22 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 :Experience is a good school. But the fees are high.
- HEINRICH HEINE
Singapore: The Day AheadSINGAPORE DAYBOOK:Partial victory for DBS in quest for Danamon. Jakarta gives it go-ahead for smaller stake than it had sought, seeks 'reciprocity' DBS Group's year-long effort for a full takeover of one of Indonesia's larger lenders met with mixed success yesterday, after the country's outgoing central bank governor told reporters that Singapore's largest bank had won approval to buy a smaller stake.
Bank Indonesia, the country's central bank, will allow DBS to buy up to 40 per cent of PT Bank Danamon, the sixth largest lender here with a wide branch network and deep roots with the country's emerging middle class.
In comments to reporters yesterday, Bank Indonesia governor Darmin Nasution, who steps down from his job tomorrow, said that approval for any larger stake in Bank Danamon may hinge on whether the Monetary Authority of Singapore grants his country's banks easier access to the Singapore market.
"If they want more . . . we want to see a realisation from MAS regarding our need for reciprocity," the outgoing governor told parliament members and reporters. (Source: The Business Times)
MARKET SCOOP Exchange rate monetary policy ensures financial stability: MAS SingTel dips on broker downgrade
Giordano closes 163 stores in China in Q1, eyes SE Asia
Keppel Reit falls after parent firm trims stake
CPF ordinary account rate remains at 2.5%
SGX in talks to sell Philippine Dealing System stake
SingTel buys back 1m shares at S$4.04-4.08 each
Plastoform to exit SGX watch-list (Amended)
(Source: The Business Times)
DBS VICKERS Securities says...
SEMBCORP MARINE | HOLD | TP: S$4.70
Sembcorp Marine (SMM) announced that its subsidiary Sembawang Shipyard Pte Ltd has exercised its voting rights to acquire all the membership interests in Equinox Offshore Brazil Cooperative U.A (EOB) and shares in Equinox Offshore ARV3 BV (EO ARV3) as EO ARV3 remained in default of its payment obligations for the conversion of the accommodation and repair vessel ARV3 due to financing difficulties
The conversion contract of a cargo/passenger vessel (ropax vessel) into a DP2 accommodation and repair vessel valued at US$140m was awarded to SMM in Dec 11 and due for delivery in 4Q12
We understand that SMM has prudently booked in the full conversion cost with zero profit recognised for this particular vessel in FY12
The completed ARV3 is a diesel-electric DP2 high specification vessel designed and equipped to provide extensive accommodation for up to 450 persons, and workshop facilities to support and service offshore facilities and projects in deep water areas
It has a back-to-back charter contract for 5 + 5 years with Petrobras
In ARV3's case, the high spec vessel comes with a long term charter contract with NOC Petrobas - a big plus point, in our view
Upon disposal, we could expect an earnings boost from profit recognition of ARV3, estimated to be around S$20-25m or 3.5-4.5% of SMM's FY13 core earnings
In addition, there could also be one-off disposal gain if it is sold at value greater than the original contract price of US$140m
We are leaving our numbers intact for now and keeping our HOLD recommendation and TP of S$4.70
UOB KAY HIAN says ...
COMFORTDELGRO CORPORATION | BUY | TP:S$2.32
ComfortDelgro (CD) proposes to acquire 100% of the issued shares of Driver Group Ltd in Melbourne, Victoria for approximately A$22m (S$27m)
The proposed acquisition, which is subject to regulatory approvals, will be made through CDC Victoria Lty Ltd, a subsidiary of ComfortDelGro Cabcharge Pty Ltd - a 51% owned subsidiary of CD
When completed in July 2013, it will further boost ComfortDelGro Cabcharge's presence in Australia where it already operates bus services in both New South Wales and Victoria
Under the proposed transaction, CDC Victoria will acquire five metropolitan bus routes and a fleet of 42 vehicles
CDC Victoria currently has a fleet of 378 buses
The business that will be acquired has an annual turnover of about A$12m (S$14.8m) with an EBITDA of A$3.8m (S$4.7m)
After adjusting for CD's effective stake in ComfortDelGro Cabcharge, the acquisition will increase EBITDA by 0.3%
Assuming a net margin of 15% for Driver Group (operating margins for CD's Australia bus business is 19%), the acquisition will be valued at 12x PE
This is in-line with global land transport peers which are trading at an average FY13F PE of 14.2x
Maintain BUY and DCF-derived target price of S$2.32 (cost of equity 6.5% terminal growth 2%)
We like CD for its consistent ability to balance the challenging domestic public transport segment with contributions from overseas operations
OCBC Securities says...
KEPPEL CORPORATION | BUY | TP:S$12.68
Keppel Corporation (KEP) announced that its wholly owned subsidiary, Keppel Real Estate Investment Pte Ltd, has entered into a sale and purchase agreement with Goldman Sachs (the placement agent) for the sale of 180m units of Keppel REIT (6.7% of total issued units of KREIT) for S$1.555/unit
The aggregate cash consideration of S$279.9m took into account KREIT's last transacted price of S$1.605/unit as at 20 May 2013 and the 30-day VWAP of S$1.5129
This is at a premium to the book value and NTA/share of S$1.31 and S$1.28, respectively, as at 31 Mar 2013
Upon completion of the sale (expected 27 May), KEP's interest in KREIT remains substantial (from 58.2% to 51.5%)
Recall that KEP earlier rewarded shareholders with dividend in specie of KREIT units; announced on 24 Jan 2013 when KREIT's share price was S$1.37
Maintain BUY on KEP with S$12.68 fair value estimate
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