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LIM & TAN SECURITIES
20 CECIL STREET #09-00 EQUITY PLAZA SINGAPORE 049705
TEL: 65330595
www.limtan.com.sg
RCB REG NO. 197301030W
DAILY REVIEW | 14 NOVEMBER 2014
FINANCIAL MARKETS
MAJOR MARKET INDICES
CLOSE
FSSTI
1D
(%)
MTD
(%)
YTD
(%)
3304.9
0.6
0.9
4.3
17652.8
0.2
1.5
6.5
S&P 500
2039.3
0.1
1.1
10.3
NASDAQ
4680.1
0.1
1.1
12.1
FTSE (UK)
6635.5
0.4
1.4
-1.7
Nikkei
17392.8
1.1
6.0
6.8
Hang Seng
24019.9
0.3
0.1
3.1
2485.6
-0.4
2.7
17.5
13.8
5.9
-1.7
0.5
Dow Jones
Shanghai Composite
VIX
SG MARKET SUMMARY
Daily Market Value (S$ 'm)
1240.2
Daily Market Volume (mln)
1741.1
52-week STI High
3387.8
52-week STI Low
2953.0
KEY INTEREST RATES
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
3 Mth SGD SIBOR
0.4
0.0
0.7
4.1
3 Mth Swap Offer Rate
0.3
-7.2
7.4
20.2
SG 10 YR Bond Yield
2.3
0.5
1.6
-9.0
US 10 YR Bond Yield
2.3
-1.3
0.2
-22.7
US FUTURES
As at 8.00am SG time
CLOSE
Dow Jones
1D
(%)
MTD
(%)
YTD
(%)
17593.0
0.0
1.6
8.0
S&P 500
2033.2
0.0
1.1
11.6
NASDAQ
4203.5
0.0
1.3
18.3
COMMODITIES
CLOSE
Gold
1D
(%)
MTD
(%)
YTD
(%)
1162.8
0.0
-0.9
-3.6
Crude Oil
74.2
-3.9
-7.9
-24.6
Baltic Dry
1264.0
-4.7
-11.5
-44.5
Crude Palm Oil
8865.0
0.8
-1.1
-10.5
FSSTI INDEX
3600
3500
52-week price chart
3400
US stocks rose a marginal 0.1-0.2% as better than expected
corporate results and M&A deals offset weakness in small cap
stocks and energy shares on continued weakness in energy prices.
Wal-Mart rose 4.7% for its biggest single day advance since 2008
as the world’s largest retailer said US same store sales grew for
the first time in 7 quarters. Walmart’s better than expected results
helped consumer stocks rise 0.6%, the biggest gainer in the S&P
500 index. Energy related stocks fell another 1.3%, bringing their
losses since June’14 to 15%, reflecting the continued weakness
in energy prices. Potential M&A deals helped offset the overall
decline as Wall Street Journal reported that there are ongoing talks
between Halliburton and Baker Hughes, in what could potentially
be one of the largest takeovers of a US energy company in
years. Halliburton rose 1.1% while Baker Hughes surged 15%.
DreamWorks Animation surged 14% on rumours of a takeover
offer from Hasbro.
IDEA OF THE DAY
ComfortDelGro Corporation ($2.62, up 1.0 cent) reported an inline
set of results with 3Q14 revenue grew by 6.0% yoy to $1.037 bln
given broad-based growth as practically all business segments
registering increases in the topline. However, we note that actual
revenue growth of $44.6 mln was boosted by a positive foreign
currency translation of $14.3 mln due to the stronger Sterling
Pound. Revenue from the group’s overseas operations accounted
for 40.3% of its overall revenue.
On a segmental basis, revenue from the group’s Bus Business
was $528.1m for 3Q14 (+4.9% yoy), mainly attributed to the UK
Bus Business with $24.8mln and the Singapore Bus Business with
$21.0mln offset by the decrease from the Australia Bus Business
with $21.0mln. Management said its subsidiary SBS Transit will
be tendering for the upcoming Bulim bus package, with results
expected to be announced in 2Q15.
The better-than-expected performance came from the Rail
Business which saw revenue jumping 21.4% yoy to $51.0mln for
3Q14, driven by contribution from Downtown Line (DTL) 1 and
increases in average daily ridership and average fare. Average
daily ridership for the North-East Line also grew by 7.1% to 527K
passenger trips and that for the two Light Rail Transit systems rose
by 9.5% to 89K passenger trips. Average daily ridership for DTL1
was 68K passenger trips for 3Q14.
