Friday, June 28, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep REIT
Company Name: KEPPEL REIT
Research House: UOB KayHianPrice Call: BUYTarget Price: 1.64

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD
Research House: DBS VickersPrice Call: BUYTarget Price: 1.08




Market Compass


28 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
28 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

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 Ahead

SINGAPORE DAYBOOK:SingTel, Yoma lose out on Myanmar bids. Norway's Telenor and Qatar's Ooredoo outbid nine others to win the licences

SINGAPORE-LISTED companies Singapore Telecommunications (SingTel) and Yoma Strategic Holdings have been shut out of two highly sought mobile licences in Myanmar that the authorities awarded yesterday.
Norway's Telenor and Qatar's Ooredoo beat out nine other bids to take the licences, wire services reported. France's Telecom-Orange, with Japan's Marubeni Corp, was named as a reserve, in case negotiations between Telenor or Ooredoo and the Myanmar authorities fall through.
This is the first time that Myanmar is opening mobile telco licences to foreign players.
SingTel, which had been seen as a frontrunner by market observers, was in a consortium with Myanmar's KBZ Group and Myanmar Telephone Co.
(Source: The Business Times)

MARKET SCOOP

Freight Links FY profit up 19.1%, raises dividends
China Fishery says to start arbitration against Veramar
No client data compromised by hacking: Eu Yan Sang
Private pre-schools eligible for government's Anchor Operator Scheme
Keppel Reit's portfolio to improve through Melbourne acquisition: Moody's
URA releases sales details for Havelock hotel site
Changi Airport passenger traffic up 4.7% in May
LTA to tender for operators of short bus routes in 2H13

(Source: The Business Times)

UOB KAY HIAN says...

KEPPEL REIT | BUY | TP: S$1.64

Keppel REIT (KREIT) has announced the acquisition of a 50% interest in 8 Exhibition Street, Melbourne from United Super Investments for A$160.2m (S$192.4m)
The 35-storey freehold prime office building has a NLA of 480,309sf and is 100% leased to well-established tenants in the financial, aviation, financial advisory, tax and transaction services sectors
KREIT has paid a deposit of S$9.6m with the remaining S$182.8m due upon completion of the transaction around 1 August 2013
DPU accretive with pro-forma 2.4% accretion to DPU if the transaction were fully funded by debt
However, gearing is estimated to rise from 43.3% in 1Q13 to 45.2% post-transaction if fully debt-funded
Management has guided that it will be looking to fund the transaction with an optimal mix of debt and equity, as the transaction will bring gearing above the 45% level
However, any equity fund raising conducted will be balanced to ensure that the transaction remains DPU accretive
The transaction is relatively small, representing about 2.9% of total asset valuations of S$6.6b
We retain our estimates pending further details on the financing for the transaction
We remain currently have a BUY on KREIT with a target price of S$1.64

DBS VICKERS Securities says ...

YOMA STRATEGIC HOLDINGS | BUY | TP: S$1.08

Yesterday, Myanmar's Parliament voted to delay awarding the licenses until a new telecommunications law governing the industry is passed
Members of the Parliament agreed that the "industry risked being monopolised" if the winners of the telecommunications license were announced before a new telecommunications law is passed in the country
In addition, it was also proposed that only foreign companies with a local joint-venture partner should be granted a telecommunications license, although it is unclear whether this new rule will be adopted
Some of the foreign bidders, including a consortium of Orange and Japan's Marubeni Corp. and Bharti Airtel, are competing for a license without a local partner
The Telecommunications Operator Tender Evaluation and Selection Committee is the independent body that oversees the bid but members of Parliament said that the decision from its lower house would override the authority of the Telecommunications Operator Tender Evaluation and Selection Committee
Hence, it is now unclear when the winners will be announced
Although bureaucratic delays are common in frontier markets, we hope that the delay will not be for too long as these developments - telecom networks and airports - are the new government's first attempts to revamp the country
It is crucial that the government shows that they are able to plan and execute the country's development forward
As mentioned in our earlier reports, we do not expect and have not imputed into our forecast any earnings impact from this telco bid
Maintain BUY and S$1.08 TP


OCBC Securities says...

YOMA STRATEGIC HOLDINGS | HOLD | TP: S$0.87

Yoma has requested for a trading halt last night pending the expected award of two telecommunications licenses today by the Myanmar authorities
However, latest news reports that the parliament had on Wednesday voted to delay the award until a new telecommunications law governing the industry is passed
This is due to concerns that the "industry risked being monopolized" and it is yet unclear if a proposed new rule - that only foreign companies with a local JV partners would be granted licenses - would be adopted
Given these latest updates, we believe that the license award could possibly be delayed as the decision from the parliament is purported to override that of the Telecommunications Operator Tender Evaluation and Selection Committee, which is overseeing the tender process
Maintain HOLD with a fair value estimate of S$0.87



SG: MARKET PULSE: Roxy-Pacific, First REIT, SingTel, Yoma (28 Jun 2013)

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.74

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST
Research House: OCBCPrice Call: HOLDTarget Price: 1.20

Stock Name: SingTel
Company Name: SINGTEL
Research House: OCBCPrice Call: HOLDTarget Price: 3.83

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD
Research House: OCBCPrice Call: HOLDTarget Price: 0.87




MARKET PULSE: Roxy-Pacific, First REIT, SingTel, Yoma
28 Jun 2013
KEY IDEA

Roxy-Pacific Holdings: Strong sales at key launches - Upgrade to BUY
Over 2Q13, ROXY launched three out of four land-bank sites - LIV on Sophia, WhiteHaven and Jade Residences - which are 100%, 71% and 50% sold to date, respectively. Overall, we judge these pace of sales to be fairly strong with selling prices above expectations. These successful launches are a key milestone for ROXY given their significant combined size - S$407m and S$76m in estimated total sales and net profits - relative to the group's project portfolio. ROXY now sits on a whopping S$1,188m of unrecognized progress billings from sold units (up 38% from end FY12), which is 8.5 times total FY12 development revenues. We also note that a significant portion of ROXY's value is diversified in its hotel segment (Grand Roxy Mercure Hotel worth S$0.47 per share) and that only 10% of ROXY's total launched development GDV is now left unsold. Our fair value increases to S$0.74 (30% RNAV disc.) versus S$0.61 (25% discount) previously. Upgrade to BUY. (Eli Lee)

MORE REPORTS

First REIT: Volatile times ahead
Concerns over the tapering off of the U.S. Federal Reserve's quantitative easing programme have driven bond yields up and adversely impacted high-yield stocks such as First REIT (FREIT). We see risks coming from higher borrowing costs in the medium-term as ~72% of its debt is based on a floating rate structure, although short-term interest rates in Singapore are likely to stay low in the near future. We expect management to take a more prudent approach towards new acquisitions given the volatile market conditions. Maintain HOLD with a lower fair value estimate of S$1.20 (previously S$1.31) as we raise our cost of equity assumption from 7.7% to 8.3% to take into account the rising bond yields and reduced investor sentiment for interest rate sensitive stocks. (Wong Teck Ching Andy)

