29 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 : We're running the most dangerous experiment in history right now, which is to see how much carbon dioxide the atmosphere... can handle before there is an environmental catastrophe.
- ELON MUSK
Singapore: The Day AheadSINGAPORE DAYBOOK : Financing boost for exports to Asia emerging markets. IE S'pore to launch credit guarantee scheme with ADB and Swiss Re. [SINGAPORE] Singapore's exports to Asia's emerging markets are about to get a $1 billion annual boost from a new government trade financing plan.
Some 250 local companies - a big chunk of them small and medium-sized enterprises (SMEs) - are tipped to gain yearly from a credit guarantee scheme that International Enterprise (IE) Singapore is launching with the Asian Development Bank (ADB) and Swiss Re Corporate Solutions, a Swiss insurance company.
With the new Trade Facilitation Scheme (TFS), which comes into effect on Dec 1, both IE Singapore and Swiss Re are topping up capital to expand the current limits of ADB's existing credit guarantee scheme, the Trade Finance Programme (ADB-TFP), to back more trade transactions by Singapore firms.
"The boost provided by the TFS will potentially support additional exports of $1 billion annually into emerging Asia - a potential 60 per cent increase in Singapore's exports supported under the ADB-TFP," IE Singapore said in a statement yesterday.
(Source: The Business Times)
MARKET SCOOP
Oxley's unit to develop 15.28-acre land in Selangor
OCBC divests from Vietnam's VPBank,sells all stake: statement
Kingsford Development puts in top bid for adjacent sites
Top metals trader resigns from Noble Singapore: sources
Pace of home price fall picks up in October
MOM bans 15 firms from hiring new foreign staff
(Source: The Business Times)
OSK DMG Securities says ...
RH PETROGAS | BUY | TP: S$1.38
We took RHP management on a non-deal roadshow on Tuesday
The company has published its 2014 drilling programme, planned reserve upgrades, and schedule of upcoming news flow
RHP's 2014 work programme, heavily focused on increasing production, includes nine
development wells and one appraisal well (contingent on Klagalo-1 being successful) in the Basin PSC
For Fuyu, 40 development wells are planned in 2Q-3Q14, with a deep exploration well to test the deep gas zone
Total net drilling capex is USD60m, and management expects >80% cash return in 2014
from cost recovery oil
RHP targets upgrading 19mmboe of 2C resources to 2P reserves in 2014
This will bring RHP's EV/2P ratio down from USD30.9/bbl to USD11.4/bbl by end-2014
KrisEnergy trades at an EV/2P of USD27.6/bbl, and the global average is USD18/bbl
We understand the Klagalo-1 well was completed ahead of schedule, with no hiccups to cementing and perforation
Wireline logs indicate potential hydrocarbons
Three zones will be tested, each for seven days
We expect the Klalin-15 and -17 wells to add to existing production, having successfully flowed
RHP is looking at acquiring a producing field in the Southeast Asian region
We do not expect this to be a large acquisition, and the agreement could be finalized within a few months
The stock trades at a 35% discount to production assets alone
Maintain BUY with SGD1.38 TP
OCBC Securities says ...
COSCO CORP | SELL | TP: S$0.61
2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore)
After recording net profit of S$139.7m and S$105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below S$50m
Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front
For 4Q13, the group may even have to reverse profits on its "substantially completed" drillship that is mired in arbitration proceedings with customer Dalian Deepwater Development, unless COSCO is able to quickly find another buyer for its drillship
Looking ahead, we expect the operating environment for the group to remain difficult
The oversupply of yard capacity in China continues to roil the shipbuilding industry
Outlook for the offshore industry is more positive, but COSCO - being a new entrant - may not be able to secure many good quality contracts, and the fact that it is executing a wide range of products that are new to the company means that margins remain vulnerable to execution risk
As of 30 Sep 2013, the group's order-book stood at US$7.2b with progressive deliveries up to 2015
However, many orders are likely to be executed at low margins
Though the group has a cash level of S$1.7b, it also has S$1.85b worth of debt maturing in a year (36% of which is secured and may be rolled over), not forgetting the substantial working capital that the group needs with its back-end loaded payments for its contracts
Moreover, any credit tightening in China may affect the ability of customers to meet their financial obligations
Maintain SELL with S$0.61 fair value estimate
NOMURA Securities says...
STARHUB LTD | NEUTRAL | TP: S$4.05
In our recent call with StarHub, management elaborated on various initiatives it is undertaking to improve its revenue run-rate beyond this year (flat service revenue guidance for this year and we currently forecast 3% revenue growth for 2014)
Most of these initiatives are targeted towards the wireless segment via data re-pricing, although pressures in the pay-TV and broadband segments continue
Wireless is 53% of revenues vs 16% for pay-TV and 11% for broadband
In wireless, StarHub is looking to increase price for excess data usage from SGD6 to SGD8 and has also discontinued its offer of free 1GB allowance on tiered plans
It is also looking to charge for WiFi too
In pay-TV, there is some cannibalisation towards internet-TV, we understand; but its own internet TV (TV Anywhere) together with VOD variant Anytime TV could help mitigate the impact of this, and it is also looking to create local content to improve stickiness
Maintain Neutral on its 5% yield, but otherwise, similar to various other integrated operators, driving revenue growth is becoming more of an uphill battle, in our view
StarHub could be looking to increase the tariff on excess data usage from the current promotional tariff of SGD6.42 per 1GB to SGD8.56 by early next year
SingTel has already increased this from SGD5.35 to SGD10.7
M1, which charges SGD5.35 currently, is also likely to review this, we think
Given that only ~13-16% of tiered subs exceed data bundles, telcos still have to
scale up the takeup of tiered plans to realise any meaningful pickup in ARPU
While StarHub and M1 had ARPU flat to down in the recent 3Q, SingTel had a sequential improvement
However, it is difficult to attribute SingTel's ARPU improvement fully to increase in excess data charges, given that there are other impacts from roaming, etc
But some benefits cannot be ruled out
StarHub also no longer offers 1GB additional allowance for free to its new tiered plan subscribers
This can help improve overall ARPU to some extent too
On Pay TV, StarHub notes that there is a tendency among subscribers to watch video content online, which could be a risk
However, StarHub has its own internet TV offering, TV Anywhere, which allows subscribers to access television content on-the-go in multiple screens including PCs and tablets
This should help retention/support ARPU on pay-TV side
With the rollout of LTE, this service should gain further traction over wireless too, we think
StarHub notes that there is competition from FTA (Free to Air) operator - currently there are 8 FTA channels of MediaCorp including Chinese/Malay/Indian content in entertainment and/or news - and we think StarHub is looking to address this by localization of content
Its Anytime TV, which is pay per use, should appeal to a price sensitive audience too
This service is for its home broadband customers who do not subscribe to its pay TV service, where it offers movies on demand and has more than 6.5k hours of video library available
StarHub is looking to introduce paid WiFi services
Most of tablet sales are outside contracts and most users offload the data into WiFi networks, so there is some revenue potential to tap there
NGN provisioning issues are still a concern especially in the enterprise segment while residential rollout seems to be tracking well (StarHub has around 20% share, we think)
IDA has also recently approved SingTel's sale of OpenNet which should simplify the whole structure, we think
StarHub's cable network lease agreement with SingTel will expire in 2017, post which it could either renew the lease on new terms or shift to NBN
StarHub thinks that given the current pay TV is over HFC (Hybrid Fiber Coaxial), transition to Fiber network, if required, would be seamless |
