From OCBC:
Land Transportation sector: Possibility of new entrant?
The
LTA recently re-iterated the possibility of introducing competition in
the bus services industry. However, as with before, we do not anticipate
any changes to the operating landscape in the medium term unless the
government decides how it wants to strike a balance between a
free-market and government assisted model. For the near-term, the street
is awaiting the recommendations from the fare review committee and has
already factored in some level of increase. That said, any further
delays from this committee could lead to continued losses for both PTOs
and even asset impairments for SMRT. We downgrade the sector to NEUTRALin
light of this possibility but do not anticipate further deterioration
in the share prices for both ComfortDelgro and SMRT at this juncture.
Maintain our HOLD ratings on both SMRT [HOLD; FV:S$1.45] and ComfortDelgro [HOLD; FV:S$1.95] although we favour the latter for its more attractive overseas ventures.
Swiber Holdings: Expanding into deepwater
According to Upstream, Swiber Holdings is preparing to invest in its first large deep-water offshore construction vessel for its fleet. In particular, the company is understood to have expressed its intention to purchase a vessel similar to Ezra’s Lewek Constellation. The capex of US$400-500m is huge, but considering that the unit is expected to take up to three years to build and the group has not announced any additional substantial capex plans, this may be a manageable purchase. Meanwhile, we would continue to monitor the group’s cashflow from operations. Pending an official statement from the company, we do not see this as a surprise, as Swiber has expressed its intentions to expand its operations into deeper waters. Maintain BUY with S$0.86 fair value estimate.
According to Upstream, Swiber Holdings is preparing to invest in its first large deep-water offshore construction vessel for its fleet. In particular, the company is understood to have expressed its intention to purchase a vessel similar to Ezra’s Lewek Constellation. The capex of US$400-500m is huge, but considering that the unit is expected to take up to three years to build and the group has not announced any additional substantial capex plans, this may be a manageable purchase. Meanwhile, we would continue to monitor the group’s cashflow from operations. Pending an official statement from the company, we do not see this as a surprise, as Swiber has expressed its intentions to expand its operations into deeper waters. Maintain BUY with S$0.86 fair value estimate.
Sembcorp Marine: Secures US$220.5m jack-up rig
Sembcorp Marine (SMM) announced that subsidiary PPL Shipyard has secured a contract to build a jack-up drilling rig from BOT Lease Co., Ltd, a leasing company of The Bank of Tokyo-Mitsubishi UFJ which is under the umbrella of Mitsubishi UFJ Financial Group. The contract price is US$220.5m (excluding cost of BOTL’s project management team and pre-operations cost), and is scheduled for delivery at end-Jan 2015. The unit is based on the proprietary Pacific Class 400 design; we note that Oro Negro had ordered a rig of similar design from SMM with a price tag of US$208.5m in Mar and Perisai Petroleum at US$208m in Feb this year. With this latest win, SMM has secured orders worth about S$2.7b YTD, accounting for 67% of our full year estimate. Maintain BUY on SMM with S$5.64 fair value estimate.
Ezra Holdings and Ezion Holdings: Ezra divests remaining shares in Ezion
Ezra Holdings announced that it will divest its holding of 40m shares in Ezion Holdings via a placement that is fully underwritten by DBS Bank. This represents about 4.17% of Ezion’s issued share capital, and was transacted at a price of S$2.25/share (4.9% discount to VWAP over 30 May 2013) for a total consideration of S$90m. Ezra will realize an estimated net gain of ~US$65.7m, and it intends to use the proceeds for working capital needs, lowering debt and fund growth of operations. We are not surprised by this move as Ezra had also previously sold off 60m shares in Ezion in Mar 2012. Maintain BUY on Ezion with S$2.62 fair value estimate and HOLD on Ezra with S$1.10 fair value estimate.
From UOB KH:
Maxi-Cash Financial Services Corp (MCFS SP, 5UF) -
Technical SELL with +12.5% potential return
Last price: S$0.48
Resistance: S$0.53
Support: S$0.42
SELL with a target price of S$0.42 with tight stops placed
above S$0.495. The stock has gapped down and prices failed
to trade above its shooting star lookalike pattern earlier. Its
upper Bollinger band has acted as a resistance. Potential
support could be near its lower Bollinger band and its rising
trendline. Watch to see if its MACD indicator could form a
bearish crossover.
