Towards Financial Freedom
DBS Equity Research: Wired Daily 27 Aug 2014
Silverlake Axis - Sweet dividend surprise but weak backlog concern. Maintain HOLD, TP revised up to S$1.05
FY14 earnings of RM249m (+27%) for Silverlake Axis were 4% ahead of our estimates due to lower costs and forex gains. Final DPS of 1.8Scts took FY14 DPS to 4.5Scts (+45%) or 105% payout ratio, way above our 3.7Scts estimate. Order backlog of ~RM250m flat q-o-q continues to be a near-term concern; potential order wins from Wing Hang and RHB are key medium-term drivers. Our DCF-based target price is revised up to S$1.05 (Prev S$ 0.94) after raising our terminal growth rate assumption to 2% from 1%. Maintain HOLD.
Cambridge Industrial Trust announced the proposed acquisition of 12 Ang Mo Kio Street 65, a 6-storey light industrial building, for S$39.8m, or S$220 psf. The Manager hopes to complete the purchase by 3Q14. The property, has 36 years remaining on its land lease, has a total GFA of c.180.5k sqft. It is currently 85% occupied and leased to two tenants. Net yield of 5.3% could rise to 6.6% by FY15. Maintain HOLD with higher target price of S$0.77 (Prev S$ 0.74).The stock currently offers a dividend yield of 7.1-7.7% for FY14-15.
Osimproposes to issue up to S$200m Convertible Bonds. Osim intends to use the net proceeds of the Issue to raise capital to roll out and enhance its well-being and lifestyle business in Asia and beyond, finance potential strategic acquisitions which the Group may pursue as part of its strategic objectives and general working capital.
SBI Offshore announced that the Middle East-Chinese consortium, which recently awarded its subsidiary a contract to provide design and engineering services for a jack-up drilling rig, has commenced discussions with SBI Offshore to build up to five units of jackup drilling rig. The consortium, whose members are involved in oil and gas activities, has indicated that the rigs will eventually be deployed in the Middle East and various parts of Asia for operation in water depths of up to 110 meters.
Manhattan Resources had entered into a conditional sale and purchase agreement to venture into mineral water mining in the PRC. The proposed acquisition is in line with the Group's foray into the mineral mining industry in the PRC and to build a more diversified and stable revenue base for the Group.
QT Vascular has been issued key patent in Japan for its proprietary balloon technology relating to side branch balloon. Significant elements of this technology are used in the Group's Glider PTCA balloon catheter. The PTA Patent for GliderTM PTCA balloon reflects progression of the company's Asian growth strategy. The Group will leverage on growing ageing population in Japan and Asia with expansion of patent portfolio. Its Asian operations are expected to experience strong growth from positive order momentum with respect to Glider family of products in 4Q2014 and additional regulatory approvals for Chocolate® in 2015.
Halcyon Agri Corporation has entered into a placement agreement with Mr Goi Seng Hui to place 25m new shares at an issue price of S$0.738 for each Placement Share to raise S$18.45m. The issue price is at a discount of approximately 9.88% to the last weighted average price. The funds raised will solely be applied to expand the Group's working capital base.
Leader Environmental Technologies is placing 24m new shares at the issue price of S$0.05 per New Share to raise S$1.2m. The issue price is a discount of approximately 5.7% to the last volume weighted average. Proceeds will be used for the sole purpose of funding its operating expenses in Singapore.
Singapore's July Industrial production registered 3.3% growth, boosted by the double-digit surge in biomedical production. Without this boost to offset contractions in the electronics and transport engineering clusters, industrial production would have fallen by 2.2% last month. The key electronics cluster - which retains the largest weight of 33.4% on the industrial production index - continued to exert a drag on overall manufacturing activity. Electronics output dropped 2.9% in July, falling for the fourth straight month. Semiconductors activity contracted by 1.6% in July. Still, the fall in electronics production was less than the 4.4% and 4% contractions seen in June and May respectively. On a month-on-month basis and after adjusting for seasonal factors, industrial production increased 2.7%. Excluding biomedical manufacturing, output would have fallen by 0.8%.
Visitor arrivals in Singapore slipped 2.8% y-o-y to 7.5 million in the first half of 2014 as the number of Chinese visitors during the six month period slumped 30%. Stripping out China, visitor arrivals in Singapore would have been up 2.3%, according to a report from the Singapore Tourism Board (STB). Some 1.53 million visitors from Indonesia - Singapore's top visitor generating market - came here in the first six months of the year, up 3% y-o-y. China is the second biggest source market for Singapore, with 871,000 travellers coming here in H1 2014, down 30%. Other countries which account for Singapore's top five visitor generating markets - namely Malaysia (-2%), Australia (-3%) and India (-1%) - reported slight decreases as well. Meanwhile, markets which saw double digit increases in tourists in Singapore in H1 2014 include Hong Kong (16%), South Korea (16%) and Vietnam (12%). The STB has forecast visitor arrivals to clock 16.3-16.8 million this year, and tourism receipts to hit S$23.8-24.6 billion. Last year, Singapore welcomed 15.5 million tourists, who spent S$23.5 billion.
US stocks rose but were off session highs as data showed the biggest jump in durable-goods orders and an unexpected increase in consumer confidence. U.S. durable goods jumped 23% in July as bookings surged for commercial aircraft. An air show in the U.K. helped drive a 318% in plane orders, the most since January 2011. Meanwhile, the Conference Board's consumer confidence index rose to 92.4 in August, the highest since October 2007, from a revised 90.3 a month earlier. Amazon.com shares rose after saying it's paying $970mil in cash for Twitch, the online gathering place for gamers. Best Buy shares fell after it reported 2Q comparable sales that are worse than consensus expectations.
Source: DBS
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