising, but savings piling up faster; cautions that risks remain. [SINGAPORE] Singapore households have been given a clean bill of health as far as their debt is concerned. Despite warnings of an increasing exposure to mortgages, net wealth has grown robustly over the past decade and stands at about four times GDP, according to the Monetary Authority of Singapore Financial Stability Review 2013. While household debt continues to increase, savings are piling up faster and massive cash deposits outweigh total liabilities, the review showed yesterday. Measures to cool the residential property market are having a significant impact, too. "However caution is in order as uncertainties and risks remain," MAS warned. (Source: The Business Times) MARKET SCOOP Nov PMI dips to 50.8, points to slower growth SGX derivatives and clearing activities grow Yuan overtakes euro in trade finance S'pore household net wealth robust: MAS S'pore shadow banking small: MAS S'pore-based banks lending more to China, India: MAS S'pore jumps 50 spots up on World Giving Index (Source: The Business Times) UOB KAY HIAN says ... TIGERAIR | SELL | TP: S$0.43 We are not confident of Tigerair's prospects in 2HFY14 due to weak loads out of Singapore We, thus, lower our fair value to S$0.43, valuing the stock at 0.9x FY14F P/B from 1.0x P/B October pax load factor (LF) fell to a 21-month low as the 21% capacity growth vastly outstripped the 8% traffic growth The 74.4% load was substantially lower than the 88.0% breakeven load achieved in 2QFY14 The weak October loads do not bode well for 4Q13, which is a peak quarter for Tigerair As such, we have lowered our FY14 traffic growth by 5ppt to 20% and revise down our pax LF by 2ppt to 79% 2QFY14 LF was at its lowest in eight quarters, declining 5.6ppt yoy The weak October loads suggest little leeway in raising prices and yields are thus unlikely to improve in 2HFY14 At the 2QFY14 analysts briefing, Tigerair highlighted the possibility of implementing fuel surcharges on select routes after a successful implementation on Indonesian routes However, October's weak loads suggest that Tigerair does not have much pricing power and the odds of the airline implementing surcharges appear low One of the key concerns we have on Tigerair is the uncertainty regarding the financial stability of its associates and the extent and duration of continued financial backing For 1HFY14, combined associate losses and impairments amounted to S$99m Despite the losses, Tigerair invested an additional S$71m in associates during 2QFY14 We assume just S$34m in associate losses and impairment for 2HFY14 If November's operating statistics do not show an improvement, we believe the stock will face further downward pressure Political unrest in Thailand, which is a key sector for Tigerair would very likely lead to lower loads Under such a scenario, we believe that the odds of Tigerair underperforming for the next six months are high We lower our FY14 earnings forecast by S$20.0m and now expect Tigerair to report a net loss of S$19m compared to S$1m net profit previously The downward revision is mainly due to a 5ppt reduction in pax traffic growth assumptions We lower our target price by 17% to S$0.43 after lowering the fair value to 0.9x FY14F P/B from 1.0x It is worth noting that parent airline SIA's own airline operations are implicitly valued at a lower 0.7x P/B after adjusting for its stake in SIA Engineering DBS Securities says ... YOMA STRATEGIC HOLDINGS | BUY | TP: S$1.02 Yoma announced that its telecom JV with Digicel and FMI named Digicel Asian Holdings, has signed an agreement with Ooredoo Myanmar, one of the winners of Myanmar's telco operating licence, to develop, construct and lease telecom towers to the latter This joint venture will be amongst the first telecoms tower companies to begin construction in Myanmar and will accept multi-tenancy agreements This development is in line with Yoma's aspiration to be a conglomerate and we believe it will contribute positively to the company in the long haul although the accretion may be insignificant Yoma has not released any quantifiable details at this stage But, Yoma would surely need funding to invest in this JV although we believe their stake would not be substantial Based on Myanmar government's timeline to expand mobile penetration from less than 5% to 80% by 2015-2016, we believe this would be a fast-paced development and should start no later than 2014 That said, we do not expect immediate profits in its first year of operations considering start up expenses We expect further update on this JV over the next few weeks and will update accordingly Maintain Buy on Yoma with TP of S$1.02 OCBC Securities says... YOMA STRATEGIC HOLDINGS | HOLD | TP: S$0.84 Yoma reported that a consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar This will facilitate Ooredoo's commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year We understand that Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies We will speak further with management regarding this development and, in the meantime, maintain a HOLD rating with our fair value estimate of S$0.84 under review

SG: MARKET PULSE: Yoma Strategic, CDLHT (4 Dec 2013)

