29 September 2015

SP: FX Trading Idea

for my FX trading clients




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SP: Sembcorp Industries [SCI SP] - Announces development of 426MW gas power plant for US$390m in Bangladesh


Sembcorp Industries (SCI SP)                 BUY
Price/Tgt: S$3.43 / S$4.69        Mkt Cap: US$4,277m         52-wk avg daily value: US$11.5m         1-Yr Hi/Lo: S$5.22/S$3.00

Announces development of 426MW gas power plant for US$390m in Bangladesh
Analysts: Nancy Wei / Foo Zhiwei        Tel: (65) 6590 6628/6626

What's New?
- Sembcorp announces investment of US$390m to develop a 426-MW Build-Own-Operate (BOO) power plant in Sirajganj, Bangladesh
- Sembcorp's stake is 71%, with the remaining 29% taken up by a subsidiary of the Bangladesh Power Development Board (BPDB)
- Sembcorp's proportionate equity investment is US$68m
- Plant will be completed in 2018, and is backed by a 22.5-year power purchase agreement
- Power plant is a combined cycle model, fuelled primarily by natural gas with high speed diesel (HSD) as backup

Our Take
- Based on Sembcorp's equity stake, the deal structure implies a debt-equity ratio of 75:25.
- Project costs appears favorable, coming at US$0.92m/MW, lower than the US$1.1m/MW rule of thumb.
- We estimate a equity IRR of c.18%, based on tariff rates of Tk3.19/kWh for gas power and Tk13.56/kWh for HSD power. We estimate a normalized annual net profit S$15m. Our current net profit forecasts are S$736m, S$748m and S$793m for 2015-2017 respectively.  
- A key concern is the availability of gas fuel to the project as Bangladesh's gas production faces a possible decline unless exploration/production is ramped up. The project is best run on gas fuel. While the HSD tariffs compensate for the high cost of generation, it is 2-3 times greater than bulk tariff rates from BPDB, and thus not sustainable.
- We expect earnings to come in 2H18 at the earliest, with full revenue recognition at best in 2019.
- While earnings contributions seems low, the project is a likely a beachhead for future projects in Bangladesh.

Sources:
The Daily Star - http://www.thedailystar.net/business/singapores-sembcorp-build-400mw-power-plant-122398
The Financial Express - http://www.thefinancialexpress-bd.com/2015/08/06/102999

Valuation/ Recommendation
- No changes to our earnings forecast or valuation given the project's completion is in 2018.
- Our current recommendation remains as BUY, with target price of S$4.69.


REITs: Following The Overseas Trail


Good Morning,

We looked into the currency effects from geographic diversification following the slew of overseas acquisitions by REITs.  Geographically diversified MLT, ART, CDREIT and FHT display clear pick-ups in terms of their hedged forward yields vis-à-vis forward trading yields. Channel checks reveal that most REITs with overseas exposure adopt income hedges on a 3 to 12-month rolling basis and strive for natural hedges as much as possible on the balance sheet side. We maintain OVERWEIGHT on REITs prefering  deep value and diversified REITs with ART, MLT and CCT as our top picks. Key highlights are as follows. Do let us know in case you need any further details.


Warm Regards,
Vikrant


 

REITs: Following The Overseas Trail
Analyst: Vikrant Pandey/ Derek Chang  : (65) 6590 6623 / 6590 6614


WHAT'S NEW
·        We refine our earlier note on hedged yields analysis "Levelling the Playing Field: Hedging Their Bets Overseas" by factoring in the hedging policies for the REITs.
ACTION
·        Maintain OVERWEIGHT with MLT, ART and CCT as top picks. By factoring in the effects of forex movements on S-REITs, we have observed clear beneficiaries of diversification amid a depressed domestic outlook across sectors in the face of a looming supply glut. We continue to prefer deep value and diversified REITs, noting that ART and MLT offer more appealing hedged trading yields in their respective sectors by virtue of their extensive overseas footprint at 85% and 62% respectively.
ESSENTIALS
·        Factoring in hedging policies. Our discussions with management indicate that most REITs with overseas exposure typically carry out income hedges on a 3-12-month rolling basis when it comes to foreign sourced income. This is normally accomplished through the use of forward rate agreements on the income side. On the balance sheet side, most REITs with overseas exposure adopt natural hedging (via onshore borrowings) as much as possible with some using currency swaps as well.
·        Deriving hedged yields using forward currency swaps. We obtain the implied hedge cost by using 1-year and 2-year US dollar forward currency swaps of the respective countries in which the REITs hold assets relative to that of Singapore's swap rate (base rate). We then obtain the weighted average hedge cost for the unhedged portion by geographic exposure across the REITs and subtract that from their respective trading yields, thus deriving our hedged trading yield figures.
·        Well-diversified counters MLT, ART, CDREIT and FHT benefit in terms of hedged forward trading yields vis-à-vis forward trading yields. ART will see a 57bp pick-up on a hedged forward yield basis while FHT and CDREIT see 21bp and 21bp pick-ups respectively. MLT will see a 16bp pick-up compared with flattish pick-ups among its peers. However, we note that these pick-ups are not representative of all REITs with overseas exposure, with Lippo Malls likely to see a high 203bp hedge cost for its forward yields despite its 100% Indonesian exposure.
· Benefits of diversification. REITs with relatively higher exposure to Japan, Hong Kong and Europe see a pick-up in forward yields while those with exposure to Indonesia, Malaysia and China will see a drop. We like deep value and well-diversified REITs with a significant overseas footprint, namely ART, CCT and MLT. We believe these counters will see less exposure to the slowdown in Singapore that is affecting the domestic commercial, industrial, retail and hospitality space as a result of an unprecedented simultaneous supply glut across these segments.








