Towards Financial Freedom
DBSV S'pore Wired Daily 11 November 2013
Today's Focus
Wilmar - A strong comeback; upgrade to BUY, target price revised up to S$3.83
Far East Hospitality Trust - Limited re-rating catalysts; downgrade to HOLD, TP S$0.95
With about one more week to go before the end of the results reporting season, more than half of the stocks in our coverage list have reported results. So far, it has been unexciting and uninspiring, with FY13F and FY14F earnings cut by about 2% each.
The economy, however, is looking better. Our Singapore economist raises the country's GDP for 2013 to 3.8% (previous 2.9%) and that for 2014 to 4% (previous 3.5%).
Proxies to Singapore 2013 & 2014 GDP upward revision include the banks and SPH. While Singapore banks have generally guided for high single digit loan growth in 2014, there is possible upside surprise to loan growth given the positive GDP outlook. Loan growth typically lags GDP growth by 4-6 quarters based on historical trends.
Our pick is OCBC for its strong banking operations, better-than-average asset quality indicators and product offerings over peer UOB.
SPH is benefitting from recovering GDP growth and attractive yield. Its final and special dividend of a total of 15cts will go ex on 6 December 2013 and payment will be on 20 December. This implies a yield of 3.5% based on current price. Total dividend yield for the whole of 2013 is a whopping 9.7%. For next year, we are expecting yield of about 5% to 6%.
Wilmar's 3Q13 core earnings of US$391m (+1% y-o-y; +60% q-o-q) were above our expectations. Earnings were buoyed by contributions from Sugar and Oilseeds & Grains M&P. FY13F-15F earnings revised up by 12%/7%/5%, as we impute higher Sugar contribution, better M&P and Consumer margins. Rating upgraded to BUY, target price revised up to S$3.83 (Prev S$3.53).
Far East Hospitality Trust reported a weak quarter. Gross revenues and net property income came in 9.4% below forecasts at S$31.5m and S$27.5m respectively. Room rates are still under pressure. Going forward, refurbishments and repositioning strategies are expected to drive growth. Given
limited re-rating catalysts in the immediate term, we downgrade our BUY call to a HOLD, TP revised down to S$0.95 (Prev S$0.97) after accounting for lower DPU estimates and rolling forward to FY14.
3Q13 results for Venture Corp slightly below our and market expectations, mainly because of lower than expected revenue. Margin recovery was encouraging; expect further improvement in 4Q to meet our FY13F earnings. Multiple customer engagements are expected to drive future growth.
Maintain BUY and S$8.40 TP; dividend yields of > 6% are attractive.
Amtek Engineering's 1Q14 results in line, earnings are bottoming out, formed 26% of FY14F earnings. New customers and product wins led the recovery while automation helped contain costs. Management is cautiously optimistic; further re-rating dependent on stronger pick up. Maintain HOLD for its 6-7% dividend yield while waiting for stronger momentum to emerge. Target price S$0.48.
Results for UOL Group in line; boosted by higher gross margins, led by hotel operations. Looking ahead, the Group would continue to drive all business segments. New residential launches from FY14; One KM and recent Myanmar hotel JV are expected to boost recurrent income in medium term. Maintain BUY and S$7.86 TP.
LionGold Corp is expected to report a loss before tax for the half year ended 30 September 2013.
The loss is mainly attributable to: 1. care and maintenance costs from the Group's gold mining
operations in Bolivia and Ghana; and 2. substantial losses arising from the unrealised loss on
financial assets at fair value through profit and loss.
PSL Holdings is expected to report a loss for the 3Q13 mainly due to: reduction in the Group's revenue as a result of stiffer competition; and decrease in other operating income.
CSC Holdings has been awarded a contract valued in excess of RM80m, for the construction of foundations as well as a two-storey basement for the new development, Bora Residences @ Tropicana Danga Bay in Iskandar, Johor. Malaysian Contracts secured by the Group to date exceeds
RM200m. CSC's current order book stands at approximately $250m. CSC expects to complete the bulk of its projects over the next six months.
Chasen Holdings is proposing to undertake a renounceable non-underwritten rights issue of up to 112m Warrants, at an issue price of S$0.01 for each Warrant. Each Warrant carries the right to subscribe for one (1) new share at an exercise price of S$0.12, on the basis of four (4) Warrants for every ten (10) existing Shares held.
The residential resale property market softened in October, with prices falling for both private and public homes. The flash report released by the Singapore Real Estate Exchange (SRX) showed the resale price index for non-landed residential private homes dipping 0.1% to 176.2 from September. As for HDB homes, the resale price index fell 1.6% to 148. An increasing or upcoming supply of homes and government measures that tempered demand are likely the main reasons for the price fall.
China's industrial output rose 10.3% y-o-y in October, beating market expectations, while retail sales were up 13.3%. Fixed-asset investment, an important driver of economic activity, climbed 20.1% in the first 10 months from the same period last year. Exports increased 5.6% y-o-y in October, driven by the United States, China's largest trading partner, and a sharp turnaround in demand from the
European Union where export growth jumped to 12.7% after a one per cent contraction in September. Inflation accelerated slightly to 3.2% in October led by higher food prices, a marginal increase from the 3.1% recorded in September. Inflation for the first 10 months of the year through October came in at 2.6%, well below the government's full-year target of 3.5%.
Source: DBSV
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