Technical SELL with +12.5% potential return
Last price: S$0.48
Resistance: S$0.53
Support: S$0.42
SELL with a target price of S$0.42 with tight stops placed
above S$0.495. The stock has gapped down and prices failed
to trade above its shooting star lookalike pattern earlier. Its
upper Bollinger band has acted as a resistance. Potential
support could be near its lower Bollinger band and its rising
trendline. Watch to see if its MACD indicator could form a
bearish crossover.
Adventus Holdings (ADVT SP, 5EF) –
Technical BUY with +34.4% potential return
Last price: S$0.029
Resistance: S$0.039
Support: S$0.022
BUY with a target price of S$0.039 with tight stops placed
below S$0.025. The stock appears to be trending above its
mid-Bollinger band and 50-day moving average. A golden
cross which has formed earlier had not been negated. Watch
to see whether its MACD could move above its centreline.
Technical BUY with +34.4% potential return
Last price: S$0.029
Resistance: S$0.039
Support: S$0.022
BUY with a target price of S$0.039 with tight stops placed
below S$0.025. The stock appears to be trending above its
mid-Bollinger band and 50-day moving average. A golden
cross which has formed earlier had not been negated. Watch
to see whether its MACD could move above its centreline.
Suntec Real Estate Investment Trust (SUN SP, T82U) -
Take profit from previous technical SELL
Last price: S$1.74
Resistance: S$1.87
Support: S$1.65
The stock was featured as a technical SELL when it opened at
S$1.955 on 18 Apr 13. The stock has since returned +10.9%
on closing prices. Prices have not been stopped out above
S$2.05 and have exceeded the initial SELL target of S$1.85.
Some profits could be taken off the table should there be a
follow-through buy after the hammer pattern has formed
near its rising 200-day moving average.
Our institutional research has a fundamental BUY with a
target price of S$2.27.
Take profit from previous technical SELL
Last price: S$1.74
Resistance: S$1.87
Support: S$1.65
The stock was featured as a technical SELL when it opened at
S$1.955 on 18 Apr 13. The stock has since returned +10.9%
on closing prices. Prices have not been stopped out above
S$2.05 and have exceeded the initial SELL target of S$1.85.
Some profits could be taken off the table should there be a
follow-through buy after the hammer pattern has formed
near its rising 200-day moving average.
Our institutional research has a fundamental BUY with a
target price of S$2.27.
DBS Group Holdings- Uncertainties abound for acquisition of Bank Danamon.
(DBS SP/BUY/S$16.97/Target: S$20.80)
FY13F PE(x): 11.7
FY14F PE(x): 10.5
The deal as originally submitted. To recap, DBS previously proposed to acquire a 67.4% stake in Bank Danamon from Fullerton
Financial Holdings through a swap of 439m new DBS shares. Bank Danamon shares were priced at Rp7,000/share, representing 2011 P/B of 2.6x. DBS will embark on a mandatory tender offer to acquire the remaining Bank Danamon shares for cash at the same price of Rp7,000/share.
Reluctant to own associate stake. Management at DBS has stressed that majority control of Bank Danamon is important for branding and integration of IT systems. The deduction to core capital is also punitive under Basel III if DBS only manages to
acquire an associate stake. Therefore, DBS is unlikely to proceed with the acquisition if it is restricted to acquire only a 40% stake in Bank Danamon.
Maintain BUY. DBS has demonstrated its ability to execute its nine strategic priorities amid doubts by many analysts. It generated organic growth by building up its global transaction service, wealth management and SME businesses on a regional basis. It stabilised NIM and benefitted from growth in fee income in 1Q13.
Our target price for DBS of S$20.80 is based on a P/B ratio of 1.50x, which is derived from the Gordon Growth Model (ROE: 11.4%, required\ return: 8.0% and constant growth: 1.2%).
(DBS SP/BUY/S$16.97/Target: S$20.80)
FY13F PE(x): 11.7
FY14F PE(x): 10.5
The deal as originally submitted. To recap, DBS previously proposed to acquire a 67.4% stake in Bank Danamon from Fullerton
Financial Holdings through a swap of 439m new DBS shares. Bank Danamon shares were priced at Rp7,000/share, representing 2011 P/B of 2.6x. DBS will embark on a mandatory tender offer to acquire the remaining Bank Danamon shares for cash at the same price of Rp7,000/share.
Reluctant to own associate stake. Management at DBS has stressed that majority control of Bank Danamon is important for branding and integration of IT systems. The deduction to core capital is also punitive under Basel III if DBS only manages to
acquire an associate stake. Therefore, DBS is unlikely to proceed with the acquisition if it is restricted to acquire only a 40% stake in Bank Danamon.