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28 September 2015

SINGAPORE: Singapore Telecommunications - Steep Selldown Unwarranted



Singapore Telecommunications        BUY
Price/Target: S$3.64/S$4.56        Mkt Cap: US$40,766m        Daily Vol:  US$70.4m        1-Yr Hi/Lo: S$4.53/S$3.64

Steep Selldown Unwarranted
Analyst: Jonathan Koh, CFA        
  • We have identified two possible reasons for the selling on SingTel this morning:
    1. An article on www.techinasia.com reported that MyRepublic has raised US$16m (S$23m) from various investors to finance its bid to be the fourth mobile operator in Singapore. However, we noticed a discrepancy. The article says part of the funding comes from "Brunei Telco DST Communications". We want to clarify that DST is not a full fledged telco in Brunei. It is a internet service provider that offers fixed broadband services in Brunei (profile is similar to MyRepublic's existing business). It is owned by Datastream Technology Sdn Bhd, which is headquartered in Malaysia. Also, MyRepublic needs to incur capex of S$5m to participate in the HetNet trial conducted at Jurong East. Thus, MyRepublic still does not have sufficient financial resources to embark on its bid to be the fourth mobile operator (reserve price for spectrum set-aside for new entrant tentatively set at S$40m).
    2. Media in Australia has reported on the potential merger between M2 Group and Vocus Communications to create a $3b company, which creates more competition down under. We want to highlight that M2 and Vocus are smaller competitors in Australia. In fact, the on-going merger between TPG Telecom and iiNet would pose a greater competitive threat. In any case case, the setup of NBN would level the playing field which gives Optus and other competitors an opportunity to grow their fixed line businesses. At this juncture, mobile accounted for 76% of operating revenue for the Consumer business in Australia.
  • We believe the sell-down this morning is not warranted and re-iterate our BUY recommendation for SingTel.


best regards,

Jonathan Koh, CFA

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: Singapore Daily: Monday, September 28, 2015 [SG Offshore & Marine]

The Straits Times index fell 0.31% or 8.83pts to 2836.91 (day range: 2841.89 - 2816.76) on Friday. The index is below its 20d MA (@ 2885) and below its 50d MA (@ 3062). 27% of the index constituents are above their 20D MA (vs 30% the previous session) and 10% of the shares are above their 50D MA (vs 10%). Technically, the index keeps approaching the first downside target at 2800 while being capped by the descending 20-day MA. Meanwhile the daily RSI remains in the selling area between 50 and 30 and is capped by a declining trend line. The ST outlook continues to be bearish. Once breaking below 2800, the index is expected to decline further to 2700.





KEY HIGHLIGHTS

Sector        

Offshore & Marine


A long march.

At A Glance
Corporate

Frasers Hospitality: Goes global on hotel residences.

HLH Group: Bringing HDB-style homes to Cambodia.

Rickmers Maritime: New CEO aims to get Rickmers Maritime ship-shape.

         

Sector

Property: Weak A$ drawing more S'pore interest in hotel assets Down Under.

Property: High-end home sales get boost as buyers find reasons to bite.

Property: GCB site in Cluny Hill area sold for S$21.52m.

Telecommunications: MyRepublic secures S$23m capital funding.

Economics

Economy: August fall in manufacturing output stokes recession fears.



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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 September 2015

SMRT (HOLD) : A Record Fine



SMRT [MRT SP]         HOLD
Price/Tgt: S$1.295 / S$1.25        Mkt Cap: S$1.97b         52-wk avg daily value: S$2.85m         1-Yr Hi/Lo: S$1.815/S$1.12

A Record S$5.4m fine
Analysts: Andrew Chow        Tel: (65) 6590 6633

What's New?

The LTA has fined SMRT Corp S$5.4m – the largest penalty so far – for the massive breakdown of its North-South and East-West lines on 7 July.

Our View

This would lower FY16F net profit forecast by 5.6% but could have been worse in our view. More than 250,000 commuters were affected by the North-South and East West Line breakdown and under the new regulations that were approved by Parliament in February 2014, SMRT could have been hit by a maximum fine of up to 10% of its annual fare revenue (from a previous maximum fine of S$1.0m). The key catalyst for this stock is the potential special dividend from the rail financing framework, which we believe could result in a special dividend of 18.2-23.2 cents/share for SMRT shareholders. assuming: a) the government buys back train assets from SMRT at 0.9-1.0x P/B, b) SMRT pays down 50% of its outstanding debt, and c) the remaining net cash gets fully paid out as a special dividend. In our view, should a special dividend be paid, the theoretical price range for SMRT is S$1.43-1.48.  

Meanwhile, we maintain our HOLD rating, with a DCF-based target price of S$1.25. Entry price is S$1.14.    



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.

SP: Money Talk: Keppel Infrastructure Trust (KIT SP): Through the Looking Glass







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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.

24 September 2015

Happy Holidays!

Thank you for visiting my blog. Sharing will resume on Friday.

Happy holidays!

23 September 2015

SG Technicals - Valuetronics (VALUE SP, BN2)



Valuetronics (VALUE SP, BN2)

Technically, the immediate support for Valuetronics could be at S$0.38-0.39, which is near its middle Bollinger band.

Share price formed a higher low with a tweezer bottom during August this year and has since continued to move higher.

