DBS: Citi gives 5 reasons why DBS would not (and should not) buy Stan Chart:
1) Onerous regulatory hurdles – Given multiple jurisdictions that DBS and Stan Chart overlap, this is nothing short of a regulatory nightmare.
2) Too much to use of scarce management resource – Even assuming no regulatory resistance, the sheer complexity of bringing together these two organizations would tie up excessive amounts of top management time and distract from growing the core business, which itself is increasingly challenging in the present soft macro environment.
3) Digital expansion the way forward. DBS has cited that the key challenge that the banking industry must address over the five years is the threat of digital disruption. But equally, digital channels can be used by DBS as a means to broaden its retail access in countries such as India.
4) M&A remains tactical. DBS' recent actions suggest that it is only willing to consider M&A of specific tactical portfolios — in the past 18 months this included a cards portfolio in Hong Kong and an Asian private-bank portfolio.
5) Wrong time of the cycle - In Citi's view, buying any bank (let alone one as large and complex as STAN) into a weakening growth backdrop carries a greater risk of failing to deliver shareholder value.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
21 December 2015
Economy: Post interest rate liftoff; what's next?
A concise writeout of what happens after interest rates hike. From Maybank
Economy: Post interest rate liftoff; what's next?
While the US interest rate hike was largely expected, Maybank-KE notes that the speed and scope of future hikes remains as a huge guessing game. Future hikes are expected to be driven by data even though the Fed's "dot plot" chart indicates that the Fed is likely to hike four times in 2016.
Despite this, Maybank-KE feels that the Fed's views and forecasts on inflation are optimistic particularly in view of depressed energy prices. The house thus expects the Fed to hike two to three times in 2016 for a total increase in rates by 50-75 bps.
Other key takeaways from the Fed hike points to the relative strength of the world's largest economy which is expected to grow 2.4% in 2016 on an inflation-adjusted basis.
Another point to note is the fact that the Fed will be reinvesting principal payments from its holdings of maturing securities purchased under QE and rolling over maturing Treasury securities. This means that the Fed's balance sheet will not shrink anytime indicating that the Fed is still in accommodative monetary policy mode.
While the jury is still out on the impact of the rate hike, downside risks with the end of the three super cycles are becoming apparent.
1. USD index downward trend appears to have been broken, implying greater strength in the USD
2. Conversely, the global commodity price index has seen its upward trend broken in line with a slowdown in China as well as the strong USD
3. The global bond index is now trading sideways, breaking a previous upward trend.
Looking elsewhere, Hong Kong adjusted its base rate immediately after the Fed liftoff in view of the HKD's hard peg to the USD.
Other than HK, major central banks, namely the BoJ and ECB are seen as maintaining the status quo of zero-bound/negative interest rates and QE stimulus measures.
While the house expects most Asian economies to maintain their current interest rate levels throughout most of 2016, China, India, and Vietnam are likely to see interest rate cuts as the central banks there try to boost economic growth.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Economy: Post interest rate liftoff; what's next?
While the US interest rate hike was largely expected, Maybank-KE notes that the speed and scope of future hikes remains as a huge guessing game. Future hikes are expected to be driven by data even though the Fed's "dot plot" chart indicates that the Fed is likely to hike four times in 2016.
Despite this, Maybank-KE feels that the Fed's views and forecasts on inflation are optimistic particularly in view of depressed energy prices. The house thus expects the Fed to hike two to three times in 2016 for a total increase in rates by 50-75 bps.
Other key takeaways from the Fed hike points to the relative strength of the world's largest economy which is expected to grow 2.4% in 2016 on an inflation-adjusted basis.
Another point to note is the fact that the Fed will be reinvesting principal payments from its holdings of maturing securities purchased under QE and rolling over maturing Treasury securities. This means that the Fed's balance sheet will not shrink anytime indicating that the Fed is still in accommodative monetary policy mode.
While the jury is still out on the impact of the rate hike, downside risks with the end of the three super cycles are becoming apparent.
1. USD index downward trend appears to have been broken, implying greater strength in the USD
2. Conversely, the global commodity price index has seen its upward trend broken in line with a slowdown in China as well as the strong USD
3. The global bond index is now trading sideways, breaking a previous upward trend.
Looking elsewhere, Hong Kong adjusted its base rate immediately after the Fed liftoff in view of the HKD's hard peg to the USD.
Other than HK, major central banks, namely the BoJ and ECB are seen as maintaining the status quo of zero-bound/negative interest rates and QE stimulus measures.
While the house expects most Asian economies to maintain their current interest rate levels throughout most of 2016, China, India, and Vietnam are likely to see interest rate cuts as the central banks there try to boost economic growth.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
14 December 2015
Happy 2016! (On leave from 28 to 31 Dec 2015)
Hi everyone!
As another year draws to a close, I am sending this email out to all my friends and family with wishes for a joyous holiday season. Thank you for choosing UOB Kay Hian, and having me as your broker.
2015 has been a year of unforeseen ups and downs in various markets; equities, commodities and FX. The US rates hike is one of the most anticipated events since Mar this year. Even though US economy has released quite robust economic data over the months, with some scattered negative surprises, Feds has delayed the rate hike again and again. As US Feds has kept pushing the rates lift-off to a later date (3 months later each time), it has added more confusion and uncertainties in the market. We will have our answer this coming Thurs Morning.
Not to mention on the other hand, China's growth has slowed down a little for the first time (around June 2015) and devaluating RMB during the month of August this year, most of the markets got hit badly too. That somewhat contributed to a flash crash on 24 Aug 2015 where there is a lack of liquidity of overwhelming sellers than buyers. On the whole, China's economy is indeed slowing down, and is in the midst of transition transiting from exports, investment and heavy industry to consumption and services. Last Sunday, the trade data released showed that China's activity data was stronger than expected in November, with factory output growth picking up to a five-month high, signalling that a flurry of stimulus measures from Beijing may have put a floor under a fragile economy. Still, China trade data will be closely monitored for market directions.
Lastly, the most recent announcement from ECB (Euro Central Bank) was ECB's smaller than expected stimulus measures,causing stocks to tumble and euro$ to surge. In lay man's terms, EURUSD has been going down about -3% over a period of 6 months, only to rocket up around +3% in merely 4 sec! It is one of the most shocking trading events, swinging from one extreme to another. This serves as a reminder to all that anything can happen during trading hours, especially FX markets.
At the point of writing this email, Singapore STI Index has lost about 500 points, or approx 15 percent during the last 12 months from 3,318.70 points in December 2014. Gone were the days when one can 'safely park money' in any good undervalued counters for capital appreciation and dividend play. If one had adopted the 'buy-and-hold' method, it is not surprising to have incurred (paper or actual) losses for this year. The market in the year of 2015 requires traders/investors to understand the concept of longing and shorting counters to make a better informed decision for the year 2015. This is especially so for those who has SBL (Shares Borrowing and Lending) or CFD (Contract For Difference), who can borrow shares to short quiet and unpopular counters with low or no growth.
With the above statement, many of my friends believed and thought that it is 'easier to make money' by shorting such counters. It is not always the case for some, because during such times, there may be shares buy back by the companies or other speculations too, resulting in margin calls and top ups, making open shorts unprofitable, and very stressful too.