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 1.83

MARKET PULSE: Yoma Strategic, CDLHT

4 Dec 2013

KEY IDEA Yoma Strategic Holdings: Signs agreement with Ooredoo Summary: Yoma reported that its consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar. We understand from management that detailed terms regarding ownership and capital outlay for the consortium are still being negotiated and will be announced in due time. Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies, including Ooredoo's to facilitate its commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year. Maintain HOLD with an unchanged fair value estimate of S$0.84. (Eli Lee) MORE REPORTS CDL Hospitality Trusts: Proposed acquisition of Jumeirah Dhevanafushi in the Maldives Summary: CDL Hospitality Trusts (CDLHT) has entered into conditional land and business sale agreements with Xanadu Holdings Pvt Ltd for the acquisition of Jumeirah Dhevanafushi in the Maldives at US$59.6m (~S$74.8m). Based on the purchase price and assuming that CDLHT owned the property from 1 Jan 2013, the pro forma annualised net property income yield of the property for the nine months ended 30 Sep 2013 would be 6.2%. On a pro forma annualised basis for the nine months ended 30 September 2013, this translates to a DPS accretion of 2.2%, with potential for improvement as the property is currently still gestating as it only opened on 1 Nov 2011. These transactions will entail the activation of the CDLHT's business trust (HBT). Upon the completion of the acquisition, the HBT lessee will lease the property from the H-REIT (CDLHT's REIT) lessor pursuant to a lease agreement. We maintain a BUY rating on CDLHT but place our fair value estimate of S$1.83 under review pending a call with management. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks fell Tue, with the S&P 500 and the Dow falling for a third straight day over uncertainty on the Fed tapering and fears that the market was overdue for a pullback from record levels. - Singapore's Nov purchasing managers' index fell short of expectations, dipping 0.4 point to 50.8, but the electronics index continued to strengthen, pointing to a surer-footed recovery for the sector. - Dynamic Colours is selling Suzhou Huiye Chemical & Light Industry Co and Suzhou Huiye Plastic Industry Co to AEI Compounds for about US$15m. - Tiong Seng Holdings has boosted its order book with a S$204.5m contract win from the Housing and Development Board (HDB).

SG: MARKET PULSE:Telecoms Sector, Yoma (3 Dec 2013)

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

MARKET PULSE: Telecoms Sector, Yoma

3 Dec 2013

KEY IDEA Telecoms Sector: Limited growth, steady dividends Summary: Going into 2014, we believe that there is a possibility of investors switching out of more defensive stocks into the cyclical ones as the developed economies continue to improve. And because of their outperformance in 2013, dividend yields have fallen to around 4.5%, making them merely "decent" when compared to the STI's 3.5%. In summary, we think that the telcos will likely see just limited growth in the mobile market; stiffer competition in the broadband market; and a relatively unexciting Pay TV market. As such, earnings growth is not likely to be exciting. Hence we maintain our NEUTRAL rating on the sector. (Carey Wong) MORE REPORTS Yoma Strategic Holdings: Signs agreement with Ooredoo Myanmar Summary: Yoma reported that a consortium, Digicel Asian Holdings, comprising Digicel Group, First Myanmar Investment Co., Ltd and Yoma Strategic Holdings Ltd, has signed an agreement with Ooredoo Myanmar to develop, construct and lease telecommunications towers in Myanmar. This will facilitate Ooredoo's commitment to rapidly achieve coverage across the country after winning a coveted telecommunication license earlier this year. We understand that Digicel Asian Holdings' company in Myanmar, Myanmar Tower Company, will construct multi-tenancy towers in Myanmar and aim to work with multiple telecommunications operating companies. We will speak further with management regarding this development and, in the meantime, maintain a HOLD rating with our fair value estimate of S$0.84 under review. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock indexes ended lower on Mon, with the Dow briefly falling below 16,000 ahead of the closing bell as investors debated whether a record rally has become overextended. - The massive construction of HDB flats will start to taper off from next year as balance is restored between demand and supply in the market, Minister Khaw Boon Wan said. - Better-quality Chinese companies will come to Singapore following last month's agreement between the regulators of the two countries. - Sitra Holdings has obtained JTC approval to sell its Sungei Kadut property to World Furnishing Hub Pte Ltd for S$8.65m. - Sembcorp Industries' new S$154m multi-utilities centre at Banyan sector has started supplying steam, water and on-site logistics services to petrochemical plants there. - A "software bug" gave M1's mobile data service the sniffles yesterday, with some of its users experiencing patchy 3G data access for several hours. - LionGold Corp, together with a subsidiary of associated firm ISR Capital and Chinese firm Suzhou Power, is partnering a new private equity fund that invests in natural resources.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

Market Compass

03 December 2013~ Good Morning Singapore!

Singapore Idea Snippets:

