Towards Financial Freedom
DBS Equity Research: Wired Daily 5 Sep 2014
Sheng Siong - Long-term growth intact but TP lowered to $0.78 post placement on EPS dilution
Sheng Siong's 120m new placement shares to investors at a placement price of S$0.67 will raise about S$80m in proceeds, which will be used to fund expansion in Singapore including acquiring new properties for outlet expansion. The Lim family's stake in SSG will be diluted from 69.4% to 63.8%. FY15F's EPS and DPS dilution will be approximately 8%. Cash hoard swells to >S$170m and net cash per share will improve to 11.6 ct/share. Our assumptions show a 1-2% increase in FY15F/FY16F earnings and 7%/6% reduction in EPS. Our TP, based on 25x FY15F earnings is consequently lowered to S$0.78 to largely reflect the dilution in EPS. We remain positive on the stock since long term growth will be underpinned by store expansion in Singapore and its recent announcement of planned expansion into Kunming China. Maintain Buy.
Among the 8 bids received for an EC site along Choa Chu Kang Drive, Sim Lian Land placed the top bid of S$207.4milor S$361 psf ppr for the site, which is expected to yield an estimated 535 homes. Sim Lian's top bid was 2.2 %higher than the next highest bid.
Keppel Corporation's indirect wholly-owned subsidiary, KSI Production Pte Ltd, is acquiring a 10% stake in Golar Hilli Corporation for US$50. KSI will acquire 50 ordinary shares of Golar Hilli from Golar GHK Lessors Limited at US$1 per unit. Golar Hilli is the owner of the Moss LNG carrier HILLI, which is scheduled to be converted into a Floating Liquefaction Vessel (FLNGV) by Keppel Shipyard.
The ECB has unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation. ECB reduced all 3 of its main interest rates by 10bps. The benchmark rate was lowered to 0.05% and the deposit rate is now minus 0.2%. The ECB will also start buying asset backed securities to boost the flow of funding while stopping short of broad-based quantitative easing.
More evidence of a cooling in Singapore property market emerged. HDB resale prices slipped 1.1% in August compared with July 2014, data from the Singapore Real Estate Exchange (SRX) showed. The 3 and 4-room flats were the main drag, as their resale prices fell 2% and 0.9% respectively in August. HDB resale prices were down 7.1% from August last year and 8.6% from the peak in April 2013.
Source: DBS
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