SingTel: Not awarded Myanmar telco licence
SingTel was not among one of the two winners awarded the 15-year telecommunications licences in Myanmar. Instead, these licences went to Norway's Telenor and Qatar's Ooredoo (formerly known as Qatar Telecom). While we do expect a pull-back in SingTel's share price, it is mainly because of the 3.3% jump yesterday ahead of the announcement (as SingTel was widely touted as one of the front-runners). Otherwise, we do not expect any lasting impact as there will be other opportunities for SingTel to get involved at a later stage. In addition, some market watchers note that those awarded the maiden licences may face a lot of challenges in getting the infrastructure in place. For now, we maintain our HOLD rating and S$3.83 fair value on SingTel. (Carey Wong)

Yoma Strategic Holdings: Missed out on telco license
Yesterday evening, Myanmar authorities announced that it would award two telecommunications licenses to Norway's Telenor and Qatar's Ooredoo, with the France's Telecom-Orange group as a reserve. We see some downside risk to Yoma's share price from this news, given that Digicel was widely perceived by the market to be one of the frontrunners. That said, we believe there is still some scope for the group to stay involved in the telecommunications sector in Myanmar, which could still throw up various opportunities ahead. This is especially since Digicel has already spent several years investing in Myanmar and establishing a business presence. Given the limited color from Digicel's press release yesterday, however, we see this to be uncertain at this juncture and likely contingent on further negotiations between the parties in the consortium. Maintain HOLD with a fair value estimate of S$0.87. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- China Gaoxian Fibre Fabric Holdings shareholders voted yesterday in support of the company's RMB2.2b (S$444m) investment in a project to expand its polyester production capacity.

- Popular Holdings' FY13 net profit fell 25.2% to S$23.3m, from S$31.1m the previous year, as its property development and retail arms brought in less revenue.

- Marine fuel provider Chemoil Energy has secured two banking facilities totalling US$800m.

- Freight Links Express Holdings reported a 19.1% rise in FY13 net profit to S$38.36m, boosted by higher revenue from the warehousing and chemical logistics business segments.

- Companies in Singapore will move to an electronic mode of reporting financial information that replaces static paper-based formats.






Thursday, June 27, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED
Research House: Credit SuissePrice Call: SELLTarget Price: 0.90

Stock Name: Yongnam
Company Name: YONGNAM HOLDINGS LIMITED
Research House: DBS VickersPrice Call: BUYTarget Price: 0.41

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: OCBCPrice Call: BUYTarget Price: 6.48




Market Compass


27 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
27 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping



Source: Marketwatch

Quote for the day :Technology is just a tool. In terms of getting the kids working together and motivating them, the teacher is the most important.
- BILL GATES
Singapore: The Day Ahead

SINGAPORE DAYBOOK:Output up 2.1% in May as pharma jumps. Transport, precision engineering sectors contract; Q2 GDP growth put at 2%

[SINGAPORE] Yet another jump in pharmaceutical output drove manufacturing output higher than expected in May, setting the stage for a sequential rebound in second quarter GDP.
Industrial production grew 2.1 per cent year- on-year in May, trouncing the market's expectations for just 0.1 per cent growth but slowing from April's revised growth of 5 per cent.
But if the biomedical sector's 22.8 per cent growth is excluded, industrial output would have shrunk 2.4 per cent instead.
After seasonal adjustments, manufacturing output grew 1.2 per cent month-on-month. Excluding biomedical production, output would have risen 1 per cent from April.
(Source: The Business Times)

MARKET SCOOP

CFOs upbeat about growth prospects
Sin Heng Heavy Machinery plans 1-for-4 rights issue
OCBC starts Sembcorp Industries with 'buy'
JTC tenders to sell 4 Tuas South sites
WEin jv to explore oil and gas in Myanmar
Banks slow to revive Singapore trading desks after rate-fixing cull
Mugabe heads to Singapore for health check before vote

(Source: The Business Times)

CREDIT SUISSE Securities says...

NOBLE GROUP LTD | UNDERPERFORM | TP: S$0.90

We assume coverage on Noble Group with an UNDERPERFORM rating and a TP of S$0.90, as we expect the company's ROE to be below its COE in FY13, driven by weakness in Agriculture
Noble made its first loss in the Agriculture segment in 1Q13, and we expect challenges faced to persist into 2Q13
Lower raw sugar prices are likely to offset higher utilisation of its Brazilian sugar mills
Logistics bottlenecks in Brazil will only ease in July at the earliest
Oilseed processing in China could see weakness caused by structural overcapacity
Despite initiatives taken to reduce its Selling, Administrative and Operating expenses by US$100 mn, we estimate Noble needs to earn an Energy GP/ton of US$9.50 and Agriculture GP/ton of US$4.50 to generate an ROE of above 10.5%, which we believe is unlikely given macro headwinds
Our FY13 EPS forecasts are 10% below consensus
We base our target price of S$0.90 on 0.9x P/B, in line with global peers

DBS VICKERS Securities says ...

YONGNAM HOLDINGS LIMITED | BUY | TP: S$0.41

Yongnam has won two new civil engineering subcontracts worth HK$166m (S$27m) in Hong Kong
The two projects are namely the Hong Kong Express Link Central-Wan Chai Bypass Tunnel to be completed by April 2014 and the Shatin to Central Link MTR project due for completion by December 2013
The project value is small in our view and within our project win expectations for the year
No change to our earnings forecast on this event for now
With regards to Yongnam's exposure to insolvent Downtown Line 2 (DTL2) contractor Alpine Bau GmbH, we estimate this could lower our current TP of S$0.41 by 5% if Yongnam provides for losses
Yongnam has reported that its exposure will be about S$5m (10% of FY13 earnings)
Main contractor Alpine Bau GmbH has filed for insolvency and Yongnam is exposed to package C918 of DTL2
The project value is S$25m, started in March 2011 and due to end in 2Q13 to 3Q13
As this project is very near completion, we estimate that write offs could amount to about c.S$5m if management chooses to do so
Otherwise, we remain positive as Yongnam is a strong contender for Yangon Airport Project
Results of Yangon Airport's expansion project bid are expected to be announced around July
We believe Yongnam's consortium is a strong contender and is one of the front runners
If it wins the contract, the Yangon Airport project could add another S$0.12 to the stock price based on our assessment
Maintain BUY

OCBC Securities says...

