Saturday, December 18, 2010

The Spice family

DBSV: Sponsored REITs ahead of the acquisition game

Sponsored REITs ahead of the acquisition game
Current yield gaps between the physical market and implied REIT valuations show that REITs in the industrial & hospitality sectors, retail and healthcare have positive yield gaps, with industrial offering the widest spreads. The office sector continues to see negative yield spreads, which point to continued need for income support arrangements so that assets will have time to stabilize and for earnings to catch up in the coming years, in order to make acquisitions accretive.

The positive outlook on asset values in Singapore boosted by the ample liquidity is likely to increase the competition for assets from private funds/investors who could have a lower required rate of return, thus pricing REITs out of some property deals. As such, we believe that S-REITs could continue to head overseas in search for growth. While we believe it is a viable option to diversify its earnings base, more importantly, REITs have to address potential forex exposure and tax leakages for overseas acquisitions against the benefits of yield accretion to its existing portfolio.

We continue to like the sponsored REIT model, notwithstanding that they continue to explore 3rd party opportunities to remain ahead of peers. Their sponsors can offer a pipeline of assets for the REITs to purchase or it could act as a warehouse for new assets in cases where it is nonaccretive to purchase the asset at the onset, stabilize its earnings and then offer it to the REIT for purchase at a later date. Thus, sponsored REITs have better growth visibility in the medium term.

In addition, industrial REITs are likely to continue to enjoy better acquisition growth potential given the relatively higher yields of industrial assets (vs current implied yields of industrial REITs) and each transaction tend to be of lower values compared to other asset classes.

While we have seen several of these S-REITs purchasing from their respective sponsors in 2010, we see several potential opportunities that REITs could tap in 2011.

CDL HT: A low gearing position of 21% gives debt-funded headroom of up to S$600m (up to c40% gearing). Management remains keen to acquire Studio M hotel from
sponsor M&C Holdings in addition to other hotel assets that they are understood to be looking to acquire in the region. MLT: Its Sponsor, Mapletree Investments has assets worth up to S$300m that are completed/completing which could be injected in the near future.

K-REIT could purchase One Financial Centre (understood to be 63% pre-committed as of Sept’10) in the medium term once it completes in 2011.

Cache Logistics Trust: sponsor CWT limited has over 3m sqft of completing/completed warehouse space that could be offered to Cache in the medium term.

Ascott REIT, who has a right of first refusal (“ROFR”) from its sponsor, Ascott Group, could potentially acquire Ascott Raffles Place, which is understood to be for sale.

Retail REITs like FCT, which had previously stated that they are likely to purchase Bedok Mall from their sponsor after completion. CMT and CRCT can potentially inject properties that are currently under incubation by the sponsors, which could be offered to the trust. In the longer term Industrial REITs like A-REIT and a-itrust could also acquire projects currently under development from sponsor Ascendas Group.

DBSV: Singapore REITs -Measuring the cost of Interest rate hikes

Measuring the cost of Interest rate hikes
Taking advantage of the low interest rate environment. S-REITs have been pro-active in their capital management strategy aiming towards extending their debt expiry profile and refinancing existing debt ahead of expiry. Since the beginning of the year, in view of the large proportion of debt expiring in the coming 2 years, S-REITs have taken advantage of the improving capital markets and low interest rate environment and re-financed existing debt into loans with longer tenures. Additionally, they have also expanded their sources of debt through the issue of multi-term notes & convertible bonds. The total S-REIT debt currently stands at of S$17.5bn, where an estimated 19% (S$3.4 bn) and 24% (S$4.2bn) are scheduled for renewal in 2011 and 2012 respectively, down by 30% and 25% since the middle of the year. The average length of debt expiry currently stands at 2.8 years.

Interest rate environment likely to stay low for now. DBS economist believes that the current low interest rate environment is likely to stay at least to the end of 2011, which will be beneficial for S-REITs, as they are likely to continue to enjoy interest savings on refinancing their debt in 2011. Increasing financial flexibility with average gearing of 34.4% post acquisition. Post acquisitions (including the planned purchase of MBFC by K-REIT and Suntec REIT), the average S-REIT sector’s aggregate leverage still remain relatively low at c34.4% (below most S-REIT managers’ comfortable range of between 40-45%). We note that there has been an increase in the number of assets that are unencumbered, due to more unsecured loan issued in the past few months. This empowers S-REITs with more financial flexibility going forward.

High portion of S-REIT debts are fixed. Based on our estimates, with the recent issues of fixed rate MTNs & through refinancing activities to date, a majority of S-REIT debt is now secured in fixed-rate instruments. Therefore, this should limit the impact of potential interest rate hikes on the S-REITs distributable income in the future.

Based on our sensitivity analysis in the table below, a 50 bps increase in interest rates will have minimal impact (estimated at –0.2% to –3.2%) on S-REITs FY11 distributable income.

DBSV: Singapore REITs The quest for growth

Singapore REITs
The quest for growth
• S-REITs offer FY11 yields of 6.1%, an attractive 340 bps spread against long bonds
• As inflation inches higher, we prefer SREITs with ability to continue delivering strong organic growth
• Strong balance sheets to leverage on in the chase for further acquisitions
• BUY FCT, P-Life, Cache, MLT, CDL HT, ART, CMT

Normalized FY11F yield of 6.1%. The S-REIT sector now trades at a normalized FY11F distribution yield of c6.1%, slightly below its historical mean of c6.5%. Spreads have narrowed but still remain attractive at c340bps above the long-term government bond yield, currently at c2.7%.

The quest for DPU growth. S-REITs offer a good hedge against inflation given that earnings growth can potentially outpace inflation, which is expected to inch higher to 3.2% in 2011. We prefer S-REITs with the ability to deliver growing distributions organically while having the opportunity to acquire accretively. We continue to hold the view that hospitality and retail sectors offer a more robust outlook on the back of expected strong visitor arrivals in 2011. Office REITs are expected to see topline pressure from negative reversions in 2011 though the sector is on an uptrend.

Interest rate hikes to have minimal impact on distributable income. Given the current low interest rate environment, S-REITs have taken the opportunity to refinance, lengthen the debt maturity profile as well as widen their sources of debt, hence enjoying savings in interest. DBS economist expects interest rate hikes only towards the end of 2011. Even then, our scenario analysis reveals that the impact on S-REITs FY11 distributable income is limited to -0.2 to - 3.0% as majority of the S-REITs have hedged/fixed their interest rate positions.

Industrial & Sponsored REITs have potential for further accretive acquisitions. Even after acquiring cS$6bn of assets YTD, S-REIT sector gearing remains low at 34.4%. Further growth from acquisitions is possible and we look towards the industrial REITs for their ability to acquire earnings accretive assets given the relative higher yields of industrial assets while sponsored REITs continue to offer long-term portfolio growth visibility to investors from potential asset injections in the medium term.

Stock picks. CMT, FCT, CDL HT and Ascott REIT are expected to deliver strong organic growth potential coupled with sponsor injection possibilities. P-Life offers downside protection as revenue is pegged to inflation. MLT and Cache offer potential earnings surprise given their visible sponsor pipeline.


