20 Sept 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 : The only disability in life is a bad attitude.
- SCOTT HAMILTON
Singapore: The Day AheadSINGAPORE DAYBOOK :S-EA to drive IPO growth in S'pore: Bocker. Japanese, European companies also show more interest in listing here. SOUTH-EAST Asian companies will continue to be a key source of new listings for the Singapore Exchange (SGX), even as interest from Japanese and European companies picks up, SGX chief executive Magnus Bocker said yesterday at the market operator's annual general meeting.
"SGX is one of the most international exchanges in the world" with 40 per cent of its listed companies based outside of Singapore, Mr Bocker said, in response to questions from shareholders about the exchange's ability to attract foreign issuers.
Looking ahead, the immediate region will remain the key contributor to new listings. "I think you will see an increased number of listings from Asean," Mr Bocker said.
Singapore's political and regulatory stability is attractive to asset managers, and gives SGX a leg-up over its regional rivals in attracting initial public offerings, he said. "It's because of the trust in Singapore, in SGX."
(Source: The Business Times)
MARKET SCOOP
Singapore Airlines, India's Tata to establish new carrier
SingTel closing e-book service skoob
Blumont invests A$116m in Bostwanacopper producer
CapitaLand to issue bonds worth up to S$700m
Nam Cheong to co-invest in Indonesian shipping firm
Asian Trust raises stake in Logistics Holdings to 5.6%
(Source: The Business Times) DBS Securities says... CENTURION CORPORATION | BUY | TP: S$0.77
Centurion is a premier player in the foreign worker dormitory business, garnering c.11% market share with 18,000 beds in three dormitories in Singapore
The Group has also expanded into Malaysia since 2011, operating 11,000 beds as the first and only purpose-built dormitory operator in the country
With its aggressive growth strategy, the Group has grown from operating 5,300 beds in 2011 to c.30,000 today, with another 25,000 beds in the pipeline by 2015
As an operator of approved dormitories, Centurion is a beneficiary of increasing government rigour in ensuring that minimum housing standards for foreign workers are adopted
However, the availability of such dormitories is limited - there are c.740k foreign workers vs. c.160k purpose-built dormitories today - and as a result, monthly bed rents have increased c.30% over the past three years
This shortage should continue to support further rent increases over the next few years
Meanwhile, supply of dormitory land remains scarce due to the relative difficulty in identifying socially and commercially viable land plots for development
Key growth drivers are continued rent increases (we assumed 5% p.a.), higher occupancy and 50% expansion in beds in Singapore from 2013 to 2015 and 120% in Malaysia by 2015
Beyond worker's dormitory business, Centurion has also expanded its mandate to include student accommodation in the region
Including the potential dilution from a proposed 1-for-10 bonus issue of warrants, we derived a DCF-based TP of S$0.77, assuming 6.97% WACC
Further acquisitions and higher than expected rent rates are potential upsides, while there are risks of higher land/construction costs resulting from competition and regulatory changes
OCBC Securities says ...
SOILBUILD BUSINESS SPACE REIT | BUY | TP: S$0.82
We are initiating coverage on Soilbuild Business Space REIT (Soilbuild REIT) with a BUY rating
Our fair value of S$0.82 is based on the dividend discount model, and implies an attractive total expected return of 20.1%
At current price, Soilbuild REIT is trading at the steepest discount of 8.8% to its book value, compared to an average P/B of 1.10x seen across its subsector peers
This is unjustified in our view given Soilbuild REIT's quality portfolio assets, growth potential and respectable FY14F yield of 7.8%
Soilbuild REIT currently owns a young portfolio of seven modern business space properties in Singapore which enjoy excellent connectivity
In addition, Soilbuild REIT has the largest exposure to the business park segment relative to the other industrial S-REITs
We like Soilbuild REIT's exposure in this space because demand in the local scene has been growing steadily throughout the years due to its high quality and lower rents relative to traditional office spaces
The Sponsor for Soilbuild REIT is Soilbuild Group Holdings, a leading integrated property group based in Singapore
It is one of the few Singapore construction companies that are allowed to tender for
public sector projects without any value limitations
Given Soilbuild Group's track record and expertise, we believe Soilbuild REIT is able
to leverage on the capabilities of its Sponsor to grow its income
Soilbuild REIT is granted Right of First Refusal (ROFR) by its Sponsor over all its income-producing business space assets in Singapore
The ROFR currently covers four industrial properties, providing Soilbuild
REIT with a clear acquisition pipeline
In addition, several of its properties have under-utilized plot ratios, and present opportunities for growth
As of the listing date, Soilbuild REIT is sitting at healthy gearing ratio of 29.9%, while 75.0% of its interest rates are fixed
This not only gives Soilbuild REIT ample debt headroom to pursue its growth plans but also limits its exposure to rising interest costs DMG OSK Securities says... KEPPEL CORPORATION | BUY | TP: S$12.24 Keppel Corp (KEP) has secured two FPSO conversion contracts
This lifts its YTD new orders to SGD4.3bn, accounting for 72% of our SGD6bn order win estimate for FY13
The contracts are positive as they reflect the group's strong execution capability and raise its net order book to SGD14.4bn
We maintain our EPS estimates, BUY rating and TP of SGD12.24
Conversion project from SBM, a repeat customer
The first contract from SBM Offshore (SBMO NA, NR) is for the conversion of a floating,
production, storage and offloading (FPSO) unit that will be used for the Stones ultra deepwater development by Shell in the Gulf of Mexico
The FPSO is designed with a processing capacity of 60,000 barrels of oil per day (bopd) and will be able to store 800,000 barrels of crude oil
Beating MMHE to bag M3nergy FPSO conversion contract
The second contract, awarded by M3nergy, involves the conversion of a FPSO for the
Petronas-operated Bukit Tua Field, 35km north of Madura Island in Indonesia
The conversion is expected to be completed in 2Q14
The FPSO will have a production capacity of 25,000 bopd and a storage capacity of 630,000 barrels
We understand KEP beat other yards to the job, including Malaysia Marine and Heavy Engineering Holdings (MMHE MK, NEUTRAL, FV: MYR4.11)
We value the stock using a SOP approach according to the following: i) Keppel O&M at an 18x FY14F P/E (previously 16x), ii) infrastructure at 8x FY14F, iii) Keppel Land (KPLD SP, NR) at SGD4.36 per share, iv) KGreen Trust (KGT SP, NR) at SGD1.20
based on a 6.5% yield, and v) the market prices of the group's other listed companies |
