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Tuesday, July 2, 2013

Local Brokerages Stock Call 2 July 2013

From OCBC:
Mapletree Logistics Trust: Strong take-up rates at MBLH
Mapletree Logistics Trust (MLT) announced that Menlo Worldwide Logistics has signed a binding commitment to lease 48,700sqm at MLT’s Mapletree Benoi Logistics Hub (MBLH) for a period of 10 years. Together with Menlo’s commitment which accounts for 55% of MBLH’s NLA, we understand the property is now 75% pre-leased, with the balance in the advanced stage of negotiation. We are positive on this development as it reflects continued healthy leasing demand and strong interest from major third-party logistics service providers. Judging from the strong pre-commitment levels, we believe that MLT will be able to meet its estimated yield-on-cost of 8-9%. In addition, we expect the long lease to further enhance MLT’s already resilient lease structure. However, as we have previously factored in the redevelopment project, we make no change to our forecasts. We maintain HOLD on MLT with an unchanged fair value of S$1.15.

Vard Holdings: Lower profit guidance
Vard Holdings warned that its 2Q2013 financial results (due 11/7/2013) are likely to be below current consensus estimates due to difficulties in its operations in Brazil. After a recent assessment, management found further delays, cost over-runs at its Niteroi yard due to lower-than-expected productivity, additional costs for outsourcing and higher start-up costs at the Promar yard. This comes as a surprise as the group had previously guided that its Brazil operations are coming under control and would stabilize by year-end, suggesting that the situation is more fluid than initially thought. In view of the poor earnings visibility, we switched our valuation methodology to PBR. We also cut our FY13F/14F net profit estimates by 20-25%. Downgrade to HOLD with lower FV estimate of S$0.93 (previously S$1.52) using 1.5x PBR (2 std dev below). 

From Maybank:
Del Monte Pacific: Time For A Pina Colada; Initiate Buy TP $1.00
DELM SP | Mkt Cap USD747m | ADTV USD0.5m

DMPL is a dominant F&B player in the Philippines, where it owns the rights to the Del Monte brand. New management team since 2006 has been reshaping the company and the fruits of their labour would be more evident in the next three years. 
We see the company experiencing a structural shift towards higher margins and ROE (from 13% currently to 20% by FY15F), as its business model changes from being an OEM exporter outside Philippines to a brand owner. This will be accelerated by the expiry of unfavorable supply contracts by FY14.
Our TP of SGD1.00 is pegged to 25x FY14F PER, justified by a 22% net profit CAGR and dividend payout of 75%, which is superior to ASEAN-listed peers. Initiate with BUY.

Sino Grandness: Big Uncertainty Removed; Maintain Buy TP $1.89
SFGI SP | Mkt Cap USD333m | ADTV USD2.1m

Sino Grandness announced yesterday that it has obtained a no-objection letter from SGX for the proposed Garden Fresh spinoff. It is an important milestone that we have been waiting for. We are more confident about a successful Garden Fresh IPO than before, thus we change our valuation methodology to SOTP. Our target price is raised to SGD1.89 accordingly. Maintain BUY.
Garden Fresh IPO is likely to launch in the next twelve months and we are optimistic on an at least mid-teen FY13 IPO PER.
Assuming a successful Garden Fresh IPO and parent company Sino Grandness selling some vendor shares, some special dividends can also be expected in FY14.
From UOB KH:

United Envirotech (UENV SP, U19)-
Resistance: S$1.00
Support: S$0.835/0.715

The stock has retraced from S$1.00 and on the
immediate basis the support is at S$0.835. The
stock may trend towards S$0.715 should there be a
follow through after the bearish crossover has
formed at its weekly MACD indicator.

Thai Beverage (THBEV SP, Y92) –
Technical BUY with +13.3% potential return

Last price: S$0.615
Resistance: S$0.71
Support: S$0.58
BUY with a target price of S$0.71 with tight stops placed
below S$0.58. The stock is trading above its 120-day
moving average and has attempted to close above its
mid-Bollinger band after rebounding from its lower band.
Its Stochastics indicator has formed a bullish crossover
Watch to see whether prices could test S$0.58 as its
MACD indicator looks poised to form a bullish

Vard Holdings (VARD SP, MS7) –
Technical SELL with +11.9% potential return

Last price: S$0.965
Resistance: S$1.20
Support: S$0.85
SELL with a target price of S$0.85 with tight stops
placed above S$1.02. The stock has been resisted by
its declining 50- and 100-day moving average and has
gapped down. Its rising negative DI has been
accompanied with a rising ADX. Watch to see whether
prices could find support near its gap up on 7 Oct 11
and whether its MACD indicator could trend lower.

Interra Resources (ITRR SP, 5GI) –
Technical SELL with +20.4% potential return

Last price: S$0.44
Resistance: S$0.54
Support: S$0.35
SELL with a target price of S$0.35 with tight stops
placed above S$0.47. The stock has broken below its
rising 150-day moving average, and its declining 15-day
moving average has crossed below its 35-day MA. Its
RSI indicator looks poised to trend lower, and its
negative DI appears to be heading north with a potential
rising ADX. Watch to see whether prices could break
below S$0.41.

Singapore Property – Residential: Loan curbs to moderate massmarket
CapitaLand (CAPL SP/BUY/S$3.01/Target: S$4.45)
Ho Bee (HOBEE SP/BUY/S$1.945/Target: S$2.45)
OUE (OUE SP/BUY/S$2.77/Target S$3.63)

The Urban Redevelopment Authority’s (URA) latest flash estimates
indicate that private home prices increased by 0.8% qoq in 1Q13 following
a 0.6% gain in the previous quarter. Housing Development Board (HDB)
data shows that public housing prices advanced at 0.5% qoq, the slowest
growth since 1Q09, vs a 1.2% qoq growth in 4Q12. The recent loan
curbs are likely to moderate the pick-up in mass-market prices. For
2013, we expect volumes to drop by 20-40% yoy and prices to moderate
by 3-8% as investment demand slows down post recent policy measures.
We prefer deep-value and diversified property stocks with exposure
to the office sectors, with CapitaLand, OUE and Ho Bee as our top

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