1. finance
2. investing
3. stocks

LIM & TAN SECURITIES
20 CECIL STREET #09-00 EQUITY PLAZA SINGAPORE 049705
TEL: 65330595
www.limtan.com.sg
RCB REG NO. 197301030W
DAILY REVIEW | 12 JANUARY 2015
FINANCIAL MARKETS
MAJOR MARKET INDICES
CLOSE
FSSTI
1D
(%)
MTD
(%)
YTD
(%)
3338.4
-0.2
-0.8
-0.8
17737.4
-1.0
-0.5
-0.5
S&P 500
2044.8
-0.8
-0.7
-0.7
NASDAQ
4704.1
-0.7
-0.7
-0.7
FTSE (UK)
6501.1
-1.0
-1.0
-1.0
Nikkei
17197.7
0.2
-1.5
-1.5
Hang Seng
23920.0
0.4
1.3
1.3
3285.4
-0.2
1.6
1.6
17.6
3.2
-8.6
-8.6
Dow Jones
Shanghai Composite
VIX
SG MARKET SUMMARY
Daily Market Value (S$ 'm)
1264.4
Daily Market Volume (mln)
1596.4
52-week STI High
3387.8
52-week STI Low
2953.0
KEY INTEREST RATES
US stocks fell close to 1% as concern grew that Europe’s stimulus
plan might not be sufficient and American wages fell before the
start of corporate earnings season. Stocks briefly rose at the start
of trading as data showed US employment rose more than forecast
in December’14 and the jobless rate declined to 5.6 percent,
wrapping up the best year for the labour market since 1999.
However, the early gain quickly melted away as investors focused
on an unexpected decline in earnings in the Labour Department
report. Average hourly earnings for all employees dropped by 0.2
percent, the biggest since comparable records began in 2006.
The US report comes amid cooling markets that stretch from
Europe to China. S&P 500 futures fell earlier today after a person
familiar with the matter said European Central Bank (ECB) staff
presented policy makers with models for buying as much as 500
billion euros ($591 billion) of investment-grade assets. A 500
billion-euro purchase program would take the ECB halfway toward
its goal of boosting its balance sheet to avert a deflationary spiral
in the euro area.
All 10 major groups in the S&P 500 retreated. Financial, consumerdiscretionary and industrial shares had the biggest losses, declining
more than 1 percent. Energy shares sank 0.8 percent to cap a third
weekly decline as oil closed at a more than five-year low.
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
IDEA OF THE DAY
3 Mth SGD SIBOR
0.6
0.0
39.9
39.9
3 Mth Swap Offer Rate
0.7
-6.2
-3.4
-3.4
Keppel REIT ($1.21, down 1.5 cents) said that nine of its 11
completed office towers in Singapore and Australia have achieved
100% committed occupancy. This includes Bugis Junction Towers,
Marina Bay Financial Centre (MBFC) Towers 1 and 2, the North
and South Towers at One Raffles Quay as well as Ocean Financial
Centre in Singapore.
SG 10 YR Bond Yield
2.1
-1.4
-6.0
-6.0
US 10 YR Bond Yield
1.9
-3.6
-10.4
-10.4
As at 8.00am SG time
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
Dow Jones
US FUTURES
17673.0
0.1
-0.4
-0.4
S&P 500
2037.7
0.1
-0.7
-0.7
NASDAQ
4206.8
0.1
-0.6
-0.6
COMMODITIES
CLOSE
Gold
1D
(%)
MTD
(%)
YTD
(%)
1226.2
0.3
3.5
3.5
Crude Oil
48.4
-0.9
-9.2
-9.2
Baltic Dry
709.0
-2.1
-9.3
-9.3
9012.0
-0.5
6.0
6.0
Crude Palm Oil
FSSTI INDEX
3600
3500
52-week price chart
3400
3300
3200
3100
3000
2900
2800
01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14 12/14
Source: Bloomberg
Meanwhile, occupancy at the newly acquired MBFC Tower 3 has
also increased to 97% from 94% when Keppel REIT first announced
the proposed acquisition in mid-Sept 2014. Over in Australia, the
properties that have achieved full committed occupancies are 8
Chifley Square in Sydney, 8 Exhibition Street in Melbourne and 275
George Street in Brisbane.
In 2014, rental rates for new leases and renewals at Keppel
REIT’s properties in the Raffles Place and Marina Bay precincts in
Singapore averaged $12 psf per month, with a number of leases
committed at $15 psf per month. We also note that leases that were
reviewed during the year registered an approximate 17% positive
rental reversion on average.
New tenants signed on in 2014 range from diverse sectors including
banking, insurance and financial services, technology, media and
telecommunications (TMT) sector, energy and natural resources,
as well as real estate and property services. In particular, Keppel
REIT saw an increase in demand from firms in the TMT sector for
its properties in Singapore’s central business district. The amount
of space taken up by new TMT tenants was more than double that
of 2013 as these companies locate to prime business addresses.