The potential gap cover suggests Valuetronics could test S$0.44/0.45 should the MACD indicator display a mild correction going forward.

On 22 Sep 15, we initiated coverage on Valuetronics with a BUY  and target price of S$0.56, based on 8.3x FY17F PE.




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.

Malaysia: Foreign Reserves Improves But Ringgit Weakens (23 Sep 2015) - SG-UOB Global Economics & Markets Research

for clients who are keen to invest in malaysia stocks, feel free to speak to me.


Malaysia: Foreign Reserves Improves But Ringgit Weakens
 
§  Foreign reserves rose by US$0.6bn to US$95.3bn as at mid-September.  The current reserves level is sufficient to finance 7.3 months of retained imports and is 1.1 times the redefined short-term external debt.  
 
§  The level of reserves has risen since second half of August (US$94.7bn end-Aug; US$94.5bn mid-Aug) which we think is due to a combination of lower central bank intervention, sustained current account surpluses, and repatriation of funds from abroad. The downtrend between June to August reflected the central bank's efforts to smoothen out excessive volatility as the USDMYR weakened by 12.6% to 4.195 at end-August.
 
§  USDMYR opened higher at 4.31 this morning and has traded higher to 4.35 at time of writing. The recent rebound from the low of 4.20 last week has been much stronger than expected. The current movement is viewed as a corrective rebound which is expected to extend higher with the next resistance at 4.35. A clear break above 4.35 would greatly increase the odds of a break above the year's high at 4.3750. The Dollar index has been climbing from its post-FOMC plunge as markets continue to anticipate a rate hike by December.
 
Global Economics & Markets Research
|||| United Overseas Bank Group
80 Raffles Place, UOB Plaza 1 #05-00, Singapore 048624
Singapore Company Reg No. 193500026Z

 

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the opinion of UOB or any entity in the UOB Group.


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.

22 September 2015

SP: Money Talk: VALUETRONICS HOLDINGS (VALUE SP): Conviction BUY For This Value Gem






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18 September 2015

SINGAPORE:Silverlake Axis (SILV SP) Flash Note



Silverlake Axis (SILV SP SP)  
HOLD Recommendation; Target Price S$0.66

Silverlake Axis Ltd Acquires SunGard Ambit (Singapore) Pte. Ltd. for US$12 million
Analyst(s): Andrew Chow, CFA/ Bennett Lee, CAIA: (65) 6590 6633 / 6590 6616


Whats New:

Silverlake Axis Ltd entered into a conditional Sale and Purchase Agreement with SunGard Asia Pacific Inc. to acquire the entire share capital of SunGard Ambit Pte. Ltd. ("SAS") for US$12m. This acquisition will be financed entirely with SILV's internal resources.

About SAS:
SAS and its subsidiaries ("SAS Group") are in the business of providing a range of banking software that enables banks to address their core banking, customer management, online banking, mobile banking and card management requirements in Asia Pacific, Middle East, South Asia and Eastern Europe.

Our view:

We think this acquisition brings a complementary retail banking portfolio of software and service solutions to SILV. In particular, the SAS Retail Banking Product Portfolio positions SILV for mid-tier customers while offering a broader variety of tiered deployment options from a technology and a pricing perspective. SAS's products can be deployed on open digital platforms thereby making it possible for Silverlake Axis to address the needs of customers from mid-tier to large enterprises. We view this positively as this expansion is likely to offset slower revenue growth from SILV's license and project services segments while banks and financial institutions continue to cut back on CAPEX spending.

We understand that the acquisition is expected to contribute approximately 15% to the revenue of the enlarged Silverlake Axis Group upon completion. In addition to cost synergies, we think that revenue synergies will also be created from the cross selling of software and services to each other's customers.

Maintain HOLD with a DCF based target price of S$0.66.

Regards,
Bennett Lee
UOB Kay Hian Research
DID: +65-6590 6616
Email:
bennettlee@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.

AREIT SP: Proposed Acquisition of S$1b Australian Portfolio



Ascendas REIT (AREIT SP)   BUY

Proposed Acquisition of S$1b Australian Portfolio
Analyst(s): Vikrant Pandey/ Derek Chang  : (65) 6590 6623 / 6590 6614

  • Ascendas REIT (A-REIT) proposed the maiden acquisition of a portfolio of 26 Australian freehold industrial assets for A$1.01b (~S$1.01b). This marks AREIT's maiden entry into Australia, extending its reach into cities like Sydney (9 properties), Melbourne (9 properties), Brisbane (7 properties) and Perth (1 property). Aggregate leverage is expected to increase from 34.7% to 37.3% once the acquisition is completed.
  • Management expects DPU accretion of about 3-3.5%, using a combination of debt and perpetual securities, (Australian onshore loans of A$600m with the remaining financed by perps). However, we understand that the NPI yield will likely be around 6-6.4%, which is comparable to leasehold properties in Singapore.
  • The transacted price comes at a 6.6% premium to the independent valuation of A$950.64m (S$950.64m) by Jones Lang Lasalle (JLL).  However, JLL has also opined that taking into consideration past Australian portfolio transactions, a portfolio premium of 7.5-10% above market valuation is line with industry standards.
  • Acquisition is in line with management's  strategy for overseas markets to account for 20-30% of the portfolio. The transactions extends AREIT's footprint in Australia to about 11% by asset value. The portfolio asset value would increase by about 14% to about S$8.96b.
  • The announcement has been attached for reference. We will update further after the management briefing.
Valuation. We have a BUY recommendation on AREIT with a target price S$2.62. Our valuation is based on a two-stage DDM model (required rate of return: 6.9%; terminal growth rate: 1.5%). The stock is offering a yield of 6.6%. We will incorporate the accretion from the Australian acquisition after the management briefing.



