DBS Equity Research: Wired Daily: 19 March 2015

kiasutrader

Publish date: Thu, 19 Mar 2015, 04:16 PM

Frasers Centrepoint Limited - Aging The Centerpoint Mall to get a major uplift; positive for FCL in the medium term

Frasers Centrepoint Limited (FCL) announced a make-over of The Centrepoint, one of its key asset located in Orchard Road. The Group is expected to spend an estimated S$50m in an asset enhancement program spanning 16 months. The renovation will include extensive works at ground and basement levels and an integration of floor plates between the main building and basement annexe. The aim is to have a more open concept layout with wider street frontage and shop visibility.

This comes on the back of recent news of long-term tenants exiting the mall, including electronics retailer Harvey Norman, Marks & Spencer and supermarket Cold Storage. The introduction of new department store retailer, Metro (who replaced The Robinsons) also failed to inject more vibrancy since its opening late last year. In addition, we see increased competition from other malls. In the medium term, positive impact for FCL in terms of capital values and rentals post AEI. In terms of contribution, the asset contributes 7% of RNAV, 2% of PBIT.

MyRepublic, a Singaporean retail broadband service provider, once again talked about interest to enter the mobile telco market as the fourth player by participating in the next 4G spectrum auction. The company expects to introduce 10GB -12GB data bundles as standard for mobile connections (from the current 2-3GB).

A new telco would need to invest over S$500m even for the bare-bone network while Singaporeans expect world-class network. However, MyRepublic has raised S$30m funding so far which appears to be for the expansion of retail broadband business in Australia and New Zealand. At present, the regulator has not given any dates for the next spectrum auction though it remains a possibility during the course of FY15. According to news sources, a portion of spectrum licenses will expire in early 2017, which is likely to be auctioned off in the next 2 years. In addition, IDA had set aside 40 MHz at the previous 4G spectrum auction in 2013, which remains available. Any potential weakness in Singapore telecom stocks due to the news should be a buying opportunity. M1 continues to be our top pick.

ST Engineering's aerospace arm, ST Aerospace, is teaming up with Tenryu Holdings to set up joint venture ST Aerospace Aircraft Seats, which will have a planned investment of S$29.8m. ST Aerospace will own 90% of the joint-venture shares, with the remaining 10% to be held by Tenryu. Based in Singapore, ST Aerospace Aircraft Seats will design and manufacture a range of aircraft seats, such as economy, business and first class seats.

CNA Group is acquiring a 10% shareholding (value to be determined after due diligence) in Jilin Gold Group (JGG) to invest and further participate in JGG's businesses which includes a gold mine, jewellery retailing and franchising, hotels, and events management and media advertising agency, throughout China. This investment is expected to generate a consistent and recurring annual dividend yield for CNA Group.

Blumont Group proposed a rights cum warrants issue in a bid to raise up to S$27m mainly to repay debt. It plans to issue a renounceable non-underwritten rights issue of up to 2.7bn new shares at an issue price of 1 cent apiece and up to 2.7bn free detachable warrants. Each warrant carries the right to subscribe for one new share in the company at an exercise price of 1.2 cents.

Noel Gifts International has been awarded a contract by the Monetary Authority of Singapore (MAS) for the Packaging, Marketing and Sale of Numismatic Currency Sets. The revenue, which is subject to market demands, that could potentially be derived from the contract is up to approximately S$7.9m.

Forecasters are already cutting back their expectations for full-year growth for Singapore, just three months into 2015. Consensus now expects the Singapore economy to expand 2.8% this year - lower than their earlier projection of 3.1%. Their lowered median forecast is still within the official projection range of 2 to 4% GDP growth.

U.S. stocks rallied after the Federal Reserve said data suggested economic growth has moderated; fuelling speculation it is not in a rush to raise rates. The central bank said higher interest rates in April are unlikely and it won't tighten until it is "reasonably confident" inflation will return to its target and the labour market improves further. The Fed also dropped an assurance it will be "patient" in raising interest rates. This still leaves the door open for rate hikes start either June or September. The Fed will now set policy at each meeting based on the latest economic data, making its actions less predictable. US bond yields field and the Dollar weakened against major currencies. The USDSGD cross pulled back to 1.375.

Source: DBS

Frasers Property (TQ5)ST Engineering (S63)Southern Arch (A33)Noel Gifts Intl (543)

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2024-09-18

ST Engineering

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ST Engineering - Rolling Forward Our Valuation; Reiterate BUY
Source : RHB, Price Call : BUY, Price Target : 5.32
Last Price : 4.70, Upside/Downside : +0.62(13.19%)

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