Yet, not all is lost in the midst of doom and gloom. In my views, we can continue to spot for blue chip share, noting the prices along the way. I have been advocating this since the start of 2015, helping some to profit from it too. Blue-chip shares are giant companies with solid reputations such as banking, telcos, transport and property developers. As what I have always shared with my friends using an extreme example, if DBS were to be S$10.00 today, we simply buy some and hold. If DBS were to go lower subsequently, that does not matter at all. Simply because we are buying the shares of a company that is worth investing in. With this simple mentality, it helps to question the rationale of investing in that particular counter, maximizing our chances for greater returns when the market recovers.
Looking forward my 2 cents, I personally see that :
Let's look forward to 2016 and hope that it will be a better market for all.
Happy 2016! And once again, thank you all for your support! Cheers!
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
As another year draws to a close, I am sending this email out to all my friends and family with wishes for a joyous holiday season. Thank you for choosing UOB Kay Hian, and having me as your broker.
2015 has been a year of unforeseen ups and downs in various markets; equities, commodities and FX. The US rates hike is one of the most anticipated events since Mar this year. Even though US economy has released quite robust economic data over the months, with some scattered negative surprises, Feds has delayed the rate hike again and again. As US Feds has kept pushing the rates lift-off to a later date (3 months later each time), it has added more confusion and uncertainties in the market. We will have our answer this coming Thurs Morning.
Not to mention on the other hand, China's growth has slowed down a little for the first time (around June 2015) and devaluating RMB during the month of August this year, most of the markets got hit badly too. That somewhat contributed to a flash crash on 24 Aug 2015 where there is a lack of liquidity of overwhelming sellers than buyers. On the whole, China's economy is indeed slowing down, and is in the midst of transition transiting from exports, investment and heavy industry to consumption and services. Last Sunday, the trade data released showed that China's activity data was stronger than expected in November, with factory output growth picking up to a five-month high, signalling that a flurry of stimulus measures from Beijing may have put a floor under a fragile economy. Still, China trade data will be closely monitored for market directions.
Lastly, the most recent announcement from ECB (Euro Central Bank) was ECB's smaller than expected stimulus measures,causing stocks to tumble and euro$ to surge. In lay man's terms, EURUSD has been going down about -3% over a period of 6 months, only to rocket up around +3% in merely 4 sec! It is one of the most shocking trading events, swinging from one extreme to another. This serves as a reminder to all that anything can happen during trading hours, especially FX markets.
At the point of writing this email, Singapore STI Index has lost about 500 points, or approx 15 percent during the last 12 months from 3,318.70 points in December 2014. Gone were the days when one can 'safely park money' in any good undervalued counters for capital appreciation and dividend play. If one had adopted the 'buy-and-hold' method, it is not surprising to have incurred (paper or actual) losses for this year. The market in the year of 2015 requires traders/investors to understand the concept of longing and shorting counters to make a better informed decision for the year 2015. This is especially so for those who has SBL (Shares Borrowing and Lending) or CFD (Contract For Difference), who can borrow shares to short quiet and unpopular counters with low or no growth.
With the above statement, many of my friends believed and thought that it is 'easier to make money' by shorting such counters. It is not always the case for some, because during such times, there may be shares buy back by the companies or other speculations too, resulting in margin calls and top ups, making open shorts unprofitable, and very stressful too.
Yet, not all is lost in the midst of doom and gloom. In my views, we can continue to spot for blue chip share, noting the prices along the way. I have been advocating this since the start of 2015, helping some to profit from it too. Blue-chip shares are giant companies with solid reputations such as banking, telcos, transport and property developers. As what I have always shared with my friends using an extreme example, if DBS were to be S$10.00 today, we simply buy some and hold. If DBS were to go lower subsequently, that does not matter at all. Simply because we are buying the shares of a company that is worth investing in. With this simple mentality, it helps to question the rationale of investing in that particular counter, maximizing our chances for greater returns when the market recovers.
Looking forward my 2 cents, I personally see that :
- major global announcements and important economic data by US, China, Euro will be watched closely as usual. In short, major events (trade data, GDP, jobless claims) will continue to overshadow and have bigger impact than micro events (company news, acquisition and etc).
- China should recover gradually and slowly, bringing some hopes in the midst all the negativity now.
- Oil related counters will not improve unless the oil rout is settled, which is very unlikely any time soon.
- While many expected Yellen to announce the rate hike this coming FOMC meeting, please be prepared for any surprises. Personally I hope that the rate hike will be confirmed asap as this will give stock markets a clearer direction. The current market has fallen quite a fair bit and it seems to me that the rate hike has been factored in already; once the hike is confirmed, markets should recover somewhat depending on the latest economic data.
- Volatility in the market is expected, due to the new interest rate environment (assuming confirmed interest rates hike that is). We should be able to buy some really good bluechip stocks at lower prices.
- once the hike is confirmed, I think the market will be concerned about US debts ceiling next
Let's look forward to 2016 and hope that it will be a better market for all.
Happy 2016! And once again, thank you all for your support! Cheers!
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
09 December 2015
MAL: Strategy - TPPA: What’s In It For Us?
Malaysia: Strategy
TPPA: What's In It For Us?
Analyst: Vincent Khoo, CFA Tel: (603) 2147 1998
Lester Chin Kent Lake Tel: (603) 2147 1970
Yesterday, Bank Negara hosted a briefing on the Trans-Pacific Partnership Agreement (TPPA), which provided optimism that TPPA would be beneficial to Malaysia. Although we understand that the TPPA would only be implemented in 2018 even should Malaysia ratify it in 2016, we highlight the key potential beneficiary sectors. They include export-oriented manufacturers (textile) and potentially, beneficiaries of the liberalisation of foreign ownership, such as convenience store retailers.
- The Trans-Pacific Partnership Agreement (TPPA) is understandably the most important trade negotiation since the World Trade Organisation in 1995, which would see 12 participating countries, including Malaysia. Collectively, these 12 nations have a population of more than 800m and account for 40% of global GDP.
What's New
- We attended yesterday's briefing on the "Implications and Benefits of Trans-Pacific Partnership Agreement" by key speakers Dr Sukhdave Singh, Deputy Governor of Bank Negara, and Datuk J. Jayasiri, Deputy Secretary-General of the Ministry of International Trade and Industry. On a whole, there is general optimism that the TPPA would present net economic benefits to Malaysia although these could be slightly offset by adjustment costs arising from heightened competition and cross-sectoral TPPA obligations.
- Parliamentary debate in Jan 16. The TPPA is set to be debated in the parliament in Jan 16. If passed, the TPPA will provide Malaysia access to four trading partners which Malaysia presently has no free trade agreements with - Canada, Mexico, Peru and the US. These four countries accounted for about 74% of the market size of the TPPA economic bloc, with a GDP of about US$21t as of 2014.
- According to a PwC study, Malaysia's non-participation in the TPPA would result in a cumulative GDP opportunity loss of US$9b-16b (RM67.36b) over 2018-27. Details remain scarce and the real implication of the TPPA would only be known upon its earliest implementation in early-18. However, we note that the tangible benefits would not come in until perhaps from 2018 onwards.
- Clear winners are export-oriented companies within the E&E and cost-efficient automobile component manufacturing sectors, which are set to benefit from the higher regional content value requirement and the opportunity to participate in direct government procurement, especially in the US. Similarly, textile manufacturers are set to benefit from the 'yarn forward rule' that requires TPPA nations' fabric production to use member-produced yarn in textiles in order to qualify for duty-free access.
