LIM & TAN SECURITIES 16 COLLYER QUAY #15-00 INCOME @ RAFFLES SINGAPORE 049318 TEL: 65330595 www.limtan.com.sg RCB REG NO. 197301030W

DAILY REVIEW | 03 NOVEMBER 2015 FINANCIAL MARKETS

MAJOR MARKET INDICES

FSSTI

CLOSE

1D (%)

MTD (%)

YTD (%) -11.61

2974.41

-0.80

-0.80

17828.76

0.94

0.94

0.03

S&P 500

2104.05

1.19

1.19

2.19

NASDAQ

5127.145

1.45

1.45

8.26

6361.8

0.01

0.01

-3.11

Nikkei

18683.24

-2.10

-2.10

7.06

Hang Seng

22370.04

-1.19

-1.19

-5.23

Shanghai Composite

3325.084

-1.70

-1.70

2.79

14.15

-6.10

-6.10

-26.30

Dow Jones

FTSE (UK)

VIX

SG MARKET SUMMARY Daily Market Value (S$'m)

874.5

Daily Market Volume (mln)

1450.9

52-week STI High

3549.9

52-week STI Low

2740.4

KEY INTEREST RATES CLOSE

1D (%)

MTD (%)

YTD (%)

3 Mth SGD SIBOR

1.1

0.0

0.0

134.3

3 Mth Swap Offer Rate

1.4

0.3

15.0

92.9

SG 10 YR Bond Yield

2.5

2.8

2.8

10.9

US 10 YR Bond Yield

2.2

1.3

1.3

0.0

As at 8.00am SG time

CLOSE

1D (%)

MTD (%)

YTD (%)

Dow Jones

US FUTURES 17719.0

-0.1

0.7

1.3

S&P 500

2092.6

-0.1

0.9

2.9

NASDAQ

4690.0

-0.1

1.0

11.4

CLOSE

1D (%)

MTD (%)

YTD (%)

COMMODITIES

Gold

1133.2

-0.1

-0.8

-4.4

Crude Oil

46.1

-1.0

-1.0

-13.4

Baltic Dry

706.0

-2.1

-2.1

-9.7

6651.0

0.3

0.3

-21.8

Crude Palm Oil

FSSTI INDEX

US stocks rose 1-1.5% as all 10 main S&P 500 groups rose, with energy and health-care stocks climbing at least 2%. Energy companies surged 11% in October to snap their longest streak of monthly losses ever. Consol Energy Inc. jumped 17% while Chevron Corp gained 4.5% to a July high. Deals boosted health-care shares. Dyax Corp soared 28% a er Shire Plc agreed to buy the drug-maker for at least $5.9 billion. Pfizer Inc climbed 3.8% as people with knowledge of the ma er said the company is making progress in talks to buy Allergan Plc.

IDEA OF THE DAY DBS’s ($17.25, down 0.02) 3Q’15 profit rose 6% yoy to $1.07bln, bea ng expecta ons of $994mln as a result of be er than expected net interest income and lower than expected non-performing loans. It would have been even be er if not for a one- me $50mln charge for the first funding valua on adjustment to the fair value of over the counter deriva ves (this is meant to be a one- me charge to account for the bank’s funding cost in the price of over the counter deriva ves). Excluding this one- me item, opera ng profit would have grown 10% yoy, instead of only 6%. Compared to its peers, DBS outperformed in 3Q’15 with its net interest margin rising 10 basis points from 1.68% to 1.78% versus a 6 basis point improvement for UOB to 1.77% while OCBC’s declined 2 basis point to 1.66%. DBS was the only bank to have improved net interest margin on a sequen al basis. DBS also registered the biggest net interest income improvement in 3Q’15 with a 13% yoy improvement to $1.81bln compared to UOB’s 6.9% improvement to $1.24bln and OCBC’s 6% improvement to $1.32bln. For non-interest income, UOB outperformed with a 4.2% increase to $850mln, thanks to sale of investment securi es, compared to DBS’s flat performance at $899mln and OCBC’s 3% decline to $775mln. But looking ahead, DBS expects non-interest income to pick-up pace as the market adjusts from the aberra on from the engineered fall in RMB in August against the US dollar. This unexpected RMB movement prompted market vola lity that spooked wealth management clients, but these clients are now returning to the markets again. In terms of asset quality, both OCBC and UOB registered increased non performing loan ra os with the former rising from 0.7% to 0.9% and the la er 1.2% to 1.3% as a result of several large problema c accounts in the oil and gas industry, specifically Jurong Aroma cs (which filed for bankruptcy protec on against its creditors). DBS was the only bank that maintained its ra o at 0.9% with management saying that they remain comfortable with their exposure to the oil and gas as well as China exposure. Specially, DBS’s CEO Piyush Gupta said that even if oil prices were to remain at current depressed levels over the next 2 years, it will not impact their credit profile materially. DBS also did the best in terms of loans growth in 3Q’15 with loans growth rising 9% to $288.8bln compared to 4% growth for both OCBC and UOB to $212.7bln and $199.6bln respec vely. In terms of guidance, DBS and UOB are maintaining their 5% growth guidance for the rest of the year while OCBC has revised down their previous guidance of 5% to low single digit reflec ng a slowdown in loan growth outlook in their key markets due to interest rate vola lity and uncertainty from China over its economic growth.

