Daily Review

LIM & TAN SECURITIES
20 CECIL STREET #09-00 EQUITY PLAZA SINGAPORE 049705
TEL: 65330595
www.limtan.com.sg
RCB REG NO. 197301030W
DAILY REVIEW | 30 DECEMBER 2014
FINANCIAL MARKETS
MAJOR MARKET INDICES
CLOSE
FSSTI
1D
(%)
MTD
(%)
YTD
(%)
3367.7
0.4
0.5
6.3
18038.2
-0.1
1.2
8.8
S&P 500
2090.6
0.1
1.1
13.1
NASDAQ
4806.9
0.0
0.3
15.1
FTSE (UK)
6633.5
0.4
-1.3
-1.7
Nikkei
17729.8
-0.5
1.5
8.8
Hang Seng
23773.2
1.8
-0.9
2.0
3168.0
0.3
18.1
49.7
15.1
3.9
13.0
9.8
Dow Jones
Shanghai Composite
VIX
SG MARKET SUMMARY
Daily Market Value (S$ 'm)
583.7
Daily Market Volume (mln)
1010.0
52-week STI High
3387.8
52-week STI Low
2953.0
KEY INTEREST RATES
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
3 Mth SGD SIBOR
0.5
0.1
6.4
13.8
3 Mth Swap Offer Rate
0.7
-5.0
57.3
199.8
SG 10 YR Bond Yield
2.3
0.1
4.8
-10.3
US 10 YR Bond Yield
2.2
-2.1
1.8
-27.3
As at 8.00am SG time
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
Dow Jones
US FUTURES
18002.0
0.1
1.5
13.1
S&P 500
2087.4
0.1
1.4
15.0
NASDAQ
4316.3
0.1
-0.4
22.0
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
1182.9
0.0
1.3
-1.9
COMMODITIES
Gold
Crude Oil
53.6
-2.1
-19.0
-45.5
Baltic Dry
782.0
-0.8
-32.2
-65.7
8500.0
0.6
-0.7
-14.2
Crude Palm Oil
FSSTI INDEX
The S&P 500 rose 0.1 percent to 2,090.57 but the Dow fell 15.48
points, or 0.1 percent, to 18,038.23. The Russell 2000 Index gained
0.3 percent. Equities are approaching the end of the year at record
levels, bolstered by the fastest expansion for the American economy
in more than a decade. The Federal Reserve’s pledge on Dec. 17 to
be patient in raising interest rates helped the S&P 500 fully recoup a 5
percent loss in the first half of the month.
6 out of 10 major group in the S&P 500 increased today. Utilities and
consumer-discretionary companies gained the most, while technology
and phone shares had the worst performance. Energy shares rose 0.3
percent, even as oil erased an early rally. Crude reached a five-year
low on speculation that a global supply glut that’s driven crude into a
bear market will continue through the first half of 2015.
IDEA OF THE DAY
Despite concern that sliding oil prices may cause a slowdown in order
flows, three O&M companies announced new contract wins on Monday.
While the deal size may not be too significant by historical standard, this
shows that the sector is still seeing interest in O&G activities, particularly
for the shallow water segment which remain resilient amidst recently
announced capex cuts by oil majors.
Keppel Corporation ($8.85, up 10.0 cents) via its US-based indirect
wholly-owned subsidiary, Keppel AmFELS LLC, has won a contract
valued at over US$100 mln to build one of the world’s largest land
drilling rigs for a major operator. Targeted for delivery in mid-2016,
Keppel AmFELS will be undertaking the engineering, procurement and
construction of the rig. The rig will be capable of operating in harsh
conditions. Backed by its recent share buyback programme and
insiders’ purchases (including Fullerton Alpha Aggregate Fund’s 3mln
shares at $8.43 each), we maintain our Buy recommendation.
