Initiate with BUY and S$1.27 TP US markets fell as political bickering ahead of the need to raise the country's debt ceiling picked up, uncertainty about when the FED will start cutting back QE and heading into election weekend in Germany. The US 10-year treasury yield rose to an intra-session high of 2.77% before ending the week at 2.73%. In Germany, Angela Merkel has won a landslide personal victory in Germany's general election but her conservatives appeared just short of the votes needed to rule on their own and may have to convince leftist rivals to join a coalition government.

The STI should start the week softer on the back of Friday's decline on Wall Street. A pullback to test the immediate support at 3200 is possible this week. Index valuation reached 13.9x (ave) 12-mth forward PE last week. With the uncertainty that follows the deadline to raise the US debt ceiling and a likely lack luster 3Q results season, STI's shortterm rally has likely come to a stall around 3250 last week. A consolidation band from c.3200-3250 or a pullback to 3200 followed by 3165 is seen in coming weeks/month before rising again.

We are initiating coverage on Rex International Holding (RIH) with a BUY call and target price of S$ 1.27. RIH is an independent E&P player armed with potentially revolutionary exploration technology. We estimate that the use of Rex VD could yield success rates in excess of 50%, compared to global average of around 15% using traditional methods, thus potentially boosting project ROIs to >100%. RIH has the first mover advantage in "seeing" oil gives it a head start in cherry picking attractive licences. It is a potential multi-bagger as it buys assets cheap and spins off successful discoveries. 

Keppel Corp has sold its entire stake in Berich Enterprises and Keppel Kazakhstan LLP for US$32.5m cash. The principal activities of Keppel Kazakhstan are the design, engineering and construction of barges, pontoons, pipe racks, modules, and drilling units for the oil and gas industry in the Republic of Kazakhstan.

YHM Group has secured a contract with a value of up to approximately US$183m over a 3-year period with an additional 2 year extendable option to provide a semisubmersible rig to be used by a Southeast Asian based national oil company to support its oil and gas activities in the Andaman Sea. The company is in the process of forming a joint venture company to own the Semi. The Semi will be upgraded and refurbished and is expected to be deployed in the Andaman Sea between end 2013 and early 2014.

Telcos are reporting an increase in the number of subscribers busting their data cap.SingTel sees a trend that 4G customers are using more data on average than 3G users, about 20-30% increase. Already, SingTel's last-reported quarter ended June 30, 2013, saw 13% of post-paid subscribers on tiered plans exceeding their monthly data limits, up from 10% in the quarter before that. Over at StarHub, the faster 4G network has been a boon for data usage, and this trend is expected to continue. There has been a similar trend at M1. In its last reported quarter, 15% of its post-paid users on tiered data plans exceeded data caps - up from 9% the previous quarter.

In property news, UOL Group and Singapore Land move 160 units at Thomson Three on the first day of sales bookings this week. This was out of the 200 units they released. The developers plan to release a further 120-150 units this weekend. Located on Bright Hill Drive, the project comprises 435 apartments and 10 strata semi-detached houses. The average price of the 99-year leasehold development is about $1,350 psf. According to UOL, without TDSR (total debt servicing ratio), it could easily have priced this project at $1,500 psf on average, or even higher.

Source: DBSV