03 Dec 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : You can have peace. Or you can have freedom. Don't ever count on having both at once. - ROBERT A.HEINLEIN Singapore: The Day Ahead SINGAPORE DAYBOOK : The constraints and advantages that S'pore has: Tharman [SINGAPORE] The global economy, especially the developed countries, should expect to go through a period of "sub-normal growth" for several years to come, says Deputy Prime Minister Tharman Shanmugaratnam. And while this will cause problems for everyone, he said Singapore is "fortunate" because of the many opportunities available to its people across regions such as Asia, Africa and Latin America that will help "balance the loss of demand growth" in the advanced economies. He made these points during a question-and-answer session after delivering the S Rajaratnam Lecture yesterday, an annual event organised by the Ministry of Foreign Affairs' Diplomatic Academy in honour of Singapore's first and longest-serving foreign minister. Mr Tharman, who is also Finance Minister, said the government is doing all it can to improve the lives of Singaporeans, especially the lower-income group. (Source: The Business Times) MARKET SCOOP Keppel confirms BT report of Norway deal, with option for two more Do Not Call registry opens; businesses required to sign up Genting Singapore near one-month high on CIMB upgrade; index flat Private housing site beside Aljunied MRT triggered from reserve list Andrew Tan to become MPA's CEOfrom Jan 1 HDB construction to taper from '14: Khaw (Source: The Business Times) UOB KAY HIAN says ... PROPERTY - SINGAPORE | OVERWEIGHT | Maintain OVERWEIGHT as the market has priced in an overly bearish scenario for property and REITs stocks on expectations of a rise in interest rates with the Fed's tapering Tapering will have minimal impact on short-term rates and we expect a growth pick-up to offset a rise in long-term rates We are already factoring in a 3% rate for bond yields (60bp higher than the current yields of 2.4%) We prefer diversified, deep-value developers and high-beta REITs in the office space with OUE, Ho Bee and CapitaCommercial Trust as our top BUYs Most upbeat on the office segment, wich is turning around with spot rents picking up and positive rental reversions accelerating, underpinned by healthy demand and limited supply We forecast office rents to pick up by 8% yoy in 2014 Retail rents are expected to remain stable, rising 0-2% yoy in 2014, while industrial rental growth will likely moderate to 0-2% yoy following a larger upcoming supply in 2014-15 REITs: High-beta office and industrial REITs to outperform as the economic recovery gains momentum We expect S-REITs to transition from yield vehicles to growth vehicles, led by the rental growth pick-up in the office segment Business parks and high-tech industrial spaces should follow as these segments are closely linked to the office segment Suntec REIT, CapitaCommercial Trust and Ascendas REIT are our preferred REIT picks Developers are deep in value but lack near-term catalysts Peak/trough P/B multiples suggest developers offer an attractive upside potential of 131% vs a downside risk of 40% However, near-term newsflow from the residential segment is likely to be negative as the latest property measures will result in a 5-10% yoy fall in property prices and 20-30% yoy fall in volumes in 2014 Slowing residential demand and elevated land prices are prompting developers to explore overseas land acquisitions We prefer diversified developers with exposure to the commercial segment CapitaLand, OUE and Ho Bee are our preferred picks OCBC Securities says ... VARD HOLDINGS | HOLD | TP: S$0.84 Vard Holdings Limited (VARD) announced that it has secured a new contract for the construction of one advanced offshore support vessel (OSV) worth ~NOK400m This contract was awarded by Island Offshore, which is an existing customer of VARD VARD has delivered more than 30 vessels to Island Offshore previously, while it also has five vessels under construction for Island Offshore Delivery for this OSV is scheduled for 1Q15 This latest contract brings total YTD order wins for VARD to NOK12.3b, within our forecast of NOK12.9b Hence, we maintain our HOLD rating and S$0.84 fair value estimate on VARD, pegged to 8x FY14F EPS OCBC Securities says... Oil and Gas: Good performance to continue in 2014 | OVERWEIGHT | Index mostly in-line with market; among top three best performing sub-indices The FTSE Oil and Gas index has performed more or less in-line with the broader market this year. Still, it is among the top three best-performing FTSE sub-indices YTD, along with the FTSE Telecommunications and FTSE Maritime indices. On the other hand, price performances of individual stocks have differed greatly, with the key outperformers being Kreuz Holdings (+95% YTD) and Ezion Holdings (+45% YTD) in the Offshore & Marine space. Positive on the rig building sector and certain OSV segments Stepping into 2014, we continue to advocate a focused stock-picking strategy, overweighting companies that are operating in sub-sectors with more favourable demand-supply dynamics, and those with strong balance sheets and order books. The local rigbuilders are expected to continue securing orders at a pace that will at least match this year's, while the offshore support vessel sub-sector should also see continued recovery as the market situation gradually tilts in favour of vessel owners - the Indonesian and Malaysian OSV sectors are especially looking relatively promising. Meanwhile, subsea tendering activity remains firm. Solid long-term fundamentals; near term driven by macro events We believe that the offshore sector has strong long-term fundamentals as countries have an interest in fulfilling as much domestic demand as possible in order to boost energy security. Investors should be mindful, however, that macro events remain a key driver of the broader sector in the near term. Going into 2014, we remain OVERWEIGHT on the oil and gas sector, as we expect that the favourable oil price environment will continue to be conducive for capital expenditure. Our preferred picks are Keppel Corporation [BUY, FV: S$12.87], Sembcorp Marine [BUY, FV: S$5.68], Ezion Holdings [BUY, FV: S$2.57] and Nam Cheong Ltd [BUY, FV: S$0.37].

