07 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 : I don't want to be the next Michael Jordan, I only want to be Kobe Bryant.
- KOBE BRYANT
Singapore: The Day AheadSINGAPORE DAYBOOK : SGX unlocks volatile trio, but adds shackles. No short-selling or contra for Asiasons, Blumont and LionGold [SINGAPORE] Singapore Exchange (SGX) will allow the three volatile counters it had suspended to trade today - but with curbs.
The shares of Asiasons Capital, Blumont Group and LionGold Corp will resume trading with restrictions against short-selling and taking on new contra positions, according to a regulatory announcement issued by the exchange yesterday.
The move is expected to offer an escape route, albeit a potentially costly one, for traders who had open positions on the affected stocks after Friday's surprise intervention by SGX in suspending the counters, and possibly pave the way towards normalised trading.
"It's a good move," one trader said. "Hopefully it will calm the market a little bit after last Friday, because it triggered a tsunami, you know. Carnage, man, pure carnage."
(Source: The Business Times)
MARKET SCOOP
Blumont scraps S$146m coal mine purchase
AsiaPhos' IPO 3.8 times subscribed
Singapore's LionGold says in talks to acquire stake in gold miner
Asiasons, ISDN, InnoPac say in compliance with listing rules
Innopac, ISR Capital, ISDN shares trading off lows after SGX query
BreadTalk targets S$1b in revenue by 2016
(Source: The Business Times)
CIMB Securities says ...
CAMBRIDGE INDUSTRIAL TRUST | NEUTRAL | TP: S$0.74
With a more challenging acquisition market, we expect CIT to grow at a slower pace in 2014
We have lowered our capex assumption for FY14 to S$85m from S$150m previously
Consequently, we have reduced FY14/15 DPUs by about 6.8% on average
Downgrade to Neutral from Outperform with lower DDM-based target price of S$0.74
As the industrial landscape becomes more regulated through various government policies, such as i) the shortening of industrial land leases and ii) upfront payment of land rents, both the acquisition and development market have become more challenged as investors find it more difficult to achieve similar returns as before
Also, due to the availability of liquidity and with current low interest rates, the mismatch in pricing expectations between vendors and REIT managers has continued
On this basis, we expect CIT to rely less on acquisitions or development for growth and more on AEIs in 2014
Previously, management indicated that it would focus on three key issues in 2H13: i) reduce the lease expiry profile in 2014; ii) refinance the S$308m debt that will be due in FY14 and iii) the sale of Lam Soon Industrial
Of the three key issues, Lam Soon has successfully been divested at S$140.8m, while the refinancing of the debt due next year was previously highlighted to be at an 'advanced stage of negotiations' with several financial institutions
For the 2014 lease expiry profile, we remain confident of management's ability to lower the level on a quarterly basis
We have downgraded CIT to Neutral on the back of a more challenging growth environment in FY14
DMG OSK Securities says ...
RH PETROGAS | BUY | TP: S$1.33
RH Petrogas (RHP) will issue 116m new shares, at SGD0.63/share, to a group of institutional investors, raising USD56m to fund drilling activities in the Basin and Island PSCs, which we expect to accelerate in FY14
The stock remains deeply undervalued, with current assets worth SGD0.98/share
Multiple catalysts are expected over October and 4Q13
Maintain BUY with its TP adjusted to SGD1.33 postplacement
Institutional support for drilling activity. 90% of the proceeds will be used in exploration, development or production activities in the Basin and Island production-sharing contracts (PSCs) in Indonesia
We believe that the large cash inflow will allow RHP to expand its drilling programme in
FY14
Also, this increases RHP's free float from 23% to 36%, which may improve its trading liquidity - thereby lowering the "illiquidity discount"
RHP should trade at SGD0.98 for today's assets
Based on our assessment of RHP's 2P reserves and 2C contingent resources, RHP
should trade at SGD0.98 today (post-placement) to reflect the market value
of its reserves and resource
We expect RHP to announce the results of the Zircon-1 well next week as well as the spudding of the exploration well Klagalo-1 in 4Q13
Subject to oil finds, additional appraisal wells may be drilled in the Zircon and Koi prospects this quarter
Additional catalysts would be: i) the signing of new PSCs in Myanmar/Asean region, ii) approval to commence production in Fuyu-1 in China, and potentially iii) news of exploration and production (E&P) players like Sona Petroleum (SONA MK, NR) or Rex International (REXI SP, NR) acquiring a stake in RHP
As the cash inflow to RHP adds to its value today, this implies a dilution of less than 20%
The cash will be used productively in drilling new wells and raising the market value of resources by proving and then transferring them to 2P reserves
Maintain BUY with its TP adjusted to SGD1.33 based on parity to our NPV-and-risking model
UOB KAY HIAN says...
REX INTERNATIONAL | BUY | TP: S$1.47
We initiate coverage with a BUY and target price of S$1.47 (based on expected monetary value of Rex's exploration assets using forecast from traditional geologist findings), representing a 58.1% upside
Rex's most valuable asset is its access to the proprietary Rex Technologies that may significantly improve the odds of successful oil exploration
With more than 80% accuracy in blind and live tests, Rex Technologies showed great promise and has helped Rex to secure strategic partnerships and concessions
Results from Rex's first few exploration wells will be critical and is a potential catalyst
A successful oil discovery may see a re-rating of the stock
Results of the first exploration well are expected to be known by 1Q14
Using proprietary satellite and seismic imaging technologies, management believes Rex Technologies can produce an exploration success rate in excess of 50%, compared with a global average of 10-15%
In addition, Rex Technologies also cuts the exploration process to 18-60 months from the 72-114 months required under conventional technologies
Rex has conducted blind tests for Hibiscus and Fram and has shown an impressive 100% accuracy
Over the past two years, Rex had analysed 59 prospects for North energy, accurately predicting 35 of the 41 wells that had been drilled (85% accuracy)
Rex successfully predicted 24 out of 25 dry wells and 11 out of 16 commercial oil wells
As Rex Technologies gains traction among market players, Rex has been able to secure concessions on better terms, such as eliminating common industry practices of paying entrance fees
With its leverage, Rex has successfully farmed into 15 concessions ASX-listed Bass Strait Oil Company (BAS) is Rex's newest strategic partner as it partners with REX to reassess specific exploration opportunities in Gippsland Basin of Australia
A potential multi-bagger with exploration target of 2,183mmbbl unrisked resources (EMV range: US$1.31-5.39/share)
Oman Block 50, Rak Offshore and Sharjah Central form almost 90% of our total risked NAV, and are estimated to have a risked value attributable to Rex of US$1,319m (US$1.31/share) based on conventional chances of success
To derive our target price of S$1.47, we applied a 20% discount to our risked NAV to account for the concentration risks from Oman Block 50, which forms almost two thirds
of our risked NAV estimate |
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