DBS Equity Research: Wired Daily 05 Nov 2014

kiasutrader

Publish date: Wed, 05 Nov 2014, 10:18 AM

Global Logistic Properties - 2Q15 results hit by forex losses. Maintain BUY and TP of S$3.42. We remain positive on GLP.

Global Logistic Properties reported a lower 2Q15 net profit, hit by forex losses. On the operation front, positive leasing momentum was seen in core markets, while developments gaining ground to hit target. Maintain BUY and target price of S$3.42. We remain positive on GLP, driven by its value creation from development projects in China and fee income business.

SIA Engineering reported a disappointing set of number in 2QFY15. 2QFY15 net profit of S$42.1m was down 41% y-o-y and 21% q-o-q. This represents the worst quarterly earnings performance since 2007. Revenue was down marginally by 3%, but operating margin dipped to 5.6% vs. 7.0% in 1QFY15 and an average of 9.8% achieved in FY14, largely due to higher subcontract costs on fleet management contracts. Our earnings estimates and target price are currently put under review, pending analyst briefing today.

SMRT announced that its CFO, Mr Sam Ong, has tendered his resignation from the Group, and his last day will be 9 Nov 2014. The reason given in the announcement was that he "has decided to resign from the Company to pursue philanthropic interests and business prospects". We were surprised by the short tenure of just 8 months. However, this is not an indication of red flag, in our view, given strong corporate governance/ Temasek as major shareholder. We had upgraded SMRT to BUY recently with a revised TP of S$1.86 (from HOLD). This development could put a short term dent in share price, but we believe fundamentals remain intact and advise accumulation on pull backs.

The Government has publicly stated its preference for purpose built dormitories (PBD) as the way forward for housing foreign workers. We are overall positive on this Bill. Licensing requirements will weed out opportunistic dormitory operators, and the focus on quality vs. prices should give Centurion a competitive edge regarding future dormitory tenders or projects. Despite near term headwinds, we believe that Centurion's long term prospects are still bright. We have a BUY call on Centurion, target price S$0.91.

Singapore Medical Group proposed placement of 26.97m new shares at an issue price of S$0.162 per share. The Placement Price represents a discount of 10.0% to the last volume weighted average price. Upon completion of the Placement, the Group is proposing to undertake a renounceable non-underwritten rights issue of up to 25.1m new shares at an issue price of S$0.153 for each Rights Share, on the basis of one (1) Rights Share for every ten (10) existing Shares held. The proceeds are proposed to fund the growth and expansion of the Group.

Keppel Infrastructure Holdings, has entered into a Heads of Agreement (HOA) with Petronas LNG to purchase up to 1 million tonnes of Liquefied Natural Gas (LNG) per year, over 10 years. This LNG purchase will bolster Keppel Gas' portfolio of natural gas and allow Keppel Gas to offer competitive gas supply options to its customers in Singapore.

Thai Beverage unveiled "Vision 2020", the Group's roadmap for the next six years. Driven by "Five Strategic Imperatives" - Growth, Diversity, Brands, Reach, and Professionalism, ThaiBev is setting out to further the success it has progressively achieved since its establishment in 2003. The Group aims to :-

• Increase revenue contribution from non-alcoholic beverages to over 50%

• Increase revenue contribution from outside of Thailand to over 50%

• Streamline businesses into three product groups supported by common infrastructure

• Push core brands and key markets for each product group

Serrano has been awarded a new interior fit‐out contract by Woh Hup (Private) Limited, the main contractor, for a private condominium development project at Pasir Ris Grove / Pasir Ris Drive 1. The award of the contract, together with other recent contracts which the Group has secured, brings the total order book for the Group's Interior Fit‐Out Business to approximately S$83.9m as at todate.

Tiong Seng has been awarded a contract for the development of an Executive Condominium at Choa Chu Kang Grove worth around S$276m by MCL Land. The project comprises the design and build of 1,327 units, one block of 4-storey multi-storey carpark with a roof garden, ancillary facilities, swimming pool and a basement carpark. The contract is expected to commence in November 2014. This updates Tiong Seng's current order book to S$1.4 bn, expected to be completed by 2020.

Roxy-Pacific Holdings is relaunching its freehold Trilive condo in the Kovan area, with price reductions of about 8% on selected units. To date, the group has sold only 20-odd units in the 222-unit project, at an average price of about S$1,500-plus per square foot.

Tritech Group has been awarded a S$11.5m sewer contract by the Public Utilities Board. The completion date is March 2017.

Singapore's October PMI rose 1.4 points to 51.9 - a level not seen since April 2011. 50.5 - This is better than consensus estimate of 50.5, the same as September's showing. The expansion in overall PMI was attributed to better new orders (up 1.1 to 52.9), new export orders (up 0.8 to 51.5), and production (up 2.0 to 53.1). All other subindices - except for input prices (down 0.9 to 48.7) and order backlog (down 0.3 to 50.4) - posted higher readings in October as well.

US stocks fell, led by energy companies after WTI oil fell to a 3-year low to end at USD77.2pbl, off the intra-day low of USD75.84pbl. Brent crude clung above its recent low at USD82.8pbl. Disappointing forecasts from Sprint Corp. to Priceline Group Inc. also weighed on sentiment. But airline stocks gained as the slump in crude oil boosted their earnings prospects. On the data front, US factory orders slipped 0.6% in September, matching consensus. The European Commission cut its growth forecast for the euro area and said inflation will be even weaker than what the ECB predicts. The ECB meets Nov. 6 to deliberate on monetary policy amid increasing the pressure for the central bank to consider additional stimulus.

Source: DBS

SIA Engineering (S59)SingMedical (5OT)ThaiBev (Y92)Roxy-Pacific (E8Z)Tritech (5G9)

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