20 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 : The hardships that I encountered in the past will help me succeed in the future.
- PHILIP EMEAGWALI
Singapore: The Day AheadSINGAPORE DAYBOOK:Koh Boon Hwee's Credence to buy up to 36.05m new XMH shares at 27.74 cts/shr XMH Holdings Ltd said that Koh Boon Hwee founded Credence Capital Fund II (Cayman) Limited has agreed to subscribe up to 36.05 million new shares at S$0.2774 each, raising net proceeds of S$9.92 million.
The other founders of Credence Capital, a South East Asia Private Equity Fund, are Tan Chow Boon and Seow Kiat Wang.
After the subscription, Credence will become the company's first major institutional investor, holding 19.9 per cent of XMH's total enlarged issued and paid up share capital.
The Fund provides growth stage capital and expertise to small and medium enterprises within the advanced manufacturing, information communication technology, services, logistics and consumer sectors. (Source: The Business Times)
MARKET SCOOP Indian firms flock to S'pore debt market Sembcorp unit in utilities joint venture in Oman Asian markets hold hope for diamond rebirth MGCCT's fee model for future Mapletree Reits (Source: The Business Times) OCBC Securities says...
KS ENERGY | HOLD | TP: S$0.50
KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12
Though the group's operating profit went into the red again after four previous quarters in the black, we understand that S$5.8m of the group's "other operating expenses" relates to one-off foreign exchange losses from the disposal a jointly held asset
Meanwhile, about S$6.5m of the group's share of results of jointly controlled entities relates to the disposal gain
The jointly owned asset that was sold was the KS Titan 2
It was disposed for US$42m (~S$52m), and the buyer was Hercules Oilfield Services
With this development, KSE currently has three offshore jack-up rigs seven land rigs and four workover rigs
In addition, it has two jack-ups under construction at Cosco
Looking ahead, management believes that the distribution business will continue to be an important contributor the group's overall performance this year
We review the valuations of KSE's closest comparables on the SGX, and note that the average P/Book valuation is about 0.7x
We ascribe a ~20% premium to arrive at a 0.85x P/Book for KSE due to its integrated operations which are larger in scale in comparison to some of its peers
As such, our fair value estimate falls to S$0.50, based on 0.85x FY13/14F NTA
DMG OSK Securities says ...
OLAM INTERNATIONAL | BUY | TP:S$1.97
Olam reported strong 3QFY13 PATMI that grew 10% y-o-y to SGD109m
This came in within our expectations and accounted for 26% of our full-year estimates
Olam continued to report strong net contribution (NC) growth of 26.4% y-o-y in 3QFY13
In 3QFY13, sales volume rose 44% y-o-y, and NC increased 26% y-o-y
The growth in NC was mainly due to a 142% surge in sales volume for food staples and packaged foods and a 36% growth in industrial raw materials, partially offset by a 20% decline in edible nuts, spices & beans and a 13% drop in confectionary & beverage ingredients
Olam has initiated a strategy review of its businesses which will involve re-balancing its growth objectives with more focus on accelerating positive free cash flow generation
Olam has sold 25.5% stake of its instant noodles business in Nigeria to Sanyo Foods for USD20m
Olam's valuations appear attractive, as it is currently trading at a 9.1x FY14 P/E, a 37% discount to its five-year historical average of 14.4x
We remain positive on Olam's growth potential from its food segment, which recorded a three-year (FY09-12) net contribution CAGR of 38%
DBS VICKERS Securities says...
SINGAPORE AIRLINES | HOLD | TP:S$11.50
Overall revenue grew just 1.6% y-o-y to S$15.1bn whilst only the group's core passenger airline segment recorded slightly better results of S$187m vs S$181m a year ago, whilst the other segments failed to improve on last year's performance
Silkair -7.6% y-o-y to S$97m; SIA Cargo losses widened to S$167m from S$119m and SIA Engineering -1% to S$128
It was only thanks to a gain on sale of aircraft and spares (+S$56m) and lower net finance charges that SIA's profits grew
Whilst we expect the group's yields to remain weak, with a mild recovery upside, we believe that lower jet fuel prices will help lead to better results for SIA ahead
We have lowered our jet fuel price assumptions for SIA for FY14 and FY15 to US$125/bbl and US$130/bbl respectively but lower yield assumptions also mean that overall, our forecasts remain largely unchanged (+3.4% for FY14 and -2.1% for FY15 to S$653m and S$818m respectively)
SIA has hedged 57% of its FY14 fuel requirement at US$119/bbl.
SIA has a strong net cash position of S$3.50 per share but we see the stock as fairly priced at 1x P/B against a projected ROE of 5%, and at >20x FY14 PE
A S17cts final dividend was declared; Maintain HOLD, TP S$11.50 (1x FY13 P/B)
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