DBSV S'pore Wired Daily 16 December 2013

kiasutrader

Publish date: Mon, 16 Dec 2013, 12:09 PM

Dairy Farm - Costs a concern; downgrades to HOLD, target price cut to US$9.46.

The STI has fallen 130 pts in the past eight days, just recovered slightly last Friday. Market sentiment continued to weak, weighed down by concerns over QE3 tapering. The technical support for the STI is at 3015-3040, which presents a buying opportunity. This support level, which was briefly tested in the last two trading days, is just below the -0.5 SD FY14F level of 3043.

We believe the 13.1x (-0.5SD) FY14F PE level is attractive, as we are expecting 9% earnings growth for FY14F. The last time the STI hit the -0.5SD level was in June last year, when the market was affected by concerns over QE3 tapering, which was subsequently postponed. Weak data coming out of China back then was also another reason for the selldown.

Many believe the US is on the verge of taking off but our economist begs to differ as the key component -consumption is still on a down trend. Overall, he expects GDP growth of 1.6% in 2013, followed by 2.0% in 2014. Despite anemic growth, Fed is expected to taper anyway, possibly in April. Our economist is not expecting more volatility in emerging markets and we should look beyond Fed tapering as bond yield is already re-anchored to 2.5% to 3.0%, above the 2.0%-2.5% target range. Second, most Asia countries have reported improved trade

performances and more stable balance of payments.

Our analyst downgrades Dairy Farm to HOLD, target price cut to US$9.46 (Prev US$11.60). Margins are likely to be lower going forward due to higher costs. Lower margins could lead to soft FY13F results. He has trimmed FY14F/FY15F earnings by 15% each.

Thai tycoon Charoen Sirivadhanabhakdi has trimmed his stake in Fraser and Neave (F&N), to raise the conglomerate's public float to meet listing requirements. TCC Assets, Mr Charoen's private vehicle, sold a 2.1% stake in F&N, or 30.9m shares, for $173m through married deals. At $5.596 per share, the sale price represented a 0.6% discount to F&N's Thursday closing price of $5.63. Following the sale, Mr Charoen's interests in F&N, held through TCC Assets and listed beer brewer Thai Beverage Public Co, fell to 87.93% from 90.07%. This brings the public float to about 12%, meeting the minimum public float requirement of 10%.

Centurion has acquired a 7220 sq m plot of land in Jakarta, Indonesia for S$0.8m, for the development of worker accommodation. This will be Centurion's maiden worker accommodation investment in Indonesia.

Tigerair has entered into strategic alliances with three airlines to expand its network and commercial cooperation. These initiatives form part of its strategy to accelerate business growth in the key Asian markets of North-east Asia, India, and Singapore without overstretching its resources.

These latest strategic alliance initiatives comprise:

- a joint-venture agreement with China Airlines to establish a Taiwan-based budget carrier,

- an interline agreement with SpiceJet to enable greater connectivity between flights operated by both carriers, and

- an alliance agreement with interline partner, Scoot, to expand and deepen their collaboration in commercial activities and network coordination.

Global Tech is expected to record a net profit for the year ended 30th September, 2013 as compared to a net loss for the corresponding year ended 30th September, 2012, which is mainly attributable to the written back of provision for taxation previously made by the Group during the year.

Transview Holdings is expected to report a loss for FY Dec 13 mainly due to the lower operating income as a result of the challenging market conditions.

Shares of Wilton Resources Corporation, formerly Hartawan Holdings will commence trading today, marking a new chapter as a SGX Catalist-listed corporation involved in gold exploration and mining in Indonesia. The commencement of trading follows the completion of a reverse takeover (RTO) of Catalist-listed Hartawan by Wilton Resources Holdings, an investment holding company controlled by experienced entrepreneurs, Mr. Wijaya Lawrence of Indonesia and, Mr.Patrick Ngiam of Singapore.

Albedohas agreed to buy an additional six parcels of land from a company majority owned by Malaysian tycoon, Tan Sri Dato' Danny Tan in a move that will increase the size of the reverse takeover (RTO) deal by more than twofold from S$774m to S$1.86 bn. Albedo, which will be transformed into a major property developer in Malaysia on completion of the RTO, first agreed to buy seven parcels of land from Tan Sri Dato' Tan's Infinite Rewards Inc in September 2013. The additional six land parcels currently belong to Tan Sri Dato' Tan and his family and will bring Albedo's Iskandar landbank to 13 parcels of about 1,182.58 acres.

Albedohas also announced the issue of up to 260m nonlisted and non-transferable warrants for an issue price of S$0.001 per Warrant, each Warrant carrying the right to subscribe for one (1) new Share in the capital of the Company at an exercise price of S$0.04338 per share. The Exercise Price represents a discount of 10.0% to the last volume weighted average price. The proceeds will be used for general working capital purposes, including the repayment of trade payables and borrowings.

Singapore's retail sales fell unexpectedly in October after growing in September as buyers avoided buying motor vehicles. Retail sales fell 3.2% in October compared to September when it rose 0.6% from August. Stripping out motor vehicles, retail sales fell marginally by 0.5% in October compared to the 2.4% drop in September. Retailers of motor vehicles suffered a seasonally adjusted double-digit decline of 17.3% in October compared to September, when they enjoyed 19.1% growth. Year-on-year, retail sales declined 9.4% in October, also due to lower motor vehicles sales. Excluding the latter which fell 39.6% y-o-y, retail sales went down by 0.9%. The total retail sales value in October was estimated at $2.9 bn, lower than the $3.2 bn a year ago.

Source: DBSV

DFIRG USD (D01)F & N (F99)Centurion (OU8)Guoan Intl (G11)Wilton Resources (5F7)

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