SEMBCORP INDUSTRIES | BUY | TP: S$6.48

Sembcorp Industries (SCI) is a major industrial group primarily involved in the businesses of 1) utilities, 2) marine and 3) urban development
SCI is now a more focused group today after a streamlining of its businesses
The nature of SCI's utilities business is relatively stable, as the demand for utilities generally does not vary significantly over a short period of time
At the same time, growth is driven by asset acquisition and construction, so there is growth potential, provided that good investment decisions are made
SCI's marine arm is also well positioned to capitalise on demand from the offshore oil and gas industry, given its market -leading position
Finally, SCI's urban development segment, though small in comparison to the utilities and marine arms, possesses growth potential with its focus on emerging markets
SCI has had a good track record in its three main business segments, inspiring confidence in the business and investment community
The long-term outlook for its businesses also looks bright, though the Singapore utilities business may, in the short term, be impacted by an expected increase in competition
The group has been consistent in paying out dividends of at least S$0.15/share each year since 2009, implying a minimum dividend yield of 3.1% at current prices
Initiate with BUY and S$6.48 (based on sum-of-parts method) fair value estimate



SG: Market Pulse: Starhill Global, Hyflux, Yoma (27 Jun 2013)

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: OCBCPrice Call: BUYTarget Price: 0.95

Stock Name: Hyflux
Company Name: HYFLUX LTD
Research House: OCBCPrice Call: HOLDTarget Price: 1.30

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD
Research House: OCBCPrice Call: HOLDTarget Price: 0.87




MARKET PULSE: Starhill Global, Hyflux, Yoma
27 Jun 2013
KEY IDEA

Starhill Global REIT: Prospects remain bright

Summary: Starhill Global REIT (SGREIT) announced that its convertible preferred unit (CPU) holders have notified the REIT manager of their intention to exercise their rights to convert a total of 152.7m CPUs into new units on 5 Jul. With the conversion, we estimate that the distribution to CPU holders will drop from an average of S$2.4m to just S$0.3m per quarter, leaving a larger distributable amount available to unitholders. However, as the unit base is expected to increase by 10.8% upon the conversion, the net impact is likely a marginal dilution of ~1.1% to pro forma FY12 DPU, according to management. We now factor in the impending CPU conversion into our forecasts. We also update our CAPM assumptions to incorporate the continued increase in risk-free rate. As a result, our fair value eases from S$1.00 to S$0.95. Nevertheless, we continue to like SGREIT for its strong growth potential, robust fundamentals and attractive valuations. Maintain BUY. (Kevin Tan)

MORE REPORTS

Hyflux: Value is starting to emerge

Summary: Hyflux Ltd recently saw a massive correction in its share price, plunging nearly 13.1% from a high of S$1.37 on 10 Jun to a low of S$1.19 on 24 Jun; it was down 6.1% on 24 Jun itself, no doubt spooked by recent reports of credit tightening in the mainland. But these worries - while valid - are overwrought. We believe that Hyflux should still have access to funds from overseas, and this should put the company on a better footing against local Chinese companies when it comes to bidding for projects. Nevertheless, as the market appears to be taking a more "risk off" approach, we now use a lower 20x peg (versus 22x previously) against our FY13F EPS, which results in our fair value easing from S$1.44 to S$1.30. However, value is starting to emerge, especially closer to its recent S$1.19 low; hence we maintain our HOLD rating on the stock. (Carey Wong)

Yoma Strategic Holdings: Telco license award possibly delayed

Summary: Yoma has requested for a trading halt last night pending the expected award of two telecommunications licenses today by the Myanmar authorities. However, latest news reports that the parliament had on Wednesday voted to delay the award until a new telecommunications law governing the industry is passed. This is due to concerns that the "industry risked being monopolized" and it is yet unclear if a proposed new rule - that only foreign companies with a local JV partners would be granted licenses - would be adopted. Given these latest updates, we believe that the license award could possibly be delayed as the decision from the parliament is purported to override that of the Telecommunications Operator Tender Evaluation and Selection Committee, which is overseeing the tender process. Maintain HOLD with a fair value estimate of S$0.87. (Eli Lee)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- Kevin Rudd returned as Australian PM yesterday, executing a stunning party room coup on Julia Gillard with less than three months out from a general election.

- Tuan Sing Holdings has entered into a sale and purchase agreement with Robinson Point (Cayman) Limited to acquire Robinson Point for S$348.9m.

- Keppel Reit has acquired a 50% stake in a freehold office building, 8 Exhibition Street in Australia, for A$160.2m (S$192.4m).

- Sin Heng Heavy Machinery announced that it plans to raise about S$18.4m through a one-for-four rights issue priced at 16 cents apiece.

- Mirach Energy is proposing to raise some S$18.1m in net proceeds from a rights issue of 152m new shares and another S$36m via a convertible loan.

- Singapore's industrial production grew 2.1% YoY in May, above the market's expectations of just 0.1%, driven by a 22.8% jump in pharmaceutical output.





Wednesday, June 26, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CourtsAsia
Company Name: COURTS ASIA LIMITED
Research House: DBS VickersPrice Call: BUYTarget Price: 1.13

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 1.17

Stock Name: Religare
Company Name: RELIGARE HEALTH TRUST
Research House: CIMBPrice Call: BUYTarget Price: 1.07




Market Compass


26 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
26 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping



Source: Marketwatch

Quote for the day :Women are made to be loved, not understood.
- OSCAR WILDE
Singapore: The Day Ahead

SINGAPORE DAYBOOK:China's credit-guzzling banks face lean diet. Rise in interbank lending rate spooks market and may hurt small companies

STOCK markets in China yesterday finished at a four-year low amid fears that China could face a severe liquidity crunch. Though lending among banks has resumed after a temporary freeze last week, interbank lending rates remain high, limiting access to fresh capital and raising doubts over the solidity of the banking system.
On Tuesday evening, SHIBOR (Shanghai interbank offered rate) overnight rates stood at 5.7 per cent while one-week rates were 7.64 per cent. Though significantly lower than when they spiked last week, they are still above their usual average.
Analysts warn there could well be more bad days ahead for Chinese banks, which are overly dependent on interbank lending to balance their books after years of careless spending. The credit tightness comes as China's GDP is settling well under 8 per cent. But the central bank looks determined to impose discipline and some wonder whether China will miss even its 7.5 per cent GDP target for 2013.
On Monday, after four days of silence, the People's Bank of China issued a statement, suggesting there will be no loosening ahead, despite a string of poor economic data.
(Source: The Business Times)

MARKET SCOOP

AusGroup sues Karara for A$54.7m
OCBC offers access to blue chips for as low as S$100/mth
AusGroup halts share trading on law suit against customer
Courage seeks approval to diversify into property investment
H2 GLS sites announced
TEE in MOU to buy water treatment plant in Huzhou, China
Logistics to buy Minton Court for $13.4m

(Source: The Business Times)


DBS VICKERS Securities says...

