24 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 : A mind at peace, a mind centered and not focused on harming others, is stronger than any physical force in the universe.
- WAYNE DYER
Singapore: The Day AheadSINGAPORE DAYBOOK : SPH Reit off to healthy start. Counter rises 9.4 per cent in debut; one of most actively traded securities on the day SPH Reit ended its trading debut on a high note, gaining 9.4 per cent from its initial public offering (IPO) price to close at 98.5 cents yesterday.
The counter, which was priced at 90 cents per unit, was one of the most actively traded on the day as well, with about 122 million units changing hands.
There was little surprise to the first-day bump, said Ong Kian Lin, analyst at Maybank Kim Eng, as the Reit had been much sought after by investors. The offering of 308.9 million units was 37 times subscribed, with institutional investor interest particularly strong.
"So you already expect the (unit) price to do quite well," Mr Ong said.
He said SPH Reit benefited from the blue-chip stature of its sponsor Singapore Press Holdings (SPH) and reputable cornerstone investors that include Great Eastern Life Assurance Company, Hong Leong Asset Management and Morgan Stanley Investment Management Company.
Also helping was the defensive nature of retail Reits. Mr Ong noted that the price appreciation for retail property has not been as drastic as other asset types such as industrial property, given the easy monetary policy following the global financial crisis.
The "mismatch between rentals and asset prices" is also the narrowest for retail properties compared with other asset classes, he added.
SPH Reit's entry to Singapore Exchange (SGX) brings the number of Reits and property trusts on the bourse to 33, with a combined market capitalisation of $60 billion, Magnus Bocker, CEO of SGX, shared yesterday at the listing ceremony for the trust.
This compares with just three Reits 10 years ago with a total market value of $1.2 billion, a year after the regime was launched in 2002.
"More importantly, Reits in Singapore are now a well diversified sector, with issuers, sponsors and properties from Singapore, from Asia-Pacific, from Europe, being on our market," Mr Bocker said.
SPH Reit, which lists with Paragon and Clementi Mall in its initial portfolio, offers a distribution yield of 5.6 per cent annualised for the second half of the current financial year 2013. For the next financial year, the yield is predicted to be 5.8 per cent.
Lee Boon Yang, chairman of SPH, said yesterday at the same ceremony: "As the sponsor of SPH Reit, we are committed to growing and establishing the Reit as a major mall owner and manager in Singapore and Asia-Pacific."
Dr Lee said the Seletar Mall, due to complete in 2014, has been identified as the first pipeline asset, "to provide investors with clarity of growth".
Mr Ong expects growth for SPH Reit to come from acquisitions, with rents "toppish" at the moment.
Sharon Low, chief financial officer of SPH Reit's manager, had said rents are expected to grow at 3 per cent for Paragon and 2.5 per cent for Clementi Mall.
(Source: The Business Times)
MARKET SCOOP
Keppel Land to dispose stake in Jakarta Garden City for S$290.5m
FCOT posts DPU of 2.19 cents, up 28.8%
Cache Logistics Trust posts Q2 DPU of 2.147 cents, up 8.4%
Revaluation lifts CIT's Q2 earnings, DPU at 1.24 cents
SPH soars 9% over IPO price on debut
Property cooling measures give foreign buyers cold feet
(Source: The Business Times)
NOMURA Securities says...