SG: Market Pulse: Oil & Gas Sector, Vard (2 Dec 2013)

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.84

MARKET PULSE: Oil & Gas Sector, Vard

2 Dec 2013

KEY IDEA Oil and Gas: Good performance to continue in 2014 Summary: The FTSE Oil and Gas index has performed more or less in-line with the broader market this year. Still, it is among the top three best-performing FTSE sub-indices YTD, along with the FTSE Telecommunications and FTSE Maritime indices. Stepping into 2014, we continue to advocate a focused stock-picking strategy, overweighting companies that are operating in sub-sectors with more favourable demand-supply dynamics, and those with strong balance sheets and order books. The local rigbuilders are expected to continue securing orders at a pace that will at least match this year's, while the offshore support vessel sub-sector should also see continued recovery as the market situation gradually tilts in favour of vessel owners. Maintain OVERWEIGHT on the oil and gas sector, preferring Keppel Corporation [BUY, FV: S$12.87], Sembcorp Marine [BUY, FV: S$5.68], Ezion Holdings [BUY, FV: S$2.57] and Nam Cheong Ltd [BUY, FV: S$0.37]. (Low Pei Han, Andy Wong) MORE REPORTS Vard Holdings: Secures NOK400m contract Summary: Vard Holdings Limited (VARD) announced that it has secured a new contract for the construction of one advanced offshore support vessel (OSV) worth ~NOK400m. This contract was awarded by Island Offshore, which is an existing customer of VARD. VARD has delivered more than 30 vessels to Island Offshore previously, while it also has five vessels under construction for Island Offshore. Delivery for this OSV is scheduled for 1Q15. This latest contract brings total YTD order wins for VARD to NOK12.3b, within our forecast of NOK12.9b. Hence, we maintain our HOLD rating and S$0.84 fair value estimate on VARD, pegged to 8x FY14F EPS. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks closed mostly lower on Fri, pulling back from Wed's record levels, but still achieved gains for the week and month. - After the great penny stock collapse of Oct, a listless month of trading in Nov saw the Singapore market lose around S$12.6b of value. - Business loans continued to power Singapore's bank lending growth in Oct, with total loans rising 1.4% MoM, according to preliminary figures released by MAS. - Keppel Corp's Keppel Shipyard is in talks with Norway's Golar LNG on a contract for a landmark conversion of an LNG carrier into a floating LNG production facility. - GSH Corporation Ltd's subsidiary signed a sales and purchase agreement with Tropicana Kia Peng to acquire a parcel of prime land in downtown Kuala Lumpur for RM132.4m (S$51.55m). - Asiatravel.com Holdings posted deeper losses of S$5.74m for FY13, from the S$3.77m loss in FY12. - Casa Holdings Ltd's FY13 net profit rose to S$9.53m from S$9.45m a year ago. - CapitaMalls Asia will open two new shopping havens this week, one on each side of the island.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: RH PetroGas
Company Name: RH PETROGAS LIMITED

Research House: OSK

Price Call: BUY

Target Price: 1.38

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: OSK

Price Call: SELL

Target Price: 0.61

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: Nomura

Price Call: HOLD

Target Price: 4.05

Market Compass

29 November 2013~ Good Morning Singapore!

Singapore Idea Snippets:

29 Nov 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : We're running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere... can handle before there is an environmental catastrophe. - ELON MUSK Singapore: The Day Ahead SINGAPORE DAYBOOK : Financing boost for exports to Asia emerging markets. IE S'pore to launch credit guarantee scheme with ADB and Swiss Re. [SINGAPORE] Singapore's exports to Asia's emerging markets are about to get a $1 billion annual boost from a new government trade financing plan. Some 250 local companies - a big chunk of them small and medium-sized enterprises (SMEs) - are tipped to gain yearly from a credit guarantee scheme that International Enterprise (IE) Singapore is launching with the Asian Development Bank (ADB) and Swiss Re Corporate Solutions, a Swiss insurance company. With the new Trade Facilitation Scheme (TFS), which comes into effect on Dec 1, both IE Singapore and Swiss Re are topping up capital to expand the current limits of ADB's existing credit guarantee scheme, the Trade Finance Programme (ADB-TFP), to back more trade transactions by Singapore firms. "The boost provided by the TFS will potentially support additional exports of $1 billion annually into emerging Asia - a potential 60 per cent increase in Singapore's exports supported under the ADB-TFP," IE Singapore said in a statement yesterday. (Source: The Business Times) MARKET SCOOP Oxley's unit to develop 15.28-acre land in Selangor OCBC divests from Vietnam's VPBank,sells all stake: statement Kingsford Development puts in top bid for adjacent sites Top metals trader resigns from Noble Singapore: sources Pace of home price fall picks up in October MOM bans 15 firms from hiring new foreign staff (Source: The Business Times) OSK DMG Securities says ... RH PETROGAS | BUY | TP: S$1.38 We took RHP management on a non-deal roadshow on Tuesday The company has published its 2014 drilling programme, planned reserve upgrades, and schedule of upcoming news flow RHP's 2014 work programme, heavily focused on increasing production, includes nine development wells and one appraisal well (contingent on Klagalo-1 being successful) in the Basin PSC For Fuyu, 40 development wells are planned in 2Q-3Q14, with a deep exploration well to test the deep gas zone Total net drilling capex is USD60m, and management expects >80% cash return in 2014 from cost recovery oil RHP targets upgrading 19mmboe of 2C resources to 2P reserves in 2014 This will bring RHP's EV/2P ratio down from USD30.9/bbl to USD11.4/bbl by end-2014 KrisEnergy trades at an EV/2P of USD27.6/bbl, and the global average is USD18/bbl We understand the Klagalo-1 well was completed ahead of schedule, with no hiccups to cementing and perforation Wireline logs indicate potential hydrocarbons Three zones will be tested, each for seven days We expect the Klalin-15 and -17 wells to add to existing production, having successfully flowed RHP is looking at acquiring a producing field in the Southeast Asian region We do not expect this to be a large acquisition, and the agreement could be finalized within a few months The stock trades at a 35% discount to production assets alone Maintain BUY with SGD1.38 TP OCBC Securities says ... COSCO CORP | SELL | TP: S$0.61 2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore) After recording net profit of S$139.7m and S$105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below S$50m Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front For 4Q13, the group may even have to reverse profits on its "substantially completed" drillship that is mired in arbitration proceedings with customer Dalian Deepwater Development, unless COSCO is able to quickly find another buyer for its drillship Looking ahead, we expect the operating environment for the group to remain difficult The oversupply of yard capacity in China continues to roil the shipbuilding industry Outlook for the offshore industry is more positive, but COSCO - being a new entrant - may not be able to secure many good quality contracts, and the fact that it is executing a wide range of products that are new to the company means that margins remain vulnerable to execution risk As of 30 Sep 2013, the group's order-book stood at US$7.2b with progressive deliveries up to 2015 However, many orders are likely to be executed at low margins Though the group has a cash level of S$1.7b, it also has S$1.85b worth of debt maturing in a year (36% of which is secured and may be rolled over), not forgetting the substantial working capital that the group needs with its back-end loaded payments for its contracts Moreover, any credit tightening in China may affect the ability of customers to meet their financial obligations Maintain SELL with S$0.61 fair value estimate NOMURA Securities says... STARHUB LTD | NEUTRAL | TP: S$4.05 In our recent call with StarHub, management elaborated on various initiatives it is undertaking to improve its revenue run-rate beyond this year (flat service revenue guidance for this year and we currently forecast 3% revenue growth for 2014) Most of these initiatives are targeted towards the wireless segment via data re-pricing, although pressures in the pay-TV and broadband segments continue Wireless is 53% of revenues vs 16% for pay-TV and 11% for broadband In wireless, StarHub is looking to increase price for excess data usage from SGD6 to SGD8 and has also discontinued its offer of free 1GB allowance on tiered plans It is also looking to charge for WiFi too In pay-TV, there is some cannibalisation towards internet-TV, we understand; but its own internet TV (TV Anywhere) together with VOD variant Anytime TV could help mitigate the impact of this, and it is also looking to create local content to improve stickiness Maintain Neutral on its 5% yield, but otherwise, similar to various other integrated operators, driving revenue growth is becoming more of an uphill battle, in our view StarHub could be looking to increase the tariff on excess data usage from the current promotional tariff of SGD6.42 per 1GB to SGD8.56 by early next year SingTel has already increased this from SGD5.35 to SGD10.7 M1, which charges SGD5.35 currently, is also likely to review this, we think Given that only ~13-16% of tiered subs exceed data bundles, telcos still have to scale up the takeup of tiered plans to realise any meaningful pickup in ARPU While StarHub and M1 had ARPU flat to down in the recent 3Q, SingTel had a sequential improvement However, it is difficult to attribute SingTel's ARPU improvement fully to increase in excess data charges, given that there are other impacts from roaming, etc But some benefits cannot be ruled out StarHub also no longer offers 1GB additional allowance for free to its new tiered plan subscribers This can help improve overall ARPU to some extent too On Pay TV, StarHub notes that there is a tendency among subscribers to watch video content online, which could be a risk However, StarHub has its own internet TV offering, TV Anywhere, which allows subscribers to access television content on-the-go in multiple screens including PCs and tablets This should help retention/support ARPU on pay-TV side With the rollout of LTE, this service should gain further traction over wireless too, we think StarHub notes that there is competition from FTA (Free to Air) operator - currently there are 8 FTA channels of MediaCorp including Chinese/Malay/Indian content in entertainment and/or news - and we think StarHub is looking to address this by localization of content Its Anytime TV, which is pay per use, should appeal to a price sensitive audience too This service is for its home broadband customers who do not subscribe to its pay TV service, where it offers movies on demand and has more than 6.5k hours of video library available StarHub is looking to introduce paid WiFi services Most of tablet sales are outside contracts and most users offload the data into WiFi networks, so there is some revenue potential to tap there NGN provisioning issues are still a concern especially in the enterprise segment while residential rollout seems to be tracking well (StarHub has around 20% share, we think) IDA has also recently approved SingTel's sale of OpenNet which should simplify the whole structure, we think StarHub's cable network lease agreement with SingTel will expire in 2017, post which it could either renew the lease on new terms or shift to NBN StarHub thinks that given the current pay TV is over HFC (Hybrid Fiber Coaxial), transition to Fiber network, if required, would be seamless