Proposed Portfolio Details

 




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US FOMC: Fed Stays On Hold In Sep On Global Concerns (18 Sep 2015) - SG-UOB Global Economics & Markets Research




US FOMC: Fed Stays On Hold In Sep On Global Concerns
 
§  The Fed kept its ultra-low rates policy unchanged in Sep, even as Yellen maintained that rate liftoff remains on course in 2015 but highlighted global developments worries on the rise while domestic inflation are pressured lower.
 
§  The Fed's 2015 GDP growth forecasts were upgraded while unemployment expected to improve more in 2015-2017 with inflation projections are more dovish compared to June. The September dot-plot chart points to an even more gradual rate liftoff trajectory while there are now 4 FOMC participants (out of 17) who assessed that policy tightening should be appropriate only after 2015 (up from just two participants in June 2015).
 
§  We now expect the first Fed rate hike to take place in the 15-16 December 2015 FOMC and we further revised lower the rate trajectory, expecting the FFTR to reach 0.5% by end 2015, and 1.5% by end 2016. We ruled out the liftoff taking place in October FOMC because we expect the potential a repeat of the US government shutdown & US debt ceiling limit drama in October/November could complicate Fed monetary policy decision making just like what happened to Bernanke in 2013.
 
Global Economics & Markets Research
|||| United Overseas Bank Group
80 Raffles Place, UOB Plaza 1 #05-00, Singapore 048624
Singapore Company Reg No. 193500026Z

 
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Any person receiving this email and any attachment(s) contained,
shall treat the information as confidential and not misuse, copy,
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system. As the integrity of this message cannot be guaranteed,
neither UOB nor any entity in the UOB Group shall be responsible for
the contents. Any opinion in this email may not necessarily represent
the opinion of UOB or any entity in the UOB Group.



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.

17 September 2015

SP: First Resources - Strong 8M15 Production A Buffer For Coming Weakness. (BUY) by Singapore Research Team




First Resources (FR SP/BUY/S$1.58/Target: S$2.40)

Strong 8M15 Production A Buffer For Coming Weakness

Production Summary

(tonnes)
Aug 15
mom % chg
yoy % chg
8M15
yoy % chg
Comments
FFB Processed
343,093
32.3
(2.6)
1,972,091
11.1
Growth was lower vs harvested FFB as external FFB purchased dropped.
FFB Harvested
313,372
35.9
0.6
1,756,735
14.2
  Nucleus
287,318
40.0
2.9
1,583,188
14.4
Strong mom increase on more harvesting days and peak crops
  Plasma
26,054
3.0
(19.2)
173,547
12.0
FFB Purchased
29,721
3.1
(27.0)
215,356
(8.9)
CPO
77,526
35.6
0.2
438,695
11.4
Palm Kernel
17,714
34.2
(2.9)
102,131
11.1
Blended FFB Yield (tons/ha)
2.1
31.3
(12.5)
11.9
1.7
FFB yield down yoy in August, mainly dragged down by plasma.
OER (%)
23.0
1.3
2.7
22.8
1.3
Improved as less third-party fruits purchased.

Source: FR, UOB Kay Hian        

WHAT'S NEW

·        First Resources (FR) announced Aug 15 production data.  FFB production grew by a strong 35.9% mom due largely to more harvesting days (Jul 15's was affected by the Lebaran holidays). But production was relatively flat at +0.6% yoy as growth from nucleus areas was offset by a contraction in plasma production. Plasma areas were affected by last year's drought.  For 8M15, FFB production was up 14.2% yoy.  

·        Reducing third-party purchases.  Total CPO production posted a slower growth vs FFB production due to lesser third-party purchases at mills.  FFB purchased fell 27% yoy in August and 8.9% yoy in 8M15.  

IMPACT

·        On track to meet expectations.  Although 8M15 production growth of 14.4% yoy was slightly ahead of our expectation of 12.8% yoy for 2015, we are keeping our forecast because: a) of the higher base impact from 4Q14, and b) current dryness and haze could delay the ripening process and result in smaller bunch size.

·        FR's integrated model gives it an advantage to refine its own CPO to sell at better prices. Since the announcement of an export levy in Indonesia, CPO prices were adjusted lower to reflect the levy. This benefitted refiners as feedstock price is lower and the export levy for refined products is lower than CPO prices.  FR will also benefit from the biodiesel policy in Indonesia as Pertamina resumes its purchases of biodiesel to fulfill the mandate.  

Earnings revision

·        We maintain our EPS forecasts of 8.5 US cents, 11.5 US cents, and 12.7 US cents for 2015-17 respectively.

RECOMMENDATION

·        Maintain BUY and target price at S$2.40, based on 15x 2016F PE. We like FR as it is a beneficiary of Indonesia's new export levy and biodiesel policies. It also has one of the lowest cost of production and good track record of delivering better-than-industry FFB yield and OER.

Figure 1:  FR's Production Trend

Source: FR





Regards,
Singapore Research Team
____________________________________________________
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 contents are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representation and accepts no responsibility or liability as to its completeness or accuracy.

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.

FYI: Rate Increases Help Banks First

Morning,

as mentioned to some clients before, the rise of interest rates will benefit banks greatly.