COURTS ASIA | BUY | TP: S$1.13
Courts offers investors a unique exposure to Asean's retail markets, growing middle class, rising disposable income, and increasing consumer appetite for credit on the back of rising incomes
Courts is a beneficiary of Singapore's rising population and housing demand
With presence in Malaysia, and Indonesia from 2014, Courts will also benefit from the growing middle class and rising income of Asean consumer markets
Courts' unique business model of offering in-house credit to customers helps it to expand its customer base and have an active balance sheet that yields c.25% on its credit sales vs cost of funding of 8%-9%
Entry into Indonesia presents a longer term catalyst for the stock
We forecast earnings growth of 15% CAGR between FY13 to FY15F, largely driven by store growth in Singapore and Malaysia
Management has planned for 1 new big box and 6 new stores in Malaysia this year
We factor in modest contribution from the Indonesia store which is expected to open in 2014
We view an upward earnings revision is possible in the event that the Indonesian operation exceeds expectations
Courts currently trades at 10.7x FY14F PE, compared to peers' 12-15x
We expect Courts to post healthy earnings CAGR of 15% from FY13 to FY15F, which implies a PEG of 0.7x
We initiate Courts with a BUY on account of its healthy growth prospects and undemanding valuation
Our TP of S$1.13 is based on 13x PE valuation, comparable to its peers

OCBC Securities says ...

NEPTUNE ORIENT LINES | HOLD | TP: S$1.17

According to the Shanghai Containerised Freight Index (SCFI), average freight rates~for 2Q13 have fallen by more than 13% QoQ with the decline more pronounced in certain sectors (mainly Europe and South America: - 35.4% QoQ % -34.5% QoQ each)
The sole sector that registered marginal improvements was Intra-Asia (+4.1% QoQ)
This was in stark contrast to the figures over the same period last year where overall average freight rates improved by 31.2% QoQ as carriers collectively enforced capacity cuts and rate hikes
Members of the Transpacific Stabilisation Agreement (TSA) - of which Neptune Orient Lines (NOL) belongs to - have agreed to hike rates by US$400/FEU for the transpacific route and by US$600/FEU for all other destinations, effective 1 July
However, carriers continue to be plagued by over-capacity issues and the impact from this increase could only be temporary in nature
Aside from the substantial capacity adjustments back in late 2011, efforts to control capacity since then have waned despite initiatives by alliances to reduce routes, and this has led to a negation of general rate hikes implemented in Jan and Apr this year
Although there has been the recent formulation of a P3 alliance between the world's three largest container liners (Maersk, CMA CGM and Mediterranean Shipping Company), it will only commence from 2Q14 and impact mainly the Asia- Europe trade route (of which NOL has ~15% top-line exposure)
While the low-fuel cost environment and ongoing cost-saving initiatives will benefit NOL, we opt to lower our forecasts in light of weaker freight rates and anticipation of a slightly disappointing peak season
Lowering our P/B peg to 1.1x (1.3x previously), our fair value estimate falls to S$1.17 (S$1.38 previously)
Downgrade to HOLD

CIMB Securities says...

RELIGARE HEALTH TRUST | OUTPERFORM | TP: S$1.07

CEO, Mr Gurpreet Dhillon, and CFO, Mr Pawanpreet, participated in our recent annual Asia-Pacific Conference
Discussions centred on: 1) forex fluctuations / hedges; 2) acquisitions; and 3) growth of its underlying assets
Management says the trust's forex exposure has been fully hedged till Mar 14 with a policy of hedging distributions for the next 12 months on a rolling basis
Management is evaluating three potential assets (estimated value of S$100m) for acquisition
Assets under consideration are those which are operated by Fortis but owned by third parties
As for underlying assets, revenue growth for its seven largest assets was 7-55% yoy in FY3/13
RHT offers a combination of stability through its fixed base fees (that are growing 3% p.a.) and growth through variable fees tied to the revenue growth of its underlying assets
The latter should come from capacity expansion and ARPOB increases for underlying assets
Meanwhile, RHT's low asset leverage should provide debt headroom for acquisition growth; while parent/sponsor's deleveraging efforts should instil some confidence
Share price has corrected alongside a weakening Indian rupee and the broad-based selldown of SREITs and other yield instruments in the wake bond yield spikes
Maintain Outperform, nonetheless, as we believe attractive headline yields of 9-10% have priced in some risks
We see re-rating catalysts from earnings deliveries and acquisitions



SG: Market Pulse: Sembcorp Industries, Tat Hong (26 Jun 2013)

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: OCBCPrice Call: BUYTarget Price: 6.48

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD
Research House: OCBCPrice Call: HOLDTarget Price: 1.31




MARKET PULSE: Sembcorp Industries, Tat Hong
26 Jun 2013
KEY IDEA

Sembcorp Industries: Not your typical utilities company

Summary: Sembcorp Industries (SCI) is a major industrial group primarily involved in the businesses of 1) utilities, 2) marine and 3) urban development. The nature of its utilities business is relatively stable, while growth is driven by asset acquisition and construction. SCI's marine arm is also well-positioned to capitalise on demand from the offshore oil and gas industry, given its market-leading position. Finally, the urban development segment possesses growth potential with its focus on emerging markets. The long-term outlook for its businesses look bright, though the Singapore utilities business may, in the short term, be impacted by an expected increase in competition. The group has been consistent in paying out dividends of at least S$0.15/share each year since 2009, implying a minimum dividend yield of 3.1% at current prices. Initiate with BUY and S$6.48 (based on sum-of-parts method) fair value estimate.

MORE REPORTS

Tat Hong Holdings: Time to take profit

Summary: Since our last upgrade on Tat Hong Holdings ("Poised for Recovery", 9/1/2012), the group's crane fleet grew by ~20% (in tonnage), utilization rate by 5 ppt and rental rates by an estimated 10-15%, resulting in a 66% jump in FY13 PATMI. In our view, the easy money has already been made. Investors who have heeded our call would have made 45% return in 1.5 years and should now consider taking some profit. Looking ahead, the macro environment looks increasingly uncertain with sluggish data points coming out of China. Tat Hong's crane fleet expansion is also expected to slow after a 79% surge in crane tonnage over the past five years. Finally, there is a possible share overhang resulting from private equity AIF Capital's conversion of convertible preference shares to 53.3m ordinary shares. Downgrade to HOLD with lower FV estimate of S$1.31 (previously S$1.75). (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES
- AusGroup is suing Karara Mining Limited for A$54.7m for works carried out in Western Australia.

- Baker Technology has divested its entire 20.29% stake in Discovery Offshore SA for NOK199m (S$41.9m).


- Swissco has secured contracts worth S$8.24m for three of its crew boats.

- Yongnam Holdings has secured two new specialist civil engineering subcontracts worth HK$166m (S$27m).

- Z-Obee's FY13 net income fell 17% to US$4.26m as impairment losses from the group's asset portfolio wiped out an increase in fair value gains.





