| Starhill Global REIT: Another positive development Summary: Starhill Global REIT (SGREIT) announced that the rent review for the Toshin master lease has been concluded, and that a renewal rent at 6.7% higher than the prevailing rate has been secured. This is consistent with our 29 Apr report that SGREIT may again benefit from rental upside following the completion of the review process. We now factor in the increased rents in our forecasts but lower our fair value marginally to S$1.00 on higher risk-free rate (S$1.05 previously). However, we continue to like SGREIT for its growth potential, strong financial position and compelling valuations. For FY13, SGREIT looks set to gain from continued strength from its Singapore portfolio, incremental income from its newly-acquired Plaza Arcade and a 7.2% rental escalation from its Malaysia master leases in Jun. We maintain BUY on SGREIT. Key risks include weaker JPY/AUD and negative impact from a potential CPU conversion. (Kevin Tan) MORE REPORTS Tiger Airways: Time for a tiger Summary: In light of its more than 6% price correction, we are reiterating our BUY rating on Tiger Airways (TGR) with an unchanged fair value estimate of S$0.79 as we believe prospects remain positive for the counter. Its recent May operating statistics revealed its eighth consecutive month of passenger traffic growth for TGR SG, and passenger load factors during the period have also remained fairly resilient, which demonstrates its effective capacity management. In addition, we are hopeful for a better showing from its associate airlines given the propensity for travel in the coming months for Indonesia and the Philippines. On a broader scale, the industry dynamics, namely growth in the Asia-Pacific region, remains conducive for budget carriers as consumers become more affluent and appetite for air travel increases. (Lim Siyi) |
Midas Holdings: JV NPRT secures CNY1.26b metro contract Summary: Midas Holdings (Midas) announced that its 32.5%-owned JV Nanjing SR Puzhen Rail Transport (NPRT) has clinched a CNY1.26b metro contract. This is for the supply of 33 train sets (or 198 train cars) for the Shenzhen Metro Line 3 project. However, delivery is scheduled only from 2015 to 2016. Given that this is the third contract secured by NPRT in two weeks, we believe this highlights the growing momentum of China's metro industry. In our view, this may also lead to future contract wins for Midas given that it is a supplier of aluminium extrusion profiles for NPRT. Maintain BUY on Midas, with an unchanged fair value estimate of S$0.54, pegged at 1.1x FY13F P/B. (Wong Teck Ching Andy) |
NEWS HEADLINES - US stocks fell, sending the S&P 500 Index lower for a second day, after Bank of Japan Governor Haruhiko Kuroda said he sees no need to expand monetary stimulus immediately. - DBS would still want to buy Temasek's entire stake in Danamon, Business Times reports, citing an interview with Peter Seah, chairman of DBS Group Holdings Ltd. - Aussino expects that it will not be able to exit the SGX watch list by the 3 Sep deadline and intends to apply to SGX for extension of time to apply for removal from watch list. - T T J Holdings wins new contracts for structural steelworks and civil defence shelter doors in Singapore and Malaysia, bringing its order book to S$164m as at 11 Jun. - Tsit Wing's Chairman and CEO Peter Wong seeks to privatize the company and has acquired an aggregate of 20m ordinary shares at a price of $0.3075 each, valuing it at S$65.5m - Del Monte Pacific says shareholder Nutriasia Pacific to enter a placement agreement for the sale of 150m shares of the Company which will be listed and traded on the PSE, marking first dual listing between the SGX and the PSE. |
Wednesday, June 12, 2013
Starhill, Tiger, Midas up STI
Tuesday, June 11, 2013
STI down 0.6% with 3150 support
Singapore shares slipped into the red in early trading, joining Asian
peers in poor health as investors continued to mull mixed economic
signals out of Asia and the US.
The STI drops 0.6% to 3,180.80, retreating to near its 2013 lows.
"Given mixed Wall Street seen overnight and the lack of catalyst for any rally, do expect the STI to remain range-bound at 3,150-3,210," OCBC says in a note. Penny stocks find favour in thin volume, with 729.8 million shares worth $385.6 million changing hands. Decliners outnumber gainers 236 to 71.
Property-related stocks, which had helped lift the index Monday, handed back much of those gains. Global Logistic Properties (MC0.SG) led decliners on the STI with a 1.8% fall to $2.76, while CapitaLand (C31.SG) retreated 2.4% to $3.26. City Developments (C09.SG) meanwhile slipped 1.1% to $10.04.