Given the current context, it's good to pick up some banking shares. Since it is not so possible to know if it is the lowest price, it is better to spread the purchases over a range of prices.

for your reading pleasure


Rate Increases Help Banks First
Data on past Fed moves show interest on deposits rises more slowly than on loans


ENLARGE
A rate increase would benefit lenders more than savers. PHOTO: SUPERSTOCK/EVERETT COLLECTION
By 
JAMES STERNGOLD
Sept. 16, 2015 7:55 p.m. ET


When the Federal Reserve ultimately raises interest rates, banks will get more out of it than savers will.
Consumers have been anxiously awaiting a bump in rates to lift the interest on their deposits from near zero. But an examination of the data from previous rate increases shows that deposit rates may not move much at all, even as rates on some loans climb almost immediately.
In periods of rate increases by the Fed over the last two decades, the average interest paid on deposits rose by only about 0.25 percentage point over the first year, according to data provided by Bankrate.com.

Over the same period, the rates on 30-year fixed-rate mortgages increased by more than twice as much, and the prime borrowing rate, a benchmark for everything from credit cards to home equity lines of credit, rose by eight times as much.

The result for consumers is the flip side of the fillip bank profit margins are expected to get when interest rates go up. When rates rise, banks push up the rates they charge for loans much more quickly and further than what they pay depositors for their funds.

The Fed is expected to lift its benchmark interest-rate target from near zero this year. Expectations that it could do so when it meets Thursday have eased, though it would have other opportunities in October and December.

Consumers have been collecting little interest on their savings since the Fed moved rates to near zero in December 2008. There is some reason for optimism as the central bank prepares to reverse course. According to Bankrate, depositors were getting 0.3 percentage point a year in interest on the average money-market deposit account, higher than the current fed-funds-rate target of 0-0.25 percentage point. In the last three rate-increase campaigns, deposit rates stood below the fed-funds rate.

Eventually, some experts and bank executives also say that savers may see more of a deposit-rate increase than they have in the past, especially if the Fed's short-term target ultimately goes up by a half percentage point or more. Many economists forecast a quarter-point increase to start.
In 2006, banks passed along 17% of the increase in rates to depositors over the next year, said Erika Najarian, head of U.S. banks equity research at Bank of America Corp.'s BofA Merrill Lynch Global Research. This time, the figure could rise to 30% or so, she said, in part because of new rules that encourage banks to hold more retail deposits and the ease with which consumers can now switch to higher-yielding accounts thanks to the prevalence of banking on mobile phones and computers.

J.P. Morgan Chase & Co.'s chief financial officer, Marianne Lake, also has said that the lag might be shorter than in the past for depositors.
"We are expecting retail deposits to reprice higher and faster in this cycle," she said on a July conference call.

But any predictions may turn out to be premature. Few know how consumers will react to rates moving off a level that has been at a historical low for more than a half decade. The Fed also may move slowly, increasing rates by only a very small amount, or not at all. If the economy slows down or global market jitters from China put a chill on confidence and the U.S. economy, the Fed may resist rate increases, leaving savers in the familiar position of earning very little.
"I don't think you're going to see much of a change in what banks pay depositors until the Fed's second rate move," said Scott Hildenbrand, a principal at Sandler O'Neill + Partners.

He says rates would likely have to move by one percentage point, or four increases of the type some investors expect Thursday, before it makes much of a difference to depositors.

That scenario "could take a year or more," said Donald Musso, an investor in a number of community banks and chief executive of New Jersey-based FinPro Inc., a bank consulting company. The initial rate increase, for savers, "will be ho-hummish."

Banks are expecting to gain from the strategy of holding down the cost of what they pay depositors while charging more for loans. In its second quarter earnings report in July, BB&T Corp., of Winston-Salem, N.C., calculated that if it increased the prime rate it charges borrowers by one percentage point, its net interest income would rise 1.6%.

Many midsize and smaller banks will look at the large banks for direction. "The largest banks, when they move, will have an influence" on the rest of the industry, said Dick Evans, chairman and CEO of Cullen/Frost Bankers Inc. "There's no question that an adjustment in the [Federal funds] rate upwards would be quicker on loans than deposits."

—AnnaMaria Andriotis contributed to this article.




Taken from : http://www.wsj.com/articles/rate-increases-help-banks-first-1442447705


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 September 2015

OCBC Asia Credit - Nam Cheong - Credit Update - 160915

 for clients in Nam Cheong


Trough or worse?


*        2Q2015 Performance: 2Q2015 revenue was weak, generating the worst quarterly revenue since 3Q2012. Revenue declined 49.1% y/y to MYR192.7mn, with Shipbuilding revenue falling 49.6% y/y or 42.3% q/q. This was driven by lower progressive revenue recognition from PSV sales (MYR94.4mn in 2Q2015 versus MYR228.5mn in 2Q2014). Negative product mix (more BTO versus BTS) squeezed Shipbuilding gross margins (fell 2ppt y/y to 15%). Coupled with sharply lower revenue, gross profit fell 54.3% to just MYR30.6mn. With SG&A at MYR25.8mn flat relative to 1Q2015, this drove EBIT lower to MYR4.8mn. It is worth noting that net profit of MYR10.5mn was boosted by MYR10.9mn fair value gain on derivatives as well as weighed down by MYR7.4mn exchange loss.



*        Order Book: The outstanding order book remains fair at MYR1.5bn with deliveries through 2016, declining from MYR1.6bn (end-1Q2015). This is roughly ~80% of FY2014 total revenue. Though we recognize that the environment is tricky for offshore marine vessel builders such as NCL, the order book offers some buffer while NCL's competitive niche in the Malaysian market should help the firm manage the challenging period.



