STI Market Live

Sembcorp Industries: Not your typical utilities company Summary: Sembcorp Industries (SCI) is a major industrial group primarily involved in the businesses of 1) utilities, 2) marine and 3) urban development. The nature of its utilities business is relatively stable, while growth is driven by asset acquisition and construction. SCI's marine arm is also well-positioned to capitalise on demand from the offshore oil and gas industry, given its market-leading position. Finally, the urban development segment possesses growth potential with its focus on emerging markets. The long-term outlook for its businesses look bright, though the Singapore utilities business may, in the short term, be impacted by an expected increase in competition. The group has been consistent in paying out dividends of at least S$0.15/share each year since 2009, implying a minimum dividend yield of 3.1% at current prices. Initiate with BUY and S$6.48 (based on sum-of-parts method) fair value estimate. MORE REPORTS Tat Hong Holdings: Time to take profit Summary: Since our last upgrade on Tat Hong Holdings ("Poised for Recovery", 9/1/2012), the group's crane fleet grew by ~20% (in tonnage), utilization rate by 5 ppt and rental rates by an estimated 10-15%, resulting in a 66% jump in FY13 PATMI. In our view, the easy money has already been made. Investors who have heeded our call would have made 45% return in 1.5 years and should now consider taking some profit. Looking ahead, the macro environment looks increasingly uncertain with sluggish data points coming out of China. Tat Hong's crane fleet expansion is also expected to slow after a 79% surge in crane tonnage over the past five years. Finally, there is a possible share overhang resulting from private equity AIF Capital's conversion of convertible preference shares to 53.3m ordinary shares. Downgrade to HOLD with lower FV estimate of S$1.31 (previously S$1.75). (Chia Jiunyang)

NEWS HEADLINES

- AusGroup is suing Karara Mining Limited for A$54.7m for works carried out in Western Australia. - Baker Technology has divested its entire 20.29% stake in Discovery Offshore SA for NOK199m (S$41.9m). - Swissco has secured contracts worth S$8.24m for three of its crew boats. - Yongnam Holdings has secured two new specialist civil engineering subcontracts worth HK$166m (S$27m). - Z-Obee's FY13 net income fell 17% to US$4.26m as impairment losses from the group's asset portfolio wiped out an increase in fair value gains.

Singapore’s equity top picks tips

key themes in Singapore’s equity space: 1) earnings quality with an overseas bias; 2) China domestic demand; 3) visitor arrivals to Singapore; 4) stock-specific stories.

For the first, it likes SembCorp Marine (S51.SG) as it is well-positioned for an expected order surge in 2H and has a healthy order book, Vard (MS7.SG) with its improving order outlook and asset enhancement investments, and Genting Hong Kong (S21.SG) given its valuations and improving asset performance.


For the second, it likes CapitaMalls Asia (JS8.SG) as Singapore’s best play on Asian retail and consumption, Global Logistic Properties (MC0.SG) as China’s 12th five-year plan highlighted the logistics sector as a pillar industry, and China Minzhong Food (K2N.SG) as its large-scale vegetables origination and processing business in China is well poised to grow given a burgeoning population and urbanisation trend.


On the third, it likes Genting Singapore (G13.SG) as it runs a high-traffic casino in Singapore’s protected two-player market, which has 25-year concession visibility. On the fourth, it likes Hongkong Land (H78.SG) as it provides the greatest leverage to a recovery in the Hong Kong Central office market, Neptune Orient Lines (N03.SG) on expectations for a rebound in net profit, and ARA Asset Management (D1R.SG) given its track record of growing assets under management and its scalable business model.

OVERNIGHT MARKET : Implications for Singapore

US equities posted modest gains on Friday but still fell for the week as fears over stimulus withdrawal dominated investor sentiment.

P&G (+2.9%) led gains for the Dow on Fri but the index fell 1.8% for its worst week performance since Apr. The S&P 500 saw some bargain hunting for defensive sectors on Fri but lost 2.1% for the week. Rounding off the major indices, the NASDAQ Composite declined 1.9% for the week. NYSE composite volume exceeded 5.6b (4.8b previously).

