03 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 brain is a wonderful organ; it starts working the moment you get up in the morning and does not stop until you get into the office.
- ROBERT FROST
Singapore: The Day AheadSINGAPORE DAYBOOK:China PMI dips to 50.4 on weak export orders. Pull-back in HSBC index likely to add to concerns over short-term risks [BEIJING] China's factory-sector growth eased in April as new export orders fell for the first time this year, a private survey showed yesterday, suggesting the eurozone recession and sluggish US demand may be risks to China's economic recovery.
The final HSBC Purchasing Managers' Index (PMI) dropped to 50.4 in April from March's 51.6 and was largely in line with a flash reading last week of 50.5.
China's official PMI on Wednesday painted a similar picture, falling to 50.6 in April from an 11-month high of 50.9 in March as new export orders fell.
The pull-back in both the official and HSBC PMIs are likely to add to concerns over risks to China's economy in the short term, although most analysts expect a steady and gentle recovery this year, aided by government support.
MARKET SCOOP
Taiwan cable firm's S'pore IPO aims to raise S$1.38b
UOB Q1 profit up 4.9%
Genting S'pore's Q1 net falls 44%
Sing Investments Q1 profit falls 22%
Elec & Eltek Q1 profit falls 28%
S'pore April PMI dips to 50.3, indicates slower growth
ST Engg's aerospace arm buys Turbo Mach for US$250k
DBS VICKERS Securities says...
BROADWAY INDUSTRIAL GROUP | HOLD | TP: S$0.30
1Q13 formed 4% of FY13F, if excluding forex and one-off items, Broadway would have just achieved break-even with S$0.2m profits, which is significantly lower than our S$2m estimate despite higher-than-expected sales
Weaker sales (-23% y-o-y) and operating losses (S$3.3m) at HDD (57% of group sales) dragged down group performance
Foam Plastics was stellar as EBIT quadrupled to S$6.7m on a 37% y-o-y sales growth, thanks to last quarter's order push-back
Unfortunately, it is insufficient to offset HDD's decline
Near term, HDD would be flat-line and Foam Plastics could scale back as quarterly orders normalise
Broadway has started production of stamped parts for smartphone OEMs in South Korea and Taiwan
New CEO JC Lee plans to focus on1) developing new business to diversify from HDD; 2) driving optimisation and automation to improve margins
In view of volatile earnings during this period of recovery, we have re-pegged the valuation base to 0.6xPB, deriving TP of S$0.30
NOMURA Securities says...
VENTURE CORP | BUY | TP: S$9.20
Venture reported 1Q13 net profit of SGD28.0mn (-26.0% q-q, -21.0% yy), 21% below our expectation of SGD35.5mn
While we believe Venture could see a 2Q13F sales growth incrementally better than peers on higher contribution from Oclaro, overall demand environment remains weak
We believe, margins are unlikely to see full recovery till a meaningful portion of Oclaro business gets ramped, probably by end-2013F
Ventures revenues dropped q-q across nearly all major segments
Venture noted that it continues to focus on increasing its market share from existing customers and winning new programmes and customers
The company generated a mere SGD9.7mn in operating cash flows and SGD5.7mn in free cash flows in 1Q13 which puts focus on sustainability of dividends
At 2013F dividend yield of 6.6% with 2012 dividend payout to go ex-date on 5th May 2013, that reason still stands firm
The stock has declined 1.8% over the last 3 months (MSCI Singapore: +3.7%) and is currently trading at an FY13F PE of 13.6x and PBV of 1.2x
UOB KAY HIAN says...
OVERSEA-CHINESE BANKING CORP | BUY | TP: S$12.02
OCBC reported a net profit of S$696m for 1Q13 (-16% yoy, +5% qoq), slightly below our forecast of S$720m
OCBC achieved healthy loan growth of 3.1% qoq, driven by expansion of 3.8% qoq in Singapore
NIM contracted by a severe 6bp sequentially to 1.64% due to refinancing for housing loans
Fee income increased 15% yoy to S$316m
The main growth driver was wealth management, which expanded 17% yoy to S$105m and accounted for one-third of total fee income
Net trading income was significantly lower at S$56m after five consecutive quarters with sizeable profits
OCBC's 1Q13 performance was "off colour" with net interest income and non-interest income coming in slightly below expectations
We have cut our net profit forecast for 2013 and 2014 by 8.1% and 8.8% respectively due to lower NIM and higher staff costs
We have lowered our target price for OCBC to S$12.02, based on P/B of 1.67x, derived from Gordon Growth Model (ROE: 11.0%, required return: 7.8% and growth: 3.0%) |
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