Meanwhile, Nam Cheong ($0.305, up 0.5 cent) has secured 2 vessels
sale worth about US$45 mln (≈S$59.5 mln). Including these latest
contracts, the group’s orderbook remains at a healthy level of RM1.7
bln, comprising a total of 26 vessels. An AHTS vessel was sold to a
Netherlands-based repeat customer, Vroon B.V., while it also sold a
PSV to another repeat customer, E.A. Temile Development Company
of Nigeria Ltd (Temile) based in West Africa.
These vessels are expected to deliver in 2015 and will contribute
positively to the group’s earnings for the FY14 and FY15. Even though
we are heartened by the positive responses that the group has received
from its global customers (thus helping to diversify its customer base
and reduces geographical concentration risks), our last Hold rating
still remain intact for now in view of the potential negative fallout from
Petronas’ capex cut by 10-15% and its riskier speculative building
model.
3600
3500
52-week price chart
3400
3300
3200
3100
3000
2900
2800
12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14
Source: Bloomberg
Otto Marine ($0.048, up 0.2 cent) has sold an AHTS vessel to an
unrelated third party for US$100 mln. This AHTS is the 4th and final of
the VS491 series the group has built in this batch. It is currently under
construction at Otto Marine’s shipyard in Batam, Indonesia, and is
expected to be completed in 2Q2015. GO Offshore (L), a subsidiary
of the group, will charter the vessel for 8 years upon the completion
of the vessel. In addition to the sale and leaseback of the AHTS and
the recently delivered Subsea and IMR vessel currently deployed in
Australia, Otto will also be delivering 4 AHTS vessels to an Indonesia
customer in the next 2 months. As at end-Sept 2014, the group’s net
order book stood at about US$500mln. We do not have a rating on this
stock.
Singapore Research Team
Tel: 6533 0595
Email: [email protected]
Please see research disclaimer on last page
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1
OTHER HIGHLIGHTS
United Engineers ($2.90, unchanged) has completed the
disposal of its 68.2% stake in UE E&C for $230.2mln and
in the process registered a one-time gain of $60.8mln.
Separately, it has also sold UE Managed Solutions Pte Ltd and
UE ServiceCorp (Taiwan) Ltd to Dymon Asia Pte Equity (SE
Asia Fund) for $12.24mln and $488,000 respectively. Based
on the respective book values of $7.84mln and $490,000, the
aggregate gain from the sale is about $4.398mln. Completion
of the sale is expected on 30 Jan’15.
ASTI Hldgs ($0.049, unchanged) is to dispose of its entire
24.23% stake in APSI Group, a firm that provides integrated
circuit packaging technology solutions for the global
semiconductor industry. The sale price of S$8.9mln represents
a 68% premium over the book value of the company’s 24.23%
interest in APSI at S$5.3mln. The resulting proceeds will be
used to increase the company’s cash resources to support
its Back-end Equipment Solutions & Technologies business.
Assuming the move was completed in FY13, NTA per share
will increase from 14.2 cents to 14.75 cents while loss per
share will decrease from 2.26 cents to 1.71 cents.
ECS Hldgs ($0.61, suspended) announced that VST Hldgs
has received valid acceptances equating to a 9.5% stake in
the company pertaining to its takeover offer for the latter at
$0.68/share, thereby bringing its total stake in the company
to 99% and allowing VST Hldgs to compulsorily acquire the
remaining shares in which it does not own. VST Hldgs has
extended its offer period from 29-Dec-14 to 12-Jan-15.
Oxley Hldgs ($0.525, unchanged) announced that its whollyowned subsidiary, Oxley Rising, has entered into a MOU
with AAPC Singapore, where the latter is to provide hotel
management services in accordance with the Sofitel So
standards. This hotel is part of the mixed-use development,
which comprises two hotels, residential units, an office tower
and a retail podium, in Kuala Lumpur City Centre proposed to
be developed by Oxley Rising.
Compact Metal ($0.044, up 0.1 cent) announced that it is to
place out 160mln new shares at $0.05 apiece to property
developer Sustained Land. The placee was identified as a
possible investor as it is interested in the cement business.