WTI Crude for Aug lost US$1.45, or 1.5%, to end at US$93.69/barrel while Brent for Aug delivery lost US$1.24, or 1.2%, to settle at US$100.91/barrel. For the week, WTI and Brent lost 4.5% and 4.7% each.

Gold for Aug delivery added US$5.80, or 0.5%, to end at US$1,292.10/ounce while Silver for Jul gained 14 cents, or 0.7%, to settle at US$19.96/ounce. For the week, gold and silver lost 6.9% and 9.1% each. 

Implications for Singapore

The modest gains by the US indices last Friday night and the positive Nikkei start (up 0.9% now) could provide some mild inspiration to the local bourse this morning.

Despite plunging below the 3100 key support intraday on Friday, the STI managed to regain most of its earlier losses and close back above this vital level.

With today's tone likely to turn a tad more optimistic, the index could inch higher in the direction of the 3230 key resistance; however, the risk of investors selling into strength again as the index recovers still remains.

Beyond the 3230 level, the next obstacle is pegged at the 3320 resistance. On the downside, 3100 is still the immediate support, followed by the next base at the 3000 psychological level.

SGX on CapitaLand Hospitality

While visitor arrivals increased by 6.4% in 1Q13, gross lettings for 1Q13 grew by only ~2.8% to 2.8m room nights. This means that on a per capita basis, visitor arrivals are converting into fewer room nights, continuing a trend we note for 2012. With regard to the haze, we understand from an industry source that hotel bookings are not being negatively affected just yet. However, we think a blip in hotel performance through 3Q13 is likely given that the haze could last at least several weeks. Keeping in mind the mild oversupply situation for hotels we see building up, we remain NEUTRAL on the hospitality sector. We prefer Global Premium Hotels [BUY, FV: S$0.33], a longer-term asset value play in the Economy and Mid-tier space. (Sarah Ong) Mapletree Logistics Trust: Scaling up presence in Korea Mapletree Logistics Trust (MLT) has entered into a sale and purchase agreement with supply chain management company, Oakline Co. Ltd, for the acquisition of The Box Centre in South Korea. Oakline will lease back the property for a period of six years with built-in rental escalation from second year onwards. At a purchase consideration of KRW28.75b (~S$32.0m), the property is expected to provide an initial NPI yield of 8.4%. Management expects to fund the acquisition fully by debt, which is expected to increase its aggregate leverage marginally from 34.1% as at 31 Mar to 34.6%. This is likely to add ~0.03 S cents to FY14 DPU, based on our projections. We now factor in the acquisition into our forecasts, with the assumption that it will be completed in Jul. However, we reduce our fair value from S$1.34 to S$1.15 on higher cost of equity to reflect a higher risk-free rate, higher beta and reduced market risk appetite for interest-rate sensitive stocks. We maintain HOLD on MLT due to valuation grounds. (Kevin Tan) CapitaLand Limited: Top bid for Coronation site Yesterday evening, CapitaLand (CAPL) put in the top bid of S$366 million for a 99-year leasehold landed residential site at Coronation Road. The 37,441 sqm site is located within an established landed housing estate and enjoys good accessibility to Bukit Timah Rd and Pan Island Expressway. The GLS tender attracted 12 bids and CAPL's top bid was 17% higher than the second highest bidder - signaling the group's confidence in this project. We understand CAPL intends to develop a landed project comprising semi-detached and bungalows. We expect selling prices in the range of S$1.6k - S$1.8k psf and the project to accrete 1.3 - 2.2 S-cents to CAPL's RNAV. Pending the award of the site, we would keep our fair value estimate unchanged at S$4.29 (20% discount to RNAV). Maintain BUY. (Eli Lee)