- However, protected industries could face additional headwinds as the elimination of import tariffs promotes a higher degree of competition within the domestic market. Vulnerable sectors include steel manufacturing and national automobile assemblers. Nevertheless, the impact on the tobacco, brewery and pharmaceutical players would likely be muted in the near term as we understand that the period to achieve full liberalisation has been extended further from the standard 24-month threshold.
- Minimal impact on the financial sector. The TPPA is unlikely to have a significant impact on the banking sector's competitiveness and regulatory landscape as any further liberalisation remains subjected to various criteria. For example, under the TPPA, BNM will permit 100% foreign ownership of banks but subject to the "best interest of Malaysia" criteria. This is broadly similar to BNM's current flexibility on foreign shareholding limit granted to non-TTPA members but based on special government-to-government arrangements on the principal of reciprocity. To-date, no such agreements have been established as many member and non-member TPPA countries continue to have different regulatory limits and flexibility on foreign shareholdings on local banking entities.
TPPA IMPLICATIONS
| Sector | TPPA implications | Stock Impact |
| Automobile | -Tariff reduction provides increased market access for component manufacturers, although we note that most of the Malaysian autoparts producers are not regionally cost competitive, except for a few (eg APM and plastics component manufacturers). -Increased competition from TPPA countries expected to be moderate. - National car marques may lose the advantage. | Potential winners. Auto parts manufacturer APM Automotive Potential losers. National producers. |
| Banking | The TPPA is unlikely to have a significant impact on the banking sector's competitiveness and regulatory landscape as any further liberalisation remains subjected to various criteria. It is not surprising that the criteria stated are broadly similar to those subjected to locally incorporate foreign banks of non-TPPA members. Under the TTPA agreement, Bank Negara Malaysia (BNM) will allow banks from TPPA members' flexibility to establish an additional 8 new sub-branches but subjected to distribution ratio of 1 market centre: 2 semi-urban: 1 non-urban which is similar to the existing branch distribution ratio that all locally incorporated foreign banks currently adheres to. However, given the significantly lower ROE derived from rural and sub-rural branches, many locally incorporated foreign banks have not adopted an aggressive branch expansion plan. As part of the TPPA, BNM will also permit 100% foreign ownership of banks but subjected to the "best interest of Malaysia" criteria. This is broadly similar to BNM's current flexibility on foreign shareholding limit granted to non-TTPA members but based on special government-to-government arrangements on the principal of reciprocity. To-date, no such agreements have established as many member and non-member TPPA countries continues to have differing regulatory caps and flexibility on foreign shareholdings on local banking entities. For example, Vietnam who is one of the TPPA members will continue to implement a 20% foreign shareholding limit on its local commercial banks. | Banks with strong regional growth aspirations such as Maybank and CIMB could benefit from greater government-to-government reciprocal arrangement among member TPPA countries such as Indonesia and Vietnam. |
| Construction | Slightly positive for general construction companies as cost of construction related machinery imported from Japan and the US would be lower. | |
| Consumer – Brewery | According to the draft agreement, Malaysia is to phase out import tariffs on beer and other alcoholic beverages. Current duty on imported beer stands at RM5/litre and if the current import duty of RM5/litre is to be reduced to zero, local brewers will face significant competition in the long term. Nevertheless, the local brewers will continue to be protected by their significant scale advantage on A&P and distribution, apart from retaining a modest production cost advantage. | Potential moderate losers. Carlsberg, Guinness Anchor |
| E&E | Generally positive, underpinned by: a) further tariff reduction (albeit small) on major exporting countries, such as elimination of 0.6% tariff by the US, b) access to US government procurement (the US government is currently restricted from acquiring goods and services, including E&E, from Malaysia), and c) More liberalised cross-data flows are expected to improve efficiency. However, the benefits could be partly offset by increase in labour cost for companies that do not confront with the International Labour Organisation (ILO) Declaration (key item would be imposition of limits on working hours, ie < 60 hours per week and 1 day off per week). E&E companies would only benefit from the tariff removals from 7 TPPA members - Australia (0.03%), Canada (1.5%), Mexico (2.72%), New Zealand (0.76%), Peru (3.83%), the US (0.61%) and Vietnam (0.68%). | |
| Gloves | Mildly positive impact as the bulk of rubber gloves exported are for the medical sector and hence is not subjected to any import duty in the US. Glove companies are only expected to benefit from increased import volumes from 3 of the 12 nations which impose import duty on gloves - namely Canada (15.5%), Mexico (15%) and Peru (9%) with Canada being the only glove importer (ranked among the top 10) of rubber gloves from Malaysia. | |
| Manufacturing | Bulk of their sales to the US. Removal of import tariff will likely prompt higher orders from US clients. Tariff-free access to the US would provide a competitive advantage as the US imposes anti-dumping duties on imported solar products from China and Taiwan. | Potential winners. VS Industry, SKP Resources, SLP Resources, Wellcall Potential winners. Tek Seng |
| Oil & Gas | Petronas will get preference for local suppliers of up to 40% of its annual budget for upstream businesses (scale down from 70%, in a 6-year timeframe) and receive non-commercial assistance for specific projects. According to PWC, Petronas has increased the awards of service contracts to Bumiputera companies from 30% (in the 1980s) to over 70% last year. On the flip side, companies could be encouraged to increase investments in O&G assets in TPPA countries. | Potential losers. Companies with huge dependence on Petronas local contracts and those that lack diversification to global contracts may be affected. MMHE (90%), Barakah (90%), and Perisai (>80%), have the greatest exposure to Petronas on revenue/ EBIT. |
| Plantation | No material impact on the plantation sector. Among the top six importers, only the US (4.5%) and Japan (3.0%) are participating in the TPPA agreement. Currently, crude palm oil is not subjected to any import duty from both the US and Japan. | |
| Ports | Trade creation to potentially boost demand for container/volume services | Potential winners. Westports |
| Textile | Companies may be subjected to a clause whereby they would need to include 'yarn forward rule' that requires TPPA nations' fabric production to use member-produced yarn in textiles in order to qualify for duty-free access. | Potential winners. Prolexus and Magni Tech (Non-rated). |
Source: UOB Kay Hian
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
SP: Monthly Technical Regional Indices Watch
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31690&h=f33c64866907e92c0fe0ed10fcb56c9f
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
UOBKH: Retail Market Monitor: Wednesday, December 09, 2015
fyi
SMRT (S$1.515): Is market jumping the gun over potential rail takeover by LTA?
CIMB cautioned about excessive optimism after SMRT surged 5.4% last Fri amid a speech by Transport Minister Khaw Boon Wan fuelled speculations that the government may take over the rail operations on favourable terms.
During an infrastructure forum on 4 Dec, Mr. Khaw highlighted that the Land Transport Authority (LTA) must establish a team to take on rail operations and maintenance, spurring talks that the government may nationalise Singapore's rail operators.
While the house acknowledges that SMRT would benefit if it can unlock capital from its rail assets, it sees two key obstacles that hinder the group from receiving favourable terms for a potential asset transfer to the government:
1) SMRT's asset purchase obligation of $2b under the old rail regime to buy over rail assets from the LTA between 2014 and 2019
2) Government's objective to juggle interest of the general public and rail operators
These factors are expected to handicap the group during future negotiations for a possible handover of rail operations to the LTA.