Looking ahead, Keppel REIT’s diversified portfolio with its long
weighted average lease expiry of approximately nine years for its
top 10 tenants should continue to provide Keppel REIT Unitholders
steady and sustainable returns over the longer term.
While positive, the above updates are not new and are in line with
the market’s expectations. Nevertheless, we are downgrading our
recommendation on Keppel REIT to HOLD given its relatively high
gearing of more than 40% (expectations of rising interest rates
going forward could increase the vulnerability of Keppel REIT).
Downside, however, should be supported by its 5% dividend yield,
which is similar to that of peers such as CCT and Suntec REIT.
Singapore Research Team
Tel: 6533 0595
Email: research@limtan.com.sg
Please see research disclaimer on last page
Page
1
OTHER HIGHLIGHTS
Ezra Holdings ($0.57, down 0.5 cent) reported an increase
in net profit to US$54.4 mln in 1Q15 despite lower revenue
of US$321.0 mln (-6% yoy). Adjusted EBITDA for the group
increased 13% from 1Q14 to reach US$44.7 mln, while
adjusted PAT decreased 40% yoy to US$5.2 mln in 1Q15.
Gross profit margin also declined by 2.7% pt to 12.2% in 1Q15,
owing to lower contributions from the Subsea Services division
and the Offshore Support & Production Services division.
EMAS AMC, Ezra’s Subsea Services division, saw a decrease
in revenue for 1Q15, arising from lower revenue contributions
from the vessel Lewek Express which has been in planned
mandatory dry dock for 1Q15 and the urgent maintenance and
repair of Lewek Champion due to the gangway malfunctioning
while the vessel was on a project during the quarter, causing
the vessel to be out of operations since Oct 2014. However,
Lewek Constellation, Ezra’s flagship subsea construction
vessel, is expected to be fully operational by Mar 2015 and will
commence on her projects thereafter.
Its Offshore Support and Production Services division, through
EMAS Offshore, saw 1Q15 revenues decrease by US$18.7
mln as a result of one leased-in vessel being returned to owner
in the 2H of FY14 and weakness in the Platform Support
Vessels (PSV) segment. That said, the group has maintained
operational profitability as its offshore support segment
enjoyed a healthy utilisation rate at more than 80%, despite
the last quarter being the winter and monsoon season.
Ezra has secured a healthy backlog of approximately US$2.5
bln, with majority of the contracts expected to be executed
over the next 12 to 18 months. Separately, it announced that
EMAS AMC had won a project with Apache to deploy the
Lewek Constellation for work in Australia, worth some US$105
mln. Despite the current low oil price environment, the group
is not seeing a slowdown in tendering activities, especially in
the Gulf of Mexico and West Africa.
While still relatively high, we note that the group’s net gearing
ratio has improved to 1.14x, as a result of the management’s
strategy to streamline core operations and focus more on cash
flow generation and capital management. Looking ahead,
management seeks to further rationalise non-core assets that
will potentially allow for the de-leveraging of Ezra’s balance
sheet. Maintain Hold.
Technics Oil & Gas ($0.71, down 1 cent) announced that
its independent auditor, RSM Chio Lim, have included an
Emphasis of Matter on the company’s FY14 financials. Without
qualifying its opinion, the auditors have drawn attention with
respect to the matters on the company’s ability to continue
as a going concern. In this regard, the company has incurred
a net loss of S$6.9mln in FY14 while its current liabilities
exceeded its current assets by S$26.9mln. These factors
indicate the existence of a material uncertainty that may cast
significant doubt about the company’s ability to continue as a
going concern.
Federal Int’l ($0.025, unchanged) announced a profit warning
for its 4Q14 and FY14 results and that its financials were
affected by the performance of its associate company and
tax liabilities recorded for certain subsidiaries. The additional
cost overrun and provisions made in 3Q14 for the Federal II
project also weighed down on the overall results for the year.
The company’s FY14 results are to be disclosed on or before
28-Feb-15.
ISOTeam Ltd ($0.515, up 0.5 cents) announced that its
executive directors and controlling shareholders, namely
Messrs Ng Cheng Lian, Koh Thong Huat and Foo Joon Lye,
are to collectively sell 7.941mln of their shares (or 2.647mln
each) to 12 employees of the company and its associate,
including the four executive officers of the company.
The sale price of $0.51 represents a 1% discount to its last
traded price, while none of the above-mentioned buyers would
hold a 5% or more stake in the company after the move. The
employees of the company are considered key personnel
and the rationale for the proposed share sale is to align their
interests with the shareholders of the company.
Advanced Integrated Manufacturing ($0.077, unchanged)
announced that its subsidiary, Colbree Advanced Products, is
to acquire the property situated at and known as Units 10 to
12 Beacon Court Pitstone Green Business Park Quarry Road
Pitstone Buckinghamshire in UK. The purchase price will be
no lower than GBP1.85mln while the move will allow Colbree
to secure permanent operating premises and to benefit from
any appreciation in the value of the property.