Amid rising operating cost pressures, net profit still managed to
increase by 5.3% to $80.8 mln. We understand that ComfortDelgro
has taken advantage of the recent slide in fuel prices to lock in
cheap hedging positions at lower rates than the previous year.
Notably, about 60% and 70% of its diesel requirements for the rest
of 2014 and its 2015 usage have already been hedged respectively.
3300
3200
3100
3000
2900
2800
11/13 12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14
Source: Bloomberg
ComfortDelgro continues to generate strong free cash flow with
balance sheet remains healthy. After accounting for the borrowings
of $733.4m, the group had a net cash position of $15.4m. Its gross
gearing ratio was 25.5% as at end-Sept 2014 (from 28.9% a year
earlier). Compared to SMRT, valuation is relatively undemanding
at 19.5x FY14 and 18x FY15 P/E. We also see room for the
group to potentially increase its dividends payout going forward.
Maintain Buy.
Singapore Research Team
Tel: 6533 0595
Email: research@limtan.com.sg
Please see research disclaimer on last page
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1
OTHER HIGHLIGHTS
UE E&C ($1.275, up 2 cents) 3Q’14 profit fell 20% to
$9.5mln, dragging 9 month to Sept’14 profit down 10% to
$33mln on the back of 26% yoy decline in 3Q’14 sales to
$84mln and 13% decline in 9 month sales to $266mln. 9
month to Sept’14 profit of $33mln only accounts for 47%
of full year consensus estimates reflecting weaker than
expected margins from the construction business, weaker
than expected profit from the completed EC project Austville
Residences and also slower than expected recognition of
order books.
While there is another EC project (Watercolours) to be
recognized early next year, we now expect contributions to
be much lower than our previous expectations ($10-15mln
against previous expectations of $20mln) due to higher
costs. And their 20% owned The Crest project remains
only 10% sold despite having launched it earlier this year.
At 1.33x price to book and 1x RNAV, we believe that UE
E&C is fully valued and hence downgrade it to “SELL”.
United Engineers looks like a better bet currently at 1x
book and 0.8x RNAV (with a potential offer).
UMS Hldgs ($0.51, unchanged) saw 3Q14 revenue decline
2% to S$24.8mln while net profit increased 14% to S$5.5mln
due to lower Contract Equipment Manufacturing sales
although higher gross margins helped bottomline. Interim
dividends were maintained at S$0.01. For 9M14, turnover
was up 2% to S$87.8mln while net earnings appreciated
19% to S$21.3mln. We deem this set of numbers to be
inline with market expectations as 9M14 net profit equates
to 74.5% of FY14F net profit at S$28.6mln as derived from
the average of the analysts’ estimates.
Cash flows were also strong as the company generated
free cash flows of S$5.7mln, bringing its net cash hoard
to S$32.7mln which equates to 15% of market cap. Going
forward, the company expects the performance in 4Q14
to be relatively flat sequentially. At $0.51, market cap is
$218.9mln, trailing P/E is 6.5x, P/B is 1.1x, dividend yield is
high at 9% and price-to-sales is 1.7x.
Sino Construction ($0.315, up 0.5 cents) saw 3Q14 sales
at S$0.075mln (3Q13: nil) due to a delay in revenue
recognition on the part of Elite Bay, its proposed mixed
commercial development cum bus terminal in Kota
Kinabalu.
However, 3Q14 net profit was S$4.3mln as compared to
a S$22.5mln loss in 3Q13 as the company recognised
earnings from its discontinued operations.
Going forward, there are no significant changes in the
trends and competitive conditions of the industry in which
the company operates and no major known factors or
events that may adversely affect them in the next reporting
period and the next twelve months.
Amtek Engrg ($0.595, unchanged) saw 1Q15 turnover
increase 33% to US$225.5mln although net profit dropped
46% to US$4mln as topline was helped by the consolidation
of the results from Interplex Industries while higher finance
costs and a one-off acquisition related expense affected
bottomline. No interim dividends were declared.
Cash flows were weak as negative free cash flows of
US$2.7mln were generated, putting the company in a
net debt position of US$228.4mln which equates to net
gearing of 132.6%.
Going forward, demand outlook for IT and IT related
products as well as consumer electronics products are
expected to remain challenging for the rest of the calendar
year. At $0.595, market cap is $324.6mln, trailing P/E is
18.4x, P/B is 1.5x, dividend yield is 3.9% and price-tosales is 0.4x.