Consequently, the foreign broker warned that terms for a potential rail asset transfer could turn out unfavourably for SMRT and the recent surge in share price suggests market may be overly bullish.
CIMB house reiterates its Reduce rating with an upward revised TP of $1.37.
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31689&h=4538579b59251aec5bda1a4dce588ba4
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
SMRT (S$1.515): Is market jumping the gun over potential rail takeover by LTA?
CIMB cautioned about excessive optimism after SMRT surged 5.4% last Fri amid a speech by Transport Minister Khaw Boon Wan fuelled speculations that the government may take over the rail operations on favourable terms.
During an infrastructure forum on 4 Dec, Mr. Khaw highlighted that the Land Transport Authority (LTA) must establish a team to take on rail operations and maintenance, spurring talks that the government may nationalise Singapore's rail operators.
While the house acknowledges that SMRT would benefit if it can unlock capital from its rail assets, it sees two key obstacles that hinder the group from receiving favourable terms for a potential asset transfer to the government:
1) SMRT's asset purchase obligation of $2b under the old rail regime to buy over rail assets from the LTA between 2014 and 2019
2) Government's objective to juggle interest of the general public and rail operators
These factors are expected to handicap the group during future negotiations for a possible handover of rail operations to the LTA.
Consequently, the foreign broker warned that terms for a potential rail asset transfer could turn out unfavourably for SMRT and the recent surge in share price suggests market may be overly bullish.
CIMB house reiterates its Reduce rating with an upward revised TP of $1.37.
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31689&h=4538579b59251aec5bda1a4dce588ba4
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
08 December 2015
Here’s a silver lining for Singapore’s three biggest banks
Here's a silver lining for Singapore's three biggest banks
All's not lost despite slowing loan growth.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
All's not lost despite slowing loan growth.
Banks will face a double whammy of slowing loan growth and moderating earnings growth in coming quarters, but analysts believe that their solid balance sheets provide a sense of comfort in these trying times.
For instance, OCBC noted that although slowing regional economies pose challenges for local banks, the three lenders are nonetheless cushioned by their healthy financials.
"After several years of strong loans growth and consecutively higher earnings, the local banks are entering into 2016 on a more muted note. [However], a key positive is the strong balance sheets of the local banks as well as the still low level of NPLs," OCBC said in a recent report.
Meanwhile, RHB Research noted that despite slowing loan demand, Singapore banks enjoy stable net interest margins, supported by a measured rise in Singapore's short-term rates, along with the slow and gradual normalisation of US rates from December.
Singapore banks also boast the best asset quality among ASEAN banks, RHB said.
"Exposure to the commodities sector, China and domestic mortgages would remain areas of concern in 2016. However, with proactive actions to assist distressed borrowers, we do not expect massive blowups in NPLs. SG Banks are confident provisions would not be significantly higher and we have factored in credit cost of 22bps for 2016 (2015: 23bps), with loan loss coverage stable at 145%," RHB said.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
07 December 2015
SP: IPO Fact Sheet: BHG Retail REIT
For clients who are keen in BHG Retail REIT ipo
https://research.uobkayhian.com/content_download.jsp?id=31665&h=1a56a7fdcd92b1520a3508d47cb5adbb
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
https://research.uobkayhian.com/content_download.jsp?id=31665&h=1a56a7fdcd92b1520a3508d47cb5adbb
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
03 December 2015
Delayed posts
With the pending major announcements from ECB and US Feds, markets are choppy and volitate.
As such, some of the posts here will be delayed, if you noticed. I have open trades for myself and my clients.
For more timely reports and information, you are welcome to open an account with me and join me as my client.
Thank you for reading my blog.
01 December 2015
DBS buy call on Midas (49 target price as recovery gets underway)
Midas kept at ' buy' by DBS with 49 target price as recovery gets underway
December 1, 2015: 12:56 PM
DBS Group Research is maintaining its " buy" call on Midas Holdings (Valuation: 2.00, Fundamental: 0.45) with a 49 cents target price as the research house sees a more substantial recovery for the company from 2016 onwards as contribution from its new aluminium plate and sheet plant kicks in.
In a Tuesday report, analyst Paul Yong says the completion of the alloy plate and sheet plant will raise the group' s capabilities by boosting Midas' annual aluminium alloy production capacity from 50,000 tonnes in FY15 to 160,000 tonnes in FY16.
" It should help to diversify its revenues away from the rail segment as the new alloy plate and sheet products will also be in demand from the aviation, shipbuilding, automobile, general industry and packaging sectors," says Yong.
As it is, Midas has an order book of over RMB1 billion ($ 220 million) for its core aluminium alloy extrusion segment, and over RMB10 billion for its associate Nanjing Puzhen Railway Transport, putting is in a good position to win more orders to raise its utilisation and earnings on the back of firm demand for high-speed and metro trains in China and abroad.
" We see the stock rerating towards our TP of S $ 0.49, based on 0.9x FY16 P / BV as earnings improve and ROE increases," says Yong.
Midas is down 1.6% at 30 cents.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
December 1, 2015: 12:56 PM
DBS Group Research is maintaining its " buy" call on Midas Holdings (Valuation: 2.00, Fundamental: 0.45) with a 49 cents target price as the research house sees a more substantial recovery for the company from 2016 onwards as contribution from its new aluminium plate and sheet plant kicks in.
In a Tuesday report, analyst Paul Yong says the completion of the alloy plate and sheet plant will raise the group' s capabilities by boosting Midas' annual aluminium alloy production capacity from 50,000 tonnes in FY15 to 160,000 tonnes in FY16.
" It should help to diversify its revenues away from the rail segment as the new alloy plate and sheet products will also be in demand from the aviation, shipbuilding, automobile, general industry and packaging sectors," says Yong.
As it is, Midas has an order book of over RMB1 billion ($ 220 million) for its core aluminium alloy extrusion segment, and over RMB10 billion for its associate Nanjing Puzhen Railway Transport, putting is in a good position to win more orders to raise its utilisation and earnings on the back of firm demand for high-speed and metro trains in China and abroad.
" We see the stock rerating towards our TP of S $ 0.49, based on 0.9x FY16 P / BV as earnings improve and ROE increases," says Yong.
Midas is down 1.6% at 30 cents.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Watch out for these investing themes in 2016
Watch out for these investing themes in 2016
Stick with blue chips as earnings fall.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Stick with blue chips as earnings fall.
After a particularly disappointing 2015, investors need to focus on sectors that provide reasonable growth in despite increased market volatility, according to a report by UOB Kay Hian.
UOB Kay Hian is hopeful that market earnings per share will recover 8% year-on-year in 2016, with growth drivers expected to be banks, plantation and telecommunications.
To make the most of this recovery, UOB Kay Hian is betting on companies with capacity growth in the face of resilient and steady demand. These include healthcare plays like Raffles Medical (RMG|) and Singapore O&G (SOG), as well as utilities company Sembcorp Industries (SCI).
UOB Kay Hian also favors companies that benefit from changing market trends, such as Singapore Post. SingPost is expected to benefit well from the rising e-commerce trend, as rhe group has invested strategically to improve its e-commerce network.
UOB Kay Hian also remains drawn to blue chips, particularly on back of a mixed outlook for global economies and a slower growth environment for Singapore.
