DBSV S'pore Wired Daily 9 December 2013

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Publish date: Tue, 10 Dec 2013, 10:26 AM

F&N - Sweetened its offer to bondholders by tacking an additional 375 to 600 basis points to its original Proposal

We continue to see the prospect for the STI to head higher towards 3290. But, the likelihood of this happening looks to be delayed beyond the year-end lull period.

On the economy, China's recent data suggests that the country's economy is stabilising after a long slowdown. Manufacturing and services PMIs have stabilized and the producer price index has also stopped falling, offering hope of a recovery.

Companies that can benefit from China's anticipated recovery include OSIM, which is poised to benefit from rising consumption in China, given that 55% of its salesare from North Asia. Midas is a recovery play on expectations of more high-speed bullet train contracts from China. Prospects for China Merchant remain bright.

Economic conditions in the G3 are improving as well. Policy stimulus has lifted economic performance in Japan while Europe is out of recession. The US is still on the recovery path, albeit a slow one. With the macro backdrop improving, being an export driven country, Singapore is poised to benefit from the improved global outlook. This has led our economist to raise Singapore GDP growth forecasts for 2013 and 2014. One of the sectors to benefit from the improving Singapore GDP growth is the banking sector. Our pick is OCBC (BUY, TP: S$12.40). Our banking analyst believes that there is potential upside surprise for loan growth while net interest margin is on a gradual uplift.

F&N has sweetened its offer to bondholders by tacking an additional 375 to 600 basis points to its original proposal, to avert a bond technical default as the group plans listing spin-off of property business. F&N sought bondholders' approval to give it a call option to redeem its $108.25m of 5.5% notes due 2016 at par plus 6.5%, vs its earlier offer for this series, which was rejected last month, for par plus 2.75%. For the $200m 6% notes due 2019, F&N raised its proposed early redemption offer to par plus 9%. The earlier proposal of par plus 3% was also rejected.

CordLife Group has increased its stake in its associated company, StemLife Berhad to approximately 31.81% stake after acquiring an additional 11.89% stake for RM17.7m cash from various shareholders of Stemlife.

Wilmarand global consumer goods leader Unilever signed a Memorandum of Understanding (MoU) that aims to accelerate sustainable market transformation for palm oil. In parallel, and key part of the MoU, Wilmar launched a new "No Deforestation, No Peat, No Exploitation" policy that aims to advance an environmentally and socially responsible palm oil industry.

Ipco International signed a Framework Agreement with the Haiyang City Housing & Construction Planning Authority for a 30-year natural gas distribution concession in Haiyang City, Shandong Province, Peoples Republic of China. As construction is expected to commence in the second half of 2014, there should be no significant impact in the current financial year. The total investment cost is estimated at RMB 120m.

Separately, Ipco said that it is expected to report a loss and asset impairment for the half year ended 31 October 2013. This is primarily attributable to declines in value of Financial Assets, of which the most significant is the Groups holding of 9.74% of the issued share capital of Blumont Group Ltd (Blumont).

Hiap Seng Engineering has been awarded, under a consortium with Petroleum Maintenance Service Joint Stock Company of Vietnam, a turnaround maintenance contract worth approximately US$10m for the provision of maintenance, overhaul and repair services including inspection, testing and cleaning of process equipment for

Dung Quat Refinery in Vietnam.

Vallianz Holdings is exploring options to establish an Islamic Trust Certificates Programme to broaden and deepen its investors' pool.

Cacola Furniture is proposing to issue 2.0% equity linked redeemable structured convertible notes due 2016 with an aggregate principal amount of up to S$60m. The proceeds are expected to be used for development and exploration of new investment opportunities and other corporate activities.

China's exports handily beat forecasts in November, adding to recent evidence of a stabilisation in the world's second largest economy as its leaders embark on an ambitious restructuring plan. Exports rose 12.7% y-o-y, against a median forecast of a 7.1% rise. Imports rose 5.3%, below a forecast of 7.2%, leaving a trade surplus of US$33.8 bn against forecasts for US$21.7 bn.

Source: DBSV

F & N (F99)Midas (5EN)Cordlife (P8A)Wilmar Intl (F34)Renaissance United (I11)Hiap Seng (510)OCBC Bank (O39)

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