09 April 2013~ Good Morning Singapore!
Central Execution Team - The Excellence of Execution
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Global Flash: While You Were Sleeping
Source: Marketwatch
Quote for the day :Family is not an important thing. It's everything.
- MICHAEL J. FOX
Singapore: The Day AheadSINGAPORE DAYBOOK:China Q2 GDP could be hit if bird flu worsens HONG KONG] China's economic growth in the second quarter will be under pressure if the spread of the H7N9 avian influenza worsens, according to some economists.
While the bird flu situation is not expected to be as bad as the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003, "we still would want to highlight a few downside risks facing the economy", Liu Ligang, chief Greater China economist at the Australia & New Zealand Banking Group Ltd, said in a research report yesterday.
First, the tourism industry could be hit hard amid the uncertainties, Mr Liu said. Second, the bird flu will also have a negative impact on the agricultural sector and increase the inflation outlook as the supply of meat is likely to decline in the medium term.
Thirdly, investor sentiment is likely to affect equity markets, which could remain weak in the foreseeable future, Mr Liu said.
MARKET SCOOP
PE fund mulls buying STX pan Ocean
OCBC hikes chairman's fee
HPH Trust's HK port resumes operations; dockers to meet with management
CapitaLand's The Ascott wins Nanjing contract
Maybank expects strong Q3 for SGX, raises target price
MIIFto hold SGM on April 30 to seek nod for Taiwan cable TV stake sale
S'pore GDP barely grew in Q1 as weakness in manufacturing drags
PSDto keep salaries; National Bonus to replace GDP bonus
DBS VICKERS Securities says...
WILMAR INTERNATIONAL | HOLD | TP: S$3.72
We continue to monitor the mass culling of poultry flocks in China; no significant impact on soybean crush margins thus far
Elsewhere, we estimate Indonesian palm oil gross refining margins have now dropped to US$45/MT from US$77 in Dec12, while Malaysian margin are flat at US$48
Although we are projecting only US$31-33/MT pretax margins, there is downside risk if we impute trade barrier costs (i.e. Indian import tax)
Our initial margin assumptions were aggressive; we now cut Palm & Lauric pretax margins to US$26-27/MT after imputing higher trade costs
All in, we cut Wilmar's FY13F/14F/15F earnings by 8%/8%/4%, respectively, and trimmed our DCF-based TP to S$3.72/share, implying 15.7x FY13F PE
Despite near-term challenges, Wilmar's long term growth outlook is intact, led by recovering CPO prices, expansion in branded consumer, sugar origination and investments in Africa
PHILLIP Securities says...
CORDLIFE GROUP LTD | BUY | TP: S$0.84
With increasing awareness of cord blood banking, we expect market penetration of Singapore and Hong Kong to improve materially over the next 3yrs
We believe that the Singapore government would keep policies accommodative to stimulate the current low level of birth rates (TFR target: 1.4-1.5 vs 2012E: 1.28-1.30) in the country
We expect the strong cash generated to sustain a payout ratio of c.60% in the next 3yrs
Cordlife announced a strategic alliance with Cordlabs Asia to offer umbilical cord tissue banking services beyond its current market in Hong Kong
The alliance would allow Cordlife to provide the services in India, Indonesia, Malaysia, Philippines, Singapore and Hong Kong on an exclusive basis and in Thailand on a non-exclusive basis
Acquisition of assets from CBB would drive geographical diversification into emerging markets
Given the defensive nature and positive growth outlook, we believe that the current P/E multiple of 15X undervalues the stock of Cordlife
At our target price of S$0.84, the stock would trade at a FY14/15E P/E of 19.6/17.4X respectively
DMG OSK Securities says...
SUNTEC REIT | BUY | TP: S$2.10
At its last results briefing, SUN's management indicated that 83% and 37% of Suntec City's Phase 1 and Phase 2 AEI space respectively have been pre-committed
While we speculate Phase 1 pre-commitment rate to have exceeded 90%, we expect the earnings for SUN to be the weakest between 1Q13 and 2Q13, a period when the Phase 1 has not commenced operations while Phase 2 is closed in preparation for the upcoming AEI
However, as we approach the end of Phase 1 AEI, we expect SUN to re-rate as its outlook brightens on the back of a well executed AEI
SUN, which is currently trading at 0.9x P/B is one of the few S-REITs that are still trading at a discount to book value
Currently, SUN is trading at a dividend yield of 5.2% and 5.7% of FY13's and FY14's forecasted yields respectively
We have upgraded our rating on SUN to a BUY with a TP of SGD2.10 on the back of a clearer outlook, positive rental reversion and high pre-commitment rates for the new space
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