FSSTI STOCK SELECTION
HIGHEST CONSENSUS FY14E DIV YIELD (%)
LOWEST TRAILING P/B (X)
1 HUTCHISON PORT-U
7.61
1 GOLDEN AGRI
0.53
2 GENTING SINGAPORE
7.00
2 HONGKONG LAND
0.60
3 ASCENDAS REIT
6.70
3 HUTCHISON PORT-U
0.73
4 CAPITAMALL TRUST
5.73
4 CAPITALAND
0.87
5 SPH
5.04
5 JARDINE STRATEGIC
0.92
LOWEST CONSENSUS FY14 P/E (X)
LOWEST TRAILING EV/EBITDA (X)
1 SIA
4.43
10.32
2 JARDINE C&C
7.55
3 NOBLE GROUP
10.48
3 COMFORTDELGRO
7.90
4 OCBC
10.66
4 SEMBCORP INDUSTRIES
9.60
5 DBS
11.23
5 SEMBCORP MARINE
9.73
1 SEMBCORP INDUSTRIES
2 KEPPEL CORP
9.97
Source: Bloomberg Estimates (FSSTI Universe)
Please see research disclaimer on last page
Page
2
03 - 11 NOVEMBER
SHARE TRANSACTIONS
Company
Buy
Sell
Transacted
Price* ($)
Market
Price ($)
New
Balance
Stake
(%)
58,858,000
580,000
4,500,000
1,510,000
1,000,000
-
0.845
0.06
0.076
ND
0.199
1.905
-
58,858,000
108,608,350
4,677,799,976
720,973,700
300,700,000
5.355
31.72
47.32
8.82
42.35
-
58,858,000
3,000,000
6,668,000
0.845
HK$7.36
0.095
-
19,787,000
8,933,998
18,980,000
1.80
0.48
6.66
Party
ACQUISITIONS
Accordia Golf Trust
Avitech
GSH Corp
IHH Healthcare
Kim Heng Offshore
Daiwa Investment Mgm
Lim Eng Hong
Goi Seng Hui
EPF
Thomas Tan
DISPOSALS
Accordia Golf Trust
Fortune REIT
Singapore eDevelopment
Daiwa Sec
ARA Asset Mgm
Toh Soon Huat
* ND: Not Disclosed
SHARE BUYBACK
Company
Biosensors International
Courts Asia Ltd
Genting Singapore
Lian Beng Group
OCBC
Koh Brothers
Sembcorp Industries
Please see research disclaimer on last page
No. of shares
Price
($)
Cumulative
Purchases
Of Maximum
(%)
500,000
200,000
3,000,000
200,000
100,000
380,000
139,000
0.606
0.406
1.025
0.675
10.15
0.31
4.62
60,741,000
2,863,000
3,000,000
15,747,000
11,275,000
10,887,000
1,000,000
0.36
0.515
0.02
29.7
3.28
24.6
0.06
Page
3
DIVIDENDS (LIST IS NOT EXHAUSTIVE)
Company
Amount
CitySpring Infrastructure Trust
OUE Hospitality Trust
Silverlake Axis
Sim Lian
PEC Ltd
Perennial China Retail
SMRT
Chosen Holdings
Creative Technology
Starhub
SIA Engineering
Ascendas India Trust
Rickmers Maritime
SPH
Asian Pay TV
Osim
Second Chance Properties
0.82¢ (Period 01 July To 30 September 2014)
1.64¢ (Period 01 July To 30 September 2014)
1.2¢ final / 0.6¢ special
4.6 ¢ final
2¢ final
0.95¢ (Period 01 July To 30 September 2014)
1.5¢ interim
6.72¢ final
5¢ final
5¢ interim
6¢ interim
2.4¢ (Period 01 April To 30 September 2014)
US0.6¢ (Period 01 July To 30 September 2014)
8¢ final / 6¢ special
2¢ (Period 01 July To 30 September 2014)
1¢ interim
1.5¢ final
Please see research disclaimer on last page
Last Day
First Day
Cum-Dividend Ex-Dividend
06 Nov
06 Nov
06 Nov
06 Nov
07 Nov
07 Nov
07 Nov
10 Nov
10 Nov
10 Nov
12 Nov
19 Nov
21 Nov
05 Dec
09 Dec
26 Dec
07 Jan 2015
07 Nov
07 Nov
07 Nov
07 Nov
10 Nov
10 Nov
10 Nov
11 Nov
11 Nov
11 Nov
13 Nov
20 Nov
24 Nov
08 Dec
10 Dec
29 Dec
08 Jan 2015
Date
Payable
21 Nov
03 Dec
27 Nov
27 Nov
26 Nov
03 Dec
20 Nov
21 Nov
25 Nov
28 Nov
25 Nov
10 Dec
12 Dec
23 Dec
19 Dec
08 Jan
21 Jan 2015
Page
4
WHAT’S AHEAD
NOVEMBER 2014
Sun
Mon
Tue
Wed
Thu
Fri
Sat
1
2
3
4
5
6
7
8
3Q Ended Sept ‘14
CapitaLand
FEO Hospitality
Frencken Group
Hong Leong Finance
IFS Capital
Noble group
Pharmesis Intl
Singapore Reinsurance
ST Engineering
Vallianz Holdings
9
10
3Q Ended Sept ‘14
ARA Asset Mgmt
Delong Holdings
Fuxing China
Hotel Royal
Super Group
Vard Holdings
11
3Q Ended Sept ‘14
CNMC Goldmine
CSE Global
Fortune Reit
Genting Singapore
Petra Foods
UOL group
Vard Holdings
Vicom
Wilmar International
World Precision
1Q Ended Sept ‘14
Ellipsiz
12
2Q Ended Sept ‘14
Biosensors Intl
3Q Ended Sept ‘14
Amara Holdings
China Sunsine
City Developments
Croesus Retail Trust
DMX Technologies
Golden Agri- Resources
Kingsmen Creatives
Lippo Malls Indonesia Retail
SBS Transit
Sinarmas Land
Starburst Holdings
Swiber Holdings
Telechoice Intl
13
