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.

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.

STI stay with Fall

The STI dropped 0.74% with 24.64 points to 3311.37 .

Singapore Telecommunications Ltd's shares biggest loser with 5.3% fall.

Singapore Press Holdings also fall 2.06 % to Sg$4.27.

 But DBS Bank up 1.12% at Sg$17.16.

A spike in bond yields appeared to be the key factor behind the fall in share prices of Singapore-listed telecoms, Daiwa Capital Markets said in a report dated May 30.

"We find Singapore, Malaysia and Philippines telecom stocks to be vulnerable to yield spikes," it said.

The rallies seen among defensive stocks in ASEAN telecoms over the past three years had more do with falling risk premiums rather than changes in earnings outlooks, it said. As such, the recent spike in 10-year bond domestic yields in various ASEAN markets is a matter of concern, it said.

STI Flat with United Fiber, Tat Hong Profit

SGX shares got little changed just after a 5 yrs high score in last week. The STI traded flat while MSCI's broadest index shed 0.1 %.

Golden Agri-Resources Ltd's shares rose 1.7% to 1 week high f S$0.585. 

United Fiber System Ltd's equities get 23% to S$0.037 with posted a $15.6 million profit in Q1. It also boosted by a $16.9 million gain on the de-consolidation of its subsidiary, Poh Lian Construction. United Fiber come top traded stock by volume. 

Tat Hong Holdings Ltd shares also rose 1.3% to S$1.53 with posted net profit of S$18.6 million in Q1.

STI up with Singtel, Keppel stock

SGX Shares up with Singapore Telecom rise up high since Jan 2008 & Keppel Corp with 1 month high.

STI up with 0.1% to an intra-day high of 3,458.04. MSCI's broadest index also gained 1%.

 

Keppel Corp's shares rise a month high of S$11.09. Its crosstown rival Sembcorp Marine Ltd rose 0.9 percent to S$4.47.

SingTel also get up a 5 ½ yr high as1.5% to S$4.08. The company's Australian unit, Optus, has announced plans to roll out Australia's first multi-band 4G network. 

SingTel posted a 33 percent drop in fourth-quarter net profit, but said it will pay a final dividend of 10 cents a share, up from 9 cents a year ago.

STI again on 5.5 yr High, SIA down

SGX Shares hit up their 5 ½ yr high, beside it Singapore Airlines Ltd, Asia's second-biggest airline drop after 19 months via posting disappointing results.

STI rise with 0.5% to 3457.07, thats topped valuve since 2008, while MSCI's broadest index of Asia-Pacific' shares down 0.2% .

SIA's shares fell 4.4 % to S$10.95, a low since three weeks. Its due to company reported weaker-than-expected full-year results. It downgraded SIA to "sell" with a fair value estimate of S$10.00.

STI Up with DBS Profit

SGX Shares keep up 5 year high with DBS Group Holdings gain up 4 %. Its a huge gain after 3 years.

STI received 0.9% gain to 3401, beside it, MSCI's broadest index fell down with 0.3%.

DBS Equities gear up 5% to S$17.59, peak value til May 08. DBS received profit of S$950 million, which 2% high with previous year.

Genting Singapore Plc's shares also rise up 4.23 % to S$1.64.

Index on balance with Rigbuilders Weigh : SGX LIVE

With the increase in losses of world's two largest rigbuilders, Keppel Corp Ltd and Sembcorp Marine Ltd, SGX Equity keep small change.

Again Straits Times Index keeps fix value, whereas MSCI's broadest index down with 0.2%.

On tuesday, Keppel Corp was well traded in SGX Market. Oil Rig Builder's shares down 1% og two month low of S$ 11.22. It keeps worst result now. Approx 3.9 Million Equity were traded over last 30 Days.

There was also underperformed role in market by Keppel's rival Sembcorp Marine. It keep 16 % of S$4.40, the lowest in a month.

"The drop in share prices could be seen as the profit-taking phase for the offshore and marine sector," a trader said.

Index Static, CapitaLand Rise up 1 Week High

SGX Equities got slightly change, as Investors focused on debt by Cyprus & deteriorating economic activity in the euro zone.

On Today, Straits Times Index as well as MSCI index remain static.

CapitaLand Ltd, Properyt Developer, performed well and traded widely by Friday value onwards. Equity gain 2% to a 1 week high about S$3.57.

Nomura inform that "Based on buyers' response to the new launches in March so far, it appears the latest measures have yet to dampen buyers' interest in the pre-sale market. There is scope for more policy changes, given the pre-sale market is still relatively robust. We expect secondary transaction volume to remain relatively low."

Its top pick among the developers is CapitaMalls Asia Ltd , while it remain cautious on City Developments Ltd.