26 Nov 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 : Success is a lousy teacher. It seduces smart people into thinking they can't lose.
- BILL GATES
Singapore: The Day Ahead
SINGAPORE DAYBOOK : New, direct route for China firms seeking S'pore listing. They will need approval of both SGX and CSRC; won't have to set up holding company in a tax haven. AMID an initial public offering (IPO) freeze in China, the stock-market regulators of China and Singapore have set up a framework for Chinese companies to list here, a move that might see more such companies seeking capital from investors here.
Under the framework announced yesterday, Chinese-owned, China-incorporated companies will be able to list on Singapore Exchange (SGX) after getting approval from the China Securities Regulatory Commission (CSRC) as well as SGX by fulfilling the requirements of relevant laws and regulations of both sides.
SGX CEO Magnus Bocker said investors here would have more choices and access to the growing Chinese economy.
The new development effectively gives China companies another pathway to get listed here. The traditional route was setting up a holding company in tax havens such as Bermuda and the British Virgin Islands, and listing that holding vehicle here.
(Source: The Business Times)
MARKET SCOOP
Yongnam Holdings clinches record $168m contract
CPFIS funds gained in Q3; equity funds performed better
AIMS AMP to buy stake in Optus Centre for A$184m
Cosco wins two contracts worth more than US$400m
Sunrise Brokers joins SGX as derivatives trading member
Profits up for Pacific Andes and China Fishery for FY2013
Singapore's inflation rises to 2% in Oct
(Source: The Business Times)
CREDIT SUISSE Securities says ...
BIOSENSORS INTERNATIONAL GROUP | NEUTRAL | TP: S$1.00
Shandong Weigao announced on Friday it intends to sell its entire 370 mn shares in Biosensors, or about 21.7% of Biosensors' total issued share capital, to CB Medical Holdings, a subsidiary of Citic PE, at 7.1% premium to Friday's closing price of S$0.98
We view this transaction as positive for Biosensors
As one of the most renowned PE fund manager in China, Citic PE will likely strongly support Biosensors in deal sourcing and product line diversification
Recall that Biosensors issued S$300 mn in debt early this year and acquisition will be its focus in the near term
In the near term, earnings in FY14 will likely remain distressed due to the headwinds in Japan and China
However, as ~37% of Biosensors' stake is held by two PE firms (Hony Capital holds around 15.8%), we believe the fundamentals of Biosensors will improve in the long term
We maintain our NEUTRAL rating
Our TP of S$1.00 is based on 18x FY15E normalised EPS, plus S$0.26 net cash and foreseeable licensing revenue per share
OCBC Securities says ...
SPH REIT | HOLD | TP: S$0.99
SPH REIT is a Singapore-based REIT established principally to invest in a portfolio of income-producing real estate used primarily for retail purposes in Asia-Pacific
The initial portfolio comprises two commercial properties in Singapore, namely Paragon and The Clementi Mall, with a total NLA of 898,779 sqft and appraised value of S$3.1b as at 28 Feb 2013
The Sponsor is Singapore Press Holdings, the leading media organization in Southeast Asia with a market cap of S$6.8b
Through the Paragon Mall, SPH REIT has the purest exposure to the upscale retail market in Orchard Road precinct than any Singapore-listed retail REIT
In addition to Paragon Mall, Paragon also houses Paragon Medical that hosts over 60 medical and dental specialist clinics and offices
Clementi Mall, on the other hand, is a mid-market suburban retail mall that is located in the heart of Clementi town with direct access to the bus interchange and MRT station
We like SPH REIT's unique exposure to the upscale retail market, suburban retail space and burgeoning healthcare services sector
In our opinion, the local retail landscape is expected to remain robust, bolstered by growing retail sales, rising visitor arrivals, an expanding population and comfortable supply of retail space
We also believe Clementi Mall's strategic location and retail offerings will make it very resilient in nature
Furthermore, the underlying growth drivers for the regional healthcare scene are expected to remain strong
Since its listing, we note that SPH REIT has enjoyed a strong run-up in unit price of 8.9%, significantly outperforming the FTSE ST REIT Index by 14.3ppt over the same period
At current price, SPH REIT is trading at 1.10x P/B, slightly higher than the local retail subsector P/B of 1.05x
Our DDM-based fair value of S$0.99 implies a total expected return of 6.4%, including a FY14F DPU yield of 5.4%
As the counter appears to be fairly priced with no visible strong near-term price catalyst, we initiate coverage on SPH REIT with a HOLD rating
OCBC Securities says...
BIOSENSORS INTERNATIONAL GROUP | SELL | TP: S$0.80
Shandong Weigao to sell its entire 21.7% stake in BIG Shandong Weigao (SW), which is Biosensors International Group's (BIG) single largest shareholder, announced that it has entered into a Sale and Purchase Agreement to dispose its entire 21.7% stake in BIG
to CB Medical Holdings Limited (CBMH)
The total aggregate consideration of US$312.3m translates into a purchase price of
S$1.05 per share by CBMH
This represents a 11.2% premium to BIG's closing price prior to this announcement
CBMH is an investment holding company incorporated in Bermuda. According to a SGX-net filing, it is part of CITIC Private Equity Funds Management, a large private equity fund in China
SW cited the increasingly competitive business environment in China and its decision to focus on its three core business units in which it has controlling equity interests as its
reasons for disposing its stake in BIG
As SW will incur a loss of ~CNY449.0m from this transaction, we believe it also partly reflects the lack of confidence in BIG's prospects going forward
We do not foresee any impact from SW's sale on the operations of BIG
While both companies have healthcare operations in China, BIG has operated independently from SW even when SW became a shareholder of BIG
This is because BIG has its own established manufacturing facilities, distribution channels and networks in China
SW also does not compete with BIG, nor is it a supplier or customer of BIG
While we do not rule out the possibility of a privatisation exercise on BIG by CBMH in the future, we continue to value the stock based on our expectations of its operational performance
Hence, with our estimates kept intact, we maintain our SELL rating and S$0.80 fair
value estimate on BIG
Given the recent hike in BIG's share price and with BIG now trading at a rich valuation of 20.7x blended FY14/15F PER, we believe it is an opportune time for investors to lock in some profits |
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