Towards Financial Freedom
DBS Equity Research: Wired Daily 1 Dec 2015
Midas - More substantial recovery from 2016 onwards. Maintain BUY with TP S$0.49
US stocks fell ahead of the ECB's policy decision this Thursday and the release of US November job numbers on Friday. Consensus currently sees a 78% chance that the FED will move to raise rates on December (source: CME Group FedWatch). In Asia, stocks have started the session higher after the IMF will add RMB into its basket of reserve currencies and the addition will take effect on Oct 1, 2016. RMB will have a 10.92% weighting in the basket. Other weightings will be 41.73% for the dollar, 30.93% for the euro, 8.33% for the yen and 8.09% for the British pound. For the STI, we continue to see limited downside in the near-term as the index trades near the 2825 support.
Midas has agreed to buy a China-based aluminium products maker by issuing new shares that represent up to 60.2% of its current share capital. Midas will issue up to 733.3m new shares at 36 Singapore cents apiece, or up to S$264m in total, to acquire all of Huicheng Capital, a Dalian-based company owned by Midas executive chairman Chen Wei Ping and six other individuals. Huicheng specialises in stretched plates and hot-rolled plates and coils that are used in transport and petrochemical industries.
We see value in Midas' share at 0.5x FY16 P/BV currently as we project that the Group's earnings will to start to recover more substantially from 2016 onwards, as contribution from its new aluminium plate and sheet plant kicks in. We see the stock rerating towards our TP of S$0.49, based on 0.9x FY16 P/BV as earnings improve and ROE increases. With an order book of over RMB1bn for its core aluminium alloy extrusion segment, and over RMB10bn for its associate Nanjing Puzhen Railway Transport, Midas is in a good position to win more orders to raise its utilisation and earnings on the back of firm demand for high speed and metro trains in China and abroad.
IPS Securex Holdings has received a letter of appointment (LOA) from Bio-Nexus as a subcontractor for the deployment and maintenance of Bio-Nexus' Care-Nexus software system at the Visy Group's Chicago site as well as at 15 additional sites of the Visy Group. The Visy Chicago Project comprises three modules and the project value for the first module is US$600,000.
Ho Bee Land has entered into an agreement to acquire a freehold property known as Apollo House and Lunar House, Wellesley Road, Croydon, London for £99m (approximately S$210m). The Property is acquired for recurrent income until the lease expires in June 2023.
iX Biopharma has been granted a patent in Indonesia for its WaferiXTM drug delivery technology. The patent will expire on 26 October 2030. Indonesia is the sixth country to grant iX Biopharma a patent for WaferiXTM. The Group was recently granted its Japanese patent in September 2015, while counterpart patents have already been granted in Australia, Malaysia, New Zealand and Singapore. WaferiXTM is a fastdissolving, proprietary wafer formulation that allows pharmacologically active compounds, such as ketamine or fentanyl, to be administered sublingually (i.e., placed under the tongue) and delivered safely, conveniently and rapidly into the blood stream.
The International Monetary Fund welcomed China's yuan into its elite reserve currency basket on Monday. The renminbi will join the US dollar, euro, Japanese yen and British pound next year in the basket of currencies the IMF uses as an international reserve asset.
The rental gap between Raffles Place and Marina Bay was 4% in the third quarter, the smallest differential since 2011, according to Cushman & Wakefield. This significant narrowing of rental gap came as Grade-A office rents in Marina Bay dropped 19% in the first three quarters of this year to S$10.70 per square foot per month (psf pm). During the same period, office rents in Raffles Place fell by only 0.7% to S$10.31 psf pm. Cushman & Wakefield attributed rental resilience of Raffles Place to higher occupancies amid tenant loyalty and positive net absorption of office space, as well as a lack of Grade-A office supply within Raffles Place As at end-November, office occupancy in Raffles Place rose further to 97.2%, beating the overall CBD Grade-A office occupancy average of 95.9%.
Source: DBS
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