28 Aug 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 only means of strengthening one's intellect is to make up one's mind about nothing, to let the mind be a thoroughfare for all thoughts.
- JOHN KEATS
Singapore: The Day Ahead
SINGAPORE DAYBOOK : F&N exits buildings, keeps drinks in hand. Frasers Centrepoint to be spun off into listed entity via in specie distribution of stock
[SINGAPORE] Fraser and Neave (F&N) plans to spin off its property business into a new listed entity via an in specie distribution of stock, taking its largest step yet towards breaking up one of Singapore's most storied conglomerates.
F&N said yesterday that it will distribute, for free, two shares of Frasers Centrepoint Ltd (FCL) for every one F&N share held.
After unwinding intercompany loans, FCL will then be listed by introduction, targeted for November or December.
Following the exercise, F&N will no longer hold any shares in FCL, and its remaining key businesses will be food and beverage (F&B), and printing and publishing.
(Source: The Business Times)
MARKET SCOOP
CAO leases first fuel oil storage space in Singapore
Yale opens controversial college in Singapore
New flat-type for multi-generation families launched
Income ceiling for housing grant raised to $6,500
S'pore PR to wait 3 years to buy HDB resale flat
Maximum tenure for HDB housing loans cut to 25 years
Business receipts of services sector up 7.7% in Q2
(Source: The Business Times) CREDIT SUISSE Securities says... GENTING SINGAPORE | OUTPERFORM | TP: S$1.75
We continue to rate GENS at OUTPERFORM, in anticipation of a 2H13 recovery in EBITDA (assuming VIP win rates normalise)
Potential progress on gaming legislation in Japan could also be a wildcard catalyst
The positives:
Singapore has seen a strong rebound in VIP volumes YTD (+34% YoY)
Both GENS and LVS have enjoyed new highs in quarterly rolling chip volumes
At the same time, impairment levels have remained broadly stable, in the range of S$32-45mn per quarter in the past six quarters (compared to a high of S$57mn in 3Q11)
Historical average EV/EBITDA valuations suggest 26% potential upside to GENS' stock price
GENS is also trading at a 25% discount to the Macau average FY14E EV/EBITDA of 3x
The market is sceptical about Japan but should there be progress on gaming legislation, we believe GENS' stock price could benefit. GENS' track record in Singapore and its strong balance sheet put it in a good position to compete in new markets, in our view
Management is optimistic on an initial step in casino gaming legislation by year end
The negatives:
Whilst we expect the VIP win rate to recover in 2H13 and drive a meaningful half-on-half recovery in EBITDA, it is unlikely to make up for the shortfall from the exceptionally low rate in 1H13
As such, we have cut FY13E EBITDA to S$1.3 bn and rolled forward our TP to S$1.75 (from S$1.80)
The authorities are considering tighter measures against civil service members who are frequent patrons of the casinos, potentially requiring disclosure on the frequency of visitations
This followed an incident involving a civil service graft case whereby the money allegedly misappropriated was gambled away at a casino
UOB KAY HIAN says ...
EZION HOLDINGS | BUY | TP: S$2.85
We met up with management last week
Ezion continues to be the only player in the liftboat market in Asia
Its fleet of liftboats and service rigs has increased to 27 units from 17 a year ago
Ytd, Ezion has won seven new charter contracts
Given the high ROE of these projects, it is a surprise that thus far, competition to Ezion has still not emerged
Management gave its rationale: Liftboats operating in Asia are niche assets as their
designs have been modified from the original American designs
For competition to emerge, Ezion's competitors would need to offer designs that are suitable for Asian waters
For asset investors who are non-oil & gas specialists, they may not have adequate knowledge of Asian offshore oil & gas market - and hence the confidence - to invest in these niche assets
A liftboat is usually used to facilitate the maintenance of a fixed offshore oil & gas production platform
North America has a fleet of 250 liftboats servicing 3,257 fixed platforms, or a ratio of 13 platforms per liftboat
The liftboat fleet in Southeast Asia (SEA), the Middle East and West Africa comprises only 62 units against a fixed platform market of 3,266 units, or a ratio of 53 platforms per liftboat
Obviously, there is a large potential demand for liftboats in these markets
Traditionally, these markets use work barges (together with other offshore support vessels) in fixed platform maintenance but they post higher safety risks than liftboats as
they are less stable
Despite the large potential demand, Ezion's management feels real demand still needs to be "created" by convincing Asian oil companies of liftboats' superior productivity
With an expected lower demand for housing loans going forward (following the latest round of government measures on the Total Debt Service Ratio), banks are looking for alternative avenues of lending, including corporate lending
Ezion continues to be courted by bankers and interest rates for new projects remain unchanged at 5% p.a
We expect a sharp earnings ramp-up over 2013-15 with net profit more than trebling as
more liftboats and service rigs commence operation
Ezion's fleet comprises 28 liftboats and service rigs (excluding a liftboat sold in Mar 11)
Twelve units have yet to commence operation
Following its breakthroughs in Indonesia, Malaysia and Vietnam, we expect Ezion to
announce more new charter contracts
Ytd, it has clinched seven new contracts
There are seven funding options available for new projects
These include include: a) internally-generated cash flows, b) sale-and leaseback transactions, c) a higher debt level, and d) JVs
While net gearing as of end-2Q13 was 101%, this is expected to fall rapidly to 69%
and 46% by end-14 and end-15 respectively because of strong operating cash flows
All projects that have been announced - including those that have not commenced operation - are fully funded
We maintain our earnings forecasts
Project execution remains the key risk
Our target price of S$2.85 is pegged at 11x 2014F fully diluted EPS (adjusted for dividends on perpetual securities and preference shares)
This is 15% above the long-term 1-year forward PE mean of 9.5x for the offshore support vessel-owner segment of the offshore & marine sector
DMG OSK Securities says...
SILVERLAKE AXIS | BUY | TP: S$0.82
In line with expectation, SILV reported stellar 4QFY13 results with PATAMI of MYR59.8m (+31.4% y-o-y) on the back of a MYR110.2m revenue (+14.6% y-o-y)
With the final dividend of 1.1 cent, the stock is now trading at an attractive 4.1% yield with strong growth potential
We put our forecasts and TP under review pending the company's analysts briefing
Our most recent TP was SGD0.82 and maintain BUY
Silverlake Axis (SILV)'s FY13 revenue came in flat y-o-y at MYR398.6m as a result of the decline in hardware sales (-80% y-o-y) as well as the fall in contribution of software project services (-44% y-o-y)
We see no signs of concern as hardware sales hardly generated any profits during the year while the amount of software project related work performed through the year was low as most of the major projects - for CIMB Thailand, CIMB Singapore, Thanachart-Siam City Bank and Hong Leong EON Bank - were already close to the completion
On the other hand, SILV saw strong revenue growth in software licensing (+89% y-o-y),
healthy revenue increase in maintenance services (+18% y-o-y) as well as the fresh contribution from the group's newly acquired insurance software business
The change of revenue mix as a result of major project completions resulted in a jump in software licensing revenue, which in turn drove up the margins and profitability
Both the FY13 gross and net profit margins jumped by 9ppts to 63% and 49% respectively
Yield at an attractive 4.1%
In view of its record profitability and robust balance sheet, the group declared a final dividend of 1.1 cents/share, largely in line with our expectation
The full-year FY13 dividend aggregate of 3.1 cents/share translates to an attractive yield of 4.1%, based on the stock's last closing price of SGD0.75 |
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