SG: MARKET PULSE: Strategy 2014, Dyna-Mac Holdings (29 Nov 2013)

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.47

MARKET PULSE: Strategy 2014, Dyna-Mac Holdings

29 Nov 2013

KEY IDEA Strategy 2014: Playing catch-up soon? While the Singapore stock market is likely to end 2013 flat, the economic outlook for 2014 holds some potential for a re-look at Asian and Singapore equities. We expect developed markets issues which dominated global headlines in the last two years to remain, largely centering on slowing economic growth, debt and high unemployment. However, the recent 3Q corporate results in Singapore points to a cautiously optimistic guidance for 2014, and this could mean high single-digit earnings growth for the benchmark STI stocks. We continue to have an OVERWEIGHT for the Banking and Oil & Gas sectors, and are selectively positive on certain Property and REIT stocks. The Straits Times Index (STI) is currently trading at undemanding valuations of 13.7x FY14 earnings, 1.35x book and with decent dividend yield of 3.3%. Our stock picks for 2014 in the big cap space are CapitaLand, CapitaCommercial Trust, DBS, Ezion Holdings, Keppel Corporation, Keppel Land, Starhill Global, Suntec REIT and UOB. In the mid-cap space, our stock picks are KSH, Nam Cheong and Sheng Siong Group. (Carmen Lee) MORE REPORTS Dyna-Mac Holdings: Strong proxy to global FPSO growth prospects Dyna-Mac Holdings looks set for a busy year ahead in 2014, buoyed by improving prospects in the FPSO market and a robust net order book of S$346m (as at 13 Nov 2013), thanks to YTD order wins of ~S$320m. There are positive developments happening for its major customers; while Dyna-Mac is also actively pursuing six to seven FPSO projects which it is confident of winning. If successful, this may culminate in healthy order wins amounting to ~S$280-350m for FY14, according to our estimates. We update our model and assumptions following a change in analyst coverage; and now forecast revenue and PATMI growth of 20%/-7% for FY13 and 4%/15% for FY14, respectively. Rolling forward our valuations to 16x FY14F EPS, we derive a higher fair value estimate of S$0.47 (previously S$0.44). Upgrade Dyna-Mac from Hold to BUY. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Swissco has won S$27m of charter contracts. - Etika has recorded FY13 PATMI of RM7.4m, down 66%. - Starland reported FY13 net profit of CNY2.4m versus a loss of CNY6.3m a year ago. - Casa has bought the remaining 50% stake in its Moroccan JV company. - China Aviation Oil (Singapore) Corporation Ltd, has expanded its operations in Europe with the establishment of a wholly owned subsidiary in the UK. - Singapore Airlines is adding a 5th daily Tokyo flight. - China Jishan has signed an agreement to form a JV to provide financial services.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: IHH
Company Name: IHH HEALTHCARE BERHAD

Research House: UOB KayHian

Price Call: SELL

Target Price: 1.43

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: UOB KayHian

Price Call: SELL

Target Price: 4.65

Market Compass

28 November 2013~ Good Morning Singapore!

Singapore Idea Snippets:

28 Nov 2013 ~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : My kids idea of a hard life is to live in a house with only one phone. - GEORGE FOREMAN Singapore: The Day Ahead SINGAPORE DAYBOOK : Broker seeks to recover US$68m from 10 clients. Legal action taken in wake of October's penny stock collapse. [SINGAPORE] Global broking giant Interactive Brokers has launched the largest legal action so far in the wake of October's penny stock collapse, taking aim at at least 10 clients as it seeks to recover about US$68 million of losses. BT understands that Interactive Brokers launched arbitration proceedings earlier this month against 10 individuals and entities through the American Arbitration Association. Pending the start of arbitration proceedings, the global broker has also obtained court orders in Singapore and Malaysia to freeze the assets of eight of those clients, including certain directors and shareholders of Asiasons Capital, Blumont Group, LionGold Corp and Innopac Holdings - four of the stocks at the centre of last month's selldowns. According to court documents inspected by The Business Times and confirmed by sources, Interactive Brokers on Nov 8 sought court orders to freeze the assets of Malaysian nationals Neo Kim Hock, Peter Chen Hing Woon, Tan Boon Kiat, Quah Su-Ling, Lee Chai Huat and Kuan Ah Ming; and two British Virgin Islands-registered companies, Sun Spirit Group Ltd and Neptune Capital Group Ltd. (Source: The Business Times) MARKET SCOOP China committed to reforms for sustained growth: PM Lee Ooredoo (former Qtel) sells inaugural sukuk PNE FY2013 profit falls to $3.76m Oxley Holdings sells 3-year $100m bonds Business receipts of services sector up 8% in Q3 Steering committee for UniSim law school unveiled NTU, SBF to setup African studies centre (Source: The Business Times) UOB KAY HIAN says ... IHH HEALTHCARE | SELL | TP: S$1.43 IHH Healthcare (IHH) reported 9M13 revenue and EBITDA increases of 18% and 24% yoy respectively This was mainly attributed to organic growth of existing operations, ramping up of new hospitals and a full nine-month consolidation of Acibadem Holdings (Acibadem) Net profit rose 38% yoy to RM438m, representing 66% and 67% of our and consensus full-year estimates respectively Inpatient admissions ytd rose 7.5% and 5.6% yoy in Singapore and Malaysia respectively, supported by strong domestic demand Business from medical travel rebounded in 3Q13 with a 9% qoq incease in Indonesian inpatient admissions in Singapore Price adjustments and an increase in the number of specialists contributed to higher average revenue per inpatient (ARPI). Ytd, Singapore's ARPI reached RM21,371 (+5% yoy) while Malaysia's hit RM4,499 (+7% yoy) Assuming IHH had consolidated nine months of Acibadem's performance in 9M12, inpatient admissions in Turkey would have grown 6.7% yoy in 9M13 on higher patient volumes in existing hospitals as well as contributions from its two newly-opened hospitals ARPI rose only 1.6% yoy 9M13 EBITDA margin improved to 24.3% from 23.1% in 9M12 MENH contributed a positive ytd EBITDA of RM10.9m, rebounding from a RM64m loss in 9M12 Acibadem's revenue growth was partly eroded by higher staff and rental costs as well as start-up and pre-operating expenses for its new hospitals Foreign exchange loss of RM135.8m arising from the translation of US$-denominated loans as the Turkish Lira depreciated by over 13% in the period This is compared with an exchange gain of RM41m in 9M12 on the back of a 5% appreciation in the Turkish Lira vs the US$ Still cautious on execution risks as capex balloons to RM3.8b for the period 4Q13-2016 This is 39% more than the projected budget of RM2.7b as of end-Jun 13 We note the cost estimate for Gleneagles Hong Kong Hospital increased 21% to RM1.5b (previously RM1.2b) Maintenance and expansion capex for Malaysia is now 26% higher at RM1b while Turkey's budget doubled to RM1.3b on the back of new hospital projects added to the pipeline We continue to be wary of the key challenges facing IHH such as a shortage of qualified medical staff, slower ramp-up of operations due to a weaker economic environment and managing start-up and pre-operating expenses Ytd, we have seen cost pressures impacting Acibadem's operating results as it confronts a 7-8% national inflation rate There have been several signs of difficulties in ramping up MENH The hospital currently has 120 beds operating at 75% utilisation, below the intended 330 beds ARPI is still below Mount Elizabeth Orchard's (MEO) and management is now looking to add new disciplines and specialties to MENH's offerings in order to boost revenue intensity Our site visits also indicate that less than 50% of the 254 medical suites are in use As a package promotion, the hospital has allocated one of its wards to provide lower-cost beds at S$373 per day, a 40% discount to its standard single room While management maintains it will not cut prices for its medical services, we think it will consider more package promotions if these will help pull up the hospital's business MENH has already been placed under the same management as MEO to allow the group to rationalize its cost structure We anticipate stiff competition for IHH from Connexion at Farrer Park, an integrated healthcare and hospitality complex by The Farrer Park Company Comprising a 200-suite specialist medical centre (target opening: 1Q14), a 220-bed private tertiary hospital (mid-14) and a luxury hotel (mid-14), Connexion is helmed by Dr Luisa Lee whose 30 years in the public sector included stints as CEO of Woodbridge Hospital (now Institute of Mental Health) and Tan Tock Seng Hospital Farrer Park Hospital (FPH) aims to promote fairness in its healthcare solutions, offering value for service to patients We think it will attract the same patient profiles as IHH's hospitals, including a share of the medical travel market We also note that a number of doctors who are involved in this project currently hold private practices in IHH's hospitals Hence, the opening of FPH may pose more challenges for the group Valuations rich; maintain SELL and target price of S$1.43, based on our SOTP model No change to our earnings forecasts Management says it will make an announcement on the dividend policy in 4Q13 IHH is currently trading at 45x 2014F PE, which