Created 12/18/2010 - 19:32























他說,國家基建公司(Prasarana Negara)是雙溪毛糯―加影輕快鐵工程的擁有者,而工程監督機構則是陸路公共交通委員會。

‧ 路徑地點:哥打白沙羅、珍珠白沙羅、萬達鎮、敦依斯邁花園、白沙羅高原、蕉賴、敦胡先翁花園及無拉港。


Publish date:18/12/2010

Friday, December 17, 2010


Created 12/17/2010 - 19:08









不過,興業研究指出,雖然短期熱錢可能持續推升股市,但建議投資者持續警惕和繼續減持或“高位減倉”(Top Slice)特定消息流和流動性推動,以及估值日趨昂貴的股項。


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CIMB picks in 2011

CIMB picks in 2011

Cheapest Malaysian bank

Affin Holdings is an Outperform as we have witnessed strong traction in its earnings growth in the past seven quarters and the trend is expected to continue. We are particularly positive on its robust loan growth of 11-17% since Jun 09 compared with low-to mid-single digits previously. Affin's loan growth has been consistently above the industry's pace since Jun 09, reflecting the group's ability to gain market share despite being one of the smallest banks in Malaysia. The potential share price triggers in the near term are (1) above-industry loan growth, (2) better-than-expected net interest margin, and (3) undemanding valuations. The acquisition of Bank Ina Perdana will provide Affin a foothold in the underpenetrated and fast-growing Indonesian market and this will help to support the group's longer-term earnings growth.

Axiata is our topregional telco pick

Axiata is an Outperform on the back of its modest EPS growth, rising FCFE yield and strengthening balance sheet. We expect its units in the Indian subcontinent to take over the reins of growth as its assets in Malaysia and Indonesia mature. There is room for dividends to surprise given its strong FCFE and rapidly falling gearing. We maintain our SOP-based target price of RM5.90 and continue to rate Axiata as our top pick for exposure to the regional telcos. Likely re-rating catalysts are positive earnings and dividend surprises.

Gamuda is a direct beneficiary of the MRT project

Gamuda – We are encouraged by the progress of the proposed KL MRT, which is now slated to start work in Jul 2011. This suggests that project approval, tender process and project awards are likely to come through within the next 2-6 months. A major milestone would be Cabinet approval which should occur by end-2010. This is positive for Gamuda as it has a good chance of bagging the RM12bn-14bn tunneling works. We estimate a 6-10% enhancement to FY11-12 earnings and 3-9% boost to our target price if the group succeeds in clinching the job. We maintain our Outperform call and RNAV-based target price of RM4.96. The main re-rating catalyst is progress and award of the MRT project. Gamuda is one of our top construction picks.

Kencana is an O&G stock with strong newsflow

Kencana benefited from a steady flow of projects in Malaysia, Vietnam, India and Australia in 2010, landing 13 jobs worth RM1bn which took its order book to RM2.1bn. Being one of the bigger, most efficient fabricators, Kencana is poised to secure more contracts. We expect the company to continue to clinch new projects over the next few months and stay a contract headliner as it is vying for works worth RM5.2bn in Malaysia and at least US$300m in India. It is also gunning for contracts to develop the Sepat and Berantai marginal fields, which could transform the company into an oilfield developer and producer.

MAS is top airline pick in Malaysia

MAS – We continue to rate MAS an Outperform as it is turning into a more aggressive growth-oriented company. Over the next three years, the airline will be taking delivery of the majority of the 56 aircraft it has ordered. They include new-generation narrowand wide-body planes like the B737-800, A330 and A380 that will fundamentally lower its structural costs and increase the attractiveness of its cabin offerings to passengers. After years of an incoherent response to the low-cost threat, MAS recently started a separately managed low-cost business under Firefly with the intention of regaining some of the 50%+ market share lost to its low-cost rival over the past seven years. Also, MAS’s extremely expensive fuel hedges carried over from pre-crisis days will finally expire at the end of 2011, potentially leading to a substantial earnings uplift in 2012.

MRCB is a dual construction and property GLC play

MRCB makes an entry as one of our top picks for 2011 for a construction, property and GLC play. We think that newsflow is likely to pick in 2011 on the much talkedabout 3,300-acre Sg Buloh Land as the government rolls out the ETP. MRCB is likely to emerge as one of the key beneficiaries and participate both as a turnkey contractor and a developer. Newsflow on details of the merger with IJM Land is another re-rating catalyst for the stock. We reiterate our TRADING BUY recommendation and target price of RM2.76, which is based on an unchanged 10% RNAV discount.

RHB is top banking sector pick

RHB Capital is an Outperform and our top pick for the banking sector with a target price of RM10.50. We see numerous catalysts for the group including (1) robust investment banking income supported by robust deal flow, (2) brisk loan growth in the mid-teens, driven primarily by consumer loans and lending to public sector, and (3) network expansion via its innovative EASY outlets and tie-ups with big corporates for faster new customer acquisition. We project net earnings growth of 15-17% for FY11- 12. The acquisition of Bank Mestika, which will be completed by 1Q11, will help the group to establish a foothold in the underpenetrated and fast-growing market in Indonesia.

SapCrest is top O&G sector pick

SapuraCrest – Armed with a RM13bn order book which is the highest in the sector, SapuraCrest continues to eye deals in Malaysia and overseas. The company is keen to explore opportunities in the development of marginal fields and appears to have a good chance of securing at least four of the remaining deepwater projects at the Malikai, Pisangan, Ubah Crest and Kamunsu fields. Meanwhile, in the Timor Sea off Australia, SapuraCrest is believed to be the frontrunner for a project that will require the decommissioning of the Montara platform. Overseas revenue contribution has risen from 18% of group revenue in FY1/07 to 30% in FY10 and is expected to hit 40- 50% in three years’ time.

Sime is Malaysia’s largest planter

Sime Darby – We like Sime Darby as it is a liquid and cheap proxy for rising CPO prices. In 2011, we expect the new CEO’s efforts to turn around the group and rising CPO price to prevail over worries about the huge losses at its energy & utilities division in the previous year. There is potential for recovery of some of the provisions if the group is successful in claiming part of the cost overruns and divesting its groundwater project. Sale of non-core assets could lead to earnings upside for Sime from potential gains on the sale and reduced overheads though we do not expect it to be substantial. Its foreign shareholding level has fallen close to its all-time low of 13% from a high of 21%. Factors that could catalyse the stock include higher CPO price, favourable newsflow on key management changes, sale of non-core assets and the potential listing of individual business divisions.

WCT is Malaysia’s top subcontractor

WCT’s latest RM1.4bn project win in Qatar and the integrated complex concession at the new LCCT raised the group's profile as the biggest beneficiary of mega jobs in the Middle East and open tender jobs locally. The group still has a strong chance of bagging more projects in the next six months, with potential contract awards in 2011 matching the RM2bn secured in 2010. WCT’s share price performance has lagged behind IJM’s and Gamuda’s, creating a buying opportunity. The stock remains an Outperform with an unchanged target price of RM4.21, pegged to a 10% discount to its RNAV. WCT is one of our top picks for the construction sector.

CIMB: KLCI Key drivers for 2011

Foreign funds boost

Foreigners coming backin a big way?

In 2H10, foreign investors made a beeline for Malaysia as they visited companies and toured Iskandar Malaysia. The reasons for the renewed interest include Bursa Malaysia’s perceived defensive qualities, the new administration’s various transformation programmes and severe underownership of the local stock market. Foreign funds remain extremely underweighted in Malaysia and the stockmarket has been disproportionately sold down since the 2008 general elections. Malaysia’s weighting in EM Asia is still around 2.5%, a fraction of its pre-Asian crisis levels and still low compared to even the 4% level before the global financial crisis. Statistics from Bursa Malaysia confirm this – foreign ownership in Malaysia is 22%, still below the pre-global crisis level of around 27%. A return to neutral weightings by foreign funds would have a very significant impact on the market.

