Towards Financial Freedom
DBS Equity Research: Wired Daily 4 Sep 2014
Singapore Hospitality - Tourist arrivals remain on a slower decline, signs of sustained recovery may occur in 4Q14/1Q15. Preferred picks - OUEHT, Ascott REIT and Frasers Hospitality
Tourist arrivals remain on a slower decline. Jul'14 tourist arrivals still weak, down 1% y-o-y but at a decelerating pace versus prior months. Going forward, we expect arrivals to remain soft, albeit on an improving trend. 4Q14 may see arrivals bottoming out, mainly due to the low-base effect. RevPAR growth was positive for the first time in two months, due to seasonal boost. For the rest of 2H14, we expect a gradual improvement in y-o-y RevPAR as the slowdown in tourist arrivals abates. We think there are limited catalysts to re-rate the sector until we see a sustained recovery in tourist arrivals, which may occur in 4Q14/1Q15. Till then, focus on counters that offer resiliency and clear growth drivers. Our preferred picks include OUEHT (BUY, TP S$0.95), Ascott REIT (BUY, TP S$1.33 and Frasers Hospitality (BUY, TP S$0.94).
Yoma Strategic Holdings has finalised its 1-for-3 rights issue to raise c.S$164m to kick-start the Landmark development and to acquire more land in Pun Hlaing. This issue of 432.5m rights shares (@ S$0.38/shr) will enlarge its share base by 33.5%. We are positive that funding is available now to kick-start the longawaited Landmark project. Next catalyst would be further development of Landmark. Near term, we expect this rights issue to sustain interest in the stock. Maintain BUY, target price S$0.88.
Sheng Siong Group proposes to place up to 120m new shares at S$0.67 per Placement Share. The Placement Price represents a discount of approximately 5.37% to the last weighted average price. Gross proceeds of approximately S$80.4m will provide the Group with funds for its future expansion plans in Singapore, which include the acquisition of properties for new retail outlets.
Rex International Holdings is proposing to place up to 168m new shares at a placement price of S$0.57 per share. The Placement Price represents a 7.7% discount to the last volume weighted average price. The estimated net proceeds of approximately S$93.5m will be used to settle the liabilities of and to inject working capital into Rex Technology Management and to fund development in other regions.
Sound Global has won a BOT project to reconstruct and expand works of Xingji water treatment plant and water supply network in Gucheng County, Hebei Province. This project with a total planned water supply capacity of 60,000 tonnes/day will require an investment of RMB170m from Sound Global. Project is positive but impact would be incremental to both earnings and Sound Global's existing design capacity of 2.4m tons/day.
ISDN Holdings has entered into mining operation agreements with PT Gema Energy Indonesia and PT Bun Yan Hasanah to develop and operate the manganese mines owned by Gema and Bun Yan in Nusa Tenggara Timur
Indonesia. Under the agreements, ISDN will share the profit from the mining operation with Gema and Bun Yan.
Logistics Holdings is acquiring a plot of industrial land in Johor for RM38.8m (S$15.3m) for its maiden overseas property development venture. The 11.5-hectare plot of land that it is buying in Senai Industrial Park at Iskandar
Malaysia will be used to build about 70-80 units of light and medium industrial factories, to meet the expected demand of industrial space from the nearby new township, Scientex Innoparc.
Singapore has again been ranked as the world's secondmost competitive economy by the World Economic Forum (WEF). According to the WEF's latest Global Competitiveness Index (GCI), Singapore kept its No 2 spot for the fourth year running. It was trumped only by Switzerland, which has been in first place for six consecutive years. The 2014-2015 report uses 12 pillars - including infrastructure, macroeconomic environment, and health & primary education - to rank the competitiveness performance of 144 economies worldwide. Because of its scale and depth, the GCI is viewed as the most comprehensive assessment of its kind globally.
The technology laden Nasdaq Composite Index fell the most in almost a month, dragged down by losses in Apple Inc.after Samsung introduced new smartphones and the company faced criticism for the theft of celebrity photos. Delta Air Lines Inc. shares fell after it lowered forecasts for some 3Q targets. Meanwhile, data showed factory goods orders rose 10.5% (consensus 11%) in July, the largest gain since records began in 1992. August total vehicle sales climbed to 17.45mil, higher than the previous month reading of 16.4mil and above consensus for 16.6mil.
Source: DBS
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