Thursday, July 4, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.
Research House: UOB KayHianPrice Call: BUYTarget Price: 5.60




Market Compass


04 July 2013~ Good Morning Singapore!


Singapore Idea Snippets:
04 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 :Continuous effort - not strength or intelligence - is the key to unlocking our potential.
- WINSTON CHURCHILL
Singapore: The Day Ahead

SINGAPORE DAYBOOK:S'pore PMI hit two-year high in June but pullback likely in Q3. Sub-indices tracking new domestic and export orders have slipped

[SINGAPORE] The Republic's manufacturing sector continued to buck the regional trend of faltering factory activity last month, as the purchasing managers' index (PMI) rose to a two-year high.
But economists say that the details are more telling of what is to come: the sub-indices tracking new domestic and export orders have slipped, which is why some of them now think that a pullback in manufacturing output is likely in the current quarter, Q3.
Singapore's PMI reading rose to 51.7 last month from 51.1 in May, edging away from the 50-point threshold separating growth from contraction.
The PMI figures came yesterday from the Singapore Institute of Purchasing & Materials Management (SIPMM), which surveys purchasing executives in more than 150 companies to compile the index. (Source: The Business Times)

MARKET SCOOP

Singapore manufacturing PMI edges higher in June
Midas gets S$9.08m metro contract
Singapore investors prefer to hold more cash: Manulife
Rolls-Royce, SIA in MOU to provide enhanced services
Australian dollar hits 3-yr lows, kiwi outperforms
CNA secures new systems orders worth $6m
Securities and derivatives trading on SGX up in June
ST Aerospace in another Dreamliner MRO partnership
Court to hear Kingsmen's plea for injunction against US exhibitor

(Source: The Business Times)

UOB KAY HIAN says...

SUPER GROUP | BUY | TP: S$5.60

We believe the stock's recent 10.4% pullback from its high offers investors an opportunity to accumulate
Weaker raw material costs and positive response from its push into China's consumer branded market could be catalysts
The group has soft-launched its 3-in-1 coffee in China in 1Q13, and early indications are positive
From a zero base in 4Q12, 3-in-1 coffee already accounts for 2-3% of group consumer branded sales in 1Q13
The official launch in China is targeted in 3Q13 and management is excited about the prospects
The instant coffee market in China is estimated at US$1.5b/annum but upside is strong, given the low consumption per capita
For 2013, management is targeting to achieve 9% of its consumer branded segment sales from China (vs 2-3% as at 1Q13)
The push into China could raise its budget for advertising & promotion but Super is aiming to maintain this at 13% of turnover
The unrests in Myanmar are beginning to normalise and this is expected to lead to improving sales
As for Indonesia (2% of consumer branded sales), consumers are beginning to exhibit signs of promotional fatigue (price war) and this could hopefully lead to more normalised competition and an easing price war
However, management is upbeat on prospects in China and the Philippines, and hopes that growth in these markets will help offset weakness in Indonesia and Myanmar
Overall, the group hopes to deliver a 10-15% yoy top-line growth from the consumer branded segment in 2013F
There could be potential upside risk to margins should raw material costs trend down further
In the absence of any major M&A or significant rise in capacity, we forecast that the group's free cash flow will be more than S$100m p.a. from 2014 onwards
Super remains on our BUY list with a PEG-based target price of S$5.60 (unchanged)

DMG OSK Securities says ...

LEE KIM TAH HOLDINGS | BUY | TP: S$1.02

A recent spate of privatizations in the property space highlights the latent value in commercial real estate landlords
Pan Pacific Hotels Group was the subject of a privatization move by UOL Group in May at a 9% premium to its last traded price
This was followed by Guthrie GTS, a diversified company with real estate assets across the retail, residential and commercial sectors, which received a delisting offer from its major shareholders at a 21% premium to the last traded price
We think the eventual end game for Lee Kim Tah, which has evolved from its roots as a construction company into a property developer cum landlord, is a similar privatization offer from the founding Lee family
After many years of open market purchases, the Lee family today controls over 85% of the company, putting them within a whisker of the 90% shareholding level for delisting
Privatization angle aside, the stock is undervalued as we believe the value of its 50% stake in Jurong Point and 75% stake in the SIPCOT Information Technology Park township development in Chennai, is not adequately reflected in its books
The stock trades at 34% to our re-appraised net asset value of S$1.28, and we have a TP of $1.02 based on a 20% discount to RNAV
BUY for the 22% upside potential

CIMB Securities says...

PARKSON RETAIL ASIA | OUTPERFORM | TP: S$1.88

We resume coverage on Parkson Retail Asia (PRA) with an Outperform call
PRA's expansion in Indonesia will ramp up with the launch of 'Parkson' branded department stores
The company has operated department stores under the acquired 'Centro' brand for the past two years
The group's retail space is expected to increase by 57% in FY14, which is the highest in all its key markets
Despite the presence of a powerful incumbent, MAPI, in the mid-to upper-middle class segment in which PRA will compete, we are positive on its execution capability
We think that MAPI will probably become PRA's concessionaire, which will benefit PRA as MAPI has the exclusive distribution rights for more than 100 international brands
Profitability is also expected to rise, thanks to cost savings that will accrue from a larger store network
Near-term earnings are likely to be depressed by 1) a depreciating rupiah 2) a downturn in Vietnam 3) drop in consumer spending in Malaysia from the uncertainty caused by the election in 4Q
Our strategists expect the rupiah to stabilise this year, and Vietnam SSSG is expected to be flat in FY13
Our S$1.88 target price is based on 22x CY14 P/E (vs. previous 20x), which is on par with the average of department store retailers
The stock's catalysts are earnings delivery in Indonesia, a turnaround in Vietnam and higher-than-expected SSSG




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