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Monthly Archives: April 2017

Slower terminal growth expected for Hutchison Port

Slower terminal growth expected for Hutchison Port

SINGAPORE OCBC Investment Research is keeping is “hold” call on Hutchison Port Holdings Trust, but lowering its fair value estimate to 42 US cents, from 45 US cents
previously.

While we have kept our forecasts largely intact, we have decided to lower our terminal growth rate from 1.0% to 0.5% as we have moderated our forward expectations, says OCBC lead analyst Deborah Ong in a report on Tuesday.

According to Ong, HPH Trust’s 1Q17 results were in line with expectations.The container port operator for the first quarter ended March reported a 69.9% slump in earnings to HK$166.9 million ($29.9 million), from HK$554.9 million a year ago. Excluding government rent and rates refund of HK$430.0 million a year ago, earnings were 15.7% lower year-on-year.

Excluding government rent and rates refund of HK$430.0 million a year ago, earnings were 15.7% lower year-on-year.

Revenue for the quarter declined 6.3% to HK$2.6 billion – accounting for 22.0% of OCBC’s full year forecast.This was mainly due to a 1.4% decline in container throughput of Yantian International Container Terminals (YICT) on the back of weaker empty and transshipment cargoes.

This was partially offset by a 3.2% increase in combined container throughput of Hongkong International Terminals (HIT), COSCO-HIT and Asia Container Terminals (ACT) –
collectively referred to as HPHT Kwai Tsing – on higher transshipment cargos.

We expect the trend seen in 1Q to continue for the rest of the year, with growing outbound cargoes to the US and EU, says Ong.

According to Ong, HPH Trust is currently trading at an FY17 yield of 7.1%.In addition, she notes that there is potential upside if it is able to command higher tariff
rates for the mega-vessel berths in YICT.

As at 12.11pm, units of Hutchison Port Holdings Trust are trading half a cent higher at 40 US cents.

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Posted by on April 26, 2017 in Uncategorized

 

Singapore Hot Stock List

Singapore Hot Stock List

DBS Group Research is keeping its “buy” recommendation on Mapletree Industrial Trust (MINT) with an unchanged target price of $1.94.

This is on the back of a steady DPU growth profile of 3-4% per annum, higher than its industrial peers, says DBS lead analyst Derek Tan in a report on Tuesday.

The manager of MINT on Monday reported a 2.2% increase in FY17 distribution per unit to 11.39 cents.This was mainly attributed to higher rental rates achieved across
all property segments with the initial contribution from Phase One of the build-to-suit (BTS)development for Hewlett-Packard Singapore.

The REIT offers high earnings visibility and we have confidence that the manager has the flexibility to execute on more developments to exploit its conservative balance sheet, says Tan. “This implies potential upside to earnings.

Mapletree Industrial Trust has a strong balance sheet with gearing at 29.2% – one of the lowest among Singapore industrial REITs.With the manager selective in their deployment and allocation of use of capital, we remain confident that deals, when announced, will be value accretive to unitholders, says Tan.

While the analyst notes that MINT’s share price has done well in recent times, he believes the stock still offers an attractive total return of close to 15%.

MINT’s resilience is a valued trait in this market and has yet to be reflected in its current share price, says Tan.As at 11.34am, units of Mapletree Industrial Trust are trading 2 cents higher at $1.82.

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Posted by on April 25, 2017 in Uncategorized

 

This industrial REIT offers the meatiest returns as a prime sector pick

This industrial REIT offers the 'meatiest' returns as a prime sector pickCIMB Investment Research is initiating coverage on Frasers Logistics & Industrial Trust (FLT) at add with a $1.10 target price, naming the trust as one of its sector preferred picks in place of CDL Hospitality Trusts (CD REIT) after the latter’s YTD 10% outperformance.

In a report last Friday, analysts Yeo Zhi Bin and Lock Mun Yee say the price target translates to total returns of 18% – one of the “meatiest” in the research house’s coverage, in their view.

FLT is the first Singapore REIT (S-REIT) with an initial pure-play Australian industrial portfolio as well as the fourth largest industrial owner in Australia.

Our economist at Morgans (our Australian JV partner) expects [Australia’s] GDP growth to accelerate moderately at 3% for 2017. Rising consumption, e-commerce and internalization of the retail sector is driving demand for 3PLs and logistics facilities. This has led to favorable supply-demand dynamics where cap rate compression, tightening occupancy and rental growth have been observed,” elaborate the analysts.

According to Lock and Yeo, FLT’s portfolio ticks all the checkboxes given its properties’ location in core markets with strong connectivity to key infrastructure a predominantly freehold/long leasehold and young portfolio; as well as a quality tenant base behind the trust’s high portfolio occupancy and long WALE.

Additionally, its sponsor, Frasers Centrepoint Limited (FCL), is a market leader in Australia’s industrial sector – and has an end-to-end development platform through
Frasers Property Australia (FPA).

