Today's Focus

Our analyst expects stable net interest margin (NIM) and slower loan growth for the upcoming 3Q results for the banks. NIM should remain fairly stable, tracking trends recorded in 2Q13. System loan growth is trending down, as expected. We expect loan growth to normalise at a more modest c.2% q-o-q, after the chucky loan growth seen in 1H13. In line with the softer capital market environment, market-related income is expected to moderate q-o-q. We also expect slower regional contribution due to both currency and macro effects. Preference for OCBC(BUY, TP: S$12.40) remains. Although OCBC may record another relatively feeble quarter from its insurance business contribution (we have lowered our FY13F earnings by 5% accordingly), we believe its banking operations will remain strong. OCBC will release 3Q results on 1 Nov and UOB on 5 Nov.

Unlike the market's optimism, we are neutral on Del Monte Pacific's proposed US$1.7bn acquisition of US based Del Monte Foods's Consumer Food Business. Earnings accretion to common equity holders is estimated to be minor in the interim, and is highly sensitive to acquired entity's business performance going forward. 3Q13 earnings were in line. Going forward, the Group's growth profile will be altered, given the consolidation of a larger entity with lower growth. We estimate that revenue contribution from Philippines will drop to 14% in FY14F, down from 62% in FY13F. Downgrade to HOLD after recent outperformance; TP reduced slightly to S$0.96 (Prev S$0.97). There are possible downsides to dividend payout, given its high gearing of c.1.8x post-acquisition, in our view.

2Q-FY14 results for Tiger Airways disappoint (core net loss of S$35m) as Tigerair Singapore slips into the red. No significant improvement from associates in Australia, Indonesia and Philippines either. Factoring in lower load factors and higher costs at Tigerair Singapore and wider losses from associates, we push up our core loss estimate for FY14 to S$80m from S$11m previously, and we now believe the Group is unlikely to turnaround in FY15 as well. Downgrade to FULLY VALUED with TP cut to S$0.47 (Prev S$ 0.74).

2Q14 results for Mapletree Commercial Trust in line. Strong rental reversions provide solid platform for organic income growth. However, lack of acquisitions limits upside to DPU. Downgrade to HOLD, TP revised to S$1.32 (Prev S$ 1.35). Capitamall Trust's 3Q13 results in line. Tampines Mall will be undergoing S$65m of AEI works in 1Q14. Going forward, rising labour costs could cap reversionary upside. Maintain HOLD, TP raised to S$2.16 (Prev S$ 2.07) as we roll forward our valuations.

Far East Hospitality Management will launch three Singapore hotels over the next three months. These are the Village Hotel Katong in the Marine Parade/East Coast area, Amoy at Far East Square in the Chinatown/CBD area, and a relaunch of the Rendezvous Grand Hotel in the Bras Basah area which Far East Hospitality Trust (FEHT) acquired recently from Straits Trading Company.

Tiong Seng Holdings has been awarded a contract worth approximately $42.7m for the proposed erection of a 7-storey industrial building with underground tanks at One- North. Stamford Tyres has appointed a dealer, Al Habtoor Motors, for Sumo Firenza tyres in the United Arab Emirates to expand its presence in the Middle East.

Changtian Plastic & Chemicalexpects to report a loss for the third quarter ended 30 September 2013. This was mainly due to an impairment loss on the Group's property, plant and equipment.

Mainland Chinese, Malaysians, Indonesians and Indians continued to remain the top four nationalities among the combined pool of foreigners and Singapore permanent residents who bought private homes in the first nine months of this year. Together they accounted for 81.3% of the 4,028 private homes purchased by PRs and foreigners in Jan-Sept 2013, similar to their 80.9% share of the 7,717 private homes that PRs and foreigners picked up in 2012, according to property consulting group DTZ.

Manufacturing activity in China has risen to a seven-month high this month, led by new orders. The flash HSBC Markit PMI released yesterday, a week ahead of the month's final reading, was 50.9, above market expectations. A breakdown of the PMI or purchasing managers index showed most subindices over-performing. Output rose to a six-month high of 51 from 50.2; new orders were up 0.8 point to 51.6, a seven-month high; purchases of inputs climbed above 50 for the first time in nine months; and employment increased to 49.9 from 48.8.

US stocks rose on a busy day of results releases as earnings generally beat estimates and signs of slower economic growth underpinned expectations that the FED will delay QE tapering. The US 10-year bond yield stayed around the 2.5% mark. Of the 217 S&P500 companies that have released results so far, 77% beat bottom line consensus estimates while 53% beat sales estimates.

Source: DBSV