03 Dec 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 : You can have peace. Or you can have freedom. Don't ever count on having both at once.
- ROBERT A.HEINLEIN
Singapore: The Day AheadSINGAPORE DAYBOOK : The constraints and advantages that S'pore has: Tharman [SINGAPORE] The global economy, especially the developed countries, should expect to go through a period of "sub-normal growth" for several years to come, says Deputy Prime Minister Tharman Shanmugaratnam.
And while this will cause problems for everyone, he said Singapore is "fortunate" because of the many opportunities available to its people across regions such as Asia, Africa and Latin America that will help "balance the loss of demand growth" in the advanced economies.
He made these points during a question-and-answer session after delivering the S Rajaratnam Lecture yesterday, an annual event organised by the Ministry of Foreign Affairs' Diplomatic Academy in honour of Singapore's first and longest-serving foreign minister.
Mr Tharman, who is also Finance Minister, said the government is doing all it can to improve the lives of Singaporeans, especially the lower-income group.
(Source: The Business Times)
MARKET SCOOP
Keppel confirms BT report of Norway deal, with option for two more
Do Not Call registry opens; businesses required to sign up
Genting Singapore near one-month high on CIMB upgrade; index flat
Private housing site beside Aljunied MRT triggered from reserve list
Andrew Tan to become MPA's CEOfrom Jan 1
HDB construction to taper from '14: Khaw
(Source: The Business Times)
UOB KAY HIAN says ...
PROPERTY - SINGAPORE | OVERWEIGHT |
Maintain OVERWEIGHT as the market has priced in an overly bearish scenario for
property and REITs stocks on expectations of a rise in interest rates with the Fed's tapering
Tapering will have minimal impact on short-term rates and we expect a growth pick-up to
offset a rise in long-term rates
We are already factoring in a 3% rate for bond yields (60bp higher than the current yields of 2.4%)
We prefer diversified, deep-value developers and high-beta REITs in the office space with OUE, Ho Bee and CapitaCommercial Trust as our top BUYs
Most upbeat on the office segment, wich is turning around with spot rents picking up and positive rental reversions accelerating, underpinned by healthy demand and limited supply
We forecast office rents to pick up by 8% yoy in 2014
Retail rents are expected to remain stable, rising 0-2% yoy in 2014, while industrial rental growth will likely moderate to 0-2% yoy following a larger upcoming supply in 2014-15
REITs: High-beta office and industrial REITs to outperform as the economic recovery
gains momentum
We expect S-REITs to transition from yield vehicles to growth vehicles, led by the rental growth pick-up in the office segment
Business parks and high-tech industrial spaces should follow as these segments are closely linked to the office segment
Suntec REIT, CapitaCommercial Trust and Ascendas REIT are our preferred REIT picks
Developers are deep in value but lack near-term catalysts
Peak/trough P/B multiples suggest developers offer an attractive upside potential of 131% vs a downside risk of 40%
However, near-term newsflow from the residential segment is likely to be negative as the
latest property measures will result in a 5-10% yoy fall in property prices and 20-30% yoy fall in volumes in 2014
Slowing residential demand and elevated land prices are prompting developers to explore overseas land acquisitions
We prefer diversified developers with exposure to the commercial segment
CapitaLand, OUE and Ho Bee are our preferred picks
OCBC Securities says ...
VARD HOLDINGS | HOLD | TP: S$0.84
Vard Holdings Limited (VARD) announced that it has secured a new contract for the construction of one advanced offshore support vessel (OSV) worth ~NOK400m
This contract was awarded by Island Offshore, which is an existing customer of VARD
VARD has delivered more than 30 vessels to Island Offshore previously, while it also has five vessels under construction for Island Offshore
Delivery for this OSV is scheduled for 1Q15
This latest contract brings total YTD order wins for VARD to NOK12.3b, within our forecast of NOK12.9b
Hence, we maintain our HOLD rating and S$0.84 fair value estimate on VARD, pegged to 8x FY14F EPS
OCBC Securities says...
Oil and Gas: Good performance to continue in 2014 | OVERWEIGHT |
Index mostly in-line with market; among top three best performing sub-indices
The FTSE Oil and Gas index has performed more or less in-line with the broader market this year. Still, it is among the top three best-performing FTSE sub-indices YTD, along with the FTSE Telecommunications and FTSE Maritime indices. On the other hand, price performances of individual stocks have differed greatly, with the key outperformers being Kreuz Holdings (+95% YTD) and Ezion Holdings (+45% YTD) in the Offshore & Marine space.
Positive on the rig building sector and certain OSV segments
Stepping into 2014, we continue to advocate a focused stock-picking strategy, overweighting companies that are operating in sub-sectors with more favourable demand-supply dynamics, and those with strong balance sheets and order books. The local rigbuilders are expected to continue securing orders at a pace that will at least match this year's, while the offshore support vessel sub-sector should also see continued recovery as the market situation gradually tilts in favour of vessel owners - the Indonesian and Malaysian OSV sectors are especially looking relatively promising. Meanwhile, subsea tendering activity remains firm.
Solid long-term fundamentals; near term driven by macro events
We believe that the offshore sector has strong long-term fundamentals as countries have an interest in fulfilling as much domestic demand as possible in order to boost energy security. Investors should be mindful, however, that macro events remain a key driver of the broader sector in the near term. Going into 2014, we remain OVERWEIGHT on the oil and gas sector, as we expect that the favourable oil price environment will continue to be conducive for capital expenditure. Our preferred picks are Keppel Corporation [BUY, FV: S$12.87], Sembcorp Marine [BUY, FV: S$5.68], Ezion Holdings [BUY, FV: S$2.57] and Nam Cheong Ltd [BUY, FV: S$0.37]. |
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