Towards Financial Freedom
DBS Equity Research: Wired Daily 17 Apr 2015
Telecom Sector - We estimate potential adverse impacts of 13-16%, 6-7% and 1% on group topline of M1, StarHub and SingTel respectively if 4th telco enters the market
Perennial Real Estate Holdings - Initiate coverage with BUY call, TP S$1.29
Noble Group - A trough in formation, price resilient despite recent Iceberg and Muddy Waters allegations. Trading accumulate at slightly above $0.85.
SMRT and Consistel's joint venture OMGtel could benefit in two ways: (i) provide edge in speedy rollout of 4G network in Singapore using SMRT's real estate, and (ii) drastically reduce the marketing costs required to acquire new customers as SMRT stations can serve as retail touch points. OMGtel (OMG) could have a big edge over MyRepublic due to a strong partner like SMRT, in our view. 60 MHz of 900MHz spectrum expiring in March 2017 is likely to be up for sale this year or next. We estimate 9.4% return on investment (ROI) for the new player based on 10% revenue share assumption in the fifth year. For the existing telcos, we estimate potential adverse impacts of 13-16%, 6-7% and 1% on group topline of M1, StarHub and SingTel respectively if 4th telco enters the market.
Initiate coverage on Perennial Real Estate Holdings with BUY call, TP S$1.29 based on 40% discount to RNAV of S$2.14/share. After the corporate action involving a reverse take-over (RTO) of St. James Holdings and privatisation of previously listed PCRT, Perennial Real Estate Holdings (PREH) has emerged as a strong, sizeable regional competitor to major developers. The group has, over the years, amassed an impressive portfolio in Singapore and China. The group owns, has interests in, and/or manages a diversified portfolio of about 36.5m square feet (sqft) gross floor area (GFA) in the PRC and over 2.0 m sqft in Singapore. We remain excited over the group's growth prospects in the immediate and longer term. This is underpinned by (i) recurring cashflows from its portfolio in China and Singapore and ii) start of recognition of strata-sale units from its high speed rail project in Chengdu.
Iceberg has posted a series of questions on its website for Noble's AGM today. Nothing new, the questions posed by Iceberg are a restatement of its allegations in its previous 3 reports. Meanwhile, in a filing with SGX, Noble Group reassures that liquidity headroom of $5.1b is "more than enough" to cover total debt outstanding and targets 35% payout ratio. Our analyst keeps his HOLD rating on the stock.
On the charts, Noble Group shares have held above the c.85cts level despite the 3 Iceberg and single Muddy Waters reports that attacked on similar issues. This suggests price resilience at $0.85 and further signs of a trough. The stock's volume and price action in the past 1-2 weeks also indicate likely price stabilization and basing pattern in formation. We note that substantial shareholder Prudential has raised its stake in Noble Group by 19.2mil shares (from 5.0188% to 6.1055%) at average price of $0.882 in the past 1 month. From a trading perspective, we take a contrarian view and advocate investors to accumulate the stock at current level, above $0.85.
SATS'sSingapore Food Industries (SFI) has entered into a joint venture agreement with BRF GmbH to set up a company in Singapore to process meat and manufacture branded food products for distribution to retailers, restaurants, wholesalers, distributors and ship chandlers.
ISOTeam has been awarded six new Repairs and Redecoration (R&R) contracts in the public sector worth approximately $29.24m and another three private sector projects worth $1.87m.
The certificate of entitlement (COE) bonanza continues, with a whopping 41.1% more COEs from next month. This follows the 18.3% increase in COEs for the current three month period from February-April 2015. The quota for May- July 2015 will have a total of 19,912 COEs, or 6,637 monthly.
Source: DBS
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