3600

DBS is the only bank to have guided for 2016 sales growth of 7-8%, underpinned by strong demand for loans linked to Singapore mortgages and trade. Specifically, the bank saw new mortgage bookings of over $3bln in the last quarter, the best performance in the past 3 years. Total new bookings will at least double on a year on year basis, raising their market share by a couple of percentage points to 26%.

3500 3400 3300 3200 3100 3000 2900 2800

52-week price chart

2700 11/14 12/14 01/15 02/15 03/15 04/15 05/15 06/15 07/15 08/15 09/15 10/15

Given DBS’s out-performance rela ve to UOB and OCBC in 3Q’15 and similar valua ons at 10x PE, 1.1x book and close to 4% dividend yield, our preference would be DBS first then UOB followed by OCBC.

Source: Bloomberg

Singapore Research Team Tel: 6533 0595 Email: [email protected]

Please see research disclaimer on last page

Page

1

OTHER HIGHLIGHTS SIA Engineering ($3.93, down 6.0 cents) posted a net profit of $44.5 mln for the second quarter of FY15-16, which 5.7% higher than the same quarter last year. Revenue decreased by $19.2 mln or 6.7% to $266.0 mln, with lower airframe and component overhaul and fleet management revenue, par ally mi gated by higher line maintenance revenue. Expenditure at $239.0 mln was $30.3 mln or 11.3% lower, primarily due to decreases in subcontract, staff and material costs. As a result, opera ng profit improved by $11.1 mln or 69.8% to $27.0 mln. Share of profits from associated and joint venture companies was $18.7 mln, $10.4 mln or 35.7% lower than the corresponding quarter last year. Contribu ons from the engine repair and overhaul centres at $11.7 mln were $8.3 mln or 41.5% lower.

In addi on, GLP Nagareyama will be a low emission facility designed to run on solar energy and clean electricity. As part of its sustainability ini a ves, GLP is expec ng to obtain LEED Gold cer fica on for GLP Nagareyama. GLP Nagareyama is strategically situated in Chiba Prefecture, one of the most important distribu on regions in Greater Tokyo. It is located approximately 25 km from Tokyo city center and within 2 km of the Hatsuishi Sta on of the Tobu Noda Line, which makes it an ideal loca on for sourcing a strong workforce. Customers have shown strong indica ve interest in GLP Nagareyama. GLP con nues to see significant opportunity given a rac ve market fundamentals, its market-leading pla orm and experienced local team. We maintain our Buy recommenda on on GLP.

Looking ahead, the opera ng environment is expected to remain challenging as lower work content and longer check intervals of newer genera on aircra is likely to impact the group’s business. As such, it will focus its efforts to strengthen efficiencies and manage costs as well as improving the performance of the heavy maintenance and line maintenance businesses. Supported by a strong balance sheet, SIAE will con nue to pursue strategic partnerships and long term growth opportuni es in the region. The Singapore based Boeing Asia Pacific Avia on Services, its joint venture with Boeing, is one such strategic ini a ve, although it is not expected to be accre ve in the near term. It has also declared an interim dividend of 6.0 cents per share, unchanged from last year. Despite the lacklustre results, share price should be cushioned by decent yield of 3.7%. Reiterate Hold.

Singpost ($1.89, down 0.5 cent) has reported 2Q FY15/16 headline net profit of $53.4 mln (+38.5% yoy), mainly boosted by the oneoff gains from divestment of subsidiaries. Excluding one-off items, underlying net profit actually declined 4.8% as the group con nues to invest in eCommerce infrastructure and capabili es to accelerate customer acquisi ons in the burgeoning global eCommerce market. Overall revenue rose 19.4% to $263.2 mln, led by with con nued growth in Logis cs and Retail & eCommerce and the inclusion of new subsidiaries. Mail revenue was nega vely impacted by the divestments of Nova on Solu ons and DataPost or otherwise, we note that Mail revenue remained rela vely stable compared to the same period last year.