FSSTI STOCK SELECTION
HIGHEST CONSENSUS FY14E DIV YIELD (%)
LOWEST TRAILING P/B (X)
1 HUTCHISON PORT-U
7.64
1 GOLDEN AGRI
0.50
2 ASCENDAS REIT
6.33
2 HONGKONG LAND
0.64
3 CAPITAMALL TRUST
5.49
3 HUTCHISON PORT-U
0.73
4 KEPPEL CORP
5.43
4 CAPITALAND
0.87
5 SPH
5.21
5 JARDINE STRATEGIC
0.92
LOWEST CONSENSUS FY14 P/E (X)
LOWEST TRAILING EV/EBITDA (X)
1 NOBLE GROUP
8.54
1 SIA
5.66
2 SEMBCORP INDUSTRIES
9.08
2 JARDINE C&C
7.39
3 KEPPEL CORP
9.50
3 COMFORTDELGRO
7.74
4 JARDINE C&C
10.62
4 SEMBCORP MARINE
8.47
5 OCBC
10.77
5 SEMBCORP INDUSTRIES
8.98
Source: Bloomberg Estimates (FSSTI Universe)
Please see research disclaimer on last page
Page
2
05 - 08 JANUARY
AUGUST
SHARE TRANSACTIONS
Company
Buy
Sell
Transacted
Price* ($)
Market
Price ($)
New
Balance
Stake
(%)
344,000
72,500,000
131,000
2,000,000
110,000
2,058,812
60,000
1,686,000
-
0.834
0.104
10.029
0.638
0.605
0.50
0.525
1.04
-
46,125,235
72,500,000
200,123,787
233,733,716
15,383,370
7,948,278
1,483,670,960
673,126,058
5.01
8.97
22.01
89.81
5.73
5.93
81.50
53.21
-
2,000,000
3,724,900
0.638
ND
1.82
0
729,193,900
0
8.92
Party
ACQUISITIONS
Ascendas India Trust
China Environment
City Developments
Design Studio
Heeton Holdings
ISOTeam
PACC Offshore
Perennial Real Estate
Kabouter Managment
Dharma Rustam Winata
Aberdeen Asset Management
Depa Interiors
Toh Gap Seng
Nippon Paint Singapore
Kuok (Singapore)
Kuok Khoon Hong
DISPOSALS
Design Studio
IHH Healthcare
Lim Leng Foo
EPF
SHARE BUYBACK
Company
Biosensors
Courts Asia
Falcon Energy
GP Industries
Hyflux
Raffles Education
SATS
ST Engineering
Please see research disclaimer on last page
No. of shares
Price
($)
Cumulative
Purchases
Of Maximum
(%)
505,000
175,000
310,000
24,000
780,000
659,000
41,000
91,000
0.619
0.475
0.29
0.60
0.887
0.362
2.95
3.35
18,812,000
13,074,000
12,400,000
6,822,000
50,086,000
2,490,000
12,374,000
5,595,000
11.1
23.5
15.2
13.7
60.6
2.5
11.0
1.8
Page
3
DIVIDENDS (LIST IS NOT EXHAUSTIVE)
Company
Amount
Frasers Centrepoint
Fraser & Neave
6.2¢ final
3¢ final
Please see research disclaimer on last page
Last Day
First Day
Cum-Dividend Ex-Dividend
02 Feb
02 Feb
03 Feb
03 Feb
Date
Payable
16 Feb
16 Feb
Page
4
WHAT’S AHEAD
JANUARY 2015
Sun
Mon
Tue
Wed
Thu
Fri
Sat
1
4
5
6
7
11
12
13
14
Qian Hu
SPH Reit
18
25
SPH
3
9
10
16
17
8
15
First Reit
Cambridge Industrial
19
20
21
22
Keppel Infrastructure
Keppel Reit
M1
Mapletree Logistics
Keppel T&T
Mapletree Industrial
CapitaCommerical Trust
Keppel Land
Mapletree Commercial
Sabana Shari’ah
SGX
Soilbuild Business
Ascendas Reit
Ascott Residence Trust
FrasersCentrepointAsset
Keppel Corp
26
27
28
29
Cache Logistics Trust
CitySpring Infrastructure
Mapletree Greater China
ParkwayLife Reit
CDL Hospitality Trusts
Please see research disclaimer on last page
2
24
23
CapitaMall Trust
31
30
Page
5
WHAT’S AHEAD
FEBRUARY 2015
Sun
Mon
1
Tue
2
Wed
Thu
4
3
Global Logistic Prop
Osim
8
9
Fri
5
10
11
7
Great Eastern Hldgs
12
Wilmar Intl
UOI
Sat
6
13
14
Olam
UOB
15
16
17
18
19
20
21
22
23
24
25
26
27
28
HTL International
Please see research disclaimer on last page
IndofoodAgriResources
Page
6
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
09/01/15.
2. The research analysts do not have an interest in the companies as recommended in this report as at the close
of 09/01/15.
*
Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures
Contracts owned), directorships or trustee positions.
Page
7