11 Sept 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 : Don't dwell on what went wrong. Instead, focus on what to do next. Spend your energies on moving forward toward finding the answer.
- DENIS WAITLEY
Singapore: The Day Ahead
SINGAPORE DAYBOOK :Apple tailors two new iPhones for world market.
[CUPERTINO] Apple on Tuesday unveiled two new iPhones, fielding a slick new top-end model along with one aimed at budget-conscious smartphone shoppers around the world.
"The business has become so large that this year we are going to replace the iPhone 5 and we are going to replace it with two new designs," Apple chief Tim Cook announced at the company's Silicon Valley headquarters.
Apple will begin taking orders on Friday, and on Sept 20 the two devices will go on sale in the United States, Australia, Britain, China, France, Germany, Japan and Singapore.
The iPhone 5C is part of Apple's bid to counter the flood of low-cost smartphones from rivals, most of which use the Google Android operating system.
(Source: The Business Times)
MARKET SCOOP
Hoi Hup is top bidder for Mt Sophia site
Sound Global makes S$0.70 exit offer
S'pore among top cities to live, work, visit
(Source: The Business Times) DBS Securities says... CSE GLOBAL | BUY | TP: S$1.07
Management aims to reduce CSE's over-reliance on a single country, single sector and a single program via divestment of UK healthcare business (~20% of group profit)
However, standalone healthcare business may be too small for an IPO so management also seeks to divest UK automation business (~13% of group profit)
Most importantly, UK business (~33% of group profit) can fetch higher PE than CSE itself, unlocking value for its shareholders
CSE intends to return most of the cash proceeds (we estimate 26-28 Scts DPS) to its shareholders and operate as a net cash entity, saving interest costs (~S$2m annually or 4% of profit)
About 10% earnings CAGR over 2013-16 could be inorganic as CSE can pursue acquisitions worth S$100m over the next three year
About 5-10% earnings CAGR can be achieved organically as CSE secures revenue from newer geographies in Asia (Vietnam & Indonesia), Africa and sees better momentum in the Middle East
There is a good visibility of non-UK business, which accounts for an estimated 75-80% of CSE's outstanding order book
Our TP of S$1.07 is based on its historical average of 9.6x FY13F PE plus an additional S$50m benefit from potentially successful IPO of UK business
UOB KAY HIAN says ...
HALCYON AGRI CORP | BUY | TP: S$1.00
Halcyon Agri Corp (HACL) has entered into a term sheet with Forlenza Investments, Jewel Castle and Laveyne for the acquisition of JFL Agro Pte Ltd, including its wholly-owned subsidiaries JFL Holdings, JFL Agro Sdn Bhd and JFL Rubber Sdn Bhd
The principal asset is a 99-year leasehold commencing 1 Dec 2011 of 9,845ha (66% cultivable) of Sultanate land in Kelantan, Malaysia
Also included in the purchase are related property, plant, vehicles, equipment and machinery
Purchase consideration is RM131m (US$40m), arrived at after arm's length negotiations
The proposed acquisition is subject to finalization of detailed terms, due diligence, independent land surveys and the execution of definitive agreements
Following the completion, HACL intends to develop a natural rubber plantation on the cultivable land
Dato' Lynette Le Mercier, a controlling shareholder of HACL, has a 25% indirect interest in JFL Agro
Hence, this will be considered an interested person transaction if completed
In line with HACL's long-term strategic plan to expand upstream, which we have previously highlighted
This is also complementary to its midstream expansion plans in Malaysia, with the pending acquisition of two factories in Ipoh
Management estimates that once the rubber plantation is fully matured, it will provide up to 10% of the required raw material for the Malaysian factories
Product diversity and margin expansionare some of the potential benefits to HACL for this upstream move
With proper estate management and best-practice planting and tapping techniques, HACL could control the quality of its raw material and choose to focus on producing premium/specialty grades of rubber. It may also consider other higher-margin rubber products
HACL will capture both the upstream planting margin and the midstream processing margin
300ha of oil palm to be utilized as a source of cash flow, as well as other existing planting assets on the site, to fund planting costs
These will help alleviate cultivating and financing expenses in the next 6-7 years
We estimate the cost to develop the land to maturity is about RM16-18k per ha
A combination of internal cash, debt and an equity fund-raising exercise will be used to fund what we think will be an outright purchase of the assets
The potential dilution from the equity fund-raising will be offset by the completion of its Malaysian midstream acquisition in 4Q13 (targeted), which could begin contributing as early as end-13 or 1Q14
Maintain BUY and target price of S$1.00 based on a peer-average 2014F PE of 10x
No change to our forecasts for now pending completion of the above DMG OSK Securities says... XMH | BUY | TP: S$0.55
XMH has acquired diesel-powered generator sets manufacturer Mech-Power Generator (MPG)
The deal is strongly EPS-accretive, reduces business risk through diversification into adjacent sectors and immediately removes constraints on its growth
XMH remains in a net cash position and is poised to acquire more companies
Upgrade to BUY (from Neutral) with TP SGD0.55 (from SGD0.44)
MPG provides diesel-powered generator sets to the industrial and commercial sectors
It is believed to be the single largest player in the SGD100m market with a ˇ20.0% market share
Effective purchase forward P/E of 4.0x
XMH will pay SGD17.425m for MPG in two tranches, one in CY13 and one in CY15 - each 50% cash and 50% shares
MPG must also provide a SGD6.9m profit warranty in total over the next two years - we expect this to be easily exceeded
Full-year MPG profits about 34% of XMH's
In FY14F/15F, we expect MPG to contribute SGD2.4m/5.1m to XMH's core SGD14.4/15.0m earnings
The former's margins are trending upwards due to recently signed high-value, higher-margin contracts, with more on the horizon
This deal will allow XMH (operating now at full capacity) to immediately expand its operations via MPG's 1.7ha Iskandar Malaysia land, and bypass Singaporean workspace and foreignworker constraints
The latter will also benefit from the former's strong balance sheet and access to financing to further grow its operations
Post deal, XMH remains in a net-cash position and is still on the lookout for more acquisitions
We raise our FY14F/15F estimates by 10%/25%, as MPG's profitability well exceeds our
prior acquisition assumptions
Our new assumptions include SGD0.5m/1.0m contributions in FY14F/15F from XMH's next acquisition
We upgrade XMH to BUY, valued at 14.0x FY14F EPS, with the high multiple justified by the 32%/24% EPS growth in FY14F/15F and expected further acquisitions |
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