*        Cash Burn Concerns: Operating cash flow worsened from -MYR61.2mn (end-1Q2015) to -MYR279.5mn (end-2Q2015). The biggest driver was inventory increasing by MYR171.4mn (with NCL taking delivery of BTS vessels), as well as amounts due from clients (for WIP) increasing by MYR222.7mn. NCL has already chased receivables / delayed payables to generate MYR80mn in cash but this is non-recurring. Furthermore, NCL paid out MYR84.9mn in dividends during the period. To meet these cash needs, net borrowings increased by MYR88.7mn while cash fell by 291.5mn. NCL had 571.1mn in cash at end-2Q2015, and raised a further SGD75mn (~MYR225mn) in bonds late July. With ~MYR800mn in cash, NCL should be able to meet its SGD110mn bond maturity on 07/11/15.



*        Leverage: EBITDA pressure drove net debt / EBITDA higher from 1.7x (end-2014) to 8.9x (end-1H2015). The deterioration in net gearing was more muted but still troubling, increasing from 45% (end-1Q2015) to 83% (end-2Q2015). NCL will need to pursue payments due from clients to bring down its gearing levels, and to consider selling the BTS ships in its inventory at prices that may pressure its gross margins. That said, we expect the bulk of committed vessel deliveries (for BTS vessels) to be in 2015, with 2016's pipeline more manageable.



*        Recommendation: We will retain NCL's issuer profile at Neutral for now, though we are eyeing NCL's cash burn closely for improvements. Bond rating wise, we are downgrading NCLSP'17s to Neutral, while keeping NCLSP'18s and NCLSP'19s at Overweight and Neutral respectively on valuation.




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.

15 September 2015

SP: Wilmar International - Focusing On Core Businesses. BUY (by Singapore Research Team)



SINGAPORE:   WILMAR INTERNATIONAL                        BUY

Price/Tgt: S$2.62/3.60      Mkt Cap: US$11.8b      Avg Daily Val: US$15.4m      1-Yr Hi/Lo: S$3.42/2.57

Focusing On Core Businesses

Wilmar's share price has weakened over the last three weeks by 12% on the concern of lower interest income due to interest cost normalisation.    For the last three years, total interest income was 26%, 29% and 39% of 2012/13/14 PBT respectively and positive net interest income for 2014 was US$77.4m (5% PBT) and US$17.9m for 1H15 (4% PBT).

Selldown largely done by short sellers, which hit as high as 50% of total volume. This situation will reverse as we are expecting good 2H15 results.  

The aggressive share buyback (58.76m shares or 0.919% of issued shares) shows that Wilmar is undervalued at only 0.8x 2014 BV, which is supported by its good plantation assets (238,600 ha in planted areas with a conservative estimation value of about 20% of market cap) and prime landbanks located mainly at the major ports of each of the countries it operates in for its downstream operations.

Focusing on core business which is doing well.  Wilmar's mid- and downstream operations, which are far larger than its upstream operations, are benefitting from the lower feedstock prices. Palm refining margins will be better in 3Q15 (post implementation of Indonesia exports levy) and soybean crushing margin is improving (better soybean meal price vs declining soybean prices), while expansion into more consumer products will bring down the average operating cost. Sugar should deliver positive earnings this year as sales for its milling volume had been largely locked in earlier at prices higher than current market prices.  

The new growth: Africa, sugar and consumer pack businesses are three key areas to watch for growth.

HEAVY SHORT SELLING

Source: Bloomberg

SOYBEAN CRUSH AND PALM REFINING MARGINS IMPROVED SINCE JUN/JUL


Source: Bloomberg, Shanghai JC Intelligence, UOB Kay Hian

https://research.uobkayhian.com/content_download.jsp?id=30287&h=1d749bd803935f7edf4b14ce1176d78

Regards,
Singapore Research Team

____________________________________________________
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 contents are based on information obtained from sources believed to be reliable but UOB Kay Hian Group makes no representation and accepts no responsibility or liability as to its completeness or accuracy.


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: IPO Fact Sheet: TLV Holdings






Click on the link for details.


https://research.uobkayhian.com/content_download.jsp?id=30279&h=230a6741f165e1875cdda3f2a19ba156



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.

FYI: Is $20 Oil Possible?




One major  investment house  made news on Friday afternoon by lowering its forecast for the  oil price  to $20. Lots of arguments go into this forecast and most of them have been repeated ad nauseam: Iran is increasing production; Saudi fears Iran and uses low price to deny Iran cash flow; fracking is still growing, so US supply is still growing; emerging markets are growing slowly, so demand is low; and  natural gas  is so abundant it competes with and exerts downward pressure on the price of oil. Also, geopolitical risk-premia have collapsed in the global oil-pricing mechanism. Yemen, ISIL and Russia-Ukraine are old news.

I'll stop there. The list could be longer, but you know the news flow.


Underweight Energy, Except For...

We don't think the downward pressure on the oil price is over, so we are still underweight the Energy sector with the exception of selected MLPs that benefit from volume and not from price. All MLPs have been hurt in the selloff. Some have sold off to irrational extremes, so we see opportunity in the MLP space.

Let's look at this oil-price collapse from a different viewpoint. There was a large run-up in the price of oil in the 1970s. The 1973 oil embargo and the Arab-Israeli War saw the price spike from $3 to about $12 a barrel. Subsequently, the Iranian revolution, the hostage crisis, and more Middle East pressure took the price to about $30. At the time of the Iranian revolution, the forecasted price was as high as $100 when the going price was $30.

