Towards Financial Freedom
DBS Equity Research: Wired Daily 16 Apr 2015
ASEAN Small Mid Caps Radar - We feature three SGX -listed stocks: Boustead Singapore, Rowsley and Riverstone
Singapore Property - New launches spur March sales
In our ASEAN Small Mid Caps Radar, we feature three SGX -listed stocks: Boustead Singapore, Rowsley and Riverstone Holdings. Diversified conglomerate Boustead Singapore is set to list its real estate solutions arm - Boustead Projects (BP) - on SGX by distributing part of its stake in BP to shareholders. The spin-off of BP could unlock value and help propel growth for both listed companies. Based on BP's NAV of S$0.51, the distribution in specie is worth c.S$0.153 (per BOCS share). Rowsleyis a unique emerging multi-disciplinary real estate developer backed by established architectural firm RSP. The stock currently trades at a deep discount, at 0.43x RNAV. We see this gap narrowing on successful execution of its development project in Iskandar. Riverstone is increasing its manufacturing capacity of cleanroom gloves by 24% to 5.2bn pieces of gloves by end 2015 from 4.2bn pieces at end 2014. Earnings have grown at 20% CAGR from 2011 to 2014 and could continue to grow at a face pace given its expansion plans.
Mar-15 private home sales rebounded 55% over Feb-15 to 613 units, excluding executive condominiums (ECs), and sales are largely attributable to upbeat performance at two recently launched large-scale projects - Kingsford Waterbay at Serangoon View and Sims Urban Oasis. These two projects accounted for 42% of total units sold in the month. YTD, 1,367 private property units were sold, representing a drop of close to 24% over the same period in 2014 (1,791 units sold). Prices are still holding firm; Apr-15 performance should improve on the back of strong sales at Northpoint Residences (FCL) and Botanique @ Bartley (UOL). We continue to like property developers with (i) diversified earnings stream which offer strong earnings visibility, (ii) strong balance sheets, implying ample capital to deploy opportunistically, and (iii) catalysts from asset recycling activities. Picks are Capitaland, Frasers Centrepoint Limited and UOL.
SMRTannounced that it has entered into an agreement with OMGTEL to work exclusively in connection with the latter's bid for the 4th wireless telecommunications carrier licence in Singapore. OMGTEL is a company incorporated in Singapore by Consistel Pte Ltd in Oct 2014 for the purpose of bidding for the Telco licence. Consistel is a in-building wireless systems provider. SMRT is also offered an opportunity to invest up to S$34.5m via an option to subscribe for shares in OMGTEL.
Ezra Holdings announced that the Group's Subsea Services division, EMAS AMC, has won multiple new awards from various oil and energy companies worth approximately US$55m. Work has commenced for several projects, with the others slated for offshore execution from Q3FY2015 onwards. The Group has secured a healthy backlog of approximately US$2.3 bn, with a majority of the contracts expected to be executed over the next 24 months.
SIAoperating results for March 2015. In March 2015, Singapore Airlines' systemwide passenger carriage increased 1.2% over last year, against a 1% reduction in capacity. Consequently, passenger load factor (PLF) improved 1.6 percentage points to 76.6%. Overall cargo load factor (CLF) was 0.2 percentage points lower as cargo traffic was down by 1.8% against an overall capacity reduction of 1.6%. Load factor improved on all route regions except East Asia and Europe, where demand did not keep pace with capacity changes.
SIA Engineering signs $2.9 bn Services Agreement with Singapore Airlines. The existing Services Agreement with SIA expires in 2015. The new agreement, commencing 1 April 2015, is for a term of 3 years, with options to renew for 3 years and a further period of 2 years. SIAEC's support of the SIA fleet covers a broad spectrum of maintenance, repair and overhaul (MRO) and fleet management support services. ST Engineering announced that its electronics arm, ST Electronics has secured about $382.5m worth of contracts in 1Q2015 for Rail Electronics & Intelligent Transportation, Satellite & Broadband Communications, as well as Advanced Electronics & Information Communications Technologies (ICT) solutions.
Sembcorp Industries continues its growth momentum in the renewable energy business. In China, the company's renewable energy business is expanding in Huanghua, Hebei province, with the development of two wind farms. Its proposal to build a 150-megawatt wind farm in Laoshibeihe was approved by the Hebei Development and Reform Commission while another wind farm with 48 megawatts power capacity in Jiedijianhe commenced operation. Sembcorp will be commencing the construction of the approximately RMB1.3 bn (S$0.3 bn) wind farm in Laoshibeihe this year. Sembcorp's share of the equity investment will amount to around RMB 0.2 bn (approximately S$45m). The RMB455m (approximately S$94m) wind farm in Jiedijianhe has begun supplying power to the Hebei South grid.
LH Group is expected to incur a loss for 1Q2015. Its unaudited financial results for 1Q2015 will be released on or before 11 May 2015.
Heeton Holdings is again looking for a buyer to pick up all 30 units in its iLiv@Grange project, a 16-storey building with a curvaceous facade that received Temporary Occupation Permit (TOP) in October 2013. This time around, Heeton's asking price is said to be S$110-120m, which would translate to S$1,879-2,050 psf based on the total strata area of 58,534 square feet for the freehold project in Singapore's prime district 10. In late-August 2013, its asking price was around S$2,200-2,300 psf.
China's economy grew 7% in the first quarter. The figure, slightly above consensus expectations, is in line with the government's forecast of annual gross domestic product (GDP) growth of "about 7%". In the previous quarter, the Chinese economy grew 7.3%; for the whole of last year, the figure was 7.4%.
US stocks rose, led by a surge in energy stocks as crude oil climbed to a YTD high, while Intel Corp. rallied following earnings. The USD fell after a drop in manufacturing bolstered the case for continued stimulus. In Europe, 10-year German bunds yielded the least ever as Mario Draghi signaled he will stay the course with his bond- buying program. WTI crude jumped 5.8% as gains in American crude supply eased. In after-hours, Netflix Inc. shares rose after it said subscribers to its video-streaming service topped 62mil globally in the first quarter.
Source: DBS
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