We are initiating coverage on Dairy Farm with BUY recommendation and target price of S$11.60. Dairy Farm is a beneficiary of rising middle class population and food consumption in Asia. The stock offers defensive earnings and sound financials and is trading at undemanding valuations. Recent selldown provides entry opportunity. Dairy Farmhas corrected by c.23% from May'13, more than STI Index. Valuation is attractive at 25.5x FY14F PE, below its last three years' average valuations.

Ezion is proposing to inject its marine supply base asset into Ocean Sky at cost via a share swap. Post exercise, Ezion will hold 45.15% in Ocean Sky while the latter will have a 2% stake in Ezion. This is a strategic move and is positive for long term development of Ezion. It enables Ezion to tap into the growth potential of the marine supply base business in Australia without stretching its balance sheet and resources further, while allowing the company to stay focused on its core liftboat and service rigs business. We have trimmed FY13/14/15F EPS by 2.2/3.3/3.8%. Post exercise, Ocean Sky is projected to have cash of c.S$60m for business expansion. We have not factored in any potential from this. The share price weakness post announcement is unwarranted and we advocate to BUY (TP S$3.10, Prev S$3.20) the shares on weakness.

Yangzijiang's share price was down 6% on heavy volume yesterday, which we believe is due largely to the disposal by a non-executive director, Mr. Yu Kebing. Mr Yu was among the pre-IPO investors of Yangzijiang and has been reducing its stake over the years. He has sold all his remaining 55.176m shares in Yangzijiang (or 1.44% stake) at S$1.12. Hence, there should not be any overhang. In addition, he is a non-executive director and is not involved in daily operations of Yangzijiang. The fundamental of Yangzjiang remains intact. We continue to favour Yangzijiang as the best proxy to shipbuilding recovery. No change to our BUY recommendation and TP of S$1.32.

Vallianz Holdings, an integrated offshore marine solutions services provider in the offshore oil and gas industry, has boosted its order book to US$334.0m through its New Subsidiary in the Kingdom of Saudi Arabia with an ongoing contract-with-additional option to charter AHTS vessels to a leading oil company in the Middle East. The New Subsidiary is jointly owned by Rawabi, a leading Saudi Arabian oil and gas service company.

Mermaid Maritimeis proposing to place up to 58.1m shares, at an issue price of S$0.280 to raise gross proceeds of up to S$16.3m. The proceeds will be mainly used for investment in drilling rigs and/or subsea vessels and acquisitions of additional machineries.

Otto Marine had entered into two bareboat charter agreements worth US$32m, to charter to its Malaysia partners.

TA Corporationhas secured two contracts worth an aggregate of S$77.3m for a proposed condominium development at Marine Parade Road and a proposed mixed landed housing development at Whitley Road.

Growth in bank lending here continued to slow. Domestic banking unit (DBU) loans to non-bank customers totalled $540.8 bn in August. This represents a 15.4% y-o-y increase, compared with the 17.6% rise recorded in July. On a month-on-month basis, total lending inched up 0.3% in August, compared to a 1.2% increase in July. Growth in loans to both business and consumer segments slowed; lending to businesses was up 17.4% y-o-y to $321.2 bn in August, compared to 20.8% in July. Lending to consumers was up 12.5% y-o-y to $219.6 bn in August, compared to the 13.2% increase in July. Compared with the previous month, business loans were flat, while consumer loans were up 0.8% for August.

HSBC's final China purchasing managers' index came in substantially lower than the forecast published a week ago. September PMI was 50.2 points, a touch higher than the August figure and lower by nearly one point compared to the flash PMI released earlier. Despite a pick-up in exports orders pointing to a recovery in China's main export markets, the US and Europe, domestic demand remained unchanged last month, the index showed. A breakdown of the index shows that new export orders picked up, climbing to 50.7 from 47.2 in August, but new orders remained flat and manufacturers' restocking process continued, albeit relatively slow. The official PMI published by the government is due to be released today.

US stocks fell as a potential shutdown of the US government by noon today (Singapore time) following the stalemate over the federal budget looms. US lawmakers have to approve an emergency legislation in time to keep the federal government operating. Otherwise, as many as 800k federal employees will be put on temporary unpaid leave. US 10-year treasury yield stood almost unchanged at 2.61%.

Source: DBSV