Towards Financial Freedom
DBS Equity Research: Wired Daily 25 Apr 2016
FOMC meeting outcome and banks results 2 key events this week
Trendlines Group - Downgrade to HOLD; limited upside potential after recent rally
The outcome of this week's FOMC meeting will be closely monitored. While nobody expects the FED to hike rates this week, focus is on what the FED may hint with regards to the timing of the next rate hike as well as the pace of increase. Our currency strategist thinks it is not unreasonable to expect the Fed to dial down its earlier "cautious and patient" stance.
If the FED continues to paint a "cautious and data dependent" approach, the USD will stay pressured and the liquidity inflows will continue. In this case, the Singapore equity market can remain buoyant despite the uninspiring corporate results season thus far. However, should the FED's comments be perceived as more 'hawkish', the USD will strengthen and the funds inflow to this region could come to a screeching halt.
This is an important week with banks UOB & OCBC reporting results. Investors will be watching whether banks are raising their provisions for loan losses that will have a negative impact on earnings.
Frasers Centrepoint Trust's (FCT) 2QFY16 DPU in line with forecast. Positive rental reversions of 5.6% achieved. We adjust TP and DPU slightly downwards. We maintain our BUY recommendation, with a revised TP of S$2.10 (Prev S$2.11). FCT is one of our top picks in the retail sector.
Trendlines Group is a seed-stage investor in medical device developers and agriculture technology start-ups. Increasing ageing population and growing demand for sophisticated medical devices will spur investments in medical device developers. Rising global demand for food and clean water will help attract funds for Agtech. The stock has rallied 43% since we initiated its coverage on 11 Feb 2016, leaving limited upside potential in the near term. We have moderated our expectations of growth in the portfolio value. We conservatively forecast the portfolio value to register 10% CAGR over FY15-17F versus 16% earlier. Downgrade to HOLD, TP: S$0.24 (Prev S$0.28).
1Q16 DPU for Cache Logistics Trustdeclined 5% y-o-y but weakness is expected and likely priced in. Expiring master leases in 2H16 is not a concern given robust underlying occupancies. We have conservatively assumed 10% dip in rents in our estimates (vs 3% decline previously). This led us to lower our forward DPU estimates by 3% (FY16) and 9% (FY17). Maintain BUY, TP S$0.93 (Prev S$0.96). Cache Logistics Trust offers yields of close to 9.0% as attractive, one of the highest among industrial S-REITs. We believe that most negatives are already priced into its share price.
OSIM International has won a two-year- long legal battle, after the Singapore High Court dismissed all claims against the firm by The Wellness Group (TWG) and its chairman Manoj Murjani for oppressive conduct and conspiracy to injure in relation to the lifestyle firm's shares in TWG Tea.
Swing Media Technology Group proposed to place 6.9m new shares at a placement price of S$0.533 per placement share. The placement price represents a discount of 10% to the last volume weighted average price. The proceeds of approximately S$3.7m will be used to increase its working capital in order to further fund its existing business operations.
The latest government stats show that the official private home price index has eased 9.1% over 10 consecutive quarters since the peak in Q3 2013. The Urban Redevelopment Authority (URA) index fell 0.7% quarter on quarter in Q1 this year, after easing 0.5% in Q4 last year. Prices of non-landed private homes in the suburbs or Outside Central Region(OCR) fell 1.3% q-o-q in the first quarter, after remaining unchanged in the previous quarter. However, prices in the Core Central Region (CCR) and in the city-fringe or Rest of Central Region (RCR) were more resilient. The index for CCR edged up 0.3% in Q1, contrasting with a drop of the same magnitude in Q4. The price index for RCR was unchanged, after easing 0.4% previously. The picture is grimmer in the rental market. URA's rental index for private residential properties slipped 1.3% q-o-q in Q1, the same rate of decline as in the previous quarter.
Source: DBS
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