This writer remembers those turbulent days. At its peak, the Energy sector was carrying a weight of nearly 25% of the US stock market. As an ironic historical note, Israel and Egypt fought bitterly in the 1973 war. Now they are both expanding large natural-gas finds offshore in the Mediterranean.

So guess what happened after oil went from $3 to $30 in eight years?

Things changed. Prices collapsed. OPEC lost its power. Non-OPEC production rose. Substitutions for oil accelerated. Efficiencies rose. It took 20 years for OPEC to recover. During those two decades the inflation-adjusted price of oil returned to near its pre-Middle East war level. By the way, in today's dollars, a $20 barrel is again at that lowest of levels when inflation adjustments are applied.


Then Came Fracking

As the millennium turned, we heard talk of "peak oil." Best-selling books told the Malthusian story of the world running out of energy. And then what happened? Fracking started in earnest in 2010. In just five years it has resulted in abundance. In natural gas we now measure future supply availability by the century. We will soon see the US as an exporter of LNG.

And the forecasts of price, which were in the $100s, are now down to $20 or even lower.

History suggests that the downward price adjustment will be in place for years. That is how such adjustments have worked in the past. And the lower prices of oil and gas and derivative products will eventually lead to increasing consumption and growing demand. Energy producers will suffer. The pressure mounts on them. Energy consumers will change their behavior as they begin to believe that the price change will be durable.

What about stability of governments? Here is where the rubber meets the road.

The Saudis have large reserves, and they are highly motivated to keep Iran from obtaining revenue to expand its nuclear program. It is in the Saudis' survival interest to maintain maximum production and lower prices so as to reduce the amount Iran gets from selling oil. Various estimates center on Saudi Arabia's needing about $70 oil to keep its current account in balance, so the shortfall means the Saudis will be tapping reserves. The Saudi government has even begun to issue debt. Nonetheless, Saudi staying power is measurable in years.

Iran is estimated to need $45 oil or thereabouts to balance its current account; so if the Saudis can hold the price below that level, they will be able to keep Iran under economic pressure. The marginal cost of producing an extra barrel of oil is very low in both Saudi Arabia and Iran. Thus the two enemies each have a motivation to maximize production, albeit for different reasons.

What about other places? This is where it gets complicated. Venezuela is a complete mess. Any dramatic change in government would immediately result in more oil production. Nigeria is not stable and needs revenue. Other places, like Algeria, are presently stable; but shrinking oil revenue threatens their social compact. In Algeria the worry is about instability from a second round of the "Arab Spring." For an excellent discussion of Algeria see the September 5 edition of The Economist, page 51.


Not Sustainable

To sum up, $20 may be a possible spike down, but we don't think the price would be sustainable at that level. Today, $50-$60 seems high. There are many forces at work that will drive the price lower. Our guess is that the price will hover somewhere around $30 or so -- but only for a while.

Watch global geopolitics. And watch demand and emerging economies. We do. It is still too soon to raise our weight in the Energy patch. But the entry is getting closer, and external shocks could occur at any time.

Taken from: http://www.investing.com/analysis/is-$20-oil-possible-265019



09 September 2015

FYI: Midas and Singtel

STI is currently at 2898, touching a high of 2907. Nikkei up 3% and now awaiting for Hang Seng to open. This is largely due to China's determination to ensure stability in her market.

I have been watching Midas as communicated with some of my clients. Singtel is another defensive stock that you can watch out for.

If STI is not able to maintain above 2900 for long, i expect some minor corrections again.

As usual, please remember to lock in your profits at uncertain times like this. Personally I am waiting for another correction before going long.

Some articles related to the above 2 stocks mentioned.




China economic planner approves 70 billion yuan worth of railway projects
By Reuters | 8 Sep, 2015, 12.36PM IST
Post a Comment
READ MORE ON » The National | Railway | National Development and Reform Commission | infrastructure | economic planner | China

Read more at:
http://economictimes.indiatimes.com/articleshow/48867350.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst



Defensive telcos provide shelter amidst market rout

Valuations are now more attractive after sharp sell-offs.

Telecommunications stocks have emerged as defensive shelters after suffering a sharp sell-off in recent weeks.

According to UOB Kay Hian, telco stock prices are now more palatable after the recent share price corrections, while the downside from a reversal of yield compression has reduced significantly.

"Telcos are sturdy defensive stocks because demand for telecommunications services, being a basic necessity, is inelastic. Telcos in Singapore also have low gearing levels based on net debt/EBITDA," said UOB Kay Hian.

UOB Kay Hian believes that Singtel offers the best risk-reward trade-off because it has the highest average upside of 21.5%, and the lowest average downside of 31.6%.

"We started the year with many investors being complacent on the impact from the potential entry of a fourth mobile operator. The correction of 27.3% for M1 and 17.7% for StarHub from their recent peaks has skimmed the froth in share prices," said the report.  





 
  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.

FYI: Cordlife (P8A)

Cordlife: disclosed that an unsolicited offer for its 13.4% stake, comprising shares and convertible bonds, in China Cord Blood Corporation (CCBC) has been withdrawn with immediate effect.

The US$8.00/share offer from Hong Kong-based Robust Plan was pulled due to the company's change of position following a competing bid from Nanjing Xinjiekou Department Store for CCBC's China business, which will make its minority acquisition of CCBC commercially irrelevant.

Nonetheless, Cordlife remains in a favourable position given its pivotal stake in CCBC amid the ongoing bidding war.