"Solid stocks with strong balance sheets and decent growth trading at undemanding valuations should find favour. For this theme, we would focus on blue chips that are typically more liquid," UOB Kay Hian said.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Maybank-KE maintains Underweight on REITs
Dear friends,
Please note that the reports i share with you are for reference only. It's never 100%. It's good to see both sides to a matter before making a decision, hence the reports.
S-REITs: Maybank-KE maintains Underweight on REITs, underscoring that it remains in a derating phase.
The house argues that REITs are unlike fixed income, highlighting that dim economic prospects raise the spectre of declining occupancies and weaker rent reversions. To be sure, the fact that interest rates are rising is an additional negative.
Compounding weak demand is strong supply from 2016-18 for all sub-sectors: 2x historical demand for retail, 1.4x Office, and 1.2x industrial, making industrial the cleanest dirty shirt.
Supply for industrial should taper below demand in 2017-18, while for retail, supply could exceed demand throughout. The house also expects occupancy and rent reversions to be more challenging for retail and office than for industrial.
Valuations suggest that industrial REITs have priced in the most downside as Ascendas REIT and Mapletree Industrial Trust are trading slightly below their target yields, while AA REIT and Cache are above.
For exposure, Maybank-KE advocates hiding in Industrial REITs, to which the house prefers AREIT (63% exposed to business parks and warehouses, which faces the tightest supply) and MINT (improving occupancies despite a challenging factory market).
In the office space, much of downside also seems discounted, as CCT and KREIT are trading slightly below target yields. The exception is Suntec REIT.
Retail REITs, CMT, MCT and FCT are trading way below target yields, suggesting downside of 11.5-13.3%.
The house has the following ratings on REITs:
Retail REITs:
CMT: Sell, TP $1.66
MCT: Sell, TP $1.11
FCT: Sell, TP $1.63
Office REITs:
CCT: Hold, TP $1.25
Keppel REIT: Hold, TP $0.90
Suntec REIT: Sell, TP $1.33
Industrial REITs:
AREIT: Hold, TP $2.28
MINT: Hold, TP $1.49
Cache: Hold, TP $0.95
AIMS AMP: Hold, TP $1.47
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Please note that the reports i share with you are for reference only. It's never 100%. It's good to see both sides to a matter before making a decision, hence the reports.
S-REITs: Maybank-KE maintains Underweight on REITs, underscoring that it remains in a derating phase.
The house argues that REITs are unlike fixed income, highlighting that dim economic prospects raise the spectre of declining occupancies and weaker rent reversions. To be sure, the fact that interest rates are rising is an additional negative.
Compounding weak demand is strong supply from 2016-18 for all sub-sectors: 2x historical demand for retail, 1.4x Office, and 1.2x industrial, making industrial the cleanest dirty shirt.
Supply for industrial should taper below demand in 2017-18, while for retail, supply could exceed demand throughout. The house also expects occupancy and rent reversions to be more challenging for retail and office than for industrial.
Valuations suggest that industrial REITs have priced in the most downside as Ascendas REIT and Mapletree Industrial Trust are trading slightly below their target yields, while AA REIT and Cache are above.
For exposure, Maybank-KE advocates hiding in Industrial REITs, to which the house prefers AREIT (63% exposed to business parks and warehouses, which faces the tightest supply) and MINT (improving occupancies despite a challenging factory market).
In the office space, much of downside also seems discounted, as CCT and KREIT are trading slightly below target yields. The exception is Suntec REIT.
Retail REITs, CMT, MCT and FCT are trading way below target yields, suggesting downside of 11.5-13.3%.
The house has the following ratings on REITs:
Retail REITs:
CMT: Sell, TP $1.66
MCT: Sell, TP $1.11
FCT: Sell, TP $1.63
Office REITs:
CCT: Hold, TP $1.25
Keppel REIT: Hold, TP $0.90
Suntec REIT: Sell, TP $1.33
Industrial REITs:
AREIT: Hold, TP $2.28
MINT: Hold, TP $1.49
Cache: Hold, TP $0.95
AIMS AMP: Hold, TP $1.47
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
30 November 2015
Singapore Banks
SG Banks: Credit Suisse examines the potential relaxation of property cooling measures in Singapore and how it would impact the banking industry.
Possible property price declines of 5-10% in 2016E arguably sets the stage for recalibration of stringent property measures in 2H16E. With home ownership rate of 90%, large corrections in property prices would not be tolerated. This is especially when residential property represents 46% of household assets.
Overall mortgage affordability remains manageable even if rates do increase. This is unlikely to have any significant effect such as distressed sales and price declines in the secondary market. After eight rounds of property cooling measures implanted by the government from 2009 the time is right to ease off these cooling measures as the policies have been successful in decreasing speculative activity in the market. The Monthly sub- sales now at 2-4% and foreign demand being curbed significantly as overall foreigner demand only at 4%.
The government has recently highlighted that property prices have increased at a faster rate compared to income and that gap must be closed. However from the long term perspective incomes have generally kept up with the property prices.
A potential relaxation of market cooling measures would bring about positive sentiment around
Overall, DBS remains the most mortgage resilient asset quality performance with a current share price of $16.90 and a TP of $22.00. While the house has a neutral rating on UOB with TP of $22.80. OCBC is rated at neutral with a TP of $9.90.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Possible property price declines of 5-10% in 2016E arguably sets the stage for recalibration of stringent property measures in 2H16E. With home ownership rate of 90%, large corrections in property prices would not be tolerated. This is especially when residential property represents 46% of household assets.
Overall mortgage affordability remains manageable even if rates do increase. This is unlikely to have any significant effect such as distressed sales and price declines in the secondary market. After eight rounds of property cooling measures implanted by the government from 2009 the time is right to ease off these cooling measures as the policies have been successful in decreasing speculative activity in the market. The Monthly sub- sales now at 2-4% and foreign demand being curbed significantly as overall foreigner demand only at 4%.
The government has recently highlighted that property prices have increased at a faster rate compared to income and that gap must be closed. However from the long term perspective incomes have generally kept up with the property prices.
A potential relaxation of market cooling measures would bring about positive sentiment around
Overall, DBS remains the most mortgage resilient asset quality performance with a current share price of $16.90 and a TP of $22.00. While the house has a neutral rating on UOB with TP of $22.80. OCBC is rated at neutral with a TP of $9.90.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
25 November 2015
SP: Money Talk: Jumbo Group (JUMBO SP): A Chilli-Hot Consumer Play
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31477&h=9dfe9454b8b6c1b80bbb33fb12e890af
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
SP: Weekly Support and Resistance Watch: Wednesday, November 25, 2015
Morning,
As mentioned previously, please note that this is for reference only. It is not 100%
This should serve as a guide in your decision making.
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31441&h=6bf3f9188c022dc72696c329a4d47b8f
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
As mentioned previously, please note that this is for reference only. It is not 100%
This should serve as a guide in your decision making.