The placement price represents a 13.6% premium over its last
traded price while the net proceeds of S$7.9mln will be used
as working capital and to diversify into the cement business.
The move will increase the company’s total share capital
from 799.9mln to 959.9mln shares. Assuming the move
was completed in 3Q14, NAV per share of the company will
decrease from 8.13 cents to 7.6 cents.
Digiland Int’l ($0.001, unchanged) announced that it is to
place out 7.3bln new shares at $0.001 apiece to Goodwood
Associates, a firm involved in the business of wholesale of
petrochemical products which includes LNG. The company
believes that this move is in-line with the its strategy to
expand into the oil and gas industry, while the net proceeds of
S$7.3mln from the placement will be used as working capital.
The move will also increase the company’s total share capital
to 50.3bln with the new shares representing 14.5% of the
enlarged share capital. Assuming the move was completed
in FY14, NAV per share will decrease from US 0.073 cents to
US 0.062 cents while EPS will decline from US 0.006 cents to
US 0.004 cents.
Isetan ($4.58, unchanged) announced that it will cease its
retailing operations at Isetan Orchard, Wisma Atria from 2Q15.
However, in line with its core business, it intends to continue
retailing activities and Food and Beverage services at the
premises by housing tenants and providing the necessary
facilities management.
Stamford Land ($0.54, up 0.5 cents) announced that it had
entered into an option agreement for the sale of freehold
development site at 6-26 Grove Street and 64 Constitution
Road, Dulwich Hill, New South Wales for A$51mln. The sale
is expected to be completed by end-Feb 2015 and will enable
to company to register a profit of A$27.3mln.
FSSTI STOCK SELECTION
HIGHEST CONSENSUS FY14E DIV YIELD (%)
LOWEST TRAILING P/B (X)
1 HUTCHISON PORT-U
7.66
1 GOLDEN AGRI
0.50
2 ASCENDAS REIT
6.24
2 HONGKONG LAND
0.58
3 CAPITAMALL TRUST
5.59
3 HUTCHISON PORT-U
0.74
4 KEPPEL CORP
5.16
4 CAPITALAND
0.87
5 SPH
5.13
5 JARDINE STRATEGIC
0.91
LOWEST CONSENSUS FY14 P/E (X)
LOWEST TRAILING EV/EBITDA (X)
1 NOBLE GROUP
8.73
1 SIA
5.34
2 SEMBCORP INDUSTRIES
9.56
2 JARDINE C&C
7.63
9.95
3 COMFORTDELGRO
7.91
4 OCBC
10.85
4 SEMBCORP MARINE
8.98
5 OLAM INTERNATIONAL
11.11
5 SEMBCORP INDUSTRIES
9.38
3 KEPPEL CORP
Source: Bloomberg Estimates (FSSTI Universe)
Please see research disclaimer on last page
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2
22 - 26 DECEMBER
AUGUST
SHARE TRANSACTIONS
Company
Buy
Sell
Transacted
Price* ($)
Market
Price ($)
New
Balance
Stake
(%)
656,500
30,000,000
91,000
313,000
100,000
13,000,000
-
ND
0.275
0.408
0.149
0.305
0.23
1.81
-
734,850,500
449,540,978
299,381,862
74,780,731
140,015,746
88,887,053
8.99
27.54
58.37
27.50
34.92
14.61
-
198,240
5,000,000
13,000,000
50,000
100,000
3.23
0.03
0.23
1.25
1.25
-
255,478,286
74,509,290
3,820,575
0
0
5.99
16.46
0.63
0
0
Party
ACQUISITIONS
IHH Healthcare
International Healthway
KS Energy
Progen Holdings
Sing Holdings
SHS Holdings
EPF
Andrew Aathar
Pacific One Energy
Lee Ee
F H Lee Holdings
Ng Han Kok
DISPOSALS
CapitaLand
Miyoshi Precision
SHS Holdings
UE E&C
UE E&C
BlackRock Inc
Masayoshi Taira
Thomas Lim
Norman Ip
Tan Eng Liang
* ND: Not Disclosed
SHARE BUYBACK
Company
Courts Asia
Pacific Century
Please see research disclaimer on last page
No. of shares
Price
($)
Cumulative
Purchases
Of Maximum
(%)
110,000
71,000
0.48
0.26
10,963,000
291,470,000
19.7
95.8
Page
3
DIVIDENDS (LIST IS NOT EXHAUSTIVE)
Company
Amount
Hupsteel
Second Chance Properties
Frasers Centrepoint
Fraser & Neave
1¢ final
1.5¢ final
6.2¢ final
3¢ final
Please see research disclaimer on last page
Last Day
First Day
Cum-Dividend Ex-Dividend
29 Dec
07 Jan 2015
02 Feb 2015
02 Feb 2015
30 Dec
08 Jan 2015
03 Feb 2015
03 Feb 2015
Date
Payable
14 Jan 2015
21 Jan 2015
16 Feb 2015
16 Feb 2015