With reference to the announcement that the manager of Saizen REIT ($1.10, up 17.5 cents) had accepted a 44.66bln yen offer by Triangle TMK to acquire all of the company’s real-estate assets in Japan, which was es mated to translate into an implied net offer price of S$1.172 per unit of Saizen Reit, the company updated that hedging arrangements have been entered into to substan ally hedge the net proceeds of this proposed transac on at an exchange rate of around SGD/JPY of 86.33. The company also added that this proposed transac on is subject to numerous condi ons and there is no certainty or assurance that the transac on will be completed. GLP ($2.25, up 1.0 cent) announced that it will commence development of GLP Nagareyama, a large-scale logis cs park in Greater Tokyo providing 319,000 sqm (3.4 mln sq ) of total gross floor area. Expected to be constructed in phases at a total investment cost of JPY59 bln (US$490 mln), GLP Nagareyama will be GLP’s largest development project in the country. GLP Nagareyama has been designed to op mize opera onal efficiency and drive value for customers. It will be a fully integrated supply chain facility – the first of its kind in Japan – where customers can conduct their produc on-related ac vi es at the same loca on as the storage and distribu on center which establishes seamless logis cs opera ons. Other innova ve features include varying ceiling heights and truck berth dimensions.

The postage revision in Oct 2014 helped to offset the impact of declining tradi onal le er mail volumes. Logis cs revenue con nued to increase on the back of growing contribu ons from ecommerce logis cs ac vi es and the inclusion of new subsidiaries. In Retail & eCommerce, revenue was higher as increasing ecommerce contribu ons offset the decline in retail and financial services. While capex is expected to remain high in FY15/16 due to the redevelopment of Singapore Post Centre, construc on of the eCommerce Logis cs Hub and con nuing investment in the POPSta on network, we believe Singpost is well-funded with its net cash posi on of S$87.8 mln. In fact, it has declared a higher interim DPS of 1.50 cents (up from 1.25 cents last year). Singpost is already showing in the numbers since the start of its transforma on with eCommerce related revenue now accounted 29% of group revenue while overseas revenue grew to 39.5%. Supported by yield of 3.7%, we keep our buy call on Singpost as it remains in a sweet spot to grow via accre ve M&As going forward. KTL Global ($0.082, unchanged) released a profit warning and that it expects to report a net loss for 1Q16. More details will be available when the company releases its financials on or before 14-Nov-15.

FSSTI STOCK SELECTION HIGHEST CONSENSUS FY15E DIV YIELD (%)

LOWEST TRAILING P/B (X)

1 HUTCHISON PORT-U

8.26

1 GOLDEN AGRI-RESOURCES

2 NOBLE GROUP

6.91

2 NOBLE GROUP

0.44

3 ASCENDAS REIT

6.74

3 HONGKONG LAND

0.63

4 KEPPEL CORP

6.05

4 UOL GROUP

0.67

5 CAPITALAND MALL TRUST

5.96

5 CAPITALAND LTD

0.76

LOWEST CONSENSUS FY15 P/E (X)

0.39

LOWEST TRAILING EV/EBITDA (X)

1 NOBLE GROUP

4.89

1 SIA

2 YANGZIJIANG SHIPPING

7.30

2 YANGZIJIANG SHIPPING

4.15 4.98

3 KEPPEL CORP

8.97

3 NOBLE GROUP

7.07

4 SEMBCORP INDUSTRIES

9.23

4 JARDINE C&C

7.87

5 OCBC BANK

9.31

5 COMFORTDELGRO

8.93

Source: Bloomberg Estimates (FSSTI Universe)

Please see research disclaimer on last page

Page

2

27 - 30 OCTOBER

SHARE TRANSACTIONS Company

Party

ACQUISITIONS AnnAik Ltd Hwa Hong Corpora on Osim Interna onal Super Group Ltd

Ow Chin Seng Ong Kay Eng Ron Sim Ma hews Intl Capital Mgmt

DISPOSALS Blackgold Natural Resources Epicentre Holdings IHH Healthcare

UOB Ltd Siow Chee Keong EPF

Buy

Sell

Transacted Price* ($)

Market Price ($)

New Balance

Stake (%)

696,000 127,000 150,000 487,600

-

0.084 0.319 1.385 0.919

-

76,507,682 63,505,400 500,941,534 66,962,400

30.73 9.72 67.24 6.01

-

1,047,900 100,000 369,900

0.079 0.182 ND

2.10

46,328,358 0 729,918,900

5.87 0 8.88

* ND: Not Disclosed

SHARE BUYBACK

Company

Osim Interna onal

Please see research disclaimer on last page

No. of shares

Price ($)

CumulaƟve Purchases

Of Maximum (%)