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31441&h=6bf3f9188c022dc72696c329a4d47b8f
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
SP: 1H16 Strategy: Picking Up After Hitting Bottom
STRATEGY
1H16: Picking Up After Hitting Bottom
l Back to stock picking after recent bounce. With FSSTI bouncing close to 5% from its recent Sep 15 lows, the market appears to be range bound in 1H16. FSSTI looks inexpensive but the 18-29% discounts to long-term mean valuations (PE and P/B) look appropriate given the mixed outlook and structurally weaker domestic growth prospects. We have a year-end target of 3,240 for the FSSTI.
l Hoping for earnings recovery in 2016 but downside risks remain. After a disappointing 2015, investors will be hoping for a recovery but we think any signs are only likely in 2H16 as near-term headwinds persist. We forecast 2016 market EPS growth of 8% yoy, but we see potential downside. Consensus continues to trend down and forecasts 5.4% EPS growth (-1.8ppt) after lacklustre 3Q15 reporting season.
l Buy on pull-backs as volatility remains elevated. With limited earnings visibility, growing geo-political risks, rising rates and uneven growth, we think investors should buy on pull-backs when VIX rises. We look for companies with the potential to surprise on earnings, newsflows or deep discounts to intrinsic value.
l Investment themes to consider in 1H16 include: a) capacity-driven growth, b) secular trend winners, c) growth at reasonable prices (GARP), and d) regulatory changes. Investors should remain defensive, stay nimble and buy selectively on pull-backs.
l Our picks for a profitable 1H16. Large-cap BUYs include Ascott Residence Trust, City Developments, DBS Group Holdings, Raffles Medical, Sembcorp Industries, SATS, Singapore Post, Singapore Telecommunications and First Resources. Mid-cap picks include Wing Tai Holdings, Singapore O&G, Ezion Holdings and Triyards Holdings. SELL SIA Engineering, Sembcorp Marine and Nam Cheong.
TOP CALLS
Share
|
Target
|
FY16
|
Share
|
Target
|
FY16
| ||||
Ticker
|
Price
|
Price
|
PE
|
Ticker
|
Price
|
Price
|
PE
| ||
(S$)
|
(S$)
|
(x)
|
(S$)
|
(S$)
|
(x)
| ||||
Top BUYs
| |||||||||
- Big Cap
|
- Mid Cap
| ||||||||
Ascott Residence Trust
|
ART SP
|
1.195
|
1.39
|
18.6
|
Ezion Holdings
|
EZI SP
|
0.64
|
1.01
|
3.6
|
City Developments
|
CIT SP
|
7.53
|
10.75
|
10.5
|
Singapore O&G
|
SOG SP
|
0.70
|
0.90
|
19.8
|
DBS Group Holdings
|
DBS SP
|
16.81
|
22.34
|
9.4
|
Triyards Holdings
|
ETL SP
|
0.42
|
0.88
|
3.0
|
First Resources
|
FR SP
|
1.945
|
2.40
|
11.6
|
Wing Tai Holdings
|
WINGT SP
|
1.705
|
2.50
|
19.4
|
Raffles Medical
|
RFMD SP
|
4.28
|
5.05
|
31.7
| |||||
SATS
|
SATS SP
|
3.95
|
4.50
|
18.2
|
Top SELLs
| ||||
Sembcorp Industries
|
SCI SP
|
3.30
|
4.07
|
9.3
|
Nam Cheong
|
NCL SP
|
0.146
|
0.12
|
17.7
|
Singapore Post
|
SPOST SP
|
1.805
|
2.18
|
22.0
|
Sembcorp Marine
|
SMM SP
|
2.20
|
1.72
|
14.6
|
Singapore Telecommunications
|
ST SP
|
3.80
|
4.56
|
14.9
|
SIA Engineering
|
SIE SP
|
3.74
|
3.30
|
27.1
|
* FY17 PE for SATS, SPOST, ST, SIE
Note: Closing prices as at 18 Nov 2015
Click on the link for details.
https://research.uobkayhian.com/content_download.jsp?id=31490&h=1894ea678da89602948e674a85fbfe09
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
21 November 2015
SG Technicals: SingTel (breaks out of the channel); S$3.92 is the near term focus for further upside..
fyi
Best regards,
Jeffrey Tan
UOB Kay Hian Research
DID +65 6590 6629
Please refer to the last page of our Retail Market Monitor for the disclaimer notice
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Best regards,
Jeffrey Tan
UOB Kay Hian Research
DID +65 6590 6629
Please refer to the last page of our Retail Market Monitor for the disclaimer notice
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
20 November 2015
UOBKH: Singapore Daily: Friday, November 20, 2015 [Strategy: 3Q15 Report Card – Lacking Beats]
SG might be facing a possible recession given the previous weak data. As such there will be much speculation and short term trading in the market right now. In theory, speculation leads to higher trading activity. Unfortunately based on STI volume, it is decreasing even when the price is low. Thus I have been suggesting to take profits when possible, if preferred.
The current market condition is very largely dependent on external news and information; oil prices, US, Hang seng futures, SG gdp, and major global news.
I know many clients have been asking me if there will be a crash or not. I think it is not an answer of Yes or No. It will be more appropriate and logical to flow with the market and observe the trends and news along the way.
On the other hand, before any major movements, there will be a lot of whipsaw movements in the market. Of which, based on stock market cycle and trading signs, it seems to be happening now.
Lastly, please spread your purchases and buy at each support level of STI. Aim for bluechip shares and avoid mid cap or penny shares in such times.
attached is a weekly chart of STI.
my 2 cents
KEY HIGHLIGHTS
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
The current market condition is very largely dependent on external news and information; oil prices, US, Hang seng futures, SG gdp, and major global news.
I know many clients have been asking me if there will be a crash or not. I think it is not an answer of Yes or No. It will be more appropriate and logical to flow with the market and observe the trends and news along the way.
On the other hand, before any major movements, there will be a lot of whipsaw movements in the market. Of which, based on stock market cycle and trading signs, it seems to be happening now.
Lastly, please spread your purchases and buy at each support level of STI. Aim for bluechip shares and avoid mid cap or penny shares in such times.
attached is a weekly chart of STI.
my 2 cents
KEY HIGHLIGHTS
Strategy
3Q15 Report Card – Lacking Beats
The 3Q15 reporting season ended with only 13% exceeding expectations and others mainly in line. Consensus and our estimates continue
to suffer downward revisions. Stay selective on mixed macro outlook and earnings downside.
At A Glance
Corporate
First REIT: To acquire stakes in Indonesian hospital and mall for S$70m.
Frasers Hospitality: Launches second Tianjin property.
Sembcorp Marine: Scores newbuild FSO vessel win.
SGX: To launch SGX-listed FX block futures on EBS market.
Click on the link for details
https://research.uobkayhian.com/content_download.jsp?id=31380&h=28906041af66e9058de9fde01d54540d
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
19 November 2015
US Dollar May Reverse Drop as Markets Rethink Fed Rate Hike Chances
For my FX clients.
Source: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2015/11/19/US-Dollar-May-Reverse-Drop-as-Markets-Rethink-Fed-Rate-Hike-Chances.html
The US Dollar underperformed in overnight trade amid continued fallout following the release of minutes from October's Fed policy meeting. The Australian and New Zealand Dollars outperformed as risk appetite firmed, driving the sentiment-linked currencies upward. The MSCI Asia Pacific regional benchmark stock index rose over 1 percent.
Traders latched on to comments from a dovish minority on the rate-setting FOMC committee that remained dubious about the likelihood of a December rate hike. That seemed to inspire hopes that liftoff may yet be delayed. This was presumably seen as supportive as markets continue to fear stimulus withdrawal at a time when overall global growth is slowing.