Foreign funds preferfamiliar, big-cap and liquid stocks

Foreign shareholding has risen substantially for stocks that are favourites of foreigners such as AirAsia, CIMB, E&O and Public Bank. Well-managed foreign-owned companies such as BAT and Guinness also saw a big increase in foreign ownership. What is surprising is that foreign funds have not limited their purchases to only big-cap blue chips or even just liquid stocks. Smaller-cap stocks with relatively low liquidity such as Mudajaya, CI Holdings, Daibochi, Latexx, Mah Sing and MCIL have also seen a sizeable increase in foreign ownership. The interest in these stocks, however, could have been stoked by our positive reports on the companies. The selldown by foreign shareholders was most pronounced for Alliance Financial, Gamuda, IOI Corp, Media Prima, Petra Perdana, SP Setia and WCT. We are also not too surprised by the selldown of some names such as Gamuda, WCT, IOI Corp and SP Setia which were laggards for most of the year and only started to ourperform significantly in 2H. Should foreign funds return to Malaysia in a big way, we expect the companies that are familiar to them to be the biggest winners.

Elections, elections, elections
Preparations for elections gathering pace

The 2011 Budget announced on 15 Oct appeared to us to be a feel-good populist budget that will pave the way for elections. Toll rates on PLUS’s highways were left alone for the next five years, the dreaded sin taxes and real property gains tax did not feature in the budget and construction projects were aplenty. The question that must be asked is whether this heralds general elections or Sarawak state elections. We believe it is the latter as Sarawak state elections have to be held by Jul 2011 but the general elections do not have to be called until 2Q13, which is more than two years away. We observe that the National Front has won only five of the 13 by-elections held since the Mar 08 general elections compared to eight by the Opposition. However, it won the two most recent by-elections, which came after the people-friendly 2011 Budget.

Pre-elections period is normally good for the market

Besides Sarawak and general elections, Umno party elections were originally slated to be in 2011. However, party elections have been delayed by up to 18 months and will be held shortly after general elections. Regardless of the type of election, they augur well for the stockmarket as the period leading up to elections is typically investorfriendly. We expect pump-priming efforts to ratchet up in 2011, negative policies to be kept to a minimum and speculative activities to pick up steam. In the previous elections, the KLCI gained 5% in the 12 months before the elections were held and surged 17% thereafter. The impact of Umno party elections on the market is even more significant. In the past nine occasions, the market rallied an average of 30% during the 12 months leading up to Umno party elections. On the other hand, the KLCI fell an average of 7% in the 12 months after party elections. The clear signal from the market’s performance pre and post Umno party elections is to buy ahead of the elections and sell shortly after it. For general elections, the results must be favourable to the incumbent for the market to rally after the polling date. In the case of the 2008 elections, the KLCI plunged 100 points the first trading day after elections and circuit breakers kicked in for the first time ever.

The market has historically viewed continuity positively

While the outcome of the next general elections is important in determining the direction of the market after elections, it is extremely difficult to predict given the shocking results of the last elections in Mar 2008. Recall that the 2008 elections were unprecedented in that the National Front lost its two-thirds majority in parliament for the first time since the 1969 elections. Its share of the popular vote also fell to its lowest in nearly 40 years. Unlike the situation in 1969, however, the National Front did not regain its majority in parliament by including new parties into the coalition and the opposition parties grouped together to form Pakatan Rakyat. A convincing win for the incumbent has historically been positive for the market.

CIMB: Liquidity-fuelled pre-election rally

Liquidity-fuelled pre-election rally
2011 Tgt. Index: 1,700

• Significant trading catalysts. The KLCI confounded sceptics in 2010 when it scaled new all-time highs, capping two years of a V-shaped recovery. 2011 looks set to be another good year, driven by foreign funds which have strayed from the beaten path in search of higher returns in emerging markets and also election fever as elections are generally positive for the market. Malaysia remains underowned by foreign funds, whose holdings are still worth 30% less than before the global crisis. While we think it is too early to call for general elections, we note that Sarawak must hold state elections by Jul 2011. Umno party elections should be held shortly after general elections. We continue to rate Malaysia an OVERWEIGHT and raise our end-11 KLCI target from 1,610 to 1,700pts as we halve the discount to the 3-year moving average P/E to 5%. Accordingly, we have raised the target prices for 32 stocks under our coverage.

• 2010 was another strong year. After rebounding 43% in 2009, the KLCI gained 18% YTD, in the process breaking many records including the previous high for the KLCI. Domestic factors that stoked the market include the government’s transformation efforts such as the Economic Transformation Programme, the New Economic Model and the 10th Malaysia Plan. The market ran into headwinds towards mid-year as investor fret over a double-dip in Europe and the US. But foreign funds turned sizeable net buyers in 2H following the waning of double-dip fears and rising awareness of the stronger growth potential of emerging markets.

• Very underowned. Foreign investors have been making a beeline for Malaysia, visiting companies and touring Iskandar Malaysia. The renewed interest is the result of myriad factors including Bursa Malaysia’s perceived defensive qualities, the Najib administration’s transformation programmes and severe underownership of the local stockmarket due to the massive selldown after the 2008 general elections. Foreign funds remain extremely underweighted in Malaysia and a return to neutral weightings would have a very significant impact on the market.

• Elections good for the market. The 2011 Budget announced in Oct appeared to us as a populist pre-election budget. The question is which election – general elections or Sarawak state elections? We believe it is the latter though we think it does not matter as either election augurs well for the market since the period leading up to elections is typically investor-friendly. This is particularly true for Umno party elections where the KLCI has historically rallied 30% in the 1-year periodbefore polling. For 2011, we expect pump-priming efforts to intensify, negative policies to be kept to a minimum and speculative activities to pick up steam.

• Prefer cyclicals and GLCs. 2011 is likely to turn out to be a good trading year for the market. Although risks remain relatively high, returns should be high and quick too. We expect continued volatility but with an upward bias as liquidity fuels the market. Our preferred sectors are those in the cyclical space including banking, construction, property, oil & gas and auto which stand to benefit from renewed investor confidence and higher risk appetite. GLCs should also gain prominence as investors speculate on those that will gain from pre-election government largesse.

CIMB: Malaysian Airline -Radical transformation on the cards

Malaysian Airline System Bhd
RM2.07 @07/12/10
Target: RM3.00
Radical transformation on the cards

• Maintain OUTPERFORM. MAS is en route to a radical transformation of its structural costs as 56 passenger aircraft will be delivered from Boeing and Airbus over the next four years and it has 30 more options that has not yet been exercised. A one-for-one replacement with its present aged fleet will halve the average fleetage to just six years by 2013. This process will significantly improve fuel efficiency, reduce maintenance costs, improve the product to world-class standards, justify an increase in fares and yield intangible benefits like greater pilot and crew work satisfaction and improved staff morale. The reduction in structural costs that could permanently lift MAS’s profitability range underpins our OUTPERFORM call. Our target price stays at RM3, based on 6x CY12 EPS.

• Process will take time. MAS will take delivery of three new planes in 2010, followed by eight in 2011, 13 in 2012 and 17 in 2013, 13 in 2014 and two in 2015. This fleet replacement process will take several years and the benefits will be more visible only in 2012-13. Over the past year, MAS’s yield recovery has lagged behind its peers in Singapore or HK as it is less leveraged to a business travel recovery. As a result, MAS’s share price has not re-rated as much as SIA (Outperform, TP: S$20.50) or AirAsia (Outperform, TP: RM3.85).

