DBSV S'pore Wired Daily 31 October 2013

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DBSV S'pore Wired Daily 31 October 2013

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Publish date: Thu, 31 Oct 2013, 02:26 PM

Today's Focus

Indofood Agri Resources - Strong sequential rebound, FY13F-15F earnings raised by 5-18%. Maintain BUY, TP S$1.00.

CDL Hospitality Trusts - Higher earnings on the horizon; maintain BUY and TP S$1.80

Indofood Agri Resources registered sequentially higher earnings, as expected. Ex-translational FX loss of Rp88.7bn, 3Q13 earnings of Rp211.6bn (-13% y-o-y; +220% q-o-q) were ahead. 3Q13 operating margin rebounded to 12.3% from 5.4% in 2Q13, as unit cost eased in line with higher output FY13F-15F earnings were raised by 5-18%. BUY for 12% upside to revised TP of S$1.00 (Prev S$ 0.93). We believe the market has not yet priced in stronger 4Q13 earnings. Technically, the stock looks set to head to the fundamentally of $1 and may even trend beyond that eventually, once it clears the $0.92 level.

3Q13 DPU of 2.64 Scts for CDL Hospitality Trustsin line. As we approach the year-end peak season, we expect CDREIT to deliver sequentially stronger performance in 4Q13. Valuations remain attractive at 1.0x P/BV, with FY13F-15F yield of 6.5%-7.3%. Maintain BUY and TP of S$1.80.

Results for NOL were slightly below as Intra-Asia rates plunged, owing to capacity cascading from mainlanes, despite rate restorations on Asia-Europe in June-July that helped the container liner division to break even in 3Q13. Current spot rates on Asia-Europe are back at panic levels again, but no major capacity reduction measures seen. Maintain HOLD with TP adjusted to S$1.10 (Prev S$ 1.13).

Singapore Post's 2Q14 underlying profit of S$37.3m (+13.8% y-o-y, +3.0% q-o-q) was in line, as 1H14 comprised 49.7% of our FY14F estimates. S$1.25 Scts interim DPS was also in line. High developmental costs for e-commerce were offset by higher rental income and lower interest costs. Maintain BUY with a TP of S$1.50. SingPost has S$139m net cash which can be used for profitable acquisitions, in our view.

CapitaLand achieves net profit of S$135.5m in 3Q 2013, down 9% y-o-y. Group revenue rose 52.5% to S$1.05 bn, up 52.5%. The performance is led by higher revenue from CapitaLand Singapore (CL Singapore), CapitaLand China (CL China) and CapitaMalls Asia (CMA), as well as higher sales from development projects in Australia and Vietnam. Will follow up with more updates.

China Minzhong posted a 60% plunge in net profit to RMB48.4m for the first quarter ended Sept 30, 2013. Higher operating costs, mostly labour, and average selling prices not rising fast enough to offset higher costs, pressured its margins in both its cultivation and processed business segments.

Yongnam Holdings is expected to record an operating loss for 3Q FY2013, notwithstanding a healthy increase in revenue. This is mainly due to two factors:-

1. Cost overruns from three on-going projects which pared operating margin to new lows;

2. A significant non-recurring one-off loss on disposal of some fixed assets that eroded the already thin bottom-line profit for the quarter.

Yongnam is still expected to report a net profit for FY2013, but significantly lower than that of FY2012.

Metax Engineering has been awarded a tender by the Singapore Public Utilities Board worth S$6.7m to expand the Greasy Waste Receiving and the Associated Digestion Facility at the Jurong Water Reclamation Plant. The award will increase Metax Engineering's orderbook to S$31.8m.

China Bearing is expected to report a loss for 3Q2013 and 9M2013. The significant drop in its financial performance was mainly attributed to decrease in revenue and increase in costs.

Sapphire Corporation will record a loss in the 3Q13 and it is highly likely that this loss will be higher than that reported in 2Q13 due mainly to lower operating margins and additional assets impairment.

Ziwo Holdings is expected to record a profit for 3Q 2013. However, for the nine months ended 30 September 2013 (9M2013), the Group is expected to record a significant drop in its revenue due to losses incurred in first and second quarter of 2013.

Eastern Holdings expects to report significant profits for 1HFY2014, partly due to the disposal of investment properties.

China Environment has secured five contracts worth RMB 119.1m from three customers. These contracts are scheduled to be delivered by the first half of 2014 and are expected to contribute positively to the earnings of the Group for FY Dec 2013 and 2014.

A survey by Nielsen shows that while Singaporeans may be getting more upbeat about their job prospects and personal finances, consumer confidence levels here still fall on the side of pessimism. Confidence levels in Singapore slipped in Q4 last year and remained flat for three consecutive quarters. But confidence bounced back in Q3 this year to the same level a year earlier.

Asia-Pacific air freight carriers - which account for nearly 40% of the global cargo market - continue to be dogged by weak cargo demand, with traffic slipping 3.1% y-o-y for the region last month. Globally, traffic (in freight tonne kilometres) edged up by 0.5%, with strong growth from the Middle Eastern and Latin American cargo carriers, while the European freight players turned in marginal growth, according to figures released by the International Air Transport Association (Iata). Capacity grew at a faster 3.3%, resulting in a load factor of 45.1%.

The FED decided to continue with its USD85bil/mth bond purchase as it needs to see more evidence that the economy can continue to improve. The housing sector recovery slowed somewhat and fiscal policy is restraining growth, it observed. Still, the FED removed a sentence from its previous September statement that said tighter financial conditions could slow the improvement in the economy. This fueled speculation that it will reduce QE in coming months. The FED statement wasn't as dovish as investors wished it to be, stocks eased off.

Source: DBSV

Indofood Agri (5JS)CDL HTrust (J85)SingPost (S08)Koh Eco (5HV)China Env (5OU)

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