27 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 : I have no idols. I admire work, dedication and competence.
- AYRTON SENNA
Singapore: The Day AheadSINGAPORE DAYBOOK :Shell plans groundbreaking pilot plant on Jurong Island. The group's diphenyl carbonate facility expected to start up next year. SHELL aims to start up its diphenyl carbonate (DPC) demonstration plant on Jurong Island next year. The plant will produce one of the key intermediates used to make polycarbonates.
The product is the largest-volume thermoplastic used for various engineering applications ranging from optical media to automotive glazing of windscreens and lamp lenses to electronics and sheeting film.
The Singapore demo plant marks a "scaled-up" project from the technological process first developed at the oil giant's laboratories, and it precedes a potential investment by Shell in a world-scale DPC plant once the project proves successful.
Disclosing this at a press conference at the Shell Malaysia Innovation Summit in Kuala Lumpur this week, Matthias Bichsel, Shell's projects and technology director, said the company's patented process for producing DPC at the 500 tonne-per-year (tpy) demo plant in Singapore exemplifies how the oil giant is using innovative engineering to reduce the waste by-products of what it brings to market.
(Source: The Business Times)
MARKET SCOOP
Singapore tycoon Oei sues Goldman Sachs for currency losses
TTJ FY profit falls 11%, plans 0.9ct/shr dividend
Singapore's SATS to buy terminal operator for S$110m
S'pore bonds were Asia's 2nd worst performer Jan to July
Global IPO activity down in Q3: EY
Singapore factory output up 3.5% in August
Prof Tommy Koh awarded Great Negotiator 2014
(Source: The Business Times) KIM ENG Securities says... SUPER GROUP | BUY | TP: S$6.00
Super recently launched its coffee products in China, where it used to just sell instant cereals
The new products and brand identity were unveiled to the media on 18 August, along with endorsement from famous Chinese actress and singer Wang Luodan
In the accompanying trade fair, more than 1,000 regional distributors turned up
We understand from management that sales orders and reception were very positive
Admittedly, China is a tea-drinking country with no coffee culture
But coffee consumption is picking up, driven mainly by a younger audience influenced by the Starbucks Culture and patient marketing by market leader Nestle
From a low base, consumption of instant coffee is expected to grow at 12% CAGR over the next five years and we believe the time is ripe for Super to capitalise on this expected growth without overinvesting
A major marketing thrust is the introduction of a new instant cup format that will be sold mainly through convenience stores
In recent years, companies like XiangPiaoPiao (香飘飘) have generated huge sales from bubble tea in instant cup formats, and Super hopes to achieve the same results for coffee
In our view, being remembered as an early mover in a popular product category does wonders for building brand equity
Super recently announced a 40:60 JV in China with a local company, Shanghai Shang Heng
The JV will undertake the manufacturing of liquid glucose syrup solid, a key ingredient for non-dairy creamer
Super's cash investment is estimated at USD3m
With its non-dairy creamer production facilities and existing distribution network in Jiangsu Province, we believe the execution risk for its China branded consumer strategy is lower
China branded consumer sales currently make up less than 5% of Super's total revenue (through cereal), but we believe this segment has the potential to become a significant contributor in the next 2-3 years
We raise our FY14-15F estimates by 1-2%, but our DCF-based TP of SGD6.00 is unchanged, implying 28.3x FY14F PER
Catalysts include faster-than-expected traction into new growth markets
DBS Securities says ...
SOILBUILD BUSINESS SPACE | BUY | TP: S$0.87
Soilbuild Business Space REIT ("SB REIT") offers exposure into a modern portfolio of business park/industrial properties in Singapore with a valuation of S$935m
Compared to existing industrial S-REITs, its portfolio is the youngest, with an average age of 3.1 years (by GFA), backed by long land lease tenure of c.51 years
SB REIT will derive 42-43% of its net property income from master leases, with tenures ranging from 5-15 years, and this will offer strong income visibility to the REIT
At 43.2% of asset value, SB REIT will have one of the highest exposures in the business park space segment (peers have approximate exposure ranging from 7.9%-20.6% of value), which we believe will remain relevant in the face of Singapore's growth towards a knowledge-based, value-add manufacturing economy
This augurs well for the performance of the portfolio in the medium term
The Sponsor is Soilbuild Group Holdings Ltd. ("Sponsor"), a leading property group with end-to-end integrated real estate capabilities
The Sponsor has given SB REIT a right of first refusal (ROFR), which currently covers four industrial properties
When acquired and developed completely, the ROFR properties possess the potential to increase the REIT's GFA by 72%
In addition, SB REIT can extract a further 0.8m sq ft (25% of current GFA) through maximising unutilized GFA from its portfolio
At a FYP13F-15F yield of 7.8%-8.7%, SB REIT offers one of the highest yields amongst the S-REIT space, which is attractive
Our DCF TP of S$0.87 implies a total return of 24% CREDIT SUISSE Securities says... YANGZIJIANG SHIPBUILDING | BUY | TP: S$1.30
At the launching ceremony of Yangzijiang's first 10,000 TEU containership, management expressed confidence that Seaspan is likely to exercise options for further vessels in the coming months
The company is also looking to move further up the value chain to secure contracts for 14,000 TEU containerships
The first 10,000 TEU containership is expected to take 16 months to complete and be delivered in 1Q14, slightly ahead of schedule
The second unit is expected to be launched in October and delivered in 1Q14, with a shorter construction period of 14 months
Yangzijiang is expected to deliver eight 10,000 TEU containerships in 2014 in total
Management noted continued strong enquiries for newbuild orders
As of September 2013, Yangzijiang has US$2.87 bn of options for 29 bulkers and 22 containerships
We expect Yangzijiang to secure US$2 bn of contracts in 2013, and improving order momentum to drive a re-rating
We reiterate our OUTPERFORM rating and target price of S$1.30 |
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