1,993,500

1.35

27,748,200

37.2

Page

3

DIVIDENDS (LIST IS NOT EXHAUSTIVE) Company

Amount

Last Day Cum-Dividend

First Day Ex-Dividend

Date Payable

Ascendas Hospitality Trust Chuan Hup Holdings Eu Yan Sang Interplex Holdings ISOTeam Ltd Micro-Mechanics

2.66¢ interim 1¢ final / 2¢ special 0.5¢ final 1.5¢ final 1.15¢ final 2¢ final / 1¢ special

02 Nov 02 Nov 02 Nov 02 Nov 02 Nov 02 Nov

03 Nov 03 Nov 03 Nov 03 Nov 03 Nov 03 Nov

04 Dec 18 Nov 20 Nov 20 Nov 13 Nov 18 Nov

Wing Tai Holdings AIMS AMP CAP Industrial Reit ASL Marine Santak Holdings Frasers Hospitality Trust Lum Chang Holdings

3¢ final 2.8¢ interim 0.4¢ final 0.5¢ final 1.5745¢ 1.25¢ final

02 Nov 03 Mov 03 Nov 04 Nov 05 Nov 05 Nov

03 Nov 04 Nov 04 Nov 05 Nov 06 Nov 06 Nov

23 Nov 23 Dec 17 Nov 18 Nov 29 Dec 25 Nov

Sim Lian Group Karin Technology SMRT Mul -Chem Ascendas India Trust Datapulse Technology

7.28¢ final HK9¢ final 1.5¢ interim 1.11¢ interim 2.74¢ interim 0.2¢ final

05 Nov 06 Nov 06 Nov 11 Nov 12 Nov 12 Nov

06 Nov 09 Nov 09 Nov 12 Nov 13 Nov 13 Nov

26 Nov 26 Nov 26 Nov 27 Nov 27 Nov 27 Nov

UOB Ltd Transit-Mixed Concrete TTJ Holdings Khong Guan Flour Milling Tee Interna onal SPH

20¢ special 2¢ interim 8¢ final 3¢ final 0.15¢ special 8¢ final / 5¢ special

13 Nov 30 Nov 30 Nov 01 Dec 01 Dec 07 Dec

16 Nov 01 Dec 01 Dec 02 Dec 02 Dec 08 Dec

04 Jan 16 23 Dec 18 Dec 14 Dec 18 Dec 23 Dec

Osim Interna onal Avi-Tech Electronics

1¢ interim 1.4¢ special

24 Dec 12 Feb 16

28 Dec 15 Feb 16

06 Jan 16 29 Feb 16

SHARE CONSOLIDATION Company

ConsolidaƟon RaƟo

Longcheer Holdings Jaya Holdings

Consolida on 10 into 1 Consolida on 20 into 1

Please see research disclaimer on last page

Ex Date

Record Date

02 Nov 2015 06 Nov 2015

04 Nov 2015 11 Nov 2015

Page

4

WHAT’S AHEAD

Sun

Mon

1

NÊò›Ã›Ù 2015 Tue

Wed

2

3

Far East Hospitality Reit Fortune Reit

8

9

Best World Intl Breadtalk Group China Sunsine Chemical Hotel Royal Pharmesis InternaƟonal

10

Li Heng Chemical Fibre Technologies

Thu

4 CapitaLand Challenger Technologies Haw Par Corp Rickmers MariƟme Rowsley Ltd SATS Ltd Thakral CorporaƟon

11 Amara Holdings CNMC Goldmine Croesus Retail Trust OƩo Marine UOL Vard Holdings Vicom Ltd Wilmar InternaƟonal

5 ASL Marine China Merchants Holdings CWT Frencken Group Lippo Malls Indonesia Retail FSL Trust Parkway Life Reit Religare Health Trust SIA

12 Biosensors Intl Cosco CorporaƟon Ezion Holdings GenƟng Singapore Golden AgriResources Ho Bee Land HTL InternaƟonal OUE Hospitality Trust Saizeb Reit SBS Transit Sinarmas Land Singapore Telecoms Super Group

Fri

Sat

6

7

Asian Pay TV Trust ARA Asset Mgmt Aspial CorporaƟon Fragrance Group Frasers Centrepoint Ltd Hong Leong Finance IFS Capital KSH Holdings Perennial Real Estate Sing Reinsurance Starhub Ltd ST Engineering 13

14

ComfortDelgro Corp IReit Global Mewah InternaƟonal Olam InternaƟonal Parkson Retail Asia QAF Ltd Straco CorporaƟon Tat Hong Holdings United Engineers Valuetronics Holdings World Precision

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Please see research disclaimer on last page

Page

5

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 oth er 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 company / companies as recommended in this report as at the close of 02/11/15. 2. The research analysts do not have an interest in the company / companies as recommended in this report as at the close of 02/11/15.

*

Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures Contracts owned), directorships or trustee positions.

Page

6

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