we think is unjustified, given our cautious near-term outlook Our target price implies 39x forward PE UOB KAY HIAN says ... SIA ENGINEERING | SELL | TP: S$4.65 We hosted a post-results luncheon with SIA Engineering (SIAEC). Group CFO, Anne Ang and Mr Chow Kok Wah, SVP Line maintenance, answered questions regarding line maintenance, competition, operating costs as well as prospects for engine maintenance Management explained that the difference between 1HFY14's 16.9% rise in flights handled at Changi and the 4.2% rise in line maintenance revenue was due to: a) a greater portion of LCC (low-cost carriers) work, and b) discontinuation of line maintenance work at Bahrain LCC's line maintenance requirements are not as rigorous as that of full service airlines particularly relating to cabin works and in-flight entertainment (IFE) LCCs also use narrow-bodied aircraft which requires less man hours In 1HFY14, SIAEC signed nine new contracts, which should drive growth in 2HFY14, and the unit had a 79% market share of line checks as at 1HFY14 SIAEC also clarified that they only performed technical ramp handling for Jetstar Asia and not the higher value added certification work, which was performed by SHAECO SIAEC explained that the discontinuation of a Gulf Air fleet maintenance contract was the primary reason behind a 15% decline in FMP revenue 2HFY14 should see this normalise Except for parent SIA's maintenance work, maintenance, repair and overhaul (MRO) is priced in US dollars, while SIAEC's labour cost is primarily in SGD and is expected to grow 4-5% annually (+5.5% in 1HFY14) A strong Singapore dollar has hurt SIAEC's revenue and margins SIAEC also faces difficulty in passing cost increases as airlines have other choices in terms of MRO destinations Recognising the labour challenges, SIAEC had expanded into the Philippines, where it has built two hangars at Clark Air Base A third hangar will be completed in 2014, which will enable the unit to handle wide-bodied aircraft MRO costs there are 20-30% lower and SIAEC plans to shift some of the narrow-bodied work Even so, SIAEC faces competition in the Philippines from Lufthansa Technik which has a hangar at Manila with capabilities to provide MRO service for various wide-bodied aircraft including the Airbus A380. SIAEC also plans to invest in automation to reduce costs and improve productivity SIAEC's Rolls Royce JV SAESL is expected to perform well, but the other engine maintenance associate, ESA is at the mature end of its product cycle and will thus see less maintenance works Overall, engine maintenance accounts for 90% of JV and associate income Non- SIA work accounted for 69% of JV and associate revenue but SIA's related work grew 33% yoy vs 4.9% for non-SIA work We queried management on the growing clout of Middle Eastern carriers and whether MRO OEMs will move some of their operations to the region Management opined that access to qualified engineers could be a problem as most of the skilled work force in the region is made up of foreigners who tend to command higher pay While we managed to learn more about the company's operations, we still feel that SIAEC faces substantial challenges Operationally, the entrance of ST Aerospace at Changi is a risk that should not be downplayed Management's guidance on the Pratt & Whitney associate ESA also implies that engine maintenance growth will be lower in coming quarters Meanwhile, labour cost will be an ongoing challenge as will be the ability to pass on these costs In the longer term, we believe that the Middle Eastern carriers' huge base load of orders could see engine OEMs set up shop in the region and potentially recruit from elsewhere Maintain SELL and target price of S$4.65, based on DDM (COE: 6.9%, terminal growth rate: 1%) At our target price, the stock offers a dividend yield of 4.8% OCBC Securities says ... CONSUMER SECTOR: CHALLENGING 2014 AHEAD Revenue growth hurt by weakness in EM data points Margin pressures to stay Prefer defensives/strong market positions 2013 recap: a see-sawing year At the start of the year, we had called for allocation into counters with exposure to EM Asia consumer demand. While that call did fairly well for the first half of the year, it faced some challenges subsequently and YTD gains were eroded. At the company level, revenue growth for consumer-related firms was decent although margin pressures from rising costs had an effect on bottom-line figures. Top-line growth to face headwinds For 2014, we expect revenue growth to be a tad more challenging. Data points both domestically and aboard have indicated that consumer spending will not be as forthcoming as before. Concerns over the ongoing global recovery process will continue to dominate consumer focus, as will be the impact of rising inflation on purchasing ability. In fact, we could expect to see companies spend a higher amount in order to attract a single dollar of consumer expenditure vis-a-vis previous years. Margin pressures to remain On the cost front, we expect consumer-related companies to face the greatest pressures domestically. Regulatory changes have been rather punitive on companies with higher reliance on foreign labour, and have forced companies to look towards more expensive local help. With this issue extending to other countries in the region via an increase in the minimum wage requirements, we can expect to see an overall increase in wage costs for companies in 2014. This increase in operating expenses may potentially outpace top-line growth - due to greater competitive pressures - and lead to an eventual, further compression of margins. Consumer sector to be less attractive in 2014 As the consumer sector is cyclical in nature, we expect the first half of 2014 to be an uneventful one for the sector. Investor attention is unlikely to be on consumer-related companies (particularly consumer discretionary counters) given the overall macro uncertainty and challenges ahead, and the sector could see itself trading sideways. That said, we maintain our UNDERWEIGHT rating on the sector. Our top picks are Sheng Siong Group [BUY; FV: S$0.78] as we like its defensive qualities in the face of weaker domestic sales, and Petra Foods [BUY; FYS$3.95] for its dominant leadership position in chocolate confectionary products.