17 Oct 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 :One has to grow up with good talk in order to form the habit of it.
- HELEN HAYES
Singapore: The Day AheadSINGAPORE DAYBOOK : Senate deal struck to avert default. Dow rises 1.3% at midday as US crisis nears end. [WASHINGTON] Senate Majority Leader Harry Reid said yesterday that a deal had been reached with Republican leaders to end a fiscal impasse that has threatened the United States with default. Mr Reid, speaking from the Senate floor, said that the agreement called for reopening the federal government with a temporary budget until Jan 15 and to extend US borrowing authority until Feb 7. Stocks soared as the crisis that has gripped Washington for weeks appeared to be nearing its end.
Republican Senator Kelly Ayotte said that the House of Representatives might vote first on the plan to speed its way through Congress and put it on President Barack Obama's desk for signing before today's midday default deadline.
The Dow Jones industrial average spiked 200 points, or 1.3 per cent, to 15,370 in midday trading.
The crisis began on Oct 1 with a partial shutdown of the federal government after House Republicans refused to accept a temporary funding measure unless Mr Obama agreed to defund or delay his healthcare overhaul law. It escalated when House Republicans also refused to move on needed approval for raising the amount of money the Treasury can borrow to pay US bills, raising the spectre of a catastrophic default. Mr Obama vowed repeatedly not to pay a "ransom" in order to get Congress to pass normally routine legislation.
(Source: The Business Times)
MARKET SCOOP
Keppel Land Q3 net profit jumps 70% to $126.4 million
UniSIM to host third law school
Keppel T&T Q3 profit up 4.2%
Sky Vue top selling project in Sept
RH Petrogas starts drilling of Klagalo-1 well in Indonesia
ST Engineering secures S$600m of aerospace projects in Q3
Loyz Energy to issue 50m new shares at 35 cts/shr
OCBC not seeking compensation from SingTel
(Source: The Business Times)
DBS VICKERS Securities says ...
SINGAPORE EXCHANGE | HOLD | TP: S$7.15
Daily average trading volumes have remained high (3Q13: 3.6bn) amid the strong market activity for small cap stocks during the quarter
The value-to-volume ratio has dropped further to S$0.37 compared to S$0.54 the previous quarter
As a result, average trading value for 3QCY13 declined 18% q-o-q to S$1.3bn (2Q13: S$1.6bn)
On a positive note, the proportion of capped trades (> S$1.5m) has declined to 35% (2Q13: 41%), providing support to average trading value
Compared to HKEX and Bursa, SGX generates a higher proportion of its revenue from derivatives - 29% as at 2Q13 (Bursa: 16%, HKEX: 20%)
This has helped SGX keep revenues strong
Derivative activities for SGX have been picking up strongly over the past 4 quarters
However, we expect a slight softening this quarter as derivative volumes declined by 17% q-o-q, largely from the Nikkei 225 Index Futures
Although open interest rose 3% q-o-q, we do not believe this will be sufficient to offset the volume decline
We estimate total revenues to drop by 10% to S$182m, expenses to remain stable at S$81m, and net profit of S$84m for the quarter
Base DPS of 4 S cts is expected to be declared, similar to previous quarters
Maintain HOLD, S$7.15 TPbased on DDM implying 23x FY14F EPS
Downside to the stock price should be limited, supported by dividend yields of 4-5% based on a 90% dividend payout assumption
Our forecasts are marginally tweaked and we introduce FY16F numbers
Comparatively, our BUY recommendation for HKEX is on expectation of improving trading values, revival of IPO activities and improving LME profitability while for Bursa, we see upside from structural changes over time
We see limited catalysts for SGX given soft trading values ahead. 4QCY13 is typically a slow quarter
Possible revival of trading activity in 1QCY14 may add traction
UOB KAY HIAN says ...
M1 | BUY | TP: S$3.95
M1 reported a net profit of S$39.5m for 3Q13 (+19.4% yoy), in line with our expectations
M1 added 9,000 post-paid subscribers while post-paid subscriber base expanded 4.4% yoy
Post-paid ARPU declined by a marginal 0.8% qoq to S$61.80 due to lower roaming
revenue
The proportion of post-paid subscribers on tiered data plans has expanded from 26% in 2Q13 to 32% in 3Q13
Mobile data accounted for 29.7% of service revenue (3Q12: 24.3%)
M1 added 10,000 fibre broadband customers with a higher adoption of mass-market plans
The pace of activation appears to have improved. ARPU declined 2.3% qoq to S$46.20
M1's net debt/EBITDA was only 0.6x in 3Q13, vs 0.8x last year
It generated free cash flow of S$79m in 9M13, +12.2% yoy
Management will review the possibility of capital management exercise in 4Q13
Management maintained guidance of a moderate growth in earnings for 2013
Capex is expected at S$130m
M1 will complete network enhancements in 4Q13, including: a) deploying a nationwide 3G radio network on 900MHz spectrum, and b) upgrading its core infrastructure to an all-IP core network, which supports dynamic allocation of resources involving pooling of mobile switching centres and customer databases
M1 launched internet TV service MiBox in Jul 13
Management did not disclose the size of its subscriber base for pay-TV but expects to start the cross carriage for exclusive content, such as Barclays Premier League (BPL) matches, in mid-14
We like M1 as it is the largest beneficiary of the migration to tiered data plans as mobile accounted for 78.3% of service revenue in 3Q13
M1 has strengthened its ability to bundle multiple services with the addition of fibre broadband and pay TV services
We maintain our earnings forecasts
Our target price is S$3.95, based on DCF (required rate of return: 6.7%,terminal growth: 1.0%)
Evolution into a triple-play telco encompassing mobile, fibre broadband and pay-TV services
Special dividend could provide a positive surprise
NOMURA Securities says...
KEPPEL- REIT | NEUTRAL | TP: S$1.21
KREIT reported its 3Q13 results on 14 October after the market closed
3Q DPU of 2Scts (+0.5%y-y; flat q-q) met 24.9% of our full-year forecast of 7.9Scts
Higher-than-expected income support and lower-than expected tax expenses helped offset higher-than-expected interest expenses and lower-than-expected contribution from associates
KREIT's aggregate leverage was 43.9% as of end-September (vs. 44.2% as of end-June)
Refinancing has been secured for the SGD282mn and SGD60mn in borrowings due in FY14F and FY15F respectively, which will increase KREIT's weighted average term to
expiry for its debts to 3.8 years (from 3.6 years)
It remains our view that management's near-term focus will remain on capital management
On our estimates, same store NPI (SSNPI) grew 5%y-y in 3Q13 (vs. +7.2%y-y in 2Q13), underpinned by growth at Ocean Financial Centre (OFC), One Raffles Quay (ORQ) and Marina Bay Financial Centre Phase 1 (MBFC 1)
Committed occupancy at KREIT's Singapore portfolio increased slightly to 99.5% as of end-September (from 99.2% as of end-June), principally driven by improvements at ORQ (100% from 99.8%) and OFC (98.8% from 97.9%)
We reiterate our Neutral rating on KREIT. At FY13F yield of 6.3% (implied spread 3.9pp, vs the stock's own trading historical average of 4.8pp and office REITs' blended historical average of 3.9pp) and multiple of 1x the end-September book value of SGD1.25/unit (vs KREIT's trading historical average of 0.8x), we think valuation remains fair at best |
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