DBS Equity Research: Wired Daily 3 Dec 2015

kiasutrader

Publish date: Thu, 03 Dec 2015, 05:03 PM

Japfa - Recent spike in day-old-chick (DOC) prices prompted government to consider price ceiling. No impact on FY15F/FY16F profitability

Recent spike in day-old-chick (DOC) prices, currently hover above Rp6,000/chick - significantly higher than Japfa's 3Q15 DOC ASP of Rp4,400/chick, prompted the Indonesia government to consider price ceiling. Industry players have collectively culled 2m parent stock (PS) since Oct-15; 4m more in the pipeline. We do not expect the proposed price ceiling to impact Japfa's profitability, as our FY15F/FY16F ASP assumptions of Rp4,085/Rp4,207 remain well below current elevated prices. BUY rating reiterated on 88% upside to S$0.90 TP.

Sembcorp Marineannounced that a standstill agreement has been reached between North Atlantic Drilling Ltd (NADL) and Jurong Shipyard Pte Ltd (JSPL), a wholly owned subsidiary of Semb Marine, for the delivery of the sixth generation harsh environment semi-submersible drilling rig, the West Rigel, until June 2016. In the event no employment is secured and no alternative transaction is completed when the standstill period concludes, the parties have agreed to form a Joint Asset Holding Company for joint ownership of the unit to be owned 23% by NADL and 77% by JSPL.

Persistent drop in premium digital cable ARPU (average revenue per user) and escalating operating and interest costs are key concerns for Asian Pay Television Trust. Network expansion in the Taichung region offers the ability to add more subscribers. However, potential delays in the expansion could minimize the upside. We revised down our premium digital cable ARPU and subscriber growth, resulting in c. 2% drop in FY16F EPS. Maintain HOLD and a revised DCF-based TP of $0.77 (Prev S$0.87).

mm2 Asia is proposing a share split of every one (1) existing share into two (2) shares. The reduced price of each share after the proposed share split will make each share more affordable to investors, thus encouraging greater participation and broaden shareholder base.

Singapore's PMI stayed in contraction mode for the fifth month in November, but it improved 0.3 point to 49.2, marking a slightly higher reading than consensus forecast of 49.0. The electronics PMI remained below the 50-point mark in November as well, with a 0.4 point rise to 49.0. This was higher than the market's forecast of 48.8, and showed improvements in new orders (up 0.7 point to 48.9), new export orders (up 0.4 point to 48.2), and production (up 0.6 point to 49.5).

US markets fell, led by energy stocks following a decline in oil price with the start of the OPEC meeting as investors bet that OPEC will not vote to cut production. According to Bloomberg, the Iranian Oil Ministry's Shana news agency said a majority of OPEC members agree on an output cut, with the exception of Saudi Arabia and Persian Gulf Arab countries. On economic data, a better-than-expected ADP employment change (actual 217k, consensus 190k) suggests that Friday's non-farm payrolls may also give a strong read. Meanwhile, a speech by Janet Yellen continues to paint the view that the FED will hike rates very soon but the pace will be slow and gradual, taking lead from actual inflation increase.

Source: DBS

Japfa (UD2)Sembcorp Marine (S51)

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