S&P 500 futures are pointing firmly higher in late Asian trade, hinting the risk-on mood is poised to carry forward. The move may swiftly fizzle however as cooler heads prevail over knee-jerk optimism. The Minutes document showed that almost all Fed officials agreed on a need to assess labor market strength. That seemed to set the stage for what was needed to cement rate hike chances. The subsequent 271k surge in nonfarm payrolls may have delivered precisely what Janet Yellen and company were looking for.
Scheduled commentary from Atlanta Fed President Dennis Lockhart and Fed Vice Chair Stanley Fischer – both of whom seemingly lean toward December liftoff based on recent commentary – may drive this point home in the hours ahead. That could trigger a swift reversal in the greenback's fortunes, reversing overnight losses.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Source: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2015/11/19/US-Dollar-May-Reverse-Drop-as-Markets-Rethink-Fed-Rate-Hike-Chances.html
The US Dollar underperformed in overnight trade amid continued fallout following the release of minutes from October's Fed policy meeting. The Australian and New Zealand Dollars outperformed as risk appetite firmed, driving the sentiment-linked currencies upward. The MSCI Asia Pacific regional benchmark stock index rose over 1 percent.
Traders latched on to comments from a dovish minority on the rate-setting FOMC committee that remained dubious about the likelihood of a December rate hike. That seemed to inspire hopes that liftoff may yet be delayed. This was presumably seen as supportive as markets continue to fear stimulus withdrawal at a time when overall global growth is slowing.
S&P 500 futures are pointing firmly higher in late Asian trade, hinting the risk-on mood is poised to carry forward. The move may swiftly fizzle however as cooler heads prevail over knee-jerk optimism. The Minutes document showed that almost all Fed officials agreed on a need to assess labor market strength. That seemed to set the stage for what was needed to cement rate hike chances. The subsequent 271k surge in nonfarm payrolls may have delivered precisely what Janet Yellen and company were looking for.
Scheduled commentary from Atlanta Fed President Dennis Lockhart and Fed Vice Chair Stanley Fischer – both of whom seemingly lean toward December liftoff based on recent commentary – may drive this point home in the hours ahead. That could trigger a swift reversal in the greenback's fortunes, reversing overnight losses.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
US: Oct FOMC Minutes Inserted Dec Possibility But Little Else (19 Nov 2015) - SG-UOB Global Economics & Markets Research
US: Oct FOMC Minutes Inserted Dec Possibility But Little Else
Purposeful inclusion Of December Possibility And Conveying Of Shallow Trajectory In Oct FOMC, But Lack Of Strong FOMC Consensus In Favor For Dec Hike Did Not Add/Remove Market Conviction For December Liftoff
Our Fed Outlook – Latest FOMC Minutes Do Not Change Our December Fed Liftoff Projection
The October FOMC minutes put the December FOMC meeting as a very live date for policy action as we have already noted from the October FOMC statement on 28 Oct 2015 and more recently, comments from senior Fed officials including FOMC Chair Janet Yellen (4 Nov), New York Fed President William Dudley (permanent FOMC voter) and Atlanta Fed President Dennis Lockhart (voter in 2015 FOMC). However, other that the very live possibility of seeing policy action in the December FOMC, the latest minutes does not really alter our Fed outlook.
Things could turn quiet for the US next week (23-27 Nov) as we will have the US Thanksgiving holiday on Thursday (26 Nov). The next 2 key events to watch in our view that closely relates to the Fed's December FOMC are happening in the subsequent week. The first to watch is on 3 December when FOMC Chair Janet Yellen will first deliver a speech to the Economic Club of Washington and then testify before the congressional joint Economic Committee in an annual appearance to discuss economic outlook on the same day, and the second is the US November labor market report due on 4 December.
Global Economics & Markets Research
UOB Plaza | 80 Raffles Place #05-00 Singapore 048624
Email • GlobalEcoMktResearch@uobgroup.com
URL • www.uob.com.sg/research
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17 November 2015
Midas: (S$0.315) Improved 3Q15 results a herald to the future?
To my friends who are into Midas
Midas' 3Q15 net profit soared more than 9x y/y from a low base to Rmb13.9m meeting the street's expectations on a quarterly basis. For 9M15, the group chalked up a net profit of Rmb36.4m, 70.8% higher than the same period in the previous year.
Revenue jumped 27.2% to Rmb412.2m, driven by higher contributions from its aluminium alloy extruded products, with 84.6% of demand derived from the transport industry. But gross margin slipped 1.1ppt to 25.9% due a different product mix.
Other operating income, comprising interest income and the disposal of scrap materials, jumped 78.6% to Rmb4.7m and helped shave the 17.6% rise in admin expenses to Rmb42.9m.
Bottom line was boosted by its share of profit from 32.5% associate, Nanjing SR Puzhen Rail Transport, which soared 650% to Rmb2.5m from 3Q14's Rmb0.3m.
Prospects in the Chinese rail industry have picked up after an acceleration of rail investment by the central government in 2H15. According to the National Development and Reform Commission, 2015 could see rail spending exceeding its target of Rmb800b on a traditionally peak season of construction in 4Q15.
In Sep and Oct alone, China approved the construction of 12 new rail projects worth a total of Rmb575b. Coupled with the pursuit of international rail projects, Midas is counting on its links in China to benefit from the surge in government investment.
With this in mind, the latest batch of results could be a herald of a potential turnaroud in its financial performance. The counter sits on Market Insight's Growth portfolio.
Midas is currently trading at 32.1x forward P/E and 0.55x P/B.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Midas' 3Q15 net profit soared more than 9x y/y from a low base to Rmb13.9m meeting the street's expectations on a quarterly basis. For 9M15, the group chalked up a net profit of Rmb36.4m, 70.8% higher than the same period in the previous year.
Revenue jumped 27.2% to Rmb412.2m, driven by higher contributions from its aluminium alloy extruded products, with 84.6% of demand derived from the transport industry. But gross margin slipped 1.1ppt to 25.9% due a different product mix.
Other operating income, comprising interest income and the disposal of scrap materials, jumped 78.6% to Rmb4.7m and helped shave the 17.6% rise in admin expenses to Rmb42.9m.
Bottom line was boosted by its share of profit from 32.5% associate, Nanjing SR Puzhen Rail Transport, which soared 650% to Rmb2.5m from 3Q14's Rmb0.3m.
Prospects in the Chinese rail industry have picked up after an acceleration of rail investment by the central government in 2H15. According to the National Development and Reform Commission, 2015 could see rail spending exceeding its target of Rmb800b on a traditionally peak season of construction in 4Q15.
In Sep and Oct alone, China approved the construction of 12 new rail projects worth a total of Rmb575b. Coupled with the pursuit of international rail projects, Midas is counting on its links in China to benefit from the surge in government investment.
With this in mind, the latest batch of results could be a herald of a potential turnaroud in its financial performance. The counter sits on Market Insight's Growth portfolio.
Midas is currently trading at 32.1x forward P/E and 0.55x P/B.
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
16 November 2015
ComfortDelGro (CD SP) 9M15 Results Flash: In Line. Recent profit taking provide reasonable entry opportunity
Morning,
Given the recent news Paris attacks and this morning's weak japan data, this week should be another round of selldowns, if not jittery trading to say the least.
At times as such, we should focus and spot for great blue chip shares at a discounted price. In other words giving an extreme example, if DBS were to be S$15.00, it's a very good bargain to buy some and hold for capital and dividend gains in the long run.
if you are intending to short the market, please remember be aware of breaking news and ensure sufficient cash to avoid margin call.