Thursday, December 16, 2010


Created 12/16/2010 - 18:30


馬股全日開低走低,以跌2點的1507.10點開出,隨後在國會凍結民聯領袖拿督斯里安華等3位議員資格,引發國會示威活動消息傳出後,富時綜指在聯昌集團(CIMB, 1023, 主板金融組)等藍籌股龐大賣壓下開始節節敗退,最低下挫13.71點或0.91%至1495.39點,1500點心理關口宣告失守。






























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MIDF: IATA raised forecast Impact on MAS

IATA raised forecast to $9.1b for 2011 but less upbeat

• IATA revised upwards its profit forecast for CY11 from USD5.3b to USD9.1b or up 71% driven by better utilization of aircraft at 8.3% in CY10 from 4.3% in CY09 on the back of: (1) highest number of passenger growth around 20%yoy in Asian region; (2) higher year-on-year global consumer confidence index from Asia region attributed from Thailand (+23ppt), Hong Kong (+10ppt), India (+9ppt), Malaysia (+7ppt), and Singapore (+6ppt); and (3) benign jet fuel price.

• Load factor improved to 78.8% for the 1st 10 months of CY10 vis-à-vis 75% corresponding period in view of better pricing power and healthy yields which is at 7.3% (-12% 1st 11 months of CY09).

• Despite their upward revision to profits, IATA has taken a cautious outlook for CY11 underpinned by: (1) higher fuel prices projected to be at US$84/bbl in CY11 from US$79/bbl in CY10 which will add an additional US$17.0bn to its operating and fuel bill to US$156bn; (2) moderate economic outlook despite stronger market in Asia, Middle East and South America; and (3) risk of excess capacity.

Impact on MAS

• No marginal impact to MAS as we have priced-in. Profit for FY11 is projected to increase by 170%yoy to RM839m be driven by (1) higher passenger growth by 12%yoy and higher fuel surcharge by 25%yoy, which were measured by higher RPK by 20%yoy (2) fuel cost is expected to reduce by 8%yoy, due to the expansion strategy of 5 B737-800 for 2011 which may reduce fuel consumption by 2% (3) continue appreciation of MYR against USD expected to increase non-core profit of Malaysia Airlines. In 3Q10, MAS had gain in derivative by 177% for both yoy and qoq, hence increase total profit during the quarter.

• Unchanged load factor for CY11. As at October 2010, MAS passenger load factor stood at 76% and we expect it will maintain the same figure throughout CY11 as we less upbeat on the factors mentioned above.

• Yield increased for the second quarter running. We like the fact that MAS has managed to increase its yields for the second sequential quarter at 2%yoy to 24 sen/RPK.

• Maintain BUY on MAS. We continue to like MAS due to its expansion plan of B737-800 and better operational efficiency for the last quarter results. Our TP is RM2.54 based on PER of 10.5x, which is the mean PER of its peers.

Phillip: STI at 3650 by 4Q11

we are generally positive on US, China and Asia. Amid this positive macro backdrop, for the STI, we are seeing PSR analysts forecasting collectively an 8%y-y rise in earnings for STI component stocks in 2011, rather low compared to the S&P500 forecasts, which makes us think earnings upgrades are very likely. We think we have finished the first leg of the bull market, when earnings rebounds faster than price and P/E compresses, and believe we started mid-cycle sometime around Sep10 when P/E bottomed out.

We should therefore see some mid-cycle P/E expansion going forward which we think will conspire with earnings growth to drive the STI to 3650 by 4Q11. Comparing with the previous mid-cycle expansion from 1Q05 to 2Q07, T4Q P/E basically went from 10.59x to 15.17x, a 43.2% expansion. This cycles’ mid-cycle starting P/E is 11.64x, a similar 43.3% expansion puts possible P/E expansion to 16.67x this time round.

As we don’t think the entire multiple expansion move will happen in 2011, we take a 15x multiple on our 2011 8%y-y earnings forecast which targets the STI at 3650. Why 15x?

Actually we worked backwards, the next major resistance on the STI is at 3650, divide that by our earnings forecast is a 15x multiple, well within the 11.64x to 16.67x range. As one an see from the charts (green lines) below, the first half of the mid-cycle sees unspectacular earnings growth, somewhat confirmed by our tepid 8%y-y forecast, and the STI is mainly driven by P/E expansion. As we think 8%y-y is too low anyway, with upside risk more likely, a few %pts upward revision also gives some room for error on the 15x target multiple. The final leg of the bull market, the 2nd half of the mid-cycle, is not here yet, as that is when earnings growth is phenomenal, and the peaking out of earnings is when selling begins in earnest. That seems far away yet, as earnings growth looks modest into 2011. Implicit in this STI target of 3650 is of course that we think the STI will break the 3300 barrier, our 2010 target (see Quarterly 2010-1-4), which was hit and rejected off recently. Given the earnings growth, and likelihood of upgrade, it’s very hard to make a case for the STI to be below 3300.

• The time frame of 4Q11 reflects the fact that while we think macro growth/inflation conditions are conducive, let us not forget that the issue with EZ debt is not over and will be recurring over the next year. Throw in the fact that fiscal stimulus 2 in the US has been enacted, perhaps bond vigilantes will start axing US treasuries from their portfolios, the yield spread could compress and the secular outlook threatened like it was May-Aug this year. You just can’t rule it out. Asian markets will see corrections on worries of over-tight policy. So we think it’ll be a hard grind to 3650, but so long as earnings come in and we don’t fall off the macro cliff no matter how close we teeter, we think in all probability stocks will appreciate and see through this mid-cycle phase.

SG Sector & Stock focus:
• Given that we are in a mid-cycle expansion phase, where growth moderates, solidifies, and the perception of sustainability takes hold, this is the time when businesses feel most confident about growth and begin to invest, as such suppliers of Capital Goods and related Basic Materials should post solid earnings.

• In the sector of Basic Materials, we like
Noble (S$2.11, FV S$2.33), from the fact that 27% projected earnings growth for FY11 is based on assets and new business it has already gathered during the crisis years, if we believe that management can execute, earnings should come in for a full-year contribution in this conducive macro backdrop.

Sunvic (S$0.605, FV S$0.95), a leading chemicals producer in China, has already done a massive 57% run from S$0.385 when our Hd of Research resumed coverage, we believe there is further upside as the stock warrants a P/E re-rating, ASPs have been trending higher on month, and it has strong EPS visibility going into FY11 and FY12, with 9M10 already surpassing the whole of FY09, now trading ~3.7x FY10 EPS.

• Capital Goods suppliers include
COSCO (S$2.14, FV S$2.32), as we are seeing a pickup in ship orders, and earnings are no-where near previous peaks yet, in fact less than 50% below.

SembMarine (S$5.12, FV S$5.46) and KeppelCorp (S$10.88, FV S$12.52) are two of the best rig-builders in the world, so long as oil stays above US$80, one can expect order flows to come in.

SembCorp (S$5.00, FV S$5.84), the provider of utilities services to industrials, looks to see growth in its utilities business from 2011 onward (Cascal acquisition, increased natural gas imports, 60% desalination stake in Oman, 49% coal fired plant in India) which could cause a re-rating of the stock.