Further, FPA has a development pipeline with an estimated completed value of A$850 million, which offers FLT a strategic avenue to pursue inorganic growth, especially with an increasingly low an availability of prime assets, comment Lock and Yeo.

Among the industrial S-REITs, FLT is not only unique due to its pure-play exposure to Australian industrials. Its market cap is just above US$1 billion, making the stock and Keppel DC REIT the two mid-caps which interpose between the three government-linked large caps (Ascendas REIT, Mapletree Industrial Trust, and Mapletree Logistics Trust) and a host of independent smaller-cap REITs, they add.As at 11:27, units of FLT are trading 0.5% lower at $1.02.

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DECLOUT
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Posted by on April 24, 2017 in Uncategorized

 

Keppel O&M focuses on new and LNG orders as O&M sector breaks even in 1Q

Keppel O&M focuses on new and LNG orders as O&M sector breaks even in 1QSINGAPORE: OCBC is maintaining its “buy” on Keppel Corp with a fair value estimate of $7.36 given the stock is trading at 1.0x book, below its trough of 1.2x during the 2008 financial crisis.Our revised fair value estimate of $7.36, down slightly from $7.40 after updating the values of Keppel’s listed entities, implies a P/B of 1.1x says analyst Low Pei

Our revised fair value estimate of $7.36, down slightly from $7.40 after updating the values of Keppel’s listed entities, implies a P/B of 1.1x says analyst Low Pei Han in a Friday report. This gives the stock an upside potential of about 15%.

In 1Q17 ended March, Keppel reported a 28.4% y-o-y fall in revenue to $1.25 billion but a 23.7% rise in net profit to $260.4 million which accounted for 29% of OCBC’s full-year estimate.

But this was bumped up by one-off items such as $46 million of writeback of impairment of investments, $32 million gain on disposal from the sale of 80% interest in PT Sentral Tunjungan Perkasa, as well as $44 million gain from the sale of interest in GE Keppel Energy Services and City one Development (Wuxi) Co.

We estimate recurring net profit of about $113 million, dragged [down] by the offshore marine segment which broke even in 1Q17, says Low.The property division, which has lumpy quarterly contributions, saw a 48% y-o-y fall in revenue to $262 million with lower revenue from China and Singapore.

Looking ahead, management sees many opportunities in the gas market, especially in the area of Keppel-built carriers and regasification units can be deployed alongside small gas-fired power units.

Keppel is also re-purposing its offshore technology for applications in other areas including floating infrastructure assets.

Low says it is already a well-known fact that the O&M division is undergoing a rough patch, hence negative news related to impairments might just be taken in stride by the market. What is important now will be the flow of new orders.

We are valuing the O&M segment based on 1x P/B, given that we do not expect a quick recovery in new order flows, says Low.While there is unlikely to be any demand for newbuild rigs, the analyst says there remains the possibility of production-related orders, as well as FLNG orders.Shares of Keppel are up 7 cents at $6.62.

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Posted by on April 21, 2017 in Uncategorized

 

Why Keppel REIT is still a ‘buy’ despite falling DPU

Why Keppel REIT is still a 'buy' despite falling DPUSINGAPORE-Maybank Kim Eng Research is keeping its buy recommendation on Keppel REIT with an unchanged price target of $1.18.This comes despite Keppel REIT on Wednesday posting a 13.7% drop in distribution per unit (DPU) to 1.45 cents for the first quarter ended March 31.

Distributable income fell 11.6% to $48.1 million in 1Q, from $54.4 million a year ago.

1Q17 DPU was a slight miss, says Maybank analyst Derrick Heng in a report on Thursday. While we continue to forecast falling DPUs, KREIT’s undemanding valuation of 0.7x P/BV and 6% yield more than compensate for this.

In addition, Heng believes Keppel REIT’s management will be able to mitigate any income weakness through capital distributions.

Meanwhile, Heng points to the slowing rate of rent decline as an affirmation of the research house’s view that the market is bottoming.Keppel REIT’s portfolio saw a negative rent reversion of 1% in 1Q17 – a “significant improvement” from the negative reversion of 9% in FY16.

This, along with a slower pace of rent decline in the market, reinforces our view of a bottoming office market, says Heng.As at 11.47am, units of Keppel REIT are trading 1.5 cents lower at $1.06.

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JADA SON
MIYOSHI
YUUZOO
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Posted by on April 20, 2017 in Uncategorized

 

Singapore businesses brace for higher costs

Singapore businesses brace for higher costsBusinesses in Singapore are bracing for higher costs in a country that’s already among the world’s most expensive to live in.

From a 30% increase in water prices to higher diesel costs to a looming carbon tax, manufacturers are being forced to adjust their operations to remain competitive in
an economy that’s only recently recovering from an export slump. It also signals a pick-up in inflation, an outcome the central bank flagged in its monetary policy statement last week.