1Q Ended Sept ‘14
Amtek Engineering
ASL Marine
Parkson Retail Asia
2Q Ended Sept ‘14
KSH Holdings
SATS
Singapore Telecoms
3Q Ended Sept ‘14
ComfortDelgro
Haw Par Corp
Ho Bee Land
HTL Intl
QAF
Religare Health Trust
YHI International
14
15
1Q Ended Sept ‘14
Olam
2Q Ended Sept ‘14
Tat Hong
3Q Ended Sept ‘14
Hong Leong Asia
Li Heng Chemical
Mewah Intl
Otto Marine
Straco Corporation
United Engineers
Thai Beverage
4Q Ended Sept ‘14
Frasers Centrepoint
16
17
18
19
20
21
22
23
24
25
26
27
28
29
Please see research disclaimer on last page
Page
5
RESEARCH DISCLAIMER
This report is intended for clients of Lim & Tan Securities Pte Ltd [herein after termed as LTS] only and no part of
this document may be –
i.
Copied, photocopied, duplicated, stored or reproduced in any form by any means or
ii. Re-distributed or disseminated, directly or indirectly, to any other person in whole or in part, for any purpose
without the prior consent of LTS.
This research report is prepared for general circulation. It does not have regard to the specific investment objectives,
financial situation and particular needs of any specific recipient of this research report. You should independently
evaluate particular investments and consult your independent financial adviser before making any investments or
entering into any transaction in relation to any securities or investment instruments mentioned in this report.
The information, tools and material presented herein this report are not directed at, or intended for distribution to
or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution,
publication, availability or use would be contrary to applicable law or regulation or which would subject LTS to any
registration or licensing requirement within such jurisdiction.
The information and opinions presented in this research report have been obtained or derived from sources believed
by LTS to be reliable. Their accuracy, completeness or correctness is, however, not guaranteed. Opinions and
views expressed in this report are subject to change without notice, and no part of this publication is to be construed
as an offer, or solicitation of an offer to buy or sell securities, futures, options or other financial instruments or
to provide investment advice or services. Therefore, LTS accepts no liability for loss arising from the use of the
material presented in this report where permitted by law and/or regulation. LTS may have issued other reports that
are inconsistent with the assumptions, views and analytical methods of the analysts who prepared them.
LTS, its directors, its connected persons and employees may, from time to time, own or have positions in any of the
securities mentioned or referred to in this report or any securities related thereto and may from time to time add to or
dispose of or may be materially interested in any such securities. LTS’s research analysts are primarily responsible
for the content of this report, in part or in whole, and certifies that the views about the companies expressed in
this report accurately reflect his personal views. LTS prohibits the research analysts who prepares this report
from receiving any compensation (excluding salary and bonuses) or other incentives and benefits receivable in
respect of this report or for providing specific recommendation for, or in view of a particular company or companies
mentioned in this report.
LTS-SPECIFIC / REGULATORY DISCLOSURE
1. LTS does not have a proprietary position in the companies as recommended in this report as at the close of
13/11/14.
2. The research analysts do have an interest in United Engineers as recommended in this report as at the close
of 13/11/14.
*
Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures
Contracts owned), directorships or trustee positions.
Page
6