Sunpower (S$0.37, FV S$0.57), the Chinese engineer and manufacturer of heat efficient solutions for industrials, has seen a 30% run up since coverage was initiated at S$0.285, its long term strategic partnership with Jiangsu Zhongneng (JZ) has born fruit as the recent contract announced was 55% of 2009’s revenue, as JZ capacity is projected to increase, Sunpower could be a beneficiary. For those with a bit more of a risk appetite (price has dropped 40% since buy initiation at S$0.34) and

a longer term horizon can consider Renewable Energy Asia (S$0.205, FV S$0.45), manufacturer of wind turbines and wind farm developer with China Datang (51:49 JV, minority), we see that losses have bottomed out with the latest result turning a profit, and as management tells us that its long term JV with China Datang to develop 6gw of wind farms is proceeding well, we see no reason why earnings wont come in for FY11 (Rmb0.08) and FY12 (Rmb0.2).

• Other stocks not in the above classifications but we think have good growth potential nonetheless includes

SATS (S$2.92, FV S$3.21), we believe it is a company in the mood to grow, evidenced by a proposed ~S$122m, 50.7% acquisition of TFK Corp, a supplier of ready meals to JAL in Japan. SATS will be looking to leverage on its expertise in ready meals and airline service. We look forward to positive news flow and EPS revisions to the upside.

For China Sunsine (S$0.275, FV S$0.36), the chemicals producer for rubber products, we expect revenue surprise in FY11 and FY12 from new products: insoluble sulphur and 6ppd. It has risen 17% since buy recommendation on Jan10.

Ziwo (S$0.375, FVS$0.47), the specialized fabric producer, may see renewed interest from its proposed TDR listing in 2011, capacity expansion to also make full contributions FY12.

Finally, we like canned vegetable and canned drinks processor, SinoGrandness (S$0.405, FV S$0.57), although it has run up 31% since the buy initiation at S$0.31, we think there will be significant FY11 contributions from its new canned drinks business to look forward too

CIMB: UNDERWEIGHT tanker shipping, Berlian Laju stays an Outperform

UNDERWEIGHT on tanker shipping. We are negative on the crude tanker shipping sector and are forecasting the Baltic Dirty Tanker Index to average 850 pts this year and 750 points in 2011. In September and October, TCE earnings revisited the lows of 2009 and were close to or below operating costs. Rates have since recovered on the back of the French strikes at the port of Fos-Lavera, delays at Turkey’s Bosporus Straits caused by winter fog and an increase in China’s oil imports in November. We expect the rest of 2010 to remain strong on the back of a cold winter in the northern hemisphere but view this as a purely seasonal trend. While demand for oil has recovered this year and spot chartering is active, the recovery has not been sufficient to offset the large pool of excess tankers. Given the record newbuilding deliveries expected in 2011, we expect freight rates to trend lower over the next 2-3 years.

Surplus laid bare by end of floating storage. Floating storage absorbed 50-60 crude tankers in 1H10 when the oil price contango was steeper. However, from mid- 2010, the profitability of floating storage dropped into negative territory with the flattening of the oil contango curve, prompting storage vessels to discharge their cargoes and re-enter the spot trading market. This exacerbated the tonnage oversupply.

Deliveries to reach crescendo in 2011. Although crude demand is expected to rise 2.2% this year, net tanker capacity has already expanded 4% in the first 11 months, aggravating the glut. We expect tanker capacity to increase 13.4% in 2011 just as crude demand growth is expected to slow to 1.5%. We also note that oil inventories across the OECD remain high.

MISC remains an Underperform with a target price of RM7.00, which we continue to base on 18x CY12 P/E. Potential de-rating catalysts include its expensive valuations and the dire conditions in the tanker sector.

BLTA stays an Outperform with a target price of Rp660, based on its sum-of-parts. Although chemical tanker rates are expected to remain weak in 2010-11 before rising in 2012, BLTA is trading at only 0.4x P/BV. The share price could be catalysed by the potential listing and growth of its cabotage business.

KE: CapitaLand has overreacted

CapitaLand’s share price has fallen by some 4% since its 3Q10 results, underperforming the Straits Times Index, which has declined by less than 0.5% in the same period. This is despite news on the positive take‐up rate during the initial launch of d’Leedon. We believe the market has overreacted and valuations remain attractive. Maintain BUY.

Our View
In late November, CapitaLand launched the 1,715‐unit d’Leedon (formerly Farrer Court). Of the initial 250 units released, 82% have been sold at an average of $1,680 psf. We maintain our overall ASP assumption of $1,750 psf, as we expect the developer to gradually up its asking price. Given its proximity to the Farrer Road MRT Station and a few popular schools, we expect demand to remain strong.

CapitaLand is divesting its stake in 163 strata‐titled units at The Adelphi for $218.1m. This values the development at $1,225 psf, which is 25% below our valuation of $1,645 psf. However, since the group only owns about 55.1% of the strata‐titled development, it would have been difficult to extract further value via asset enhancements on its own and a sale made sense.

Concerns over China’s property policies continue to weigh on CapitaLand’s share price. However, we are of the opinion that the market has overreacted because our sensitivity analysis shows that a 40% decline in property prices in China (which we think is highly unlikely) will only lead to a 19 cts/share decline in CapitaLand’s RNAV of $4.31/share.

Action & Recommendation
We believe that at a 15% trading discount to RNAV, valuations remain attractive. Re‐rating is likely if The Paragon, its flagship development in Shanghai, sees strong interest when it is launched in 1Q11. Maintain BUY with a target price of $4.74, pegged at a 10% premium to RNAV.

Wednesday, December 15, 2010


Created 12/15/2010 - 18:30


















此外,原產品價格近期也暴漲,其中Thom Reuters Jeffries原產品價格指數從6月的248.9點提高28.2%,至11月9日的319.1點;原油價格也從5月24日的每桶65.96美元,攀漲35.5%至12月6日的89.38美元。






Created 12/15/2010 - 19:15
















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全球復甦存疑 亞股敗退









東森關鍵時刻 20101215 B ~ 新台幣2字頭戰爭開打...

東森關鍵時刻 20101215 B (1/4) ~ 新台幣2字頭戰爭開打...

東森關鍵時刻 20101215 B (2/4) ~ 索羅斯量子基金的背後...

東森關鍵時刻 20101215 B (3/4) ~ 兩個黑暗帝國的結合...

東森關鍵時刻 20101215 B (4/4) ~ 三十歲到三十九歲的痛苦...

Source/转贴/Extract/: youtube
Publish date:15/12/2010

OCBC: Upgrade S-REITs from Neutral to OVERWEIGHT

Going into 2011, we upgrade our rating for the S-REITs from Neutral to OVERWEIGHT. The persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher. Together with "hot capital inflows" pouring into Asia, it is likely that spot rental rates and asset prices will continue to be inflated. At the same time, many REITs managers are capitalizing on the recovery cycle for further asset enhancements initiatives and acquisitions. Being an inflation hedge, we think investors' interest in S-REITs is likely to remain piqued in 2011. However, we noted that different sectors may experience different rates of recovery. In our opinion, the recovery is likely to be more pronounced for the office sector, followed by the industrial sector as the catch-up potential is greatest for these two sectors. The retail sector is likely to remain subdued next year in view of new retail supply (additional 612k sq ft of lease-able retail space in 2011), moderate rental escalation as well as lesser spending power from foreign visitors affected by the appreciating SGD. Within our coverage universe, our preferred picks are MLT [BUY, FV: S$1.00], ART [BUY, FV: S$1.38] for large-caps and FCOT [BUY, FV: S$0.18], Starhill Global [BUY, FV: S$0.66] for small-caps. Please refer to our report titled "S-REITs: Different strokes for different sectors" dated 10 Dec 2010 for more details.

