DBS Equity Research: Wired Daily 7 Apr 2016

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Publish date: Fri, 08 Apr 2016, 09:43 AM

OCBC - Acquires wealth business of Barclays in Singapore and Hong Kong

Keppel Corp - Secures first contract of the year

OCBC Bankannounced that its wholly-owned private banking subsidiary, Bank of Singapore, has entered into an agreement to acquire the Wealth and Investment Management business of Barclays Bank PLC in Singapore and Hong Kong. The purchase price is set at 1.75% of Barclays WIM Singapore and Hong Kong's assets under management (AUM) that are transferred to Bank of Singapore upon the completion of the transaction. Based on Barclays WIM Singapore and Hong Kong's AUM of US$18.3bn at 31 Dec 15, the indicative purchase price is US$320m. We view this transaction positive for OCBC as it will continue to raise the bank's wealth management income momentum. Since the acquisition of ING Private Bank Asia (renamed BoS), OCBC has successfully seen its wealth management income rise sequentially. This acquisition will further seal it's wealth management business franchise.

Keppel's Brazilian yard - BrasFELS has clinched a FPSO module fabrication and integration project worth over BRL500m (approx. S$190m) from its long-standing customer, MODEC Offshore Production Systems (MODEC). Completion in expected in 3Q17. While this is the first and only order of the year and contract value is not spectacular, we think it is commendable in the current climate. We are keeping our forecasts intact as we have imputed S$3bn new order wins in our model. We maintain our HOLD call with TP of S$5.25.

Cityneon Holdingsannounced that its wholly-owned subsidiary, Victory Hill Exhibitions (VHE) has entered into a non-binding term sheet with Beijing Starclouds Entertainment Development to host and operate the Transformers Experience touring exhibitions produced by VHE in China. Starclouds will host and operate the Exhibitions in Mainland China (excluding Hong Kong, Taiwan and Macau) for a period of two years on an exclusive licence from the date of the operating of the first exhibition. The first exhibition is expected to be open in December 2016.

Hiap Seng Engineering has been awarded a three-year term integrated plot contract by Singapore Refining Company (SRC) to provide plant maintenance services for the SRC refinery located on Jurong Island. This contract is effective for the period from 1 April 2016 to 31 March 2019.

The legal spat between Sembcorp Marineand Marco Polo Marine is now under arbitration, after efforts to resolve it through the senior management and mediation failed. SembMarine said its subsidiary PPL Shipyard had on April 7 served a notice on Marco Polo Drilling, a subsidiary of Marco Polo Marine, to start arbitration proceedings. It has also, after that, received a notice from Marco Polo Drilling and Marco Polo Marine.

US stocks rose, the Dollar fell and oil/commodities rebounded after the FED minutes revealed that policy makers were not in a hurry to raise interest rates amid on-going concerns about slowing growth abroad. This further eliminates the probability of an April rate hike and lowers the probability of a June rate hike to less than 20%. Our Singapore economist maintains the forecast for 3 rate hikes this year with the first one in June.

Source: DBS

OCBC Bank (O39)Keppel Corp (BN4)Hiap Seng (510)Sembcorp Marine (S51)MarcoPolo Marine (5LY)

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