Towards Financial Freedom
DBS Equity Research: Wired Daily 22 June 2015
Yangzijiang - Planting a seed in system supplier Highlander. Reiterate BUY; TP S$1.62.
Markets are getting increasingly jittery as the month-end deadline for Greece to repay its loans draws near. There is still hope yet as the Greek PM unveiled new proposals to EU leaders yesterday. Attention turns to the emergency summit of European leaders today that could finally break the stalemate in negotiations between Greece and its creditors
While 'Grexit' concerns and the sharp correction in Chinese shares caused a choppy environment last week, the STI held firm at around the 3300 level, underpinned by attractive valuation of 13x (-0.5SD) 12-mth forward PE and oversold technicals.
Barring a loan payment default by Greece that can result in near-term uncertainty, we maintain our view for an inflexion point at STI 3270-3300 and see the current correction as an opportunity to accumulate stocks in anticipation of a July rebound that can lift the STI to 3432. Seasonality is another factor. Historically over the past decade, the month of July boasts the best monthly performance in terms of consistency (9 out of 10 years positive) and highest m-o-m% gain (average +3.9%).
Yangzijiang is taking a 3% effective stake in Shenzhen-listed system supplier Highlander. Founded in February 2001, Highlander specializes in the marine intelligence and ocean information technology industry and has been a supplier to Yangzijiang. The deal could strengthen the bond between these two groups and provides alternative source of income
from the relevant industry to Yangzijiang. We wildly speculate that the relatively small investment of Rmb130m (approx S$28m) could in the longer run, pave Yangzijiang's way into the military vessel space, tapping on Highlander's 10 years of network and experience in this area. While the stock has done well, we see potential re-rating from probable dual-listing in Hong Kong to fund M&A activities. Reiterate BUY; TP S$1.62.
We reiterate our conviction BUY on Ezion(TP: S$1.50) as we believe its stock price would soon recover to the S$1.20 level, prior to the emergence of a dispute with rig-operator partner Atlantic Marine Services (AMS), following AMS's withdrawal of its lawsuit against Ezion. Ezion is well-positioned to benefit from the rising popularity of liftboats in this region, capitalising on its first-mover advantage. Ezion also has a prudent business model. Fleet expansion is backed by longterm charters of 3-5 years.
Singpost has sold stakes in the more traditional forms of the postal service business as it drives more focus into its ecommerce segment. It has sold a 90% stake in DataPost Pte Ltd for about S$39.3m. This follows another divestment last month of its whole stake in Novation Solutions Limited and DataPost (HK) Pte Limited for S$24.4m.
CapitaLand has entered into agreements for the acquisition of the entire interest in Vivit Minami Funabashi in Japan for a total cash consideration of JPY3.05 billion (approximately S$33.2m). Vivit is a shopping mall located in Funabashi city in Chiba Prefecture, in Greater Tokyo, Japan.
Q & M Dental Group announced the proposed acquisition of Smilebay Dental Clinics located in Penang, Malaysia for a total consideration of RM12.29m, to be paid via RM6.774m in cash and issue of RM4.516m worth of shares at S$0.72 per share.
Soon Lian Holdings has entered into a sale and purchase agreement to acquire certain assets, including inventory of aluminium alloy products and plant and machinery in Saint An Aluminium Co for approximately TWD25m (SGD1.1m). Soon Lian believes that through the proposed acquisition and the employment of Mr Liao Jinyun who has vast experience in the business of trading and wholesale of aluminium alloy products in Taiwan, the Group would be able to tap into the Vendor's established customer network in Taiwan to strengthen the Group's presence in North Asia.
LionGold Corp announced a restructuring of US$17m of existing convertible bonds that were due last month. In addition, it has proposed a new issue of up to S$100m principal amount of 2.5% redeemable convertible bonds due 2018.
Novo Group expects to record an increase of loss for the year ended 30 April 2015 as compared to that for 2014. The loss is mainly attributable to the unfavourable market conditions.
The executive chairman of Foreland Fabrictech Holdings has slashed his direct stake in the company to just 11.03%, after selling a 29.5% share for S$1m. This works out to 0.62 of a Singapore cent per share.
Source: DBS
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