Tuesday, November 5, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Cambridge
Company Name: CAMBRIDGE INDUSTRIAL TRUST
Research House: DBS VickersPrice Call: HOLDTarget Price: 0.70

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: Credit SuissePrice Call: BUYTarget Price: 19.00

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: UBSPrice Call: HOLDTarget Price: 18.10




Market Compass


05 November 2013~ Good Morning Singapore!


Singapore Idea Snippets:
05 Nov 2013 ~ Good Morning Singapore!

Central Execution Team - The Excellence of Execution

This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome.

Global Flash: While You Were Sleeping

Source: Marketwatch



Quote for the day : You must not lose faith in humanity. Humanity is an ocean; if a few drops of the ocean are dirty, the ocean does not become dirty.
- MAHATMA GANDHI
Singapore: The Day Ahead

SINGAPORE DAYBOOK :Twitter IPO seen as trend-setter for Web startups' share offers. Strong debut a good sign, weak start like Facebook's will send valuations down.
[SAN FRANCISCO] There's more at stake in Twitter Inc's initial public offering than just shares held by employees and investors. The performance will influence how Silicon Valley's dealmakers value emerging Web startups.
Venture capitalists and entrepreneurs will view a robust Twitter debut as a positive sign for other consumer-Internet IPOs and the prices that startups can command in funding rounds. A drop in shares - akin to the weakness that followed Facebook Inc's initial share sale in May 2012 - could chill startup valuations and send venture capital investments downwards.
"If Twitter's IPO doesn't go well and the six months to one-year performance doesn't go well, it will suppress valuations in the consumer space," said George Zachary, a partner at Charles River Ventures in Menlo Park, California, and an early Twitter investor. "It affects peoples' animal reactions to pricing as opposed to the rational way they price."
Facebook's 50 per cent drop in its first three months as a public company reverberated across the startup landscape. Venture investing in US Internet companies fell for three straight quarters before bouncing back in this year's second quarter, according to the National Venture Capital Association.
(Source: The Business Times)

MARKET SCOOP

Hiap Hoe Q3 net profit more than doubles to $33.3 million
Yongmao Q2 net up 76.4% at 14.9m yuan
S&P assigns BB+ and axBBB+ with stable outlook to Viva Industrial Reit
Genting Singapore Q3 EBITDA rises 20% to S$335m on year
Viva Industrial Trust falls 1.9% from offer price
F&N allows Heineken to enter soft drinks market in S'pore
Kreuz's Q3 net profit up 60.3%
Chasen's Q2 net profit falls 53% on higher expenses
(Source: The Business Times)

DBS VICKERS Securities says ...

CAMBRIDGE INDUSTRIAL TRUST | HOLD | TP: S$0.70

Cambridge REIT (CREIT) reported a 5.9% and 0.7% y-o-y rise in revenues and net property income to S$23.8m and S$19.3m respectively
The higher performance was mainly due to the contribution of various acquisitions (four properties) and development/asset enhancement projects (88 Int'l Rd and 4/6 Clementi Loop in 1H13) which more than offset the income vacuum from the divestment of four properties (of which 63 Hillview and 23 Lorong 8 Toa Payoh were only recently divested and thus were still contributing to topline in 3Q13)
Portfolio occupancy remained high at c.97%
Distributable income rose by 6.0% y-o-y to S$15.4m (including S$1.2m capital distribution), translating to a DPU of 1.251 Scts (+3.9% y-o-y)
CREIT refinanced S$250m worth of debt facilities due in 2014 and in the process lowered average cost to c.3.9%
The manager has also paid down S$108m of the loan, funded by its divestment proceeds
As a result, gearing ratio fell to c.27.9% (as of end 3Q13)
CREIT will be renewing close to 26.1% of its leases in 2014, of which a majority will be single-tenanted properties
The manager expects, out of the eight expiring head leases, to renew one, divest three and convert the remainder into multi-tenanted properties
During the course of the conversion/renewal, earnings should remain fairly stable
In addition, the completions of the acquisition of 30 Teban Gardens (by 4Q13 and the development projects at 3 Pioneer Sector 3 and 21B Senoko Loop (both by 4Q14)) will underpin a steady growth profile in the coming years
We expect gearing to settle at c.31% after all these investments are accounted for by the end of 2014
CREIT continues to offer a steady, resilient and growing DPU growth profile of c.5-6% which, in our view, is transparent and easily achievable
Our HOLD call is maintained, given limited upside to our roll-forward TP of S$0.74

CREDIT SUISSE Securities says ...

DBS GROUP | OUTPERFORM | TP: S$19.00

DBS reported 3Q13 core net profit of S$862 mn (-3% QoQ, 1% YoY - CS/consensus S$760-830 mn)
The beat was driven by better-than-expected non-interest income (trading, fee and investment gains) and slightly lower provisions
The underlying drivers remained healthy and within expectations-loan growth (2.9% QoQ, 14.7% YTD), NIMs (-2 bp QoQ) and NPLs (up 2% QoQ)
While the street would have to revise up FY13E numbers to reflect this beat, 3Q results do not change the guidance for FY14 by much
Positives: (1) Healthy broad-based loan growth (2.9% QoQ), (2) Resilient fee income given the market conditions (-3% QoQ), (3) Cost discipline remains in focus (-4% QoQ)
Negatives: (1) New NPA formation continues to remain high
Looking forward to FY14, management is confident of delivering high-single digit revenue growth and mid-single digit earnings growth: 8-10% loan growth, flat NIMs, continued operating cost discipline and credit costs in-line with FY13


UBS Securities says...

DBS GROUP | NEUTRAL | TP: S$18.10

DBS Q3 results showed a continuation of H1 trends
NIM fell 2bps QoQ to 1.60% driven by a further narrowing of the core loan yield less deposit cost spread
In Q3 this "core" spread fell 4bps to 1.92%, an all-time low (DBS' total gross lending yield is now just 2.6%)
The drivers of this decline we believe are an on-going shift in mix of lending
to shorter tenor "trade relate" business and the on-going impacts of QE on asset
spreads around the region (too much cheap US$ liquidity)
Year to date we estimate that c50% of DBS' net new lending has been to Mainland
China
A key driver of this growth is China corporates looking to tap cheaper sources of
funding overseas than is available domestically
With a closed capital account "trade finance lending" is one obvious way they can do this
With a large pool of US$/HK$/S$ funding Singapore is an ideal place to provide this cheap, short-term credit (often collateralised with a mainland bank letter of credit)
This type of activity we believe is contributing to the rapid rise in LDR for the Singapore bank system as a whole & DBS' strong funding base & HK franchise allows it to facilitate this activity for its clients
DBS' "fully loaded" Basel III core tier 1 capital ratio continued to build in Q2, up c40bps
to 11.7%
This was not so much driven by capital retention but rather by tweaking lower the risk weighting it applies to large Chinese bank exposures
The impact of this was a fall in the RWA/total asset ratio in the quarter to 58.8% from 62.8% at end Q2
This resulted in a 2-3% fall in RWAs QoQ despite c4% growth in total assets
Our DCF derived target price of S$18 uses a cost of equity of 10% and a sustainable
RoE of 12.0%
This values the bank at 1.55x YE 13E tangible book vs a 12-13% forecast RoTE, equivalent to a FY 14E P/E of 12.0x


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