19 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 : When you are content to be simply yourself and don't compare or compete, everybody will respect you.
- LAO TZU
Singapore: The Day AheadSINGAPORE DAYBOOK:Thumping vote for SPH Reit. Special dividend of 18 cents per SPH share also approved at EGM yesterday SHAREHOLDERS of Singapore Press Holdings (SPH) have overwhelmingly backed the company's decision to list a retail real estate investment trust (Reit) and pay a special dividend.
At an extraordinary general meeting (EGM) yesterday, the two resolutions put forth for votes were carried near unanimously.
The first resolution, for SPH to establish SPH Reit and inject Paragon and Clementi Mall into the trust, got a yes vote representing 99.79 per cent of the voting shares.
The second resolution to pay a special dividend of 18 cents per share to shareholders had a 99.94 per cent approval. (Source: The Business Times)
MARKET SCOOP
Sembcorp joint venture chooses HSBC to run Oman share sale: sources
Intraco's extends offer period for Dynamic Colours by 14 days
99-year leasehold plot in Faber Walk draws 18 bids
Eunosville put up for en bloc sale with S$688m minimum price
ST Engineering gains on broker report
SPH shareholders back Reit listing
Govt announces infocomm masterplan steering committee
URA launches tender for commercial site at Cecil St/Telok Ayer St
ST Aerospace in Dreamliner MRO partnership
Macquarie-linked firm buys 35% stake in Hengyang unit
(Source: The Business Times)
DBS Securities says...
ST ENGINEERING | BUY | TP: S$4.80
We recently met up with 35 fund managers on a roadshow in the US with STE's management team
Investors are generally impressed with the group's track record over the past 10 years, chalking up revenue CAGR of 9.3%, net profit CAGR of 5.7% and EVA of 8.7%
Current shareholders have done well to enjoy the ride on ST Engineering's sterling share price performance over the past 12 months, the stock generating total return of 32% (including dividend yield) notwithstanding the recent pullback
Key discussion topics during the roadshow revolved around the group's strategy for growth and possible changes in revenue mix in the next 5 years
Near term growth will come from acquisitions in Aerospace (PTF conversions in Europe), new hangar facilities in Guangzhou and engine workshop in Xiamen, and expansion into the shiprepair business in the US
Armed with a net cash chest of more than S$500m, the group is well positioned to source for M&A for longer term growth
Management's key concern would be to negotiate an environment of rising cost pressure in Singapore due to the curbs on foreign labour, to ensure the group's competitiveness in the global arena
STE has no exposure to a potentially rising interest rate environment globally, and hence STE remains our preferred pick, offering strong earnings visibility from its record order book of S$13bn, steady earnings growth of 6% and dividend yield of 4.6%
The stock is a proxy to recovery in the US economy with 27% of sales from the US. Appreciation of the US$, if sustained, will provide earnings upside
Catalyst for stock performance will come from sustained order win momentum, going forward
CIMB Securities says ...
IHH HEALTHCARE | OUTPERFORM | TP: S$1.81
As the Turkish unrest enters its third week, news reports are now focusing on the political implications of the Prime Minister's crackdown on protestors
We see potential damage to the country's image, but expect minimal adverse impact on IHH's Acibadem unit
Our conversation with IHH's management and channel checks revealed no immediate cause for concern yet
Its share price pullback since late-May was driven by market fears, rather than a reaction to the Istanbul civil unrest
While we have received sporadic reports on protestors being dispersed in Istanbul's central Taksim Square on Sunday, our focus is essentially on IHH's 65%-owned Acibadem(40% of revenue and 17% of PATMI, as atend-1Q13), which operates 15 hospitals in Turkey
Our checks with IHH's management also revealed that all its Acibadem hospitals in Istanbul (five)and Ankara (one) are seeing business as usual
Injured protestors were sent to public hospitals instead of Acibadem hospitals
We still hold on to our belief that IHH is in a sweet spot to benefit from the growing private healthcare consumption theme and revenue intensity in all its three markets
Longer term, we are upbeat about the group's recently awarded concession for its 60%-owned Gleneagles HK Hospital, which on commencement, can achieve charges that are20-25% higher than PPL Singapore's
The greater scaling-up of contributions from Novena and the two new Turkish hospitals in the next nine months will be key to enhance IHH'sFY13 earnings
We retain our EPS estimates, SOP target price and Outperform rating as we see a more robust ramp-up of group's global operations going forward
OCBC Securities says...
RAFFLES MEDICAL GROUP | BUY | TP: S$3.42
Raffles Medical Group (RMG) recently engaged real estate services firm Jones Lang LaSalle to advise and manage the sale of its freehold seven-storey commercial podium located at 30 Bideford Road
This would be done via a tender process, which closes on 15 Jul
RMG's decision to sell does not come as a surprise to us, as we had previously flagged the sale of the property as a viable option after its re-application for change of use to a medical centre was unsuccessful
As a recap, RMG completed the purchase of the 42,668 sf building for S$92.08m in Apr 2011
The latest independent valuation of the property was S$98m as at 31 Dec 2012, representing a 6.4% premium to its purchase price
We expect management to utilise the sale proceeds for its expansion plans rather than pay out a special dividend to shareholders
Investment outlay for its Raffles Hospital extension and possible Shenzhen hospital (non-binding Letter of Intent signed) is estimated to amount to S$80-130m and S$150m, respectively (capex to occur in stages)
Operationally, RMG is seeking to implement a new Hospital Information System and Electronics Medical Records System
We believe this would enhance RMG's efficiency and improve the quality of delivery of its healthcare services as patients' records can be easily shared between doctors, nurses and other ancillary services departments
RMG's share price has fallen 16.5% from its peak attained on 11 Apr this year, far more drastic than the 3.7% dip by the STI during the same period
This is despite the fact that RMG remains on track to achieve a core EPS CAGR of 12.7% from FY12-14F, while offering FY13F ROE of 14.9%
As we now roll forward our valuations to 29x blended FY13/14F EPS, we derive a higher fair value estimate of S$3.42 (previously S$3.22) on RMG
We believe that value has re-emerged for RMG following its sharp share price correction, and thus upgrade the stock from Hold to BUY
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