24 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 : The most dangerous creation of any society is the man who has nothing to lose.
- JAMES A. BALDWIN
Singapore: The Day AheadSINGAPORE 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 |
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