Tuesday, June 25, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED
Research House: UOB KayHianPrice Call: BUYTarget Price: 4.45

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 7.37

Stock Name: ChinaMinzhong
Company Name: CHINA MINZHONG FOOD CORP LTD
Research House: CIMBPrice Call: BUYTarget Price: 1.27




Market Compass


25 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
25 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping


Source: Marketwatch

Quote for the day : A hospital bed is a parked taxi with the meter running.
- GROUCHO MARX
Singapore: The Day Ahead

SINGAPORE DAYBOOK:Falling car prices keep inflation under control. But core inflation, which strips away private transport costs, surpasses headline inflation

[SINGAPORE] Singapore's core inflation outdid the headline inflation rate in May - a rare sight - as a fall in car prices last month was offset by steeper increases in food prices and services fees.
The overall consumer price index (CPI) rose to 1.6 per cent year-on-year in May, after the inflation rate plunged to a three-year low of 1.5 per cent in April.
Just shy of the 1.7 per cent consensus forecast May's headline inflation rate was kept low by a fall in car prices which sent private road transport costs tumbling 3.7 per cent year-on-year - its first decline since 2009.
This did not surprise forecasters, since lower COE premiums in April were expected to feed into May's inflation with a lag. Car dealers had also adjusted prices after car loan curbs and a new tiered additional registration fee on vehicles were introduced earlier this year. (Source: The Business Times)

MARKET SCOOP

OKP secures S$15m PUB contract
Keong Hong gets S$161.9m contract
Singapore, Malaysia face economic hit from prolonged smog
Auric offers to buy rest of Food Junction at S$0.255/shr
Sime Darby denies fire hotspots responsibility
Secondary listing for New Britain Palm Oil in the works: The Edge
New guidelines for job flexibility in service sector kick in July 1
Fitch rates UOB's offshore RMB notes 'AA-'
Gallant Venture offers Rp5,426/shr for rest of IMAS

(Source: The Business Times)


UOB KAY HIAN says...

CAPITALAND LTD | BUY | TP: S$4.45

We see good value emerging in CapitaLand, which has been sold down 32% (from February high of S$4.03)
The pace of the selldown is worse than any of the S-REITs and is among the worst for developers under our coverage
Key concerns for CapitaLand include a slowdown in China and rising interest rates, which could deter homebuying
The finance cost for developers is a small component of the overall development cost (<10%)
As home-buying sentiment improves, developers are usually quick to pass on the cost to end-homebuyers and built in the scenario in their land acquisition bids
CapitaLand has a healthy average debt maturity of 3.6x with effective interest rates for bank borrowings ranging from 0.66% to 17% and effective interest rates for debt securities ranging from 0.66% to 8.78%
CapitaLand is trading at an attractive 41% discount to its RNAV and a 30% discount to its long-term P/B value of 1.2x (vs 0.84 currently)
CapitaLand recently acquired a 99-year leasehold plot in Coronation Road for S$366m, or $908.17psf ppr
The 403,007sf site is zoned for landed residential housing.
CapitaLand is looking to build a mix of semi-detached and bungalows on the site
Although CapitaLand's bid is 17% higher than the next highest bid (total 12 bids) of S$777psf from Far East Organization, the limited availability of good landed sites, together with its premier location in District 10 near the Farrer Road MRT station and amenities such as Coronation Plaza, will ensure there is good interest for the project
We estimate breakeven cost at S$1,400-1,500psf and selling price expectations from S$1,700psf
We estimate that the acquisition could add about S$95m in pretax profits and result in a RNAV accretion of 2 S cents (0.3%) a share
Maintain BUY, raised target price of S$4.45 (from S$4.41), pegged at 15% discount to its raised RNAV of S$5.23/share

OCBC Securities says ...

VENTURE CORPORATION | HOLD | TP: S$7.37

Our recent conversation with Venture Corp (VMS) highlighted that sentiment among its customers has largely remained cautious given the still uncertain macroeconomic conditions
Manufacturing data emanating from China has also illustrated sluggishness, with the latest China HSBC Manufacturing June PMI flash estimate falling to a nine-month low of 48.3
Singapore's electronics NODX also disappointed, slipping 13.2% YoY in May, representing a tenth consecutive month of YoY decline and was below the street's 10.5% median forecast
We now expect VMS's 2H13 recovery strength to be weaker than our previous expectations in light of the aforementioned factors
Hence, we see the need to pare our FY13/14F revenue forecasts by 5.4/1.6%, even as we take into account the recent appreciation of the USD vis-à-vis the SGD
Hence, we see the need to pare our FY13/14F revenue forecasts by 5.4/1.6%, even as we take into account the recent appreciation of the USD vis-à-vis the SGD
Our FY13/14F PATMI estimates are lowered by 7.8/6.6%, respectively
VMS's strategy in current uncertain times is to continue its acquisition drive for new customers and improve its product and service quality as a means of differentiating itself from its competitors
This also involves a targeted approach to increasing its market share with existing customers given its strong design and engineering capabilities
This would position the group for a future uplift in orders when the economic environment improves on a firmer footing, in our view
Although VMS's share price has dipped 11.5% since its disappointing 1Q13 results, we prefer to wait for clearer signs of a rebound in the global economic conditions before turning more positive on the stock
Maintain HOLD with a lower fair value estimate of S$7.37 (previously S$8.00) as a result of our reduced forecasts

CIMB Securities says...

CHINA MINZHONG FOOD | OUTPERFORM | TP: S$1.27

Minzhong's investor relations manager, Dave Tan, participated in CIMB's annual Asia Pacific conference in Kuala Lumpur on 19-20 June
The key takeaways from his meeting with investors are: 1) it will be the cultivation business rather than the processed business that will drive earnings
And to capitalize on this, it will be ramping up industrialised farming facilities
Management is targeting to open three new facilities in Tianjin, Jiangsu and Sichuan
Supply contracts for the processed business can be achieved within six months but the potential JV to build cultivation facilities in Indonesia will take time
The board is seriously considering paying dividends in FY13 but nothing is firm yet
It is possible that Minzhong will look to match Indofood's 40% payout over time
FY13 operating cash flow is guided to be about Rmb700m-800m
The key re-rating catalystswill be Indofood getting a board seat and dividends
These two events should ease corporate governance concerns
Although free cash flow in FY13 will be low given management guidance that free cash flow will hit a below-expectation Rmb1bn,we think dividends are still possible because of Indofood's Rmb455m cash injection
A 10%payout would translate into a yield of 2.2%
We raise out target price to a 10% premium to sector average (4.5x CY14 P/E) in anticipation of a re-rating as corporate governance concern eases
Maintain Outperform with dividends as a key re-rating catalyst



SG: Market Pulse: CapitaLand, NOL (25 Jun 2013)