SINGAPORE EXCHANGE | NEUTRAL | TP: S$7.60
Better than expected
Excluding a SGD15mn impairment charge for its 5% in Bombay Stock Exchange, SGX reported FY13 earnings of SGD351mn (+15% y-y), 8% ahead of our and market estimates
The derivatives business did exceptionally well (+34% y-y) driven by the strong growth in Nikkei Futures & Options contracts and China A50 Futures
The securities business average daily value traded rose to SGD1.45bn, from SGD1.32bn in FY12 (we had expected SGD1.33bn)
Along with the usual quarterly interim dividend of SGD0.04, it also declared a DPS of SGD0.16, taking the full-year DPS to SGD0.28 or a payout of 89% (FY12 payout ratio: 99%)
Management was particularly pleased with the record performance in derivatives business, which we believe underscores SGX as an important clearing house for risk management activities
Retail participation has improved this year and management plans to continue to do more in terms of events and education in this space
Indeed, the securities market velocity of 52% would have been lower if not for the retail business
Currently, retail penetration in Singapore is low at 8%, vs 16% in Australia and 24% in HK
Management expects operating expenses for FY14 to be between SGD320mn and SGD330mn, with technology-related capital expenditure expected to be between SGD35mn to SGD40mn
Stable revenue growth was 3.6% y-y
Depository services revenue was flat y-y, while issuer services showed 6% y-y growth and member services & connectivity revenue grew 11% y-y
Market data revenue declined 6% y-y
Operating expenses: Rose 6% y-y to SGD301mn (FY12: SGD284mn) in line with management guidance as staff costs were up 16% y-y due to higher variable compensation in FY13 (22.4% y-y including CPF)
This results in positive jaws of 4%
Management also announced that it will soon add Thailand and the Philippines to the Asean equity index futures space and introduce more India-based products
CIMB Securities says ...
SHENG SIONG GROUP | OUTPERFORM | TP: S$0.77
2Q's core earnings is in line, forming 21% of our estimate and consensus (2Q is seasonally weaker). 1H forms 48%
We raise FY14-15 EPS estimates by 3-5% to factor in higher gross margins
This increases our target price, still based on 23x CY14 P/E (10% discount to Dairy Farm)
A 1.2 cents interim dividend was declared
Maintain Outperform with catalyst to come from earnings delivery from new stores
The 21% yoy increase in 2Q core earnings was due to the additional sales contribution from the 11 new stores (S$20.1m) and the rise in gross margin to 23.1% (+1.3% pts yoy), from the combined effect of stable selling prices, improvement in sales mix and cost efficiencies from the Mandai distribution centre
We expect gross margin recovery to have run its course as 2H12 margins were free from the debilitating effects of 4Q11 price wars, hence representing normalised margins
However, the sales contribution from new stores should still be strong enough to power earnings momentum in 2H13 as 1) the new stores will not have reached full maturity until end-FY13, and 2) lower sales from stores (Bedok Central and Verge) affected by construction works could return to normal as this temporary drag ease out
2Q SSSG declined 1.8% due to lower sales from stores in mature estates
Management has taken steps to address this, with the closure of its Ang Mo Kio store for a full store refresh renovation
We expect to see more of this in FY13-14
No new stores were opened in 2Q, which is understandable after FY12's rapid expansion
1.2 Scts interim dividend
The interim dividend represents 88% of 1H13 earnings
Maintain Outperform
DBS VICKERS Securities says...
YOMA STRATEGIC HOLDINGS | BUY | TP: S$1.02
We hosted Yoma on a two-day NDR in Hong Kong, meeting 13 fund managers
Investors who are keen on Myanmar opening up mostly agreed that Yoma is a direct and liquid access to this frontier market
Discussions centered on Yoma's property business, with key concerns being sustainability of demand and pricing, Yoma's funding needs and its ability to execute an aggressive and diversified expansion plan
Also, the share price has more than doubled within the year and investors are apprehensive of entering at current levels, and asked about possible re-rating catalysts
Property sales still positive but higher expenses would squeeze growth
Despite healthy property sales, Yoma's earnings growth will be reined in by slow construction in 1H14 and higher staff costs due to several managerial appointments
We raised SGA costs by 30-40% for FY14F/15F and cut net earnings by 16%/6%
For 1QFY14, we expect S$2.8m net profit and S$24m sales
Yoma is due to report results at end July
Maintain BUY; progress of Landmark, non-property developments are imminent catalysts
The stock has quietened down after its failed telco bid but Yoma's position is intact
It will continue to benefit from the larger SPA Group which has a non-sanction status and substantial exposure to quality properties which are sought after by incoming foreigners and Yangon's growing population |
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