OCBC: Singapore market More upside ahead

More upside ahead

Several positives for the Singapore market. We remain positive on the Singapore market supported by several favourable indicators including good inflow of funds, current low interest rate environment which will continue to favour equities, undemanding valuations, quality earnings for the blue chips of at least 10% in 2011, and the possibility of more mergers and acquisitions ahead.

Corporate earnings growth of at least 10% in 2011. For the near to medium term, the market focus is still likely to concentrate on Europe's sovereign debt situation, but we believe that Singapore's healthy outlook will attract buying interest in 2011. The STI is one of the better performing indices in 2010, and we expect the momentum to continue into 2011, buoyed by healthy fundamentals and good economic growth, which is likely to hit the high end of the government's official forecast of 4-6%. In addition, the recent property cooling measures have already taken roots, and we believe that a modest and gradual increase in residential property prices is more sustainable and healthy for the local property market.

Stocks are cheap. 3Q corporate earnings were good, following the positive strength in 2Q. Together with the projected 10% rise in 2011 earnings, valuations for the market are not expensive. The STI is currently trading at 15.5x this year's earnings and 14.1x next year's earnings. We expect some of the "laggards" in 2010 to be re-rated in 2011, and this is likely to include some of the property and banking stocks.

Eurozone concerns linger on. However, risks remain, even though risk appetite has recovered significantly from the lows in 2008. Still, the geopolitical tensions between North and South Korea, China's tightening measures and the debt crisis in the Eurozone area will continue to rein in optimism. In addition, there is persistent worry of another recession in the US. In this environment, interest rate is likely to remain low, and this could be another positive factor that will favour equities over other asset classes.

Stock picks for 2011. We continue to have an OVERWEIGHT on the Oil & Gas and Commodities sectors. This year, we have also placed a maiden OVERWEIGHT on the Healthcare sector, but have downgraded our long-standing OVERWEIGHT on the Telecommunications sector to a NEUTRAL. Our 2010 stock picks have done well, ending the year with an average gain of 21.1% compared to the STI's average gain of 13.8% for the same period. As such, we are maintaining most of our stock picks in 2010 into 2011. Our picks for 2011 are Ascott Residence Trust (ART), Biosensors International Group, CapitaLand Ltd, DBS Group Holdings Ltd, Ezra Holdings Ltd, Genting Singapore, Hyflux Ltd, Pacific Andes Resources Development, Keppel Corporation Ltd (KepCorp), Mapletree Logistics Trust (MLT), Noble Group Ltd, Olam International Ltd, Sembcorp Marine Ltd (SembMarine), StarHub Ltd, United Overseas Bank Ltd (UOB), United Overseas Land Ltd (UOL) and Venture Corp Ltd.

OCBC: Hyflux Good Prospects for Further Growth

Hyflux Ltd
Maintain BUY
Previous Rating: BUY
Closing price (10 Dec): S$3.27
Fair Value : S$3.66

Good Prospects for Further Growth

Good prospects for water treatment plays. The shortage of water around the globe is getting worse, according to Britain's chief scientist John Beddington, as climate change disrupts rainfall patterns and result in more severe droughts; the issue is further compounded by a growing world population and rapid urbanization. Separately, a recent report by Euromonitor International adds that the lack of water will put pressure on food prices, restrict developing countries' efforts to reduce poverty and also hamper economic growth. However, it notes that this will create opportunities in the water and wastewater industry.

Hyflux is in a sweet spot. Hyflux Ltd, as Singapore's largest listed membrane-based water treatment company, is in a sweet spot to capture these opportunities in both the water and wastewater industry. Already sitting on an estimated order book of S$1715m, Hyflux intends to focus its efforts in China and MENA, both regions identified by global agencies as those most likely to suffer chronic water shortages. According to the World Bank, China may have a supply shortfall of 201b m3 by 2030; the PRC government has previously acknowledged that the water problem is severe1 . Separately, a recent report2 by the Organisation of Arab Petroleum Exporting Countries (OAPEC) warns that population growth will worsen the water shortage in the Arab world by 2025 unless there is further investment in desalination and water treatment capacity. Meanwhile, we understand that Hyflux is also actively looking towards the Indian subcontinent - another region expected to see severe water shortages over the next decade.

Bonus issue an added sweetener. Seperately, Hyflux has gotten in-principal approval from the SGX-ST for its 1-for-2 bonus issue, which management had earlier proposed during its 3Q10 results to both reward shareholders and increase the liquidity of its shares. As the company has fixed the book closure date as 22 Dec 2010, the stock will trade ex-bonus on 17 Dec. As a recap, Hyflux had previously done a 1-for-4 bonus issue in Jun 2002, another 1-for-4 in Dec 2003 and a 1-for-2 in Jul 2005.

Maintain BUY with S$3.66 fair value. In the longer term, the next catalyst will come from the signing of the two mega desalination projects in Libya (worth an estimated S$1.3-1.5b), which management notes is still in the technical discussion stage, essentially making it a mid-2011 story. In between, we also expect Hyflux to announce smaller contract wins, mostly from China. Maintain BUY with an unchanged fair value of S$3.66 (25x FY11F EPS), or S$2.44 (adjusted for bonus issue).

OCBC: CapitaLand Valuation seems attractive

CapitaLand Limited
Maintain BUY
Previous Rating: BUY
Closing price (10 Dec): S$3.67
Fair Value : S$4.54

Valuation seems attractive
New launch in Singapore. CapitaLand (CapLand) launched the 1715-unit d'Leedon (formerly Farrer Court) at Farrer Road late last month. The 99-year leasehold project is being developed by a CapLand-led consortium. As of 06 Dec, some 82% of the 250 units released for the initial launch have been sold at an average S$1680 per square foot (Channel News Asia). Of these ~205 units, 52 units were purchased by former Farrer Court owners. Meanwhile, CapLand said at 3Q10 results that 55-unit The Nassim should be launch-ready by 4Q.

Sells Adelphi units. CapLand announced earlier this month that it will sell 163 units at The Adelphi, consisting of 86 office units and 77 retail units, for a total S$218.1m. It expects to earn an after-tax profit of about S$15.7m on the transaction, which is expected to be completed by 28 Jan 2011. CapLand said the sale was in line with its "strategy to unlock the value of non-core assets and recycle assets". Other recent capital recycling initiatives include the planned divestment of 28 serviced residence properties to its 47.74%-owned hospitality REIT. CapLand noted at 3Q10 results that it plans "to maintain significant financial flexibility to protect the downside, yet take advantage of any relevant opportunities that may arise." It had a net gearing of 0.21x debt-to-equity as of 30 Sep.

More policy measures likely. We note that the property market has continued to perform well even after the Aug 30 property measures. With sustained conditions of high liquidity and cheap debt, we believe it is very likely that policymakers will implement further measures in 1H2011. We believe that the issues of changed buyer risk appetite (hinged on cheap debt) and housing affordability, and their impact on massmarket households, are likely to be the central concern for policymakers. Further policy measures could potentially impact prices and volumes of property transactions (particularly for the mass-market segment). We also note that while the highend segment still has room to move upwards, this segment is also more vulnerable to external shocks.

Valuation seems attractive. We prefer developers with strong balance sheets and those with balanced exposure to the property sector, which should buttress earnings and

performance in a year of fairly high uncertainty for residential property. While UOL Group is our top pick for the sector, we think CapLand's valuations are attractive at the current price level. We maintain our BUY call on the stock with an unchanged S$4.54 fair value estimate, at parity to RNAV.