NEWS HEADLINES - US stocks tumbled on Thurs, with the S&P 500 suffering its worst session since Nov 2011, hit by fear that the Federal Reserve will scale back its bond buying later this year. - South Korea's Lotte Shopping Co Ltd is looking to raise US$800m to US$1b by listing a REIT in Singapore as early as this year, according to IFR, a Thomson Reuters publication. - China's flash HSBC Purchasing Managers' Index for June dropped to a nine-month low yesterday, pointing to continuing weakness in local and external demand. - Armstrong Industrial Corporation Limited said that it has received a proposal from a consortium involving its major shareholder that may result in the delisting of the company. - Former Novena Holdings CEO Toh Soon Huat is leading a group of 17 investors, including a unit of mainboard-listed Serial System, to pump a total of S$15.04m into Jubilee Industries Holdings. - ISDN Holdings Limited plans to raise up to S$111.6m in gross proceeds from the issue and exercise of warrants. - Stamford Tyres Corporation posted an 18.5% rise in earnings for its full fiscal year ended April 30, boosted by a one-time gain from the sale of its stake in an associate.

STI on drop

Singapore shares were headed for their biggest one-day decline in more than a year, tracking weaker global markets after Federal Reserve chairman Ben Bernanke said the central bank would start to reduce its stimulus measures later this year.
The benchmark Straits Times Index dropped nearly 2% on Thursday. The broadest MSCI's index of Asia-Pacific shares outside Japan fell more than 3% in its sharpest daily slump since November 2011.
Share price of Medtecs International Corp, which produces medical products including face masks, surged 11% in a second straight day of rise to $0.07, on expectation of higher sales of masks in the city-state hit by its worst air pollution in history.
In other stocks, ComfortDelGro Corporation fell 2.8% to $1.76, but stayed off a six-month low of $1.70 hit last week. Analysts at OCBC Investment Research saw it as a good entry point given its recent share stability and unchanged fundamentals.
“Domestic challenges aside, the group's overseas growth prospects, which have been its key growth driver, remain unchanged,” the analysts wrote in a note, adding that the blow to share price from a recent partial stake sale by the Singapore Labour Foundation has tapered off.
OCBC upgraded the stock to “buy” with a target price of $1.95.

SXG up with Phillip, Keppel Corp

PhillipCapital removes Boustead Singapore (F9D.SG) and SIA Engineering (S59.SG) from its top picks list for Singapore and replaces them with Singapore Exchange (S68.SG) and Keppel Corp. (BN4.SG).

The house likes Singapore Exchange for three reasons: higher securities revenue; continued derivatives revenue growth; an expected increase in free cash flow and dividend yields. It has an Accumulate rating and $8.00 target on the stock.

The house believes that Keppel Corp. "will continue to benefit from the robust O&M outlook, which is well-supported by high dayrates and utilizations for both jack-up and semi-sub rigs." Keppel's 4%-5% dividend yield should also not be ignored, it says. It has an Accumulate rating and $12.34 target on the stock.
Boustead is flat at $1.32, SIA Engineering gains 0.8% to $4.93, Singapore Exchange is up 1.1% at $7.34 and Keppel Corp. is 1% higher at $10.68.

Singapore's STI is trading at 3,215.39, up 1.1% from Monday's close after a bullish cue from Wall Street. Singapore Technologies Engineering (S63.SG) is pacing gains, up 2.8% at $3.99 after it announced its unit ST Aerospace has signed a deal with UTC Aerospace systems for long-term repair and maintenance of Boeing 787 Dreamliner components.

