11 July 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 :It is health that is real wealth and not pieces of gold and silver.
- MAHATMA GANDHI
Singapore: The Day AheadSINGAPORE DAYBOOK:China's rig-builders gatecrash big league [SINGAPORE] Despite being relative newcomers to offshore rigs, China-based shipbuilding yards have held on to their lead in rig orders in 2013. This has led analysts like Vincent Fernando from Religare Capital Markets to think of 2013 as the "tipping point" for China's rigbuilding industry.
Rigzone data shows China has collected US$5.06 billion in orders for jack-ups, semisubmersibles and tender rigs in the year to date - ahead of US$4.37 billion in the bag for the Singapore powerhouses.
Last year, Singapore's Keppel Offshore & Marine and Sembcorp Marine were the world leaders, bagging a record US$13.8 billion in offshore rigbuilding contracts.
Mr Fernando thinks that the Chinese yards may break through the stigma of delays and quality issues associated with rigs built by newcomers. They also enjoy the support of their government and of multinationals. (Source: The Business Times)
MARKET SCOOP
Overseas Union to raise up to S$614m for Reit listing
UOB first in Singapore to offer online access to gold, silver accounts
S'pore GDP seen picking up in Q2 on pharma rebound, financial services
GEHboosts stake in LGlobal Funds to 87.33%
Singapore property stabilising, cooling measures stay for now: fin min
Fresh grads' starting pay to rise by 2% this year: report
Singapore to set aside S$17m for SMEs to improve energy use
(Source: The Business Times)
DBS VICKERS Securities says...
TAT HONG HOLDINGS | BUY | TP: S$1.43
We see two potential downside risks to earnings for the coming quarter in weaker AUD and slower mining and infrastructure spending in Australia
2H13 revenues from Australia fell 12% y-o-y, affected by a slowdown in mining and infrastructure spending
These could result in slower equipment sales/rental and translation losses for 1Q14F
The outlook for mining in Australia will likely remain weak with infrastructure spending expected to slow down over the next two quarters
We now expect less aggressive growth in equipment sales, and general equipment and crane rental business
The AUD has also depreciated 9% against the SGD, which could result in translation losses
Premised on the above, Australia will potentially drag earnings growth
For FY14F, we lowered crawler crane utilisation rate from 77% to 73% and rental rates by 7% to account for slower rentals
We also reduced equipment sales revenue growth from 3% to 1% and general equipment rental income growth from 9% to -13%
In addition, we factored in S$5.5m impact from a weaker AUD against the SGD in 1QFY14F
TAT is currently trading at -0.5SD of its mean valuation, at 9.8x PE
Despite near-term headwinds, the stock is attractive as valuation is below average
Our target 12x FY14F PE multiple values the stock at S$1.43
OCBC Securities says ...
ROXY-PACIFIC HOLDINGS | BUY | TP: S$0.76
ROXY announced that it has acquired, for RM470k, a 47% stake in Macly Equity Sdn Bhd (Macly) which owns a 70k sq ft land site in Kuala Lumpur, Malaysia at Jalan Dewan Sultan Sulaiman
We understand this land site was acquired for RM89.8m by Macly and that ROXY is finalizing a JV agreement whereby it would likely fund the remaining commitment via a shareholder loan with the site valued at cost
This site has a total GFA of 686k sq ft and is strategically located beside the upcoming Quill City (a 7-acre mixed development on Jalan Sultan Ismail), the Sheraton Imperial Hotel and monorail Stations to Bukit Bintang
The site has already received a development order and would likely be developed into a project with a 90:10 mix of residential and retail components
We see the project launching for sale by end 2014 with a targeted TOP of 2019
In addition, we forecast a breakeven ASP in the range of RM800-RM850 psf, and selling ASPs of RM1,100 psf and RM2,200 psf for the residential and retail components, respectively
This being so, this acquisition would likely accrete 2.4 S-cents to ROXY's RNAV
This is ROXY's first acquisition in Kuala Lumpur, Malaysia and we like the group's approach of selecting a site with strong potential while working with a local partner
The site is located near the upcoming 6-storey Quill City Mall which is slated to open in time for Hari Raya next year and is reportedly already 50% pre-leased
Maintain BUY with a higher fair value of S$0.76 (30% RNAV disc.) from this acquisition, versus S$0.74 previously
We see the stock as a compelling risk-reward proposition currently as the group now sits on a whopping S$1,118m of unrecognized development revenue from sold units and enjoys significant diversification from its hotel segment (Grand Roxy Mercure Hotel worth S$0.47 per share)
DMG OSK Securities says...
SINGAPORE PRESS HOLDINGS | SELL | TP: S$4.00
SPH yesterday filed its preliminary prospectus for SPH REIT with the MAS
This follows its earlier announcement (25 Jun 2013) in the wake of market volatility which saw an 18% correction in the Singapore REIT sector
SPH REIT expects to raise gross proceeds of between SGD476m to SGD554m (including over-allotment) based on an offering price of SGD0.85 and SGD0.90 respectively
About 224.9m (9% stake) will be offered to institutional investors, 84m (3.4% stake) to the public, and 251m (10% stake) to cornerstone investors consisting of GE Life, Hong Leong Asset Management, Morgan Stanley Investment Management, Newton IM and Norges Bank
SPH REIT projected FY14 yield of 5.8% to 6.0% compares well to CMT (5.3%) and FCT (5.7%)
We expect share price to react positively today as SPH is expected to pay a special dividend of SGD0.18 per share upon a successful SPH REIT listing, increasing FY13 dividend yield from 5.6% to 9.9%
However, on a longer term view, we think the stock is fundamentally over-valued and maintain our SELL call, with SOTP TP of SGD4.00 |
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