Page
4
WHAT’S AHEAD
DECEMBER 2014
Sun
Mon
Tue
Wed
Thu
Fri
Sat
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Second Chance
Please see research disclaimer on last page
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5
WHAT’S AHEAD
JANUARY 2015
Sun
Mon
Tue
Wed
Thu
Fri
1
4
5
6
7
11
12
13
14
SPH Reit
18
25
SPH
19
15
First Reit
20
21
Mapletree Industrial
Mapletree Commercial
SGX
27
28
26
8
Sat
2
3
9
10
16
17
Cambridge Industrial
22
23
24
29
30
31
CDL Hospitality Trusts
Please see research disclaimer on last page
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RESEARCH DISCLAIMER
This report is intended for clients of Lim & Tan Securities Pte Ltd [herein after termed as LTS] only and no part of
this document may be –
i.
Copied, photocopied, duplicated, stored or reproduced in any form by any means or
ii. Re-distributed or disseminated, directly or indirectly, to any other person in whole or in part, for any purpose
without the prior consent of LTS.
This research report is prepared for general circulation. It does not have regard to the specific investment objectives,
financial situation and particular needs of any specific recipient of this research report. You should independently
evaluate particular investments and consult your independent financial adviser before making any investments or
entering into any transaction in relation to any securities or investment instruments mentioned in this report.
The information, tools and material presented herein this report are not directed at, or intended for distribution to
or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution,
publication, availability or use would be contrary to applicable law or regulation or which would subject LTS to any
registration or licensing requirement within such jurisdiction.
The information and opinions presented in this research report have been obtained or derived from sources believed
by LTS to be reliable. Their accuracy, completeness or correctness is, however, not guaranteed. Opinions and
views expressed in this report are subject to change without notice, and no part of this publication is to be construed
as an offer, or solicitation of an offer to buy or sell securities, futures, options or other financial instruments or
to provide investment advice or services. Therefore, LTS accepts no liability for loss arising from the use of the
material presented in this report where permitted by law and/or regulation. LTS may have issued other reports that
are inconsistent with the assumptions, views and analytical methods of the analysts who prepared them.
LTS, its directors, its connected persons and employees may, from time to time, own or have positions in any of the
securities mentioned or referred to in this report or any securities related thereto and may from time to time add to or
dispose of or may be materially interested in any such securities. LTS’s research analysts are primarily responsible
for the content of this report, in part or in whole, and certifies that the views about the companies expressed in
this report accurately reflect his personal views. LTS prohibits the research analysts who prepares this report
from receiving any compensation (excluding salary and bonuses) or other incentives and benefits receivable in
respect of this report or for providing specific recommendation for, or in view of a particular company or companies
mentioned in this report.
LTS-SPECIFIC / REGULATORY DISCLOSURE
1. LTS does not have a proprietary position in the companies as recommended in this report as at the close of
29/12/14.
2. The research analysts do have an interest in United Engineers as recommended in this report as at the close
of 29/12/14.
*
Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures
Contracts owned), directorships or trustee positions.
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