Of the measures announced by Finance Minister Heng Swee Keat in his February budget, higher water tariffs have generated the most debate and anxiety among Singaporeans.

Having kept the cost steady since 2000, Prime Minister Lee Hsien Loong is clear why the government needs to adjust prices: as an island nation that’s water-stressed, the state needs to pay for expensive desalination plants. Higher prices will also make consumers more aware of their usage of the scarce resource.

For Lee Soon Kiat, director of government relations at semiconductor maker Globalfoundries Inc., higher water tariffs — to be implemented in two phases beginning in July — means extra costs of as much as $5 million a year at plants producing electrical circuits.

It’s clear that it will add to our operating costs,” said Lee, who is also a member of the executive committee of Singapore’s Semiconductor Industry Association. It’s an issue that our industry will have to adapt to, and continue to pursue water saving or recycling measures in our processes.

Singapore is routinely ranked among the top when it comes to global competitiveness, mainly because of its low company tax rates, good infrastructure and easy procedures
to open a business, rather than cost effectiveness. It was placed fourth out of 61 countries in last year’s world competitiveness index — compiled by the Swiss business school IMD — but ranked among the lowest, at 57, on scores for cost of living.

Song Seng Wun, a regional economist at CIMB Private Bank in Singapore, said the government is banking on companies accepting higher costs in exchange for the city
state’s other advantages: its reliable power and water supply, business-friendly framework, stable legal and political system and competitive tax rates.

Singapore has never been the cheapest place to do business,” he said. Other factors have to be strong enough to keep Singapore as a very competitive place. Measures to
create a green and healthy environment is “also a competitive advantage,” he said.

The moves fit into the government’s broader goal of forcing businesses to innovate in order to boost productivity, from encouraging companies to adopt digital technologies to re-skilling workers to keep pace with global change.

At $1.21 per cubic meter currently, water for industrial use in Singapore is already more expensive than in many other Asian countries, and several times pricier than in China, according to Simon Powell, head of Asian utility research at UBS Group AG in Hong Kong. That’s forcing companies that rely on significant amounts of water, such as power plants and the brewery that produces the local Tiger beer, to review their consumption needs.

Tuas Power Ltd. one of the largest power generators in Singapore had been implementing steps to save water before the cost announcement was made, said spokeswoman Michele Sit. The company will install additional meters to track unusually high consumption or wastage of water, she said.

Heineken NV’s unit in Singapore, the maker of Tiger beer, had already committed to cut water usage by 20% even before the planned tariff increase, according to its head of corporate affairs, Mitchell Leow. About 95% of the beer is made out of the water.

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TT INTL
SINGTEL
WILMAR INTL

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Posted by on April 19, 2017 in Uncategorized

 

DBS launches 24/7 foreign currency exchange capabilities first in Southeast Asia

DBS launches 247 foreign currency exchange capabilities; first in Southeast AsiaSingapore DBS Bank is introducing round the clock currency exchange in 12 major currencies from 3Q this year.

This means customers can now exchange in 12 key currencies anytime and anywhere without needing to visit money changers, and pay in foreign currency without additional
charges.

No more scrambling to locate a money changer while overseas or being forced to accept an unfavourable rate. We believe this will further incentivise Singaporeans to
move towards the security and convenience of cashless payments,” says Jeremy Soo, Head of Consumer Banking Group (Singapore) at DBS.

DBS is the first bank in Southeast Asia to introduce this capability.Customers will need to sign up for both the DBS Multi-Currency Account (MCA) and DBS Visa Debit
Card to enjoy 24×7 foreign currency exchange.

In addition, the customer’s DBS MCA must be linked to their DBS Visa Debit Card as a primary account.

In 2015, DBS made the DBS MCA a standard account for new customers to ensure customers will always have ready access to currency exchange. The DBS MCA is also the only
multi-currency account in Singapore that allows exchanges in 12 key currencies, including SGD.

This February, we registered an astonishing 43% increase in foreign currency spending from customers on the DBS MCA and DBS Visa Debit Card scheme, compared to
previous average monthly spends. The introduction of our 24/7 foreign exchange capability provides a complete foreign currency payment solution, said Soo.

The introduction of the 24/7 foreign currency exchange capability is expected to accelerate customer take-up of the scheme as more customers will be able to access
foreign currency exchange services at competitive rates via their DBS iBanking or mBanking platforms, anytime and anywhere.

To celebrate the successful launch of the DBS MCA and DBS Visa Debit Card foreign currency scheme, DBS customers get to enjoy free ChangiWIFI credits worth $15 and
free rides worth $10 to or from Changi airport when they spend a minimum of $500 on travel-related transactions — such as airlines and/or hotels — with the DBS Visa
Debit Card.Shares of DBS are up 7 cents at $18.97.

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Black Gold Natural
Golden Agri-Res
QT Vascular
Alliance Mineral

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Posted by on April 18, 2017 in Uncategorized