13 June 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 :I don't look to find an educated person in the ranks of university graduates, necessarily. Some of the most educated people I know have never been near a university. - JOHN KEEGAN
Singapore: The Day AheadSINGAPORE DAYBOOK:SGX: Dynamic circuit breakers a better tool. It favours 'speed bump' approach over static halts [SINGAPORE] The Singapore Exchange is considering the use of dynamic circuit breakers (CIRB) to ensure an orderly market in times of turmoil and to protect investors from excessive volatility.
At a press briefing yesterday, SGX head of securities Nels Friets said that a dynamic approach was chosen, over the static model proposed in its July 2011 consultation paper, because it satisfies international best practice and would be in line with other developed markets such as the United States, Australia and the United Kingdom.
"Our view is that we should let the market find its own equilibrium as much as possible," he said. "Ours is more a 'speed bump' approach than the static trading halt approach."
Details of the proposals are in a consultation paper on the SGX's website but in a nutshell, the CIRB would take the form of a 10 per cent price band above and below a "reference price" for all Straits Times Index stocks, Morgan Stanley Capital International Singapore stocks and those priced above 50 cents in their underlying currencies, including real estate investment trusts, exchange traded funds and exchange traded notes. (Source: The Business Times)
MARKET SCOOP
Global Yellow Pages diversifies into food, buys 16.73% more of Yamada
Singapore's SGX proposes circuit breakers for stocks
Bank Danamon falls as DBS may deal
Economists expect slower 2013 growth of 2.3%: MAS survey
No go for Changi Motorsports Hub: SSC
NewSatflags interest in Singtel's sale of Optus unit: report
Jaya, Atlantic Towing seal second offshore deal
MAS reprimand ahead for banks in Singapore
Poh Lian sub-contractor also applies for judicial management
(Source: The Business Times)
DMG OSK Securities says...
KING WAN CORP | BUY | TP: S$0.43
We showcased King Wan (KWAN) at a road show last week
Management briefed investors on how it arrived at the decision to dispose of its Thai associates as well as clarified KTIS' IPO timeline
Within the mechanical & electrical (M&E) space, KWAN is the only company that is involved in the fields of electrical, plumbing, air-conditioning and fire protection
Its economies of scale give it a contract-winning cost advantage
The group is also currently involved in the construction of the Sports Hub
The core M&E business currently contributes SGD5m-SGD7m of cash, which is easily sufficient to meet our core 1.5 cent dividend totaling SGD5.2m
Other sources of cash are KWAN's property development arms, its vessel chartering associate, and of course, the sale of shares in the Thai sugar mill (KTIS)
Management clarified that the IPO process began only in June 2012, and the short one-year period to IPO (implicit in the option to reverse the sale) was agreed upon by both parties to hasten the exercise
Management is "80% confident" that the IPO will proceed in mid-July as planned
Although profitable and paying good dividends, it sold its Thai associates because: i) its tax incentives were expiring, ii) the Thai Government had granted other licences to its rivals, which would hurt its long-term profitability, and iii) there was little reason to hold on to the illiquid 20% minority interest in a listed entity
Management intends to eventually liquidate its entire shareholding in KTIS, but we think it may let go of a third of its shares in the short term
Management also discussed the potential for a dividend policy that could support KTIS' valuations
DBS VICKERS Securities says ...
GENTING HONG KONG | BUY | TP: US$0.61
Slated for listing in 3Q13, Travellers is valued at a handsome US$8.3bn based on the proposed P23.38/share offer price
This implies 21.5x 2014F EV/EBITDA vs Belle's 16x, Bloomberry's 14x -justified given its pure exposure to gaming and strong growth potential (EBITDA 3-year CAGR: 25%)
Travellers is proposing to raise US$416m to fund RWM Phase 3 expansion (US$400-450m capex) and Manila Bayshore development (US$1.1bn capex) by 2017
Based on GENHK's diluted stake of 44.3% (from 50%), Travellers' implied valuation alone will dwarf GENHK's market cap - so its other businesses (NCL, SCL) are thrown in for free
Travellers will have a 20% dividend payout policy, supported by strong operating cashflows and balance sheet (net cash post-IPO from US$52m net debt)
Discussions with PAGCOR could see the recent imposition of 30% corporate tax being shared (in line with private casino operators' initial understanding)
As Manila Bay ramps up with the opening of another 3 IRs by 2017, there could be a potential "cluster effect" similar to Macau, which could more than double GGR to US$3b by 2015
As for NCL, we understand demand for newbuild Norwegian Breakaway has been encouraging (>100% occupancy rate) despite 20% premium pricing
We look forward to the delivery of another 2 newbuilds by 2015 (option for another by 2017)
GENHK is one of our top picks in the sector given its cheaper exposure to the burgeoning Philippines gaming market
Our revised SOP of US$0.61/HK$4.75 values Travellers at a more prudent 12.5x 2014F EV/EBITDA (Macau sector average), SCL and NCL at 10x (cruise sector average)
We raise FY13-15F earnings by 17-28% to factor in stronger growth at NCL (partially offset by 2-3% higher taxes at RWM, but may be lower pending discussions with PAGCOR)
OCBC Securities says...
MIDAS HOLDINGS | BUY | TP: S$0.54
Midas Holdings (Midas) announced that its 32.5%-owned JV Nanjing SR Puzhen Rail Transport (NPRT) has clinched a CNY1.26b metro contract. This is for the supply of 33 train sets (or 198 train cars) for the Shenzhen Metro Line 3 project
However, delivery is scheduled only from 2015 to 2016
Given that this is the third contract secured by NPRT in two weeks, we believe this highlights the growing momentum of China's metro industry
In our view, this may also lead to future contract wins for Midas given that it is a supplier of aluminium extrusion profiles for NPRT
Maintain BUY on Midas, with an unchanged fair value estimate of S$0.54, pegged at 1.1x FY13F P/B |
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