05 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 :Talent wins games, but teamwork and intelligence wins championships. - MICHAEL JORDAN
Singapore: The Day AheadSINGAPORE DAYBOOK:MAS to inject new life into Islamic finance. It is looking at shortening the approval process, providing more clarity on regulations [SINGAPORE] The Monetary Authority of Singapore (MAS) is working on giving another push to the fledgling Islamic finance business here, says Lim Hng Kiang, Minister for Trade and Industry.
It is looking at shortening the approval process and providing greater clarity and certainty in the regulatory and tax treatment for Islamic finance products, said Mr Lim yesterday, in his opening address at the 4th World Islamic Banking Conference Asia Summit.
The Islamic Financial Services Board has estimated that assets of the global Islamic financial services industry grew 20.4 per cent to reach US$1.6 trillion at end-2012.
Last year also saw a record volume of Islamic bond (sukuk) issuances globally, with sukuk issuance from more countries, and of larger size and longer tenor, Mr Lim said.
(Source: The Business Times)
MARKET SCOOP
Temasek raises stake in Philippine casino firm
Kep O&M lands $800m contract in Azerbaijan
BreadTalkopens $64.1m HQ in Tai Seng
WE Holdings jumps on Novena founder's investment
CityDev's City e-Solutions to invest US$25m in China fund
MAS to boost cross border Islamic finance activity
(Source: The Business Times)
NOMURA Securities says...
SINGAPORE TELECOM | BUY | TP: S$4.50
We hosted CFO Ms Jeann Low, CEO Digital Life, Mr Allen Lew and Mr Stuart Salier from IR team in the US and Canada last week
Management clearly doesn't see itself as an ex-growth company and is willing to acquire growth which complements its extensive sub-base, access and network ubiquity
It emphasised a number of times that 'scale matters' and SingTel and its Associates are working a lot closer to exploit this in the digital/ data world
We remain positive on SingTel as it is rare for most of its businesses to perform at the same time, which we believe is happening now
SingTel is a traditional defensive with a good dividend yield and 6-8% EPS growth now (after 3 years of declines)
There has been a lot of press recently on potential sale of Optus satellites
Management stated that no decision has yet been made
A key objective of Digital Life is to work with their operating companies to bundle content with access
Management USD2bn in capex commitment over the next 3 years for Digital Life isn't set in-stone
SingTel's consortia are one of the top-12 bidders for one of two licenses in Myanmar
SingTel management stated that the company has the credentials, track-record and willingness to enter these type of emerging-markets, but it has to be on the right-terms and with the right partner, such that the investment is protected
Management didn't commit or deny any potential for special dividends in FY14, but did state that it has always been shareholder friendly as highlighted by the recent increase in its dividend payout ratio to a 60-75% range
On Indonesia, SingTel management was far more upbeat than we have seen in recent years
OCBC Securities says ...
NAM CHEONG | BUY | TP: S$0.35
Nam Cheong Limited recently announced that its Executive Director, Mr. Leong Seng Keat, has been re-designated as the CEO
Datuk Tiong Su Kouk, who is also a controlling shareholder with a 43% stake, will relinquish his CEO position but he remains as the Executive Chairman
We believe that this leadership transition would be smooth and do not expect any significant changes to the group's business directions
We continue to like Nam Cheong for its market leadership in Malaysia
Having fine tuned its outsourcing strategy over the years, the group now dominates the OSV market with about 70% domestic market share
Although majority of its vessels are built in third-party Chinese yards, the group has supervising teams on the ground to ensure that the vessels are of sound quality
This outsourcing strategy allows Nam Cheong to scale up its production capability quickly without having to incur hefty capital expenditures
Petronas had pledged to spend RM300b in capital expenditure over 2011-15, 80% more than the previous 5-year period
Already, Nam Cheong is seeing a healthy pick-up in order wins (FY11: 13 vessels; FY12: 21 vessels) and it has recently expanded its shipbuilding programme to 28 vessels for FY14F (FY13: 19 vessels)
Its large order-book of MYR1.3b, for 26 vessels delivered over FY13-15F, helps to mitigate its risk by providing a base level of earnings
Given the strong growth profile, we find current valuation (FY13F PER of 8.6x) attractive
We now raise our FV to S$0.35 (previously S$0.30) on a higher PER of 11x
CIMB Securities says...
UMS HOLDINGS LTD | OUTPERFORM | TP: S$0.60
We initiate coverage with Outperform and a S$0.60 target price, based on 1.12x CY13 P/BV (high end of its last earnings upturn)
Re-rating catalysts are expected from an upturn in the semiconductor market and the increasing consumption of mobile devices
We expect 5Scts DPS for FY13 and 4Scts each for FY14-15, implying yields of 8-10%
Worldwide semiconductor manufacturing equipment spending is expected to grow at a 4.5% CAGR over 2013-16
The global semiconductor market is expected to bloom in the years ahead as major foundries raise their capex to support growing demand for personal mobile products such as tablets and smart phones
We expect margins to improve in FY14 following the relocation of its Singapore manufacturing operations to Penang
Penang will allow the group to enjoy lower utility charges, cheaper labour and pioneer tax incentives
Free cash flows are expected to stay strong with no major capex planned
UMS remains in a net-cash position
Strong cash generation should allow the company to reward shareholders with quarterly dividends
While risks include potential further sell downs by its CEO, industry downturn and high single customer reliance, strong cash flows and high dividend yields should compensate
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