Banks are also in the red: DBS Group Holdings (D05.SG) is down 0.4% at $16.02, UOB (U11.SG) falls 0.4% to $20.00, while OCBC (O39.SG) eases 0.7% to $10.07.
The STI drops 0.6% to 3,180.80, retreating to near its 2013 lows.
"Given mixed Wall Street seen overnight and the lack of catalyst for any rally, do expect the STI to remain range-bound at 3,150-3,210," OCBC says in a note. Penny stocks find favour in thin volume, with 729.8 million shares worth $385.6 million changing hands. Decliners outnumber gainers 236 to 71.
Property-related stocks, which had helped lift the index Monday, handed back much of those gains. Global Logistic Properties (MC0.SG) led decliners on the STI with a 1.8% fall to $2.76, while CapitaLand (C31.SG) retreated 2.4% to $3.26. City Developments (C09.SG) meanwhile slipped 1.1% to $10.04.
Banks are also in the red: DBS Group Holdings (D05.SG) is down 0.4% at $16.02, UOB (U11.SG) falls 0.4% to $20.00, while OCBC (O39.SG) eases 0.7% to $10.07.
Monday, June 10, 2013
Golden Agri, ASL Marine, Swiber for STI Up
Golden Agri-Resources: Modestly firmer CPO boost
Summary: Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, should benefit from the recent rebound in CPO (crude palm oil) prices to MYR2450/ton; we note that there is a strong historical correlation of nearly 0.7 between CPO prices and GAR share price. While the general outlook for commodities is still uncertain (as China's economic growth continues to sputter along), we believe that headwinds appear to be dissipating. Furthermore, management remains fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Maintain BUY with an unchanged S$0.63 fair value (based on 12.5x FY13F EPS). (Carey Wong)
MORE REPORTS
ASL Marine: Ceasing coverage
Summary: Among the various offshore and marine stocks, ASL Marine (ASL) is one of the counters with a more diversified business model. Its shipbuilding operations accounted for 46% of gross profit in 9MFY13, ship-repair and conversion accounted for 22%, while ship-chartering contributed 32%. The group expects the outlook of the offshore and marine industry for this year to be "good", but margins may be impacted by stiffer competition from Chinese shipyards. The long-term future of ASL looks bright, but more time would likely be needed for significant earnings growth and a re-rating of the stock. In particular, the liquidity of the stock is relatively low, partly due to the free float of ~37.8%. We last rated ASL a Buy with a fair value estimate of S$0.86. Due to a re-allocation of internal resources, we are ceasing coverage on this counter. (Low Pei Han)
Swiber Holdings: More work coming up?
Summary: According to Upstream, PEMEX is preparing to begin a bid process that aims to offer a contract to deliver and install four Ayatsil platforms. The group is in the pre-qualification phase for the contract, and heavy-lift contractors such as Saipem, Heerema and Swiber Holdings are said to be interested. The entire package is estimated to be worth ~US$300m. Swiber recently saw its share price run up about 23% from 14 May (pre-1Q13 results announcement) to its close on Friday, after we upgraded our rating from Hold to Buy. However we still see an upside potential of about 12% over a one-year time frame. Maintain BUYwith S$0.86 fair value estimate. (Low Pei Han)
NEWS HEADLINES
- Sembcorp Industries Ltd. reports solid waste management unit getting a S$299m contract from NEA to provide refuse collection and recycling services to the City-Punggol sector of Singapore.
- British automaker Rolls-Royce has won a contract to supply engines and support 50 of Singapore Airlines' Boeing Dreamliner jets in a deal worth US$4b at list prices.
- Asian Pay Television says asset manager Thornburg Investment to raise stake in the company; buying 73.8m shares for S$53.6m.
- Halcyon Agri Corp. (HACL SP) reports listing of 40m new shares at S$0.5175 each.
- Armarda Group (AMDA SP) names Chu Yin Ling Karen as CFO. Chu Yin Ling was previously the Financial Controller of Armarda Group Ltd since July 2009.
