Towards Financial Freedom
DBSV S'pore Wired Daily 20 March 2013
Today's Focus
Midas - Won €22.7m overseas contract; maintain BUY, TP S$0.60
News of the better-than-expected US February housing starts (actual 917k, consensus 915k) and building permits (actual 946k, consensus 925k) is offset by that of the Cypriot parliament voting to reject the deposit levy. This caused the near-term uncertainty that raises the question of who's going to foot the bill, although Germany's finance minister is quick to comment that what happens in Cyprus stays within Cyprus.
The indicators to watch are the Italian and Spanish government bond yields, which although lifted by a minor bounce off recent low, has not shown any big up surge. Meanwhile, technically, the Euro-USD, having retreated from a high of 1.37 beginning February to the current1.287 is also approaching support at 1.27-1.28 that should halt the current slide should it weaken a little further.
The outcome of the FOMC meeting will be decided tomorrow with the FED expected to keep interest rates and policy outlook unchanged.
The March HSBC Flash Manufacturing PMI for China will also be released tomorrow (consensus 50.8).The data should give investors an indication of whether the decline in the February figure to 50.4 is due to the Lunar New Year effect and if things should return to 'norm' going forward. Technically, we maintain our view that SSEC's pullback from 2445 that started in mid-February is a 'healthy' correction to consolidate the gains achieved in the Dec12-Feb13 rally. The index has tested the important support at 2250 that we noted earlier. Post correction, we expect the SSEC to resume its rising trend towards 2700 in coming months.
Midas has won a €22.7m (approximately RMB182.8m) contract from Ural Locomotives, a joint-venture company between Siemens and Russia's Sinara Group. Midas will supply aluminium alloy extrusion profiles for use in the manufacture of 100 electric train sets (1 train set = 5 train cars), or 500 electric train cars for commuter passenger service. Delivery for the contract is slated to take place progressively from 2013 to 2019. This is a fairly significant win for Midas in the export market, which shows their capability to win contracts outside of China. As deliveries are spread over 7 years from 2013 to 2019, the annual contribution of this contract to the top line is relatively small at c. RMB25m but nonetheless grows the Group's order book to c. RMB700m, compared to just RMB400m at the end of Feb. This is the second significant supply contract won this month, with the first being a c. RMB110m contract to supply 5 metro train projects in China. Maintain BUY and TP S$0.60.
Super Group announced that Mdm Te Lay Guat (sister-in-law of the Chairman) has resigned as executive director of the company to pursue her personal interests. This should not have a significant impact to earnings as the Chairman and other key founding directors in the business units continue to remain intact. Hence we expect Super Group's strategy and execution to remain stable.
ST Engineering has injected its pro rata share of an additional US$4.05m (S$5.01m) into the capital of its 50%-owned associated company, Total Engines Asset Management (TEAM). With this new injection, it will bring its total share capital contribution in TEAM to US$8.21m (S$10.15m). This additional funding will support the expansion of the engine leasing business.
China Aviation Oil has been awarded contracts to supply aviation fuel to Air China and three international airports - Madrid International Airport, Los Angeles International Airport and London Heathrow Airport. The term of each of these supply contracts is 18 months commencing from 1 April 2013. The aggregate contractual volume for the expected term is approximately 120,000 metric tonnes. This is another milestone in the Group's expansion of its aviation fuel marketing business. Aviation fuel supply volume jumped 36 times over 2011 to 750,000 tonnes in 2012.
UE E&C has been awarded the tender for the proposed renovation for Arts and Crafts Centre at Jalan Residency, Bandar Seri Begawan, Negara Brunei Darussalam at the tender price of approximately BND23.2m. The project period is for 12 months and is to be completed in two phases by 31 August 2013 and 31 March 2014 respectively.
Source: Kenanga
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