Towards Financial Freedom
DBSV S'pore Wired Daily 19 June 2013
Today's Focus
Capitaland - Room for further retracement to $3.37 or $3.45.
US stocks finished higher as investors await the outcome of the FOMC meeting and Ben Bernanke's press conference that follows. Investors seem to have gotten more used to the idea of tapering and think the FED will play it safe with regards to the intensity and timing of QE3 cut back.
Short covering and bargain hunting continues with the STI looking to test the 3250 level today. Our view last Friday that the STI has touched a short-term low at 3100 has paid off even as consensus grew increasingly bearish. The 38.2% retracement level at 3235 was attained yesterday.
Going forward, with the Singapore market's average 12-mth forward PE at 3287 and the 50% retracement level also around that level, we see short-term resistance there. From yesterday's close of 3229, simple maths tells us about 70% or more of this initial rebound is completed. Beyond that, we see the index's current rebound shifting to a sideway trend before gradually working higher again in 2H. That is, the recent low at 3100 looks to have ended the correction and any pullback going forward should be a higher low.
Shares of Capitaland currently trade at a 45% discount to $5.92 RNAV. At the current level, the stock trades at among the steepest discount to RNAV in the post GFC era that in the past ended major correction. Thus, we see bargain hunting opportunity with the recent sell-down. Scope for a 38.2% upward retracement to $3.37 while a 50% retracement can lift it to $3.45. Our current fundamental recommendation is a Buy with TP $4.44.
May sales for Yanlord Land remained sluggish, due to limited new launches. Our analyst does not expect any positive surprise from June sales as meaningful new saleable resources will not come until July. Concerns on slow sales and its high end inventory remain and we widen the target NAV discount to 55% (from 50%) to factor in the dim presales outlook. Maintain FULLY VALUED with a lower TP of S$1.12 (Prev S$1.24).
ST Aerospace, a unit of ST Engineering, announced a string of contract wins, including a US$28m maintenance deal with Spring Airlines Japan and a 20-year repair license agreement to provide maintenance, repair and overhaul (MRO) services for US-based UTC Aerospace Systems.
CapitaLand and Keppel Land have acquired land in Shanghai, China, for development. CapitaLand's project will be a mixed development comprising residential, office and retail components on a site in Hangzhonglu in the city's Zhabei district. The project will commence in 2015 and is expected to be completed by 2017. Keppel Land will develop about 200 landed homes on a residential site in the city's Sheshan area. The first phase of homes is expected to be launched in the second half of next year.
ISDN has proposed to acquire equity stakes in two Indonesian energy related companies - 40.8% and 80.0% ownership in PT Prisma Karun Energy and PT Potensia Tomini Energi respectively, allowing the Group a valuable foothold in the country's fast expanding energy sector.
Enviro-Hub is placing 41m new shares at the placement price of S$0.11 each. The placement price is at a discount of 6.62% to the last volume weighted average price. The net proceeds of approximately S$ 4.5m will be mainly used to fund further acquisitions and to strengthen its working capital.
Intraco is extending its mandatory conditional cash offer for its listed associated company Dynamic Colours (DCL) by another 14 days to close at 5.30 p.m. on 2 July 2013.
No further extensions or any revisions to the Offer Price of S$0.185 per Offer Share, unless a competitive situation arises. As at 5.00 p.m. on 17 June 2013, Intraco owns 39.87% of the DCL shares in issue.
In property news, Eunosville is up for collective sale at a reserve price of $688m, or $799 psf. Eunosville has a land area of 376,712 square feet. Under Master Plan 2008, the site is zoned for residential use with a 2.8 plot ratio. Built in the late 1980s by the former HUDC, Eunosville was privatised in 2011. Based on the reserve price, the breakeven cost for a new project is about $1,200 psf, with the new units expected to fetch between $1,450 psf and $1,650 psf, JLL estimates.
A 99-year leasehold residential site at Faber Walk drew 18 bids at the close of its tender yesterday. Aspial Corp's World Class Land put in the top bid of $156.7m, or $687.42 psf ppr for the site, which measures about 162,808 sq ft. The gap between top three tender prices is a narrow 1.1-1.8%, reflecting the confidence and appetite of developers, say consultants.
Source: DBSV
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