Summary: Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, should benefit from the recent rebound in CPO (crude palm oil) prices to MYR2450/ton; we note that there is a strong historical correlation of nearly 0.7 between CPO prices and GAR share price. While the general outlook for commodities is still uncertain (as China's economic growth continues to sputter along), we believe that headwinds appear to be dissipating. Furthermore, management remains fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Maintain BUY with an unchanged S$0.63 fair value (based on 12.5x FY13F EPS). (Carey Wong)
MORE REPORTS
ASL Marine: Ceasing coverage
Summary: Among the various offshore and marine stocks, ASL Marine (ASL) is one of the counters with a more diversified business model. Its shipbuilding operations accounted for 46% of gross profit in 9MFY13, ship-repair and conversion accounted for 22%, while ship-chartering contributed 32%. The group expects the outlook of the offshore and marine industry for this year to be "good", but margins may be impacted by stiffer competition from Chinese shipyards. The long-term future of ASL looks bright, but more time would likely be needed for significant earnings growth and a re-rating of the stock. In particular, the liquidity of the stock is relatively low, partly due to the free float of ~37.8%. We last rated ASL a Buy with a fair value estimate of S$0.86. Due to a re-allocation of internal resources, we are ceasing coverage on this counter. (Low Pei Han)
Swiber Holdings: More work coming up?
Summary: According to Upstream, PEMEX is preparing to begin a bid process that aims to offer a contract to deliver and install four Ayatsil platforms. The group is in the pre-qualification phase for the contract, and heavy-lift contractors such as Saipem, Heerema and Swiber Holdings are said to be interested. The entire package is estimated to be worth ~US$300m. Swiber recently saw its share price run up about 23% from 14 May (pre-1Q13 results announcement) to its close on Friday, after we upgraded our rating from Hold to Buy. However we still see an upside potential of about 12% over a one-year time frame. Maintain BUYwith S$0.86 fair value estimate. (Low Pei Han)
NEWS HEADLINES
- Sembcorp Industries Ltd. reports solid waste management unit getting a S$299m contract from NEA to provide refuse collection and recycling services to the City-Punggol sector of Singapore.
- British automaker Rolls-Royce has won a contract to supply engines and support 50 of Singapore Airlines' Boeing Dreamliner jets in a deal worth US$4b at list prices.
- Asian Pay Television says asset manager Thornburg Investment to raise stake in the company; buying 73.8m shares for S$53.6m.
- Halcyon Agri Corp. (HACL SP) reports listing of 40m new shares at S$0.5175 each.
- Armarda Group (AMDA SP) names Chu Yin Ling Karen as CFO. Chu Yin Ling was previously the Financial Controller of Armarda Group Ltd since July 2009.
Thursday, June 06, 2013
Banks down STI on 4 ½ month Low
STI shares fell down lowest pts, due to decline in Banking Sectors.
The STI fell 2.9% to 3169.23, down 7.7% from this year peak on 22 May 2013.
The MSCI’s broadest index also dropped 2.9%.
United Overseas Bank shares fell 2.4 % to $20.29.
DBS Group Holdings fell 1.8% to $16.10.
Wednesday, June 05, 2013
Keppel gains, STI fall
Singapore shares weakened, while the world’s biggest offshore oil rig
builder Keppel Corporation gained on news that it won an US$800 million
($999 million) rig order from Azerbaijan.
The Straits Times Index dropped 0.7% to 3,265.44, while the MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%.
Shares of Keppel Corp rose as much as 1% to $10.68, after the company announced that it won a contract from Caspian Drilling Company, a subsidiary of the State Oil Company of Azerbaijan Republic, to build a semisubmersible drilling rig, worth about $800 million.
“This contract will lift Keppel’s year-to-date wins to $2.4 billion, forming 41% of our full year assumption of $6 billion,” said DBS Group Research, keeping an unchanged “buy” rating and target price of $13.00. Other brokerages had a bullish outlook on Keppel Corp.
“With Keppel’s seven jack-up orders to date, all based on its KFELS B class jackup designs, we believe the outlook for margins in 2014 continues to improve,” said Barclays analysts, keeping Keppel as its top pick in the rig-building space.
The oil and gas sector index gained 0.4% on Wednesday, down 1% so far this year, lagging behind the benchmark index’s 3% rise.
The Straits Times Index dropped 0.7% to 3,265.44, while the MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%.