Personally i am looking to see if STI were to test, 2850 this week and 2740 within the next 3 weeks. If the support at 2740 were to be broken again, the next support will be 2700 and 2650
my 2 cents.
ComfortDelGro (CD SP) BUY
9M15: In Line. Recent profit taking provide reasonable entry opportunity
Analyst: Andrew Chow Tel: (65) 6590 6633
9MFY15 results highlights
Regards and great weekend!
Andrew Chow, CFA
UOB Kay Hian Research
DID: +65-6590 6633
Email: andrewchow@uobkayhian.com
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Given the recent news Paris attacks and this morning's weak japan data, this week should be another round of selldowns, if not jittery trading to say the least.
At times as such, we should focus and spot for great blue chip shares at a discounted price. In other words giving an extreme example, if DBS were to be S$15.00, it's a very good bargain to buy some and hold for capital and dividend gains in the long run.
if you are intending to short the market, please remember be aware of breaking news and ensure sufficient cash to avoid margin call.
Personally i am looking to see if STI were to test, 2850 this week and 2740 within the next 3 weeks. If the support at 2740 were to be broken again, the next support will be 2700 and 2650
my 2 cents.
ComfortDelGro (CD SP) BUY
9M15: In Line. Recent profit taking provide reasonable entry opportunity
Analyst: Andrew Chow Tel: (65) 6590 6633
| Company | Share price(S$) | Recommendation | Our Target Price(S$) | Within Expectation (Y/N) | 9MFY15 net profit (S$m) | 1QFY16 yoy | Highlights of Results |
| CD SP | 2.98 | BUY | 3.30 | Y | 233.7 | +6.3% | See comments below |
9MFY15 results highlights
- Delivering as expected. 9M15 net profits rose 6% yoy to S$233.7m and accounted for 74% of our full-year estimates. Revenue growth was broad-based across main key segment as core businesses continued to improve.
- Balancing costs pressure well, leading to steady margins. Despite the upward pressure in costs, we feel CD has managed costs well, with 9M15 operating margins holding up at 11.6% (vs 11.5% for 9M14). Staff costs and depreciation costs went up 3.9% and 9.0% respectively but this was mitigated by a 9.6% yoy fall in fuel costs.
- Fuel hedging updates. As of 9M15, the group hedged 60% and 30% of its 2015 and 2016 fuel requirements respectively.
- Maintaining earnings. The group continues to deliver and we forecast CD to register a net profit growth of 9% yoy in FY16F.
- Maintain BUY with a DCF-based target price of S$3.30. CD's prospects remain steady, with a 3-year net profit CAGR of 11%. The group has a strong balance sheet and could be ready to pounce on potentially accretive M&A should the opportunities arise in the next 1-2 years. We see the recent share price pull-back offering investors a potential decent entry opportunity into CD.
Regards and great weekend!
Andrew Chow, CFA
UOB Kay Hian Research
DID: +65-6590 6633
Email: andrewchow@uobkayhian.com
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
13 November 2015
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Valuetronics (VALUE SP) 2QFY16 Results Flash (sent on behalf of Brandon): In Line with our estimates but below consensus. Maintain BUY
Singapore: Valuetronics Holdings/2QFY16 Results Flash Note (below consensus but within our expectations)
| Company | Share Price | Recommendation | Our target price | Within our Expectation | 2QFY16 Profit yoy | 2QFY16 Profit QoQ | Highlights of Results |
| Valuetronics Holdings | 0.42 | BUY | 0.56 | Y | -11.3% | -3.8% | See attached comments |
Valuetronics reported 1HFY16 net profit of HK$65.7m forming 49% of our full year forecast but only 44% of consensus estimates.
1) 2QFY16 net profit continued to be affected by a slowdown in the consumer electronics (CE) business, however this was partially offset by the strong growth from the higher margin industrial and commercial electronics (ICE) segment due to increase in demand from existing and new ICE cusotmers. Revenue from the ICE segment increased 27.7% yoy while CE revenue plunged 40.6% yoy.
2) Robust free cash flow generation. Cash flow generation continued to remain strong as Valuetronics generated S$17.8m (S$0.047/share) of free cash flow, boosting its net cash position to S$92.4m (S$0.243/share). If we include the Group's AFS assets (which include mostly short-term investable-grade US$ fixed-income bonds), Valuetronic will have net cash + AFS assets of S$0.284/share.
Pending our results briefing next week, we maintain our BUY recommendation and target price of S$0.56.
Link to results: http://infopub.sgx.com/FileOpen/VHL_Results%20Q2%20FY2016.ashx?App=Announcement&FileID=378080
Link to press release: http://infopub.sgx.com/FileOpen/VHL_MR%20Q2%20FY2016.ashx?App=Announcement&FileID=378081
Thanks
Andrew Chow, CFA
UOB Kay Hian Research
DID: +65-6590 6633
Email: andrewchow@uobkayhian.com
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
Silverlake (SILV SP) 1QFY16 Results Flash: In Line But Focus is Elsewhere, Namely The Deloitte Report. Maintain HOLD
Silverlake Axis (SILV SP) HOLD
1QFY16: In Line But Focus is Elsewhere, Namely The Deloitte Report. Maintain HOLD
Analyst: Andrew Chow Tel: (65) 6590 6633
| Company | Share price(S$) | Recommendation | Our Target Price(S$) | Within Expectation (Y/N) | 1QFY16 net profit (RMm) | 1QFY16 yoy | Highlights of Results |
| SILV | 0.665 | HOLD | 0.66 | Y | 68.6 | +15% | See comments below |
1QFY16 results highlights
- No surprises. The group's 1QFY16 net profit of RM68.6m (+15% yoy) was in line with our expectations, accounting for 23% of our full year estimates. The group enjoyed an unrealised foreign exchange gain of RM13.5m in 1QFY16 owing to the RM weakness against the SGD and USD.
- Healthy revenue growth. 1QFY16 revenue grew a healthy 13% yoy, underpinned by a 23% yoy growth in its maintenance segment. The only negative was a 42% decline in software licensing but this segment only accounts for less than 20% of group revenue.
- Lower margins due to different revenue mix. The group's gross margin declined 4.5ppt to 60% as a result of a shift in revenue mix towards maintenance, which carries a lower gross margin (of circa 60%) compared to licensing (90% gross margin).
- Maintaining earnings pending analyst briefing on Friday. No change in our earnings estimates pending a briefing tomorrow at 9am
- Still awaiting the Deloitte report and its implications. The in line results are not likely to excite the market as investors eagerly await the release of the Deloitte report. Investors will be waiting to see the recommendations of Deloitte and whether Silverlake management will take steps to address investor concerns over its corporate structure that involves a significant amount of related party transactions. Until there are more details and developments, we maintain our HOLD rating and a DCF-derived target price of S$0.66/share.
Regards
Andrew Chow, CFA
UOB Kay Hian Research
DID: +65-6590 6633
Email: andrewchow@uobkayhian.com
This transmission has been issued by a member of the UOB Kay Hian Group for the information of the addressee only and should not be reproduced and/or distributed to any other person. Each page attached hereto must be read in conjunction with any disclaimer which forms part of it. Unless otherwise stated, this transmission is neither an offer nor the solicitation of an offer to sell or purchase any investment. Its comments are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representations and accepts no responsibility or liability as to its completeness or accuracy.
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