OCBC 2010 stock picks have done well

HLG: Maintain Hold for MAS

Firefly to operate another 4 hubs
_ Firefly is planning to set up another 4 new hubs (Kota Kinabalu, Kuching, Senai and Penang) within the next 2 years to support its expansion plan. (Star Biz)

_ Comment: These hubs will improve Firefly’s route connectivity and improve demand for Firefly. However, this expansion may come at the expense of its parent MAS. Maintain Hold for MAS with unchanged target price of RM2.27.

Tuesday, December 14, 2010


● 李敏雯 报道
  与其他新兴市场比较,亚洲货币平均被低估10%,野村新加坡(Nomura Singapore)认为明年亚洲将继续吸引更多外资流入,从而增加了亚洲货币的吸引力,新元估计能在未来两年升值近10%。









野村证券亚太固定收入市场利率策略董事经理苏普莱(Desmond Supple)进一步解释说,目前决策人较担心的是新加坡的房地产市场,但从利率角度看,进一步让新元升值实际上等于在降低利率,这对为楼市降温更加不利。






  野村证券环球外汇研究组主管弗林特(Simon Flint)相信,人民币明年的升值幅度将足以消除中美两国的紧张局势,而资本控制的情况也不会显著到对全球复苏展望产生体系性的冲击。


DXN 14.12.2010 Share buy back


Created 12/13/2010 - 10:19















正所謂“沒錢免談”(No Money No Talk),流動性非常重要,就算一個人如何進行切割運算(Sliceand Dice),牛市漲勢在缺乏強勁和穩定的流動性下根本無法長存。在低流動性和持有的馬股,無需大量流動性即可讓市場發光發亮。


第三個C:領域週期更替(Rotation Play)




第五個C:阿媽綜合症(The Amah Syndrome)
香港證券及期貨事務監察委員會前主席沈聯濤在《從亞洲到全球的金融危機》書中指出,導致1993年超級大牛市出現“非理性亢奮”(irrational exuberance)的2大因素,包括“家庭主婦”(Amah)綜合症,以及商人利用企業資產負債表額外資金在股市炒作一番,以爭取更高的回酬。


MIDF研究表示,富時綜指2011年前景良好,加上富時集團(FTSE Group)提昇馬股地位,自目前“次級新興”市場上調至“先進新興”地位,料可持續吸引外資前來。


此外,在投資者眼中,亞洲新興市場已較先進市場更具吸引力,在相關趨勢下,儘管大馬並未處在全球投資者的雷達中,也料可從中享有部份溢出效應(Spillover Effect),其中3大吸引外資因素為:1.州和全國大選。股市通常在選舉年表現良好,而全球投資者也對之認可。




“若以11月21日止1506.1點閉市位為基準,1,650點相等於9.6%漲勢,而由下而上(Bottom Up)的1,680點目標更提供11.5%上漲空間,與富時綜指10年平均回酬10.9%相符。”



大馬企業在當前牛市透過併購和內部成長日趨擴大,其中印尼業務貢獻已成為銀行領域關鍵成長推手,特別是聯昌集團(CIMB, 1023, 主板金融組)和馬來亞銀行(MAYBANK, 1155, 主板金融組);電訊企業也從早前進軍印尼市場中摘取成熟的果實。

UEM置地(UEMLAND, 5148, 主板產業組)和陽光(SUNRISE, 6165, 主板產業組)、怡保置地(IJMLAND, 5215, 主板產業組)與馬資源(MRCB, 1651, 主板建筑組),以及雙威控股(SUNWAY, 4308, 主板建筑組)和雙威城(SUNCITY, 6289, 主板產業組)近期併購案,將確保投資者對2011財政年產業領域的興趣,以及崛起成為更大和更具流動性的業者,將把大馬產業市場置在更多投資者的雷達內。

此外,特定銀行將是併購活動熱絡的大贏家,其中聯昌集團作為首要投資銀行集團,將是政府相關公司交易的潛在贏家。但銀行業本身也可能是潛在併購領域之一,當中規模最小的安聯金融(AFG, 2488, 主板金融組)是外資進軍大馬的理想對象,而大馬投資(AMMB, 1015, 主板金融組)和興業資本(RHBCAP, 1066, 主板金融組)等中資銀行也是合適的對象。












CIMB: Potential H&S pattern for STI

Potential H&S pattern for STI. The STI could not overcome its resistance trend line over the past week and is trading just below its 50-day SMA (3,189) support this week. The daily chart shows a potential head & shoulder pattern with the neckline at 3,119- 3,125pts. A breakdown of the neckline would be very negative. The weekly chart show recent confirmation of the MACD “dead cross”, which could be medium-term negative if the STI corrects further over the next few weeks.

CIMB: Choppy rebound for KLCI

The KLCI’s rebound over the past week has been very choppy, a likely sign that the index could still be in a triangle consolidation or has just started a diagonal triangle/wedge uptrend formation. The KLCI recently confirmed its weekly MACD “dead cross” signal, which is generally an indicator of a negative medium-term trend. However as long as the key support levels of 1,496 (50-day SMA) and 1,490 (support trend line) hold, the medium-term trend remains upwards. A break below these support levels would be a very negative sign.

Monday, December 13, 2010

HwangDBS: Malaysian Airlines Risky turnaround

Malaysian Airlines
Price Target : 12 m RM 1.85 (Prev RM 1.90)

Risky turnaround
• Likely to turnaround next year but expansion into low-cost airline business could pressure yield
• Expect net gearing to peak at 2.3x in FY12F as it takes delivery of more aircraft (own)
• Maintain Hold with revised TP of RM1.85 pegged to 15x CY11F EPS

Anticipated turnaround next year not without risks.
We cut FY11-12F earnings by 3%-6% after imputing lower passenger yields and higher interest expense, which more than offset impact of weaker USD and lower level of
fuel requirement hedged. We expect MAS to turnaround next year driven by y-o-y yield improvement as market conditions improve, while the USD is expected to continue to weaken against the MYR. But MAS’ expansion in the low-cost segment could start a price war between lowcost carriers and pressure yields.

Expect net gearing to peak in FY12F. We understand MAS is looking to own the first five B738-800s and all six A380-800s that it had ordered. These are scheduled to be delivered between 4QFY10F and FY12F, and likely to be funded by borrowings. Hence, we project net gearing to rise to 1.5x in FY11F and peak in FY12F at 2.3x. We understand that it had secured funding for all aircraft to be delivered in FY11.

Maintain Hold with a revised TP of RM1.85 pegged to 15x CY11F EPS. Though we expect MAS to turnaround next year, we note that its expansion into the domestic and regional low-cost segment might create downside risk to yields. Furthermore, MAS’ net gearing level is expected to rise over the next two years as some of the new aircraft would be owned by the Group. This makes it crucial for MAS to deliver consistent earnings to meet its future capital and debt commitments.

Domestic expansion is timely to capture growing air travel demand. MAS is looking to expand its domestic services, which we believe is likely to be executed through Firefly, its low-cost carrier (LCC) unit. MAS said earlier that Firefly would be venturing into the low-cost segment in a big way next year by offering low fares and expanding its fleet in phases. The airline will start operations with six B737-800s next year and double fleet size in FY12. We are positive on this development, because the expansion would allow Firefly to capture the anticipated growing air travel demand. MAS’ overall passenger yield is estimated at 22.6sen in FY11F and 23.4sen in FY12F (from 19.9sen in FY10F), likely driven by improvements in both international and domestic yields.