Consumer Sector, Cache Logistics Trust: SG Market Updates

We downgrade the consumer sector to UNDERWEIGHT in light of the weaker SG retail sales figures for Apr and the potential threats to regional consumer spending (i.e macro-overhang, government policy changes and greater foreign competition). With sales figures likely to showcase unimpressive results for May, 2QCY13 could well shape out to be a muted quarter in terms of top-line growth for consumer companies. Furthermore, operating cost pressures resulting from higher wage costs and advertising and promotional spending still remain so operating margins are likely to stay depressed. Within the sector, we favour counters with defensive qualities such as Sheng Siong [BUY; FV: S$0.82] or counters with potential M&A activity Viz Branz [BUY; FV: S$0.74]. (Lim Siyi) MORE REPORTS Cache Logistics Trust: Valuation looks undemanding Summary: We are reiterating our prognosis that Cache Logistics Trust (CACHE) is likely to continue to deliver sustainable growth for FY13. CACHE has a portfolio of quality assets which has a 100% occupancy rate and strong weighted average lease to expiry of 3.7 years. Together with the recent acquisition of Precise Two, CACHE is likely to meet our growth projection for 2013. Since 22 May, the S-REITs sector, including CACHE, has recently experienced a sell-down on fears that the US Federal Reserve may reduce the pace of its bond purchase programme and raise the interest rates in the coming months. However, we believe that the market reaction on CACHE is overdone, given its strong financial position and active capital management. At current price, CACHE offers a FY13-14F DPU yield of 6.8-7.1%, which represents an attractive spread of 471-500 bps to Singapore's 10-year bond yield. While we now revise our fair value to S$1.40 from S$1.45 on higher risk-free rate assumption, we still see good upside potential on CACHE. Maintain BUY. (Kevin Tan)

NEWS HEADLINES - Asian stock futures fell, signaling a possible extension of declines amongst Asian equities after the International Monetary Fund cut its US growth forecast and ahead of the Federal Reserve meeting this week. - Singapore may gain from its first-mover position for business trusts in the region, market watchers say, even if historical performance is mixed and amid a recent dip in sentiment for yield plays. - Singapore's monetary authority censured banks for trying to rig benchmark interest rates and orders the setting aside of as much as S$12b at zero interest pending steps to improve internal controls. - Far East Orchard has been awarded a tender for a residential land parcel with FCL Topaz Pte. Ltd., a member of Frasers Centrepoint and Sekisui House, Ltd. The total tender price for the land was S$256.9m. - First Ship Lease Trust demands the redelivery of its two crude oil tankers, after lessees default on their lease payments. - Freight Links Express expands the scope of its logistics business by entering the commodity logistics segment

STI Weekly Technical Data Analysis

Some points to note for this week's analysis (10-14 Jun 2013):
1) None of the counters are in the overbought region (RSI value 70 and above).
2) 10 of the counters is in the oversold region (RSI value 30 and below).

After ending last week at 3184.72, the STI slid further this week to close at 3161.43 (closing end of today), with an intraweek high of 3214.88 and an intraweek low of 3094.86.

Despite another week of losses, we note that the index has built a firm support at the 3100 key level after rebounding strongly from its intraday low yesterday.

And with the index showing signs of re-conquering the 3160 immediate obstacle today, we could potentially see a further technical recovery towards the 3230 subsequent resistance in the week ahead.

STI down 1.86%

Singapore shares fell for the third day in a row, plumbing new 2013 lows, hit by concerns that the U.S. Federal Reserve will roll back its stimulus amid a slowing global economy.

The Straits Times Index (STI) declined as much as 1.86% to 3,094.86, the lowest since Dec. 7. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.9%. 

 Japan’s Nikkei share average dived more than 5%, while Hong Kong’s Hang Seng Index shed 2.9%.

 "Markets are very jittery these few weeks, believing that once QE (quantitative easing) is taken out, markets will more likely reflect the reality of the slow growth environment," said Kenneth Ng, head of CIMB Research in Singapore. "We think the floor (for the STI) is somewhere at 2,740 to 2,955. 

We think that the selldown will continue, so we’ll start buying only after it falls below 3,000." Selling in the Singapore market is broad-based on Thursday, led by Global Logistic Properties, Singapore Technologies Engineering and Sembcorp Industries, which fell around 3% each.

Starhill, Tiger, Midas up STI

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.

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.

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.

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.

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.

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.

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%.