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 3.77

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 1.17




MARKET PULSE: CapitaLand, NOL
25 Jun 2013
KEY IDEA

CapitaLand Limited: Uncertainties creeping into macro picture

Summary: We believe recent PMI and interbank liquidity datapoints from China point to increasing macro uncertainties as authorities attempt to engineer a more sustainable albeit slower tempo of growth. This being so, we see heightened downside risks for CAPL's Chinese residential sales and rental outlooks. In Singapore, increasing visibility of a QE exit scenario have moved bond yields to recent highs and a trend of rising mortgage rates would likely ensue from here, in our view. Our judgment is that while rising rates alone are unlikely to trigger dramatic residential price downside, it would likely weigh on primary sales volumes ahead. We lower our fair value estimate to S$3.77 but maintain a BUY rating as we consider CAPL shares to be likely oversold at this juncture at a 45% discount to RNAV. Note that 36% of CAPL's value is constituted by its stake in listed CapitaMalls Asia (CMA) which has dipped only 8.2% YTD versus CAPL's whopping 19.5% correction. Moreover, we highlight that CAPL continues to hold a strong balance sheet (S$5.4b cash, 44% net gearing) which would buttress its businesses through potential headwinds. (Eli Lee)

MORE REPORTS

Neptune Orient Lines - Lowering the sails

Summary: We downgrade Neptune Orient Lines's (NOL) to HOLD in light of weaker than expected freight rates and poorer industry-wide action on capacity management. According to the SCFI, average freight rates have declined by more than 13% QoQ as compared to an increase over the same period last year. This downward trend could reduce the impact of the upcoming general rate hike on 1 Jul - enacted by the Transpacific Stabilisation Agreement - unless greater effort on reducing capacity is undertaken by carriers ahead of the peak-season. While the low-fuel cost environment and ongoing cost-saving initiatives will benefit NOL, we lower our forecasts in anticipation of a slightly disappointing peak season. Lowering our P/B peg to 1.1x (1.3x previously), our fair value estimate falls to S$1.17 (S$1.38 previously). (Lim Siyi)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks fell, sending the S&P 500 Index to a nine-week low after Chinese equities entered a bear market amidst concerns of a cash crunch in addition to concerns of QE tapering.

- Keong Hong has been awarded a S$161.9m contract for the building of two blocks of condominium at Boon Lay Way/Gateway Drive (Jurong East Planning Area).

- PUB has awarded OKP Holdings Limited with a S$15.0m contract to improve drainage in Lucky Heights Estate.

- Oxley Holdings acquired a 99-year lease over a 17,280 sqm commercial and hotel development land zone in Johor, Malaysia.

- Lian Beng secured two projects worth approximately S$200m, bringing the order book to a record S$1.4 billion.





Monday, June 24, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.
Research House: OSKPrice Call: BUYTarget Price: 0.61

Stock Name: Kreuz
Company Name: KREUZ HOLDINGS LIMITED
Research House: UOB KayHianPrice Call: BUYTarget Price: 0.88

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 4.29




Market Compass


24 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
24 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping



Source: Marketwatch

Quote for the day : The most dangerous creation of any society is the man who has nothing to lose.
- JAMES A. BALDWIN
Singapore: The Day Ahead

SINGAPORE DAYBOOK:Major pulp and palm oil firms say they didn't start wildfires. Indonesia sending 'contradictory signals': S'pore

[SINGAPORE] Amid contradictory remarks from Indonesian officials about which firms are responsible for starting the wildfires behind the haze blanketing Singapore and Malaysia, major pulp and palm oil firms have defended themselves against initial public allegations of wrongdoing.
Minister for Foreign Affairs K Shanmugam said yesterday on the sidelines of a community event that Singapore is getting "contradictory signals" from Indonesia on whether Singapore-linked firms are involved in starting the fires.
"We need clear clarification and a clear statement from Indonesia together with evidence because the companies which have been named all deny any involvement," he said.
With the Singapore Attorney-General looking into what can be done against firms involved in causing the haze, Singapore has to be able to establish the facts at hand. (Source: The Business Times)

MARKET SCOOP

Indonesia deploys aircraft as Singapore haze hits record
Singapore's economy starts to choke on Indonesia smoke
Blackstone, Temasek eye stake in India's Shriram Ventures: sources
Singapore's Changi in MOU to develop Vladivostok Int'l Airport
SIA gets FIRB's nod to raise stake in Virgin
99-year residential site in Coronation Road gets top bid of $908.17 psf ppr
SGX to review special audit report on China Sky for breaches

(Source: The Business Times)

DMG OSK says...

MARCO POLO MARINE | BUY | TP: S$0.61

MPM announced that its associate PT Bina Buana Raya (BBRM) has acquired a 9,000bhp AHTS vessel to be deployed in Indonesian waters
Channel checks indicate that this is a bargain-priced asset, resulting in an ROE of 90% on this vessel
Future vessel additions will provide visibility to FY14F growth
MPM is deeply undervalued at 4.9x FY14F EPS with 39% growth visible, 0.85x P/B while delivering 15%-16% ROE
Indonesian market offers 30% premium over regional rates
We see this vessel, MP Prevail, earning USD2/bhp/day, which is the market rate in Indonesia
Our model indicates that this vessel can earn a 50% net margin owing to the premium charter rate
Channel checks also reveal that this is a bargain-priced asset bought from a distressed yard, at a price of around USD18m compared to a market rate of about USD24m for a 9,000bhp AHTS vessel
The vessel will be funded with 20% equity and 80% debt
The combination of the high charter rate, low purchase price and leverage yields an ROE of 90% (See Figure 1), contributing about SGD2m per year to MPM's PATMI
FY13F a year of consolidation and preparation for bright FY14F
This year saw BBRM being listed and MPM hiring a new team of Offshore veterans to spearhead the growth of the Offshore Support Vessel (OSV) fleet
We cut FY13F EPS by 6.3% given rising overheads and maintain our FY14F EPS as the vessel addition is in-line with our model, which assumes four more vessels to be delivered over FY14-15
We see 39% EPS growth in FY14F from: i) 30% jump in rates from renewal of charters in Oct-Nov; ii) doubling of the Indonesian OSV fleet; and iii) shipbuilding orders and higher drydock volumes
Current valuations have priced in slow FY13F
MPM is in deep value territory at a mere 4.9x FY14F EPS with 39% growth on the horizon
Further, it is trading at a current P/B of 0.85x while delivering 15%-16% ROE
Maintain BUY with a TP of SGD0.61

UOB KAY HIAN says ...

KREUZ HOLDINGS | BUY | TP: S$0.88

In 2014, management plans to charter one additional third-party vessel on a long-term contract, which will ease the capacity bottleneck and allow Kreuz to bid for additional contracts
We estimate that the chartered-in vessel could lift 2014 earnings by 5-15%
Kreuz's end-1Q13 orderbook stood at US$200m, which will be recognised over 12-18 months and provide strong earnings visibility for 2013
Maintain BUY with a target price of S$0.88, pegged to an undemanding 2014F PE of 8.0x, which is at a 17% discount to the OSV owner segment's long-term PE mean of 9.6x

OCBC Securities says...

