Towards Financial Freedom
DBSV S'pore Wired Daily 6 December 2013
Singapore Hospitality - A modest recovery. Top picks: Genting Singapore (Upgrade to BUY, TP of S$1.75) and CDREIT (BUY, S$1.80)
We expect a modest recovery for the Singapore Hospitality sector. At 10.5m visitor arrivals (+8.5% y-o-y) as of YTD 8M13, visitor arrival growth continue to exceed expectations. Looking ahead, we believe 2014 will continue to see higher visitorship given: (I) Robust outlook for travel within the ASEAN region, especially major visitor source markets of Indonesia, India and China (c.45% of total visitors), (ii) The expected pick-up in business activities and a healthy pipeline of MICE and major conferences in 1H14. As such, we expect visitor arrivals to grow 6.0% y-o-y to 16.3m in 2014. However, upside is expected to be capped by new hotel openings. Over 4Q13-2014, the industry will see close to an additional 3,400 rooms or a 6% increase in room supply, mainly in the Central Business District (CBD) and along Orchard Road.
In terms of stock pick, Genting Singapore (Upgrade to BUY, TP of S$1.75) remains the main beneficiary of the sustained growth in visitor arrivals and tourists spending in 2014. Among the hoteliers, we believe CDL Hospitality Trusts (BUY, S$1.80) offer the most leverage to the expected uptick in business and MICE travellers amongst competition in the market.
Rex International has signed an agreement with North Energy ASA to acquire a 20% stake in a new licence in Norway. With this new licence, Rex will have stakes in seven offshore licences in Norway, up from four at its IPO in July 2013. Rex's portfolio in Norway is expected to grow up to 15 licences in 2014. Financing has been secured for drilling activities in Norway into 2015.
Cambridge Industrial Trust enters into S$250m interest rate swaps with several banks and reduces its all-in cost of debt to 3.33% to 3.45%.
South African coal miner Resource Generation said it was taking action to obtain funds that Blumonthas not yet paid the firm. Blumont was to have paid the firm A$22.6m (S$25.6m) for a placement of about 102m Resource Generation shares at 22 Australian cents per share. This was said to have been due on Wednesday. The proceeds were to be used to develop Resource Generation's Boikarabelo coal mine in Waterberg, South Africa. The subscription of the new shares from Resource Generation was to give Blumont a 15% stake in the company.
Home-grown international fashion label, Raoul, will expand to the Middle East after clinching a franchise deal with The Chalhoub Group, a leading player in the luxury business in the region. The agreement, signed between FJ Benjamin Holdings and Chalhoub's CGR FZE, will see nine standalone Raoul stores open by 2017, with the first two in the United Arab Emirates and Bahrain by next year. The deal is for an initial period of five years with an option to renew for another five, subject to compliances.
JTC changes industrial property rules. Industrialists and thirdparty facility providers such as property funds/developers who own industrial properties on JTC-leased sites will now be required to hold these properties for a longer period before they may sell them. JTC has also extended the minimum occupation period for anchor tenants of third-party facility providers. The changes took effect on Nov 15. The move is aimed at safeguarding Singapore's scarce industrial land resources for optimal use by genuine industrialists and dampening property speculation. Market watchers say the latest changes in JTC policies will benefit genuine industrial users but discourage property speculators.
Global passenger traffic is picking up pace, clocking 6.6% growth y-o-y in October, which is higher than the 5.2% rise seen a month earlier. According to data from the International Air Transport Association (Iata), this was more or less matched by a 6.5% expansion in capacity, keeping load factor essentially flat at 78.9%. Of the three regions with the biggest share of the passenger traffic market - Asia-Pacific, Europe and North America - Asia-Pacific carriers reported the strongest increase with a 7.8% y-o-y rise in passenger traffic in October. Capacity was 7.1% higher from the corresponding month in 2012, prompting load factor to gain 0.5 percentage point to 76.4%.
The European Central Bank (ECB) raised its Eurozone economic growth forecast to 1.1% for 2014 yesterday and predicted 1.5% growth the following year. It has also maintained its forecast that the 17-member Eurozone economy would shrink by 0.4% this year. The central bank has kept its interest rates unchanged at 0.25%.
Source: DBSV
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