Towards Financial Freedom
DBS Equity Research: Wired Daily 4 Dec 2015
STI - Starts session lower, maintain support at 2825 or slightly above given rebound in SGD
Ascendas Hospitality Trust - Acquires serviced residence in Melbourne
No changes to STI after quarterly review
European stocks fell as the much anticipated ECB stimulus fell short of expectations. The ECB will extend its QE program until at least March 2017 and broaden the range of assets purchased while keeping the pace of monthly buying steady at €60bil. Deposit rate is cut to -0.3%, in line with Bloomberg consensus forecasts. The main refinancing rate and the marginal lending rate were left unchanged. US stocks fell in tandem as Yellen continues to signal a FED rate hike with a gradual pace of increase. The USD fell and oil price rebounded. Singapore stocks are likely to start the session lower on the back of the overnight decline in European and US stocks. However, we see a decline of a smaller magnitude for the STI compared to major US/European equity indices as the SGD strengthened against the USD with the USDSGD dipping below 1.40. We continue to peg near-term support at 2825 or slightly above
Ascendas Hospitality Trust(ASCHT) announced the acquisition of the serviced apartment component of Aurora Melbourne Central from UEM Sunrise for A$120m (c.S$124m). Aurora Melbourne Central is a 92 storey mixeduse development and is UEM's Sunrise's maiden project in Australia with a gross development value (GDV) of A$770m. Construction has commenced with the project due to be completed in 2H19. ASCHT expects to fund the acquisition through a combination of equity, debt and/or hybrid securities. While we are positive on the expected DPU accretion and increased exposure to the growing Australian hospitality market, this is balanced against the uncertainty over the outlook for the Australian hospitality market by 2019.
Constituents of the Straits Times Index (STI) will remain unchanged following the conclusion of the latest quarterly review. The STI reserve list, comprising the five highest ranking non-constituents of the STI by market capitalisation, will be (in order of size) Singapore Post, Suntec REIT, CapitaLand Commercial Trust, First Resources and Neptune Orient Lines. Companies on the reserve list will replace any constituents that become ineligible as a result of corporate actions, before the next review. Several changes were made to other indexes in the FTSE ST Index Series. Full details of all deletions and additions can be found at http://www.ftse.com/products/indices/SGX-ST. All changes from this review will take effect from the start of trading on 21 December 2015. The next review is scheduled for 3 March 2016.
Singapore Exchange (SGX) is giving affected companies carrying out a share consolidation to comply with the Minimum Trading Price (MTP) requirement, a 6-month extension before they are reviewed for compliance with the MTP requirement. The 6-month volume-weighted average price (VWAP) of the shares of these companies will thus be assessed only on 1 September 2016 instead of 1 March 2016. The extension will only apply to companies which have consolidated their shares before 1 March 2016.
Roxy-Pacific Holdings has acquired a 14-storey commercial building at 117 Clarence Street, Sydney, Australia, for A$81m (S$82.9m). It is a freehold property with a total site area of approximately 1,190 square metres, and net lettable area of approximately 12,571 square metres. Roxy-Pacific said it believes the property presents a prime investment opportunity and has potential to be a stable source of rental income for the group.
Cordlife Group has acquired 22m shares in the share capital of StemLife Berhad, an associated company of the Company, for RM9.9m (approximately S$3.3m). As a result of the acquisition, the Company's stake in StemLife has increased from approximately 33.03% to approximately 41.92%.
Mencast Holdings launched a private placement of 54.6m new shares at an issue price of S$0.27 per share to raise gross proceeds of approximately S$14.8m. The issue price represents a premium of 20% to the last volume weighted average price. The proceeds will be used to pay down existing debt so as to place the Group in a more secure financial position.
TTJ Holdings has clinched new public sector and industrial contracts worth $16m, bringing its order book to $146m as at 3 December 2015. Expected to be substantially delivered between FY2016 to FY2018, the new jobs secured include a contract involving the supply, fabrication and installation of structural steelworks for the Singapore LNG Terminal Phase 3, which was the third contract awarded by the same client, and another civil defence doors project for the Thomson-East Coast Line.
Sapphire Corporation will team up with Singapore headquartered CPG Corporation to jointly explore potential infrastructure development projects in China and other emerging markets in the region. Under a three-year Memorandum of Understanding ("MoU") signed by both parties, Sapphire and CPG Corp will explore and evaluate infrastructure business opportunities in China and other emerging markets.
Source: DBS
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