Maintain BUY. DBS has demonstrated its ability to execute its nine strategic priorities amid doubts by many analysts. It generated organic growth by building up its global transaction service, wealth management and SME businesses on a regional basis. It stabilised NIM and benefitted from growth in fee income in 1Q13.
Our target price for DBS of S$20.80 is based on a P/B ratio of 1.50x, which is derived from the Gordon Growth Model (ROE: 11.4%, required\ return: 8.0% and constant growth: 1.2%).
From DBS:
We believe Yongnam’s consortium is a strong contender
for Myanmar’s airport projects. Yongnam is in partnership
with JGC Corporation and Changi Airport Group to bid
for two airport projects in Myanmar. The tender result for
the Yangon International Airport is expected to be out in
July. Yangon’s airport project win could add a S$0.12
upside to the stock price. Focus on Hathawaddy
International Airport would be less immediate as events
for this project is developing under a longer timeline. The
tender for Hathawaddy International Airport is expected
to close at the end of May with the results of the tender
to be announced at a later date. Current valuations are
compelling, and are not reflecting that Yongnam is a
strong contender for the projects. Upgrade to BUY with a
higher TP of S$0.41 (Prev S$0.33).
for Myanmar’s airport projects. Yongnam is in partnership
with JGC Corporation and Changi Airport Group to bid
for two airport projects in Myanmar. The tender result for
the Yangon International Airport is expected to be out in
July. Yangon’s airport project win could add a S$0.12
upside to the stock price. Focus on Hathawaddy
International Airport would be less immediate as events
for this project is developing under a longer timeline. The
tender for Hathawaddy International Airport is expected
to close at the end of May with the results of the tender
to be announced at a later date. Current valuations are
compelling, and are not reflecting that Yongnam is a
strong contender for the projects. Upgrade to BUY with a
higher TP of S$0.41 (Prev S$0.33).
Sembcorp Marine’s subsidiary PPL Shipyard has secured a
contract worth US$220.5m to build a jack-up drilling rig
from BOT Lease. The rig is scheduled for delivery by Jan
2015. The new contract brings SMM’s YTD win to
S$2.69bn, forming 54% of our full year expectation of
S$5bn. Maintain Hold, TP: S$4.70.
contract worth US$220.5m to build a jack-up drilling rig
from BOT Lease. The rig is scheduled for delivery by Jan
2015. The new contract brings SMM’s YTD win to
S$2.69bn, forming 54% of our full year expectation of
S$5bn. Maintain Hold, TP: S$4.70.
From Maybank KE:
ComfortDelGro: Growth Through Acquisition; Upgrade to BUY, TP $2.33
CD SP | Mkt Cap USD3.2b | ADTV USD13.3m
CDG offers a unique defensive stock exposure with diversified
earnings and geographical exposure. With continued weakness on the
economic front, we expect sustained preference for defensive stocks in
the year ahead. We value CDG using a FY14E P/E of 18X and derive a TP
of SGD2.33. Upgrade to Buy.
Despite the diversity of CDG’s businesses, three major business
units (Singapore Taxi: 23%, Australia Bus: 22%, UK/Ireland Bus: 12%)
would collectively account for more than 56% of the group’s FY15E
operating profits.
While we have a negative near term view on Singapore’s fare based
businesses, we argue that CDG’s diversification efforts have reduced
their dependency on them. With CDG’s exposure to Singapore’s fare based
at merely 8% of its market capitalization, we believe that their
exposure is limited.
CD SP | Mkt Cap USD3.2b | ADTV USD13.3m
CDG offers a unique defensive stock exposure with diversified
earnings and geographical exposure. With continued weakness on the
economic front, we expect sustained preference for defensive stocks in
the year ahead. We value CDG using a FY14E P/E of 18X and derive a TP
of SGD2.33. Upgrade to Buy.
Despite the diversity of CDG’s businesses, three major business
units (Singapore Taxi: 23%, Australia Bus: 22%, UK/Ireland Bus: 12%)
would collectively account for more than 56% of the group’s FY15E
operating profits.
While we have a negative near term view on Singapore’s fare based
businesses, we argue that CDG’s diversification efforts have reduced
their dependency on them. With CDG’s exposure to Singapore’s fare based
at merely 8% of its market capitalization, we believe that their
exposure is limited.
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