Towards Financial Freedom
DBS Equity Research: Wired Daily 21 Mar 2016
STI - Imminent pullback to 2770
Attention on Singapore 2016 Budget this Thursday
We maintain our view for the STI's current multi-week long rally to hit short-term resistance around the 2900-2920 level pegged at 12.09x (-1SD) 12-mth forward PE. We do not advocate chasing stocks at current level as near-term upside may be limited. Short-term traders who have ridden the trend up in recent weeks should consider taking profit. We anticipate a range from 2720 to 2920 for the STI in the weeks ahead. Should our view for 2900-2920 resistance pans out, we look to bargain hunt on the pullback to 2770.
Singapore 2016 Budget will be delivered this Thursday. Our economist believes it will be aimed at helping Singaporeans and local enterprises cope with the challenging economic conditions. He expect measures to help companies alleviate cost concerns, liquidity risk, as well as enable them to internationalize. Another key focus will be to soften the potential impact of an economic slowdown on the labour market. A surplus of SGD 0.4bn (0.1% of GDP) is expected for FY16, down from a projected surplus of SGD 1.8bn (0.4%) in FY15.
The share price of OSIM now trades higher than Mr Ron Sim's offer price of S$1.32 to privatise the company. We believe an offer price of above S$1.51 would enhance the privatisation success. Maintain HOLD, TP raised to S$1.46. While we note that the current traded price is above the offer, we would recommend current shareholders who might like to potentially benefit from a higher revised price to hold out, given the limited downside at S$1.32. That said, we are not ready to advocate investors to initiate new positions in hope of a higher offer given the uncertainties.
Ascendas India Trust(AIT) acquires additional building at CyberVale, Chennai. The purchase consideration of S$13.2m is to be paid in tranches as and when space is leased. We maintain our BUY call, with revised TP of S$1.03 (Prev S$0.91). We believe AIT remains an under-appreciated growth story, with 3-year DPU CAGR of 11% and attractive 6.6% yield.
Yanlord acquires two land parcels with total gross floor area of 262,100 sqm in Tianjin Haihe Academic Park over 2 bidding exercises for RMB1.97 bn. Ideally situated for prime integrated developments, the project will include the development of high-quality residential apartments, townhouses and villas and is well connected via key thoroughfares and stations from two of the city's metro lines, route 1 and 8.
Singapore Myanmar Investco is placing 7.74m new shares at a placement price of S$0.40 for each placement share. The company intends to utilise 100% of the net proceeds of S$2.96m to fund its duty-free retail operations in Myanmar, including capital expenditure in constructing and fitting out duty-free retail shops in Yangon Airport and the purchase of duty-free merchandise.
Yongnam Holdings has secured two contracts worth a combined S$49.5m. One project is a structural steelwork subcontract for the proposed 19-storey mixed-use development which houses the future Outram Community Hospital in Singapore. The other contract is a specialist civil engineering sub-contract for the Hong Kong MTR Shatin to Central Line cross harbour tunnel.
In property news, despite much industry lobbying for an extension of deadlines for developers to meet the conditions for additional buyer's stamp duty (ABSD) remission on residential sites, it appears that many developers are sanguine about the looming deadlines. Developers whom BT spoke to are confident that their projects will sell out before the respective ABSD deadlines - without having to resort to massive price cuts.
China's economy is showing signs of improvement while capital outflows from the country are moderating, top Chinese officials said on Sunday. Recent data, until early March, including fixed-asset investment and employment, showed that the economy is improving, Vice-Premier Zhang Gaoli told a high-level economic forum. Central bank governor Zhou Xiaochuan told the same forum that capital outflows have showed a significant easing, citing an abating of concerns about a slowdown in the world's second-largest economy.
Source: DBS
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