31 Oct 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 : Innovation distinguishes between a leader and a follower.
- STEVE JOBS
Singapore: The Day AheadSINGAPORE DAYBOOK :'No threat' to fair trading in Sky One, says SGX [SINGAPORE] Singapore Exchange (SGX) has found "no threat to fair, orderly and transparent trading" in the sharp drop of Sky One Holdings stock earlier this week.
In contrast, a review of trading in Asiasons Capital, Blumont Group and LionGold Corp showed "a lack of transparency" that could have threatened fair trading, the local bourse operator said yesterday.
The exchange made these comments amid questions as to why regulators had not intervened more strongly in Sky One when just three weeks earlier they had suspended and then imposed trading curbs on the three other stocks, which had also suffered unusually sharp price drops.
"Not all sharp price movements, whether up or down, warrant a suspension of the stock . . . In the case of Sky One, SGX's review of the circumstances revealed no threat to fair, orderly and transparent trading. Hence, no suspension occurred," SGX said in a statement.
(Source: The Business Times)
MARKET SCOOP
Singapore Post Q2 profit up 8.5%
NOL Q3 net profit slides 60%
Eu Yan Sang Q1 net profit quadruples
Soilbuild Reit's first distribution better than expected
Fragrance Group Q3 net profit down 3.7% at S$22.8 million
Singapore Exchange says no trading curbs needed on Sky One
Pontiac in JV with Goldman Sachs, Hines for luxe condo project next to MoMA
GIC buys 47-storey int'l Grade A office tower in Jakarta
(Source: The Business Times)
CIMB Securities says ...
MIDAS HOLDINGS | OUTPERFORM | TP: S$0.74
We raise our FY14-15 EPS to 17-19% above consensus; the market is likely to follow suit
We believe further HSR contract wins could catalyse the stock
Maintain Outperform, with our target price unchanged at S$0.74, based on 1.29x CY14 P/BV (20% discount to average P/BV during 2010-11)
To improve connectivity between provinces and cities across China, the government plans to add 11,200 high-speed train cars (10,400 currently) and extend the high-speed railway to 18,000km by 2015
To achieve this, it has allocated a Rmb3.3tr budget for railway investments over the current five-year plan period that ends in 2015
In 2011-12, Rmb1.21tr was spent on building railway infrastructure, which leaves a budget of Rmb2.09tr for 2013-15
As the procurement of railway equipment (including train cars) tends to be back-end loaded, there could be an increase in the remaining budget to Rmb2.16tr that the market has yet to factor in
Based on Midas's 60% market share, we estimate that it could win Rmb2.5bn-3.2bn of HSR orders by end-2015
Midas has built up several competitive advantages over the years: 1) close relationships with its key customers, CNR Changchun, CNR Tangshan and CSR Bombardier Sifang, 2) having the dies to produce a variety of extrusion profiles, and 3) strong track record of manufacturing quality products
As a result, we believe Midas can maintain its position as a preferred supplier to its key customers, which will help it to retain its leading market share of 60% and win the bulk of the HSR contracts
Midas is currently trading at 0.9x P/BV (1 s.d. below mean)
We believe its discounted valuations are unjustified given the strong order momentum that is likely to come in 4Q13-2015
In the next round of procurement alone, we believe Midas could win Rmb545m of HSR contracts, an upward revision from our previous estimate of Rmb309m
This will provide a further re-rating catalyst for the stock
UOB KAY HIAN says ...
INDOFOOD AGRI RESOURCES | HOLD | TP: S$0.90
Indofood Agri Resources (IFAR) released 9M13 result with net profit declined by 66.7% yoy to Rp296b
This was mainly due to a) lower CPO ASP (-12.2% yoy), b) lower edible oils & fats sales volume (-3.9% yoy) but offset from strong sugar sales volume (+14% yoy) and a slight increase in CPO sales volume, c) higher production cost, d) forex loss of Rp93b in 9M13 vs. gain of Rp17b in 9M12 and e) higher corporate tax rate of 34% in 9M13 (9M12: 23%)
Lower EBITDA margin from plantation division to 21% in 9M13 (9M12: 35%)
Total consolidated EBITDA margin declined to 17% in 9M13 from 25% in 9M12 driven by: Lower ASP of CPO and higher production cost
But, the company managed to increase its EBITDA margin from edible oil & fats division to 6% in 9M13 from 5% in 9M12, which we believe due to lower CPO prices
Improvement in quarterly net profit by 86.4% qoq to Rp123b in 3Q13 due to a) better CPO ASP (+10.6% qoq) b) improvement in quarterly nucleus FFB production by 22% qoq as a result of FFB yield improvement to 4.4 tonnes/ha in 3Q13 from 3.6 tonnes/ha in 2Q13 and c) more contribution from sugar division
As such, EBITDA margin from plantation division improved to 30.4% in 3Q13 from 6.1% in 2Q13
Stock Impact: Results were below our and consensus expectation
The 9M13 net profit was below our expectation as it accounted 50% of our forecast and 60% of consensus
Maintain HOLD recommendation based on the sum-of-the parts valuation
We will update detailed on the results after the analyst briefing today
OSK DMG Securities says...
RAFFLES MEDICAL GROUP | NEUTRAL | TP: S$3.20
Revenue growth from its hospital division was 9.4% in 3Q13 (growth in previous quarters were in the teens)
Management attributed this to a number of specialists taking leave to attend medical conferences
We would not be too concerned about the slower growth at this point, as RFMD continues to increase its specialist pool while patient volume remains healthy
Its pricing level remains 20% below competitors on average
RFMD's hospital extension is on track, and construction is likely to commence soon
Special dividend not likely, but possibly higher normal dividend
RFMD expects to record a gain of SGD18m from the disposal of Thong Sia Building, which will further strengthen its cash hoard
However, we believe a special dividend is not likely, as management intends to pursue its plans to expand into China
RFMD has been paying out about 40% of earnings each year
Assuming it keeps to that ratio, the final dividend for FY13 could be higher
RFMD has signed a framework agreement to build a hospital in Shanghai
This is its second agreement to explore a possible venture in China, with the first agreement still in negotiations
RFMD has every intention to proceed with a venture in China
Despite its strong cash position, the company expects to fund the ventures using bank borrowings
Given the lower-than-expected revenue for 3Q13, we trim our FY13F revenue assumptions to derive a slightly lower TP of SGD3.20 (from SGD3.30)
Maintain NEUTRAL |
