Towards Financial Freedom
DBSV S'pore Wired Daily 11 December 2013
Plantation Companies - Expect near-term correction in palm oil prices, recommend take profit. Cut Indofood Agri Resources to HOLD
Del Monte Pacific - Upgrade to BUY; recent weakness looks overdone
Malaysia's Nov13 palm oil stockpile of 1.978m MT (+7% mo-m) was higher than expected on slowing exports. Dec13-Jan14 stockpiles are projected to decline further on low crop season and lower imports. Palm oil price discount to soybean oil is expected to narrow further, but weaker soybean oil prices may drag down CPO prices in 1QCY14. We expect near-term correction in palm oil prices, and recommend investors to take profit, following the strong-run since end of Sep13. For SGX-listed CPO stocks, cut Indofood Agri Resources to HOLD (TP: S$ 1.00) as it has priced in significant earnings recovery next year. Lacking dividend policy, we believe there remains limited return left at current level.
We upgrade Del Monte Pacificto BUY, TP revised down to S$0.82 (Prev S$0.96), factoring in higher risk profile. The recent sell down looks overdone, and may have more than priced in uncertainty of its proposed US$1.675bn acquisition of Del Monte Food's Consumer Food Business (DMF-CFB). We lowered our FY14F forecasts by 26%, taking into account an estimated one-off transaction cost relating to the acquisition, but have not factored in potential contribution from CFB. Risks would include higher interest rates, integration and performance of combined entity, and potential dilution from equity issuance.
Yoma Strategic Holdings has entered into a conditional agreement with Pun Hlaing Lodge (PHL) to acquire 80%
effective interests in a plot of land located in the Pun Hlaing Golf Estate (PHGE). The land, with land area of 8,887 square metres and valued at US$3.0m, is designated for the construction of a hotel. Yoma also updated that the deadline for acceptance of the offer to acquire the land development rights of and to participate in the development of the Riverside Development Project has further extended as the company intends to focus on its existing projects.
China Yuanbang Property is placing out 39m new shares to raise S$9.6m. The placement price of S$0.245 each represents a discount of approximately 4.5% to the last volume weighted average. The funds will be mainly used for the development of commercial and residential properties in China.
Civmecannounced its first major award for its Darwin operations following its expansion into the Northern Territory of Australia earlier this year. As a result of this award, combined with recent awards from Western Australian operations, order book now stands at SG$$386m.
AusGroup announced the repayment of its senior debt facilities. As at 30 November 2013, the Group has work-inhand value at A$219m. This is up from A$179m advised in their Q1 update following recognition of a number of
variations, extensions and new awards.
China's industrial output growth fell slightly but retail sales and exports grew more than expected in November. Though growth shows signs of easing, this is in no way bad news for China, which needs to redefine its model and focus on achieving slower, more sustainable growth. Industrial output increased 10% y-o-y in November, down from the 10.3% growth recorded for October. The biggest drag came from non-metal and ferrous metal manufacturing and the private sector. The automobile sector performed the best; its growth accelerated to a 19-month high of 20.3%, up from October's 18.2%.
Retail sales expanded 13.7% y-o-y in November, picking up from 13.3% the month before. This was probably the result of the marketing campaign around Singles' Day on Nov 11, when e-retailers notched up unexpected takings.
Airlines are expected to carry 930m more passengers by 2017, taking the total number of passengers to 3.91 bn, with Asia-Pacific accounting for nearly a third of new passengers. Last year, airlines carried 2.98 bn travellers. Of the 930m new passengers, the bulk - or 638m - will be carried on domestic routes and the rest on international routes, according to the latest airline industry forecast by the International Air Transport Association (Iata).
US stocks fall as market awaits retail sales data tomorrow and Fed's policy meeting next week, when it will decide whether to continue pumping money into the economy at its current rate of $85 bn a month. Headline growth for November retail sales will look strong at 0.6% (MoM,sa) thanks to unit auto sales, which recouped all of their Sep/Oct losses in the single month of November. However, ex-autos, markets look for a smaller 0.2% gain in sales. That would put on-year growth at 2.5% YoY, the lowest in nearly 4 years.
Source: DBSV
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