CAPITALAND LIMITED | BUY | TP: S$4.29

Yesterday evening, CapitaLand (CAPL) put in the top bid of S$366 million for a 99-year leasehold landed residential site at Coronation Road
The 37,441 sqm site is located within an established landed housing estate and enjoys good accessibility to Bukit Timah Rd and Pan Island Expressway
The GLS tender attracted 12 bids and CAPL's top bid was 17% higher than the second highest bidder - signaling the group's confidence in this project
We understand CAPL intends to develop a landed project comprising semidetached and bungalows
We expect selling prices in the range of S$1.6k - S$1.8k psf and the project to accrete 1.3 - 2.2 S-cents to CAPL's RNAV
Pending the award of the site, we would keep our fair value estimate unchanged at S$4.29 (20% discount to RNAV)
Maintain BUY



SG: MARKET PULSE: Wilmar, Venture Corp (24 Jun 2013)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 3.25

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 7.37




MARKET PULSE: Wilmar, Venture Corp
24 Jun 2013
KEY IDEA

Wilmar: Expect more volatility ahead
Wilmar international Limited (WIL), with its large exposure to China via its oilseeds crushing and consumer pack businesses, is certainly feeling the impact from the recent slew of sluggish economic data out of the mainland. As such, stock price has been particularly volatile over the past week or so, rising by as much as 7.1% to a recent S$3.31 high before retreating by 6.3%. Going forward, we continue to expect more volatility in share price, especially if market adopts a less "risk on" approach. In view of this, we reduce our valuation peg from 15x to 12.5x, which in turn reduces our fair value from S$3.90 to S$3.25. Downgrade to HOLD for now. (Carey Wong)


MORE REPORTS

Venture Corp: Good company, uncertain times
Our conversation with Venture Corp (VMS) highlighted that sentiment among its customers has largely remained cautious given the still uncertain macroeconomic conditions. This is in line with tepid macro data points which were released recently. We now expect VMS's 2H13 recovery strength to be weaker than our previous expectations. Hence, we pare our FY13/14F revenue forecasts by 5.4/1.6%, even as we take into account the recent appreciation of the USD vis-à-vis the SGD. Our FY13/14F PATMI estimates are lowered by 7.8/6.6%, respectively. While we like VMS's strategy of continuing its acquisition drive for new customers and growing its market share with existing customers by leveraging on its strong design and engineering capabilities, we prefer to wait for clearer signs of a rebound in the global economic conditions before turning more positive on the stock. Maintain HOLD with a lower fair value estimate of S$7.37 (previously S$8.00) due to our reduced forecasts. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks eked out modest gains on Friday, but posted losses for the week, which was dominated by fears that the Federal Reserve may begin pulling back stimulus later this year.

- The strata office market could see prices rise by 5% to 8% as the buying momentum continues into this year, according to CBRE.

- Olam International has won a bid to supply 50,000 tons of wheat to Bangladesh.

- United SM Holdings Pte. Ltd. has made a voluntary unconditional cash offer for Guthrie
GTS at S$0.88 per offer share.

- CCM Group has completed the placement of 44m new shares.

- First Resources announces that reports of haze contribution are inaccurate.

- MTQ Corp has received approval for the listing of 25m bonus shares.


Friday, June 21, 2013

SG: MARKET PULSE: Hospitality, MLT, CapitaLand (21 Jun 2013)

Stock Name: GP Hotels
Company Name: GLOBAL PREMIUM HOTELS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.33

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST
Research House: OCBCPrice Call: HOLDTarget Price: 1.15

Stock Name: Capitaland
Company Name: CAPITALAND LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 4.29




MARKET PULSE: Hospitality, MLT, CapitaLand
21 Jun 2013
KEY IDEA

Hospitality Sector: Hazy days
While visitor arrivals increased by 6.4% in 1Q13, gross lettings for 1Q13 grew by only ~2.8% to 2.8m room nights. This means that on a per capita basis, visitor arrivals are converting into fewer room nights, continuing a trend we note for 2012. With regard to the haze, we understand from an industry source that hotel bookings are not being negatively affected just yet. However, we think a blip in hotel performance through 3Q13 is likely given that the haze could last at least several weeks. Keeping in mind the mild oversupply situation for hotels we see building up, we remain NEUTRAL on the hospitality sector. We prefer Global Premium Hotels [BUY, FV: S$0.33], a longer-term asset value play in the Economy and Mid-tier space.
(Sarah Ong)


MORE REPORTS

Mapletree Logistics Trust: Scaling up presence in Korea
Mapletree Logistics Trust (MLT) has entered into a sale and purchase agreement with supply chain management company, Oakline Co. Ltd, for the acquisition of The Box Centre in South Korea. Oakline will lease back the property for a period of six years with built-in rental escalation from second year onwards. At a purchase consideration of KRW28.75b (~S$32.0m), the property is expected to provide an initial NPI yield of 8.4%. Management expects to fund the acquisition fully by debt, which is expected to increase its aggregate leverage marginally from 34.1% as at 31 Mar to 34.6%. This is likely to add ~0.03 S cents to FY14 DPU, based on our projections. We now factor in the acquisition into our forecasts, with the assumption that it will be completed in Jul. However, we reduce our fair value from S$1.34 to S$1.15 on higher cost of equity to reflect a higher risk-free rate, higher beta and reduced market risk appetite for interest-rate sensitive stocks. We maintain HOLD on MLT due to valuation grounds. (Kevin Tan)

CapitaLand Limited: Top bid for Coronation site
Yesterday evening, CapitaLand (CAPL) put in the top bid of S$366 million for a 99-year leasehold landed residential site at Coronation Road. The 37,441 sqm site is located within an established landed housing estate and enjoys good accessibility to Bukit Timah Rd and Pan Island Expressway. The GLS tender attracted 12 bids and CAPL's top bid was 17% higher than the second highest bidder - signaling the group's confidence in this project. We understand CAPL intends to develop a landed project comprising semi-detached and bungalows. We expect selling prices in the range of S$1.6k - S$1.8k psf and the project to accrete 1.3 - 2.2 S-cents to CAPL's RNAV. Pending the award of the site, we would keep our fair value estimate unchanged at S$4.29 (20% discount to RNAV). Maintain BUY. (Eli Lee)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks tumbled on Thurs, with the S&P 500 suffering its worst session since Nov 2011, hit by fear that the Federal Reserve will scale back its bond buying later this year.

- South Korea's Lotte Shopping Co Ltd is looking to raise US$800m to US$1b by listing a REIT in Singapore as early as this year, according to IFR, a Thomson Reuters publication.

- China's flash HSBC Purchasing Managers' Index for June dropped to a nine-month low yesterday, pointing to continuing weakness in local and external demand.

- Armstrong Industrial Corporation Limited said that it has received a proposal from a consortium involving its major shareholder that may result in the delisting of the company.

- Former Novena Holdings CEO Toh Soon Huat is leading a group of 17 investors, including a unit of mainboard-listed Serial System, to pump a total of S$15.04m into Jubilee Industries Holdings.

- ISDN Holdings Limited plans to raise up to S$111.6m in gross proceeds from the issue and exercise of warrants.

