14 May 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 : Being an intellectual creates a lot of questions and no answers.
- JANIS JOPLIN
Singapore: The Day AheadSINGAPORE DAYBOOK:Stocks smile in the land of the diving yen. Yen may continue its freefall after briefly breaching 102 mark against US dollar THE yen dipped briefly below 102 to the dollar yesterday in Tokyo - its lowest level in 55 months - and appeared headed lower still after the G-7 finance ministers' meeting in Britain at the weekend avoided any censure of the Bank of Japan for its mega monetary easing that has sent the currency plunging by 10 per cent since April 4.
It traded as low as l02.15 to the dollar after markets opened in Tokyo although some profit taking brought the rate back up to 101.60 by the close. Most dealers appear convinced that the yen still has nowhere to go but down for now, after breaching the key 100 to the dollar barrier last week.
Minori Uchida, chief foreign exchange analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo suggested yesterday that "if or when (the yen) gets to 105 then people might start to say it's too weak" but he acknowledged that there is little consensus on where the yen's slide might end.
Buoyed by the currency's continuing fall and the dramatically positive impact this is having on Japanese corporate profits and on share prices, the Nikkei 225 stock average climbed a further 1.2 per cent yesterday to reach its highest level since December 2007 at 14,782.21.
MARKET SCOOP
YanlordQ1 net halves on translation losses
City Development Q1 net profit falls 12%
Guthrie GTS Q1 net profit down 4.8%
Straits Trading accepts UE's takeover of WBL
GoodpackQ3 net profit down 5.9%
Golden Agri profits fall 30%
Wing Tai Q3 net profit more than doubles to S$94.6m
China April factory output up 9.3% y/y, misses f'cast
MAYBANK KIM ENG Securities says...
TAT HONG HOLDINGS | BUY | TP: S$1.78
Tat Hong will announce its 4QFY3/13 results on 28 May
We expect a strong finish to the year with 4Q revenue of SGD232m and net profit of SGD17m, up 27% and 50% yoy respectively
Crane Rental and Tower Crane are expected to drive the growth; forecast 41% and 22% FY3/13 revenue growth in those two sectors
For Crane Rental, we expect new contracts in the pipeline to drive utilization higher
Current utilization rate of 71% have ample headroom to improve vs peak utilization of 80%
Our current low single digit rental rate increase in FY14/15 also has upside potential
Further growth could come from the expansion of fleet size
Rising labour cost and shortage of crane operators are two concerns for this industry
Tat Hong shares have been shorted heavily since last month after AIF converted 53m convertible preference shares into common shares
We think such potential selling will only have a short term impact on share price and in the long term, we view it positively as it will improve the liquidity of the stock
We continue to see Tat Hong as the best proxy to ASEAN infrastructure and Australia oil and gas sector play
CIMB Securities says ...
FRASER & NEAVE | OUTPERFORM | TP:S$10.03
2H13 core earnings formed 39% of our and consensus's full-year estimate
We maintain our core EPS estimates and target price on 20% discount to its property RNAV
Group revenue in 2Q13 rose 17% yoy, buoyed by a strong F&B segment
Myanmar brewery revenue also rose 33% yoy
Overall, PBIT from F&B jumped 44% yoy
In properties, Twin Fountains, its last site in Singapore, was launched recently and is over 2.3x subscribed
FNN still has S$3.4bn of unbooked presales
FNN has announced that it will return S$4.73bn or S$3.28 (29% of SOP) to shareholders in cash via capital reduction
FNN explained this will help it achieve a more efficient capital structure and distribute the gains from the APB sale
Its balance sheet will turn from net cash to one with a net gearing of 0.17x while its RNAV is expected to be around S$7.75 after the capital reduction
We estimate investors will be getting its property business at an implied discount to RNAV of 43%
UOB KAY HIAN says...
PARKWAY LIFE REIT | HOLD | TP:S$2.70
Parkway Life REIT (PLife) reported 1Q13 distributable income of S$16.0m (+2.9% yoy, -1.8% qoq) or a DPU of 2.64 S cents (+2.9% yoy, -1.9% qoq)
Although net property income was impacted by yen depreciation (-2.7% qoq to S$21.5m), DPU impact was mitigated by the yen net income hedges (until 2017), which were established in 2012
Gearing fell to 31.6% from a high of 36.4% in 2Q12 due to the depreciation of the yen and revaluation gains
In our discussions with management, acquisitions are likely to emerge from Japan and Malaysia, while Australia is also starting to look interesting as domestic financing costs decline
Asset enhancement initiative (AEI) still on the cards for Mount Elizabeth hospital,which has been facing high utilisation for its hospital beds
Acquisitions of nursing homes in Japan are likely to continue due to PLife's strategic partnership with Japan nursing home operators, but remain opportunistic as competition intensifies due to rising liquidity spurred by monetary easing
Beneficiary of yen depreciation as gearing and interest costs fall
We have adjusted 2013-15 DPU by +1.9% to +3.7% to factor in lower financing costs arising from the depreciating yen
We downgrade to HOLD with a higher target price of S$2.70 (from S$2.62)
We use the dividend discount model (required rate of return: 5.9%, terminal growth: 2.0%) to value PLife
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