DBSV S'pore Wired Daily 25 June 2013

kiasutrader

Publish date: Tue, 25 Jun 2013, 05:59 PM

Today's Focus

Courts Asia - Initiating coverage with BUY call and target price of S$1.13

DBSV Research is initiating coverage on Courts Asia with a BUY call and target price of S$1.13. Courts is a beneficiary of increased population and housing in Singapore and growing regional wealth in Malaysia and Indonesia. Courts' unique business model of offering in-house credit to customers helps it to enjoy a higher customer base. Entry into Indonesia presents a longer term catalyst for the stock. We forecast earnings growth of 15% CAGR between FY13 to FY15F, largely driven by store growth in Singapore and Malaysia.

In contrary to our earlier technical view for shares of Capitaland to extend its rebound to $3.37 or even $3.45 (Wired Daily dated 19 June), the stock has been on the slide down over the past week. Volatility from the FED's QE3 tapering and worries about a liquidity crunch in China weighed on the stock. While a minor bounce is possible from yesterday's close, technically the stock's immediate resistance is now seen at $3.04 (stronger at $3.09). There is likely eventual downside bias to $2.82 before reaching firmer support.

Gallant Venture is offering 5,426 rupiah for each PT Indomobil Sukses Internasional Tbk (IMAS) share that it does not already own, following its 7.8 trillion rupiah (S$1 bn) acquisition of a 52.35% stake in the Indonesia- listed automotive group. Gallant's offer price is slightly higher than the acquisition price of Rp5,420 per share. Gallant said it was acquiring IMAS to expand its business, enhance its portfolio and position itself to tap into the growing Indonesian economy, in particular the Indonesian middle- class sector and industrial segments.

China Fishery Group intends to launch a new voluntary cash offer for Oslo Børs-listed Copeinca, Peru's second largest fishing company, at the price of NOK68.17 per share, a premium of 17.5% over Copeinca's last closing price. The Group has gained an effective control of 74.2% of the total outstanding shares of Copeinca at the time of the announcement.

Auric Pacific Group intends to make a voluntary unconditional cash offer for its 61%-owned subsidiary Food Junction. The offer of S$0.255 per share, which is at a premium of 40% to last transacted price of Food Junction shares, values it at S$31m. Food Junction has faced challenging conditions in recent years due to the competitive nature of its business, which saw it slipping into a loss in 2012. By raising equity interest in Food Junction, Auric Pacific will have greater control and flexibility to align Food Junction's business direction with the Group's growth strategy.

OKP has won a S$15m drainage contract from PUB. This brings gross order book to S$408.5m lasting till 2015. This project win is small and within our expectation of S$117m wins for FY13F. Maintain Fully Valued call as OKP has registered weak earnings on the back of rising costs from direct labour and subcontracting services.

Keong Hong Holdings had secured a $161.9m contract as the main contractor for the private residential development, J Gateway in Boon Lay Way. J Gateway will sit on an 11,588 sq m site in Jurong East. It will comprise two towers of 20 and 38 storeys housing one- to fourbedroom units and penthouses, including small office/home office or SOHO-inspired units with high ceilings and loft platforms.

Lian Beng Group has been awarded a contract worth $115m to build a condominium along Flora Drive in Pasir Ris. The contract period is from this month to October 2015. This is Lian Beng's ninth construction contract of the year, a new record. Its order book now stands at $1.4 bn.

Oxley Holdings has acquired a leasehold site in Malaysia's Johor Bahru for RM 92.8m (S$40.0m). The site, which has an area of about 17,280 square metres, is zoned for commercial and hotel development. The group intends to develop the land, subject to approvals from the relevant authorities.

Courage Marine Group is proposing to divest into property investment business. The Group will focus on residential, commercial, warehousing or mixed-use projects.

TEE International has signed an MOU with Pioneer Environmental Technology, subsidiary of SGX mainboard listed AnnAik, to evaluate the possibility of investing in a waste water treatment plant located in Huzhou, a prefecture-level city in China. Earlier on, TEE has formed a consortium to enter into an approximately S$8.6m 3-year contract to manage and control the water level at Makkasan Water Catchment area near the Chao Phaya River, Thailand. These two projects will add to TEE's growing infrastructure portfolio, an essential part of TEE's third pillar of growth.

Singapore's consumer price index (CPI) rose to 1.6% y-o-y in May, below consensus forecast of 1.7% and after the inflation rate plunged to a three-year low of 1.5% in April. Inflation rate was kept low by a fall in car prices which sent private road transport costs tumbling 3.7% y-o-y - its first decline since 2009. But core inflation, which strips out private road transport costs along with accommodation costs, rebounded to 1.7% from 1.4% in April, surpasses headline inflation. Services inflation picked up to 2.5% in May, from 2.2% in April, due to higher healthcare-related costs. Food inflation rose to 2% in May from 1.8% in April, reflecting the quicker pace at which prices of both non-cooked food and prepared meals rose. The government also kept its headline inflation forecast of 3-4%.

A deal is said to have been inked for the sale of Park Regis Singapore at about $250m. There is talk that a sale and purchase agreement was signed recently with a China buyer for the property, which is located along New Market Street/Mer-chant Road. The asset comprises the 203-room hotel and a seven-storey office block with about 42,000 sq ft net lettable area on a site with a balance lease term of about 93 years. Assuming the office space is valued at $1,800-$2,000 psf or $75.6m to $84m, the hotel component would be priced at between $859,000 and $818,000 per room.

Source: DBSV

Gallant Venture (5IG)China Fishery (B0Z)OKP (5CF)Keong Hong (5TT)Lian Beng (L03)

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