Investors will be watching the key period between now and the upcoming EGM on 14 Sep to see if there is a formal counter-offer for CCBC before Cordlife's shareholders vote on the group' proposed stake disposal in CCBC to Golden Meditech at US$6.40/share.

At the current price, Cordlife is valued at 30.8x FY16 earnings, compared to its five-year average of 22.5x.




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 September 2015

SIN: Property: Surviving The Burn-down Analysis



Good Morning,
 
   Property stocks are trading near undeserving crisis valuations (1.46SD below mean). Analysis of the peak and trough P/B valuations implies an attractive 7:1 reward-to-risk proposition. Our stress test factoring in an unlikely 50% drop in capital values still shows deep value for the developers. We believe the market has over-discounted the negative prospects and maintain OVERWEIGHT on the sector with  CapitaLand and Wing Tai are our top picks. Key re-rating catalyst will be demand-side policy easing by the government. Key highlights are as follows. Do let us know in case you need any further details.



Warm Regards,
Vikrant
Ph: 6590 6623

Property: Surviving The Burn-down Analysis
Analyst: Vikrant Pandey/ Derek Chang  : (65) 6590 6623 / 6590 6614


WHAT'S NEW
·        The recent sharp sell-down of property developer stocks saw the property developer index down almost 13% last month, underperforming the broader Singapore market.


ACTION
·        We remain OVERWEIGHT on the property sector as we believe the market has over-discounted the negative prospects, pricing in a 50-60% correction in property prices.  Our burn-down analysis reveals, however, that deep value still remains. CapitaLand and Wing Tai remain as our top picks.

ESSENTIALS
·        Developers trading near undeserving crisis valuations. Developers within our coverage currently trade at a distressed 1.46SD below mean RNAV. This brings these counters into severe economic recessionary territory, when they traded at 1.52SD and 2.22SD below average RNAV during the global financial crisis and Asian financial crisis respectively. Mean reversion to the historical discount to long-term RNAV of 13.6% implies 55% upside.
Property Sector (Discount)/Premium to RNAV


·        Burn-down analysis indicates deep value. In the light of the gloomy domestic residential outlook, we have conducted stress tests across developers within our coverage to factor in the following:

a)        50% decline in ASPs of residential properties from 2013's peak.
b)        50% decline in capital values of commercial and retail properties in Singapore.
c)        50% decline in capital values of overseas properties and associate contributions.

The resulting 12% upside in prices on average despite our conservative assumptions presents an appealing opportunity despite the gloom and doom perceived by the market.

RNAV stress Test

CAPL
CDL
GUOL
HOBEE
OUE
WINGT
Share Price (S$)
2.73
8.25
1.95
1.935
1.83
1.6
RNAV (S$)
5.11
13.55
3.4
3.81
4.3
3.56
Assumptions
     Decline from peak end 2013 (%)
Singapore residential
(50)
 (3.1)
 (16.0)
 (11.2)
 (4.0)
 (4.8)
 (18.0)
Singapore office
(50)
 (4.9)
 (9.0)
 (7.0)
 (19.0)
 (20.0)
 (7.0)
Singapore retail
(50)
 (8.2)
 (4.5)
 (1.0)
 (0.5)
 (4.0)
 (2.0)
Overseas (including others)
(50)
 (26.4)
 (13.2)
 (22.4)
 (20.4)
 (16.0)
 (14.8)
Total
 (42.6)
 (42.7)
 (41.6)
 (43.9)
 (44.8)
 (41.8)
Stressed RNAV(S$)
 2.93
 7.76
 1.99
 2.14
 2.37
 2.07
Upside to Share Price (%)
7
(6)
2
10
30
29

Source: UOB Kay Hian

·        Analysis of the peak and trough P/B valuations implies an attractive risk-to-reward proposition of 7:1. Analysis of past P/B peaks and troughs indicates an attractive upside of 203% vs downside risk of 30%.

P/B Valuation

UpCycle
Upside
DownCycle
Downside
Upside to
Price
BV ps
Current
LT Avg
Upside
Peak Avg
to Curr
Trough
from Curr
Downside
Company Ticker
7 Sep 15
(S$)
P/B
P/B
from Curr P/B
P/B*
P/B
P/B**
P/B
Ratio
(S$)
(x)
(x)
(%)
(x)
(%)
(x)
(%)
(x)
CapitaLand
CAPL SP
2.73
4.04
0.68
1.18
74.3
2.15
217.8
0.43
(35.6)
6.1
City Devt
CIT SP
8.25
9.36
0.88
2.11
139.4
2.71
207.1
0.76
(13.3)
15.6
Guocoland
GUOL SP
1.95
2.32
0.84
1.06
26.0
1.83
118.3
0.28
(66.7)
1.8
Ho Bee
HOBEE SP
1.935
3.70
0.52
0.88
67.9
1.88
259.4
0.32
(39.6)
6.6
Wheelock
WP SP
1.495
2.62
0.57
1.15
100.8
1.62
183.0
0.57
(0.7)
251.6
Wing Tai
WINGT SP
1.60
4.00
0.40
0.96
139.6
1.38
243.7
0.32
(20.8)
11.7
Average
0.65
1.22
90.2
1.93
203.1
0.45
(29.9)


·  Key re-rating catalyst will be demand-side policy easing by the government. We believe the market has over-discounted the negative prospects, pricing in a 50-60% correction in property prices. We expect a re-rating of developers upon confirmation of price correction being arrested at more moderate 10-20% levels.




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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