- Stamford Tyres Corporation posted an 18.5% rise in earnings for its full fiscal year ended April 30, boosted by a one-time gain from the sale of its stake in an associate.


OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: UOB KayHianPrice Call: HOLDTarget Price: 11.50

Stock Name: Jaya Hldg
Company Name: JAYA HOLDINGS LTD
Research House: CIMBPrice Call: BUYTarget Price: 0.88




Market Compass


21 June 2013~ Good Morning Singapore!


Singapore Idea Snippets:
21 June 2013~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping



Source: Marketwatch

Quote for the day : One loyal friend is worth ten thousand relatives
- EURIPIDES
Singapore: The Day Ahead

SINGAPORE DAYBOOK:Mr Market's taper tantrum. Addiction to cheap money has to end some day, but markets are too spoilt to listen

FOR several days leading up to the meeting of the US Federal Reserve's key policymaking body, the Federal Open Market Committee (FOMC), which ended on Wednesday, Mr Market was on tenterhooks.
He was hoping against hope that the zero-interest rate, high-liquidity party hosted by the Fed for the last five years would rage on, but fearing in his heart that it might just be winding down.
When, after two days of deliberations, the Fed released its statement on Wednesday and chairman Ben Bernanke wrapped up his news conference, Mr Market did not like what he read and heard. So he threw a tantrum.
A bout of turmoil followed. US Treasuries were dumped, with 10-year yields hitting their highest level since March 2012. Even shorter-dated notes were sold off, as if short-term rates were on the verge of rising. Emerging-market stocks and bonds, which have been under pressure since early May, were further hammered - including all from Asean. Currencies also took a tumble against the dollar; all Southeast Asian currencies fell, and so did the Indian rupee, the South African rand and the Australian dollar. (Source: The Business Times)

MARKET SCOOP

99-year residential site in Coronation Road gets top bid of $908.17 psf ppr
SGXto review special audit report on China Sky for breaches
Wilmar senior executive emerges as significant shareholder in Whitehaven
S.Korea's Lotte Shopping to raise up to US$1b via Singapore Reit: IFR
Armstrong'smajor shareholder in talks that may lead to delisting
Jubilee to place 97.5m new shares at 15.4 cts/shr
ISDNto issue up to 179.97m warrants to fund energy-related projects
S'pore firms' payment record improves
"Hazardous" air, murky skies in Singapore from Indonesian fires

(Source: The Business Times)

DBS VICKERS says...

MIDAS HOLDINGS | BUY | TP: S$0.60

We hosted Midas' CEO and CFO for a two-day NDR in Hong Kong, and key concerns revolved around when the new high-speed train orders would be coming through
With China planning to double its HSR network to 18,000km by end-2015 and lack of orders for rolling stock in the last two years, there is firm optimism that the newly-formed China Railway Corporation could be placing orders for new HSR rolling stock in the second half of 2013, which should lead to substantial contract wins for Midas
Meanwhile, the group has won a number of metro and overseas train contracts to boost its order book to Rmb650m, up from Rmb400m at the end of 2012
32.5%-owned associate Nanjing Puzhen has won five metro contracts worth nearly Rmb4bn in the last six months to bring their order book to over Rmb10bn, which should underpin its earnings over the next two to three years
In turn, NPRT should start to contribute positively to Midas' bottom line from 2H13 onwards
Midas is currently trading below 1x P/B, which we see as attractive for a stock that is due for an earnings recovery from 2H13 onwards
Our TP is based on 1.2x P/B

UOB KAY HIAN says ...

SINGAPORE AIRLINES | HOLD | TP: S$11.50

Weaker-than-expected 2MFY14 traffic numbers, warning on yields and concern over SIA's aircraft orders lead us to downgrade SIA to HOLD
Yields are under pressure and if loads don't improve in June, losses are likely
Along with the May operating stats, SIA mentioned that yields are expected to remain under pressure as efforts are made to boost loads in the current operating environment
June is a peak period in 1QFY and if loads are below 80.5%, the odds of the parent airline business swinging into a loss are heightened
Silk Air fares no better with a ytd 7.4% decline in load factor
In 1QFY13, Silk Air contributed 25% of group operating profit
Given, the steep decline in loads, no doubt due to competition from low-cost carriers (LCC), Silk Air's yields and profits are also likely to remain weak in 1QFY14
As at end-FY12, SIA had capital commitments of S$7.5b
Recent orders along with associated engine orders could place this commitment at an estimated S$55b over the next 10-12 years
Total commitment now stands at 5x book value 4.6x market cap
While SIA has several options such as sale and leaseback of existing aircraft, we reckon it will fund about 20-25% of its capex requirements
SIA has generated an average of S$2.2b in operating cash flow over the past years and thus internal cash flow could fund about 50% of capex requirements on a straight line basis
We estimate that SIA would thus require external funding in the range of S$5b-8b to fulfill its capex commitments
According to Amadeus, Air Traffic Trend Intelligence Solution, 15% of all pax traffic between Asia Pacific and Europe transit at Dubai, Doha and Abu Dhabi
Traffic on the transit routes are growing at a faster pace than the main route, which highlights the significant competition that SIA faces
We had long argued that despite a cash hoard of S$5b, SIA should not be viewed as a dividend play given its substantial capital commitments
We cut our FY14 earnings estimates by 34% factoring in lower pax yields and adjusting our passenger and cargo traffic assumptions
Downgrade from BUY to HOLD, with a lower target price of S$11.50 (S$13.30 prev).


CIMB Securities says...

JAYA HOLDINGS | OUTPERFORM | TP: S$0.88

We came away positive from Jaya's meetings with investors a tour Annual Asia Pacific Conference
After a two-year transition, we see that Jaya has successfully morphed into a quality charterer
CEO Venkatraman Sheshashayee (Shesh) and CFO Chong Chow Pin participated in our Annual Asia Pacific Conference in Kuala Lumpur, where they met 10institutional funds
Investors found this old name familiar but lost track of the company when it underwent debt restructuring in FY09 -the result of its massive speculative new build programme, which was largely funded by short-term debt
Management articulated its strategy of transforming Jaya into a quality ship charterer with a shipyard focused on build-to-order and ship repairs
Additionally, CEO Shesh provided his views on the health of the OSV sector (steady strides and continued revival expected) and how Jaya has indirectly benefited from Malaysia's heightened E&P activities(see overleaf for details)
Chartering EBITDA had grown 43% yoy in FY12, and is set to grow by another 41% in FY13 to US$57.8m
Also, charter rates have increased due to higher-value incoming vessels and a focus on more complex time charters rather than simple bareboat charters
We see value emerging as the stock is trading at 0.65x CY3 P/BV,1 s.d.below its four-year mean
We maintain Outperform with catalysts to come from stronger chartering operations and shipbuilding and charter contracts
Also, we expect higher dividends(FY13: 1Scts; FY14: 3Scts)to accompany its rising chartering EBITDA