DBS Equity Research: Wired Daily 12 August 2015

kiasutrader

Publish date: Wed, 12 Aug 2015, 04:03 PM

Super Group - No signs of recovery. Maintain HOLD with lower S$1.05 TP

Super Groupreported 2Q15 results below expectations as revenue and operating margins disappoint. 1H15 earnings formed just 38% of our initial FY15F earnings. An interim DPS of 1 Scts was declared. Hopes of recovery may be delayed to after 2H15. We cut FY15-17F earnings by 14-16%. Maintain HOLD with lower S$1.05 TP (Prev S$1.25).

Keppel Corphas secured a Floating Production Storage and Offloading (FPSO) conversion contract as well as three repair, upgrade and modification contracts worth a total of about S$125m. The FPSO conversion job is awarded by Armada Madura EPC Ltd (a JV between Bumi Armada and Shapoorji Pallonji Group. Work has commenced and is scheduled to complete in 3Q16. The new contracts bring Keppel's YTD win to S$1.65bn, making up 55% of our full year assumption. No change to our HOLD call and S$8.14 TP.

Jul15 Malaysian palm oil output of 1.816m MT was 9% higher than expected. Given the surge in imports, end-Jul15 palm oil inventory was pushed up to 2.265m MT, 13% above forecast. Aug15 output/stockpile estimated at 1.897m MT/2.365m MT as peak harvest begins. We expect inventory to head lower to 2m MT by year-end. Top picks: Bumitama Agri and Wilmar.

Tigerair operating statistics July 2015. For the month of July 2015, the airline operations in Singapore recorded 3.3% (yo-y) improvement in traffic to 825.8 million revenue passenger-kilometres (RPK), while capacity increased by 0.1% to 968.0 million available seat-kilometres (ASK). Consequently, y-o-y passenger load factor increased by 2.7 percentage points to 85.3%. The number of passengers carried increased by 7.2% y-o-y to about 448,000. For the 12 months to July 2015, traffic decreased by 2.2% y-o-y to 9.5 billion RPK, while capacity decreased by 6.1% to 11.6 billion ASK. Consequently, passenger load factor was 3.3 percentage points higher at 82.0%. The number of passengers carried declined by 4.4% to 5.0 million.

Ntegrator International is proposing a bonus issue of up to 1,044.2m free bonus warrants, each Warrant carrying the right to subscribe for one (1) new share at an exercise price of S$0.01 for each New Share, on the basis of one (1) Warrant for every one (1) existing share held.

MS Holdings has been appointed by Cormach, one of Europe's leading crane manufacturers, as its exclusive distributor in Singapore, Malaysia, Brunei, Myanmar, Laos, Cambodia and Vietnam. This distributorship agreement covers Cormach's full range of lorry loaders, rescue cranes, heavy duty cranes, stiff boom cranes and marine cranes, and will have an initial term of 3 years commencing from 28 July 2015. This agreement is the Group's first product distribution agreement and forms part of the Group's strategy to expand its business model and presence in Singapore and in neighbouring countries.

Gaylin Holdings expects a loss for 1Q FY2016. This is mainly due to the fall in oil prices which reduces the level of activities in the exploration, development and production of oil and gas (O&G) in the global offshore O&G industry.

Courts Asia's bid for the sale of Courts Mauritius has been unsuccessful, despite being the preferred bidder, and no other bidder was being considered.

KOP Limited has entered into a framework agreement with two leading Shanghai property developers for the proposed land acquisition and resort development of Winterland Shanghai. Winterland will be located in Lingang City, with a site area of approximately 107,000 sqm.

Koh Brothers Group has secured an S$86.3m contract from PUB to upgrade a 1.8km section of the Kallang River, between Bishan and Braddell Road.

China's announcement yesterday that it is changing the basis of valuing the yuan has resulted in a near 2% drop in the currency against the dollar. The People's Bank of China (PBOC) set the mid-point of the yuan at 6.2298 per dollar, compared with Monday's 6.1162. The yuan is allowed to fluctuate in a band of 2% above or below a rate set each day by the PBOC based on the previous day's trading. On Tuesday, the mid-point of the trading band was set 1.9% below Monday's level. Yesterday's devaluation was the biggest in a decade.

China is seeking to complete the merger of two of the country's largest state-owned shipping companies - China Ocean Shipping Group (Cosco) and China Shipping Group -around 2017 in a bid to tackle the industry slump, South China Morning Post reported on Tuesday. Together, the two groups control 11 listed entities in Shanghai, Shenzhen, Hong Kong and Singapore. If the merger is realized, the new shipping company would emerge as the fourth largest, just behind France's CMA CGM.

US stocks fell, returning Monday's rally after China's currency devaluation raised concerns that the latter's economy is headed for a deeper slowdown. Declines were led by companies that rely heavily on exports to China, including auto and luxury goods makers. Commodities and energy related stocks fell as well. US 10-year treasuries yield fell to 2.14% (from 2.21%), the most since July 6.

Source: DBS

Keppel Corp (BN4)Bumitama Agri (P8Z)Wilmar Intl (F34)Ntegrator Intl (5HC)MS Hldgs (40U)KOP (5I1)Koh Bros (K75)

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