Shares of Keppel Corp rose as much as 1% to $10.68, after the company announced that it won a contract from Caspian Drilling Company, a subsidiary of the State Oil Company of Azerbaijan Republic, to build a semisubmersible drilling rig, worth about $800 million.
“This contract will lift Keppel’s year-to-date wins to $2.4 billion, forming 41% of our full year assumption of $6 billion,” said DBS Group Research, keeping an unchanged “buy” rating and target price of $13.00. Other brokerages had a bullish outlook on Keppel Corp.
“With Keppel’s seven jack-up orders to date, all based on its KFELS B class jackup designs, we believe the outlook for margins in 2014 continues to improve,” said Barclays analysts, keeping Keppel as its top pick in the rig-building space.
The oil and gas sector index gained 0.4% on Wednesday, down 1% so far this year, lagging behind the benchmark index’s 3% rise.
Tuesday, June 04, 2013
S-REITs Nam Cheong
Singapore REITs: Capitalize on over-reaction We see two key factors driving the S-REITs price correction over the last two weeks. First, increased expectations that the Federal Reserve could taper its bond purchases as early as 2H13; and secondly, opportunistic profit-taking on the back of a strong performance over 2012-13. At this juncture, however, we see the selling to be overdone. In our view, the odds of the Fed tapering bond purchases in 2H13 are roughly 50-50 and we see fundamental valuations for the S-REITs sector (370bp against the 10Y government bonds) to be undemanding currently. In addition, S-REITs sector would likely continue to deliver, in 2013, firm earnings from asset enhancement initiatives/development projects, yield-accretive acquisitions and active leasing efforts. Maintain our OVERWEIGHT rating on the S-REITs sector. Starhill Global REIT [BUY, S$1.05 FV] is our top pick in the sector due to its growth potential, strong fundamentals and compelling valuations. We also like CapitaCommercial Trust [BUY, S$1.80 FV] and Fortune REIT [BUY, HK$8.64 FV] for the quality of their portfolio assets, positive rental reversion profiles and low gearing. (S-REITs Team) MORE REPORTS Nam Cheong: Ride the upcycle! Nam Cheong Limited recently announced that its Executive Director, Mr. Leong Seng Keat, has been re-designated as the CEO. Mr. Leong, also the son-in-law of ex-CEO Datuk Tiong Su Kouk, has been with the group since 2005. We expect the leadership transition to be smooth. Meanwhile, we continue to like Nam Cheong for its market leadership in the increasingly active Malaysia oil & gas industry. Having seen a healthy pick-up in order wins, Nam Cheong recently expanded its shipbuilding programme to 28 vessels for FY14F (FY13: 19 vessels). Its large order-book of MYR1.3b, for 26 vessels delivered over FY13-15F, helps to mitigate its risk by providing a base level of earnings. Maintain BUY with a higher FV of S$0.35 (previously S$0.30). (Chia Jiunyang) |
NEWS HEADLINES - Datapluse Technology posted a 23.2% increase in net profit to S$2.19m for its 3QFY13 ended 30 Apr. - NH Ceramics entered into a purchase agreement to buy BlackGold Asia Resources Pte Ltd and BlackGold Energy Limited for US$150m. The two BlackGold firms control about 53,000 hectares of coal concessions in Indonesia. - Asian Micro Holdings is planning to acquire Oxley Global Limited in a proposed RTO deal. - Halcyon Agri announced that it would acquire Malaysian rubber processor Chip Lam Seng for RM63m (S$25.7m). - According to the latest purchasing managers' index, Singapore's industrial activity grew at a faster pace in May, also signalling a fourth consecutive month of growth for the electronics sector. |
Monday, June 03, 2013
STI on Downfall
STI dropped 0.61% to 3,291.08.
The top trading stock are Ramba gain +28.93%, Singtel keep flat, DBS dropped -1.81%, OCBC Bk gained +1.55% and UOB also gained +1.96%.
Real Estate Investment Trusts (REITs) gained +1.72%
but fall was recorded in CapitaComm -0.66% and CapitaMall of -1.40%.
The top trading stock are Ramba gain +28.93%, Singtel keep flat, DBS dropped -1.81%, OCBC Bk gained +1.55% and UOB also gained +1.96%.
Real Estate Investment Trusts (REITs) gained +1.72%
but fall was recorded in CapitaComm -0.66% and CapitaMall of -1.40%.
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