DBSV S'pore Wired Daily 6 January 2014

kiasutrader

Publish date: Mon, 06 Jan 2014, 10:10 AM

Ezion - Vessel acquisitions accretive to EPS. Maintain BUY; TP adjusted slightly higher to S$3.36.

Attention returns once again to the monthly US employment numbers scheduled for release this week. The QE tapering process has begun, this week's data releases and FED minutes will continue to provide clues on the pace of QE tapering going forward. Near-term support for the STI is at 3130 that coincides with the 15-day exponential moving average, firmer at 3080.

Our Singapore economist says not to read too much into the 2.7% (q-o-q saar) decline for 4Q13 advanced GDP estimates because the figure can be subject to significant revision. The final 4Q13 GDP figure could contract by a lesser 0.8% q-o-q. This is because the three factors that dragged on growth in 4Q13 are transient.

Ezion has proposed to acquire the Liftboat #4, which was divested as part of the sale and leaseback exercise in Feb 2012. The buyback is part of Ezion's effort to raise charter rates in its upcoming renewal in 2Q14 by re-flagging the vessel to domestic flag, which can't be done under current ownership. In addition, having Indonesian-flagged vessels also sharpens Ezion's competitive edge in Indonesia in the long run. Separately, Ezion is also acquiring the remaining 50% stake in the Alaskan jackup #1 from partner looking to exit. We estimate that the two transactions are accretive and could add 1.8% to both FY14 and FY15 EPS. Net gearing increase of 0.1x is manageable. Maintain BUY; TP adjusted to S$3.36 (Prev S$ 3.30). We continue to like Ezion's strong growth profile and earnings visibility.

OCBC is reported to have made a binding bid for Hong Kong's family- run Wing Hang Bank Ltd. BT reported that OCBC conducted due diligence and offered less than the two times book value Wing Hang was seeking. The Hong Kong bank has a market value of US$4.6 bn, which is 1.7 times its estimated 2013 book value, data compiled by Bloomberg shows. Buying Wing Hang would be OCBC's biggest acquisition. The Singapore bank, which gets almost twothirds of its revenue from its home country, is stepping up overseas expansion plans as it seeks to offset the lowest lending margins in South- east Asia.

Keppel T&T is thinking of listing a data centre real estate investment trust (Reit) on the mainboard of the Singapore Exchange. Keppel T&T said it was reviewing the properties that will form the Reit's portfolio and the terms on which they will be injected into the trust. Other details, such as the size and timeframe of any offering to be made where the Reit is concerned, are also being considered.

OUEannounced that SGX has issued the 'eligibility-to-list' letter for the proposed IPO of OUE Commercial REIT.

Asia Fashion Holdings is proposing to acquire 100% of the share capital of China Construction Material (Hong Kong) (CCMH). CCMH's principal activities are the manufacture and sale of Base material boards, Floor and grainy board, Decorative boards and Aluminium products. The purchase consideration of RMB100m shall be satisfied by the issuance of shares worth RMB50m and the balance in cash. Asia Fashion recorded net loss in FY12 and reported 2Q13 total loss of RMB 451.5m. It may be placed on the Watch-List if it continues to record pre-tax losses for the next two financial years.

Croesus Retail Trust has established a US$500m Euro Medium Term Note Programme. The proceeds will be used for financing or refinancing acquisitions and/or investments.

Otto Marine has entered into a Memorandum of Agreement to sell seven (7) vessels for an aggregate consideration of US$10m. The transaction is not expected to have a material impact on the consolidated net tangible assets per share or earnings per share for FY Dec 13.

Singapore Exchange buyback activity fell to its lowest level in three years with 69 companies recording 1,068 filings worth $451m in 2013 - sharply down from 2012 (98 firms, 1,521 filings, $719m) and 2011 (96 companies, 1,730 filings, $1.06 bn). Buyback totals were also lower than the yearly averages of 82 firms, 1,252 filings and $685m from 2007 to 2012. Firms got off to a very slow start in 2013. The activity picked up in Q2 and Q3 - but dipped sharply in Q4. Buybacks are not used by listed firms to drive share prices up but as a means of price support in a fast falling market. Firms buying back shares last year accounted for an average of 6% of their stocks' trading volume in 2013.

Growth in China's services sector fell to a four-month low in December as business expectations dropped. The official purchasing managers' index (PMI) for the non- manufacturing sector dropped to 54.6 in December from November's 56. The services PMI follows two manufacturing PMIs out recently that showed growth in China's factories slowing in December as export orders weakened.

Source: DBSV

Ezion (5ME)OCBC Bank (O39)OUE (LJ3)

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