But domestic expansion may slow yield recovery. Although the expansion would allow Firefly to capture growing air travel demand, the airline still risks its yield dropping as

AirAsia, the largest LCC in the region, might retaliate by lowering fares to defend market share. This could pressure Firefly’s yields further. We are also concerned about the potential cannibalization of MAS’ existing domestic offerings although Firefly is supposed to cater only to the low-cost segment.

Cut FY11-12F earnings by 3%-6% after imputing 4%-8% lower passenger yields and higher interest expense, which more than offset the impact of weaker USD (against MYR) and lower level of fuel requirement hedged. We raised interest expense by 24% for FY11F and 65% for FY12F after increasing capex assumptions to RM3.1bn and RM3.9bn, respectively (from RM924m each year previously). We understand that currently, the Group is looking to own the first five B738-800s and all six A380-800s that it had ordered. These will likely be funded by borrowings. We also imputed MAS’ new fuel hedging position in FY11 following its recent restructuring of hedging instruments. Its current hedging level is 33% at US$93/barrel WTI crude oil price (from 40% at US$100/barrel). Meanwhile, our MYR/USD assumptions were also revised to MYR2.98 and MYR2.87 in FY11F and FY12F (from 3.28 previously) based on DBS’ latest forecasts. The new hedging position and weaker USD brought down our fuel cost assumptions.

FY10F core net loss is raised by 13% mainly to account for higher non-fuel costs based on 9M10 result. Operationally, we expect 4QFY10 to register a loss (RM54m core net loss), but it would be narrower q-o-q as it is a seasonally stronger quarter. However, we understand that MAS may recognize an exceptional gain in the quarter from the restructuring of its fuel hedges, which we did not factor into our forecasts. Expect net gearing to peak in FY12F as more new aircraft come in. MAS is scheduled to receive two B738s in 4Q10, followed by four B738s and seven A330s next year. FY12F will see five B738s, three A330s and six A380s delivered. As MAS will own the first five B738s and all six A380, we expect net gearing to rise to 1.5x in FY11F and 2.3x in FY12F, on the back of increased borrowings. Thus far, we understand that funding for all incoming aircraft in FY11 had already been lined up.

Maintain Hold with a revised TP of RM1.85 pegged to 15x CY11F EPS. Though we expect MAS to turnaround next year, we note that its expansion into the domestic and
regional low-cost segment might create downside risk to yields. Furthermore, MAS’ net gearing level is expected to rise over the next two years as some of the new aircraft would be owned by the Group. This makes it crucial for MAS to deliver consistent earnings to meet its future capital and debt commitments
Corporate: KrisAssets to buy The Gardens from IGB
Written by Siow Chen Ming
Monday, 13 December 2010 00:00

KrisAssets Holdings Bhd’s plan to issue RM300 million in redeemable convertible bonds may be a precursor to its acquiring The Gardens, Mid Valley, from parent IGB Corp Bhd.

Such an exercise could create a win-win situation for both companies. While IGB gets to unlock the value of its assets, working its balance sheet harder and changing from a single-asset entity may give the quiet KrisAssets a much-needed boost.

Last week, KrisAssets obtained the approval of Securities Commission Malaysia to issue up to RM300 million seven-year redeemable convertible secured bonds, which will raise funds for the company to “pursue potential acquisition/investment opportunities and to refinance existing borrowings”.

While the company did not elaborate on the acquisition/investment plans, property market observers are already predicting that it will purchase The Gardens from IGB via a cash plus share deal.

IGB controls 73.46% of KrisAssets, which owns only Mid Valley Megamall. It makes sense for KrisAssets to add The Gardens, which is adjacent to Megamall, to its current single-asset portfolio. This was always the plan but it had yet to be implemented because the management of both KrisAssets and IGB wanted The Gardens to first develop a strong base of recurring rental income.

The Gardens has been operating for more than three years now, thus making it timely for KrisAssets to acquire it from IGB. The Gardens is carried on IGB’s balance sheet at a net book value of RM594 million, according to the company’s annual report for 2009.

Market observers say both KrisAssets and IGB need corporate exercises to stimulate interest in their shares. The shares of the former, especially, are illiquid, which is a roadblock for institutional funds. The company also lacks a clear dividend growth pattern in order to retain shareholders despite its free cash flow strengthening over the years.

Investors tend to compare KrisAssets, which is a purely property investment company, with real estate investment trusts (REITs) despite the fact that the business models are different. KrisAssets’ priority over the past few years has been to degear or trim borrowings rather than pay its shareholders generous dividends. The priority of REITs, however, has always been to ensure dividend growth by acquiring yield-enhancing property assets that would give a decent spread over cost of funds.

KrisAssets closed last Wednesday at RM3.58, which translates to a market capitalisation of RM1.21 billion. Its market price still trails its net tangible assets of RM3.64 per share or shareholders’ funds of RM1.23 billion. While some REITs do trade below their NTA, they do not trade at more than 8% gross dividend yield.

If KrisAssets were a REIT, it would be grossly undervalued vis-à-vis its income distribution potential. If annualised, KrisAssets could report a pre-tax profit of RM150.6 million in FY2010 ending Dec 31 (excluding fair value gain). Assuming that it distributes at least 90% of its pre-tax earnings as dividends, which is what REITs normally do, KrisAssets could return RM135.5 million to shareholders, which translates to an 11.2% gross yield on its market cap of RM1.21 billion.
If traded at par with the valuation of REITs of 8% yield, KrisAssets’ current share price would have an upside of 40%. Nonetheless, it is highly improbable that KrisAssets will distribute 90% of its pre-tax earnings as dividends.

The company has, over the past five years, trimmed its net borrowings by RM236.6 million, from RM487 million as at FY2005 ended Dec 31 to RM250.4 million as at Sept 30, 2010, and distributed a smaller amount of RM154.1 million in dividends (FY2006 to FY2010), including an interim dividend of RM25.3 million in FY2010.

In essence, KrisAssets has been utilising the bulk of its earnings and cash flow to pare its borrowings rather than pay dividends. But as the company’s revenue and cash flow grow and net borrowings decline, there will be more free cash flow to be distributed to shareholders.

If annualised, KrisAssets’ FY2010 revenue would come up to RM236.8 million and its operating profit before working capital changes to RM168.8 million. This is a significant increase from FY2005 where revenue was RM171.2 million and operating profit before working capital changes was RM109.2 million.

It is learnt that management is not keen on converting the company into a REIT at this stage as it is not ready to embrace the structure which would limit flexibility in terms of capital management. As a REIT, the bulk of income earned from real estate assets has to be distributed to shareholders. In addition, the guidelines in terms of fundraising and acquisitions are more rigid.

In the final analysis, now that KrisAssets has reduced its gearing and freed up more operating cash flow, it has to reinvest in new asset acquisitions — with the help of some new gearing — to expand its earnings base, or it has to step up its dividend distribution to shareholders.

Ideally, the company should do both to enhance the appeal of its shares, striking a balance between growth and dividend returns to shareholders.

This article appeared in Corporate page of The Edge Malaysia, Issue 836, Dec 13-19, 2010

Source/转贴/Extract/: The Edge Malaysia, Issue 836, Dec 13-19, 2010
Publish date:13/12/2010

DBSV: • Accumulate stocks over next 2 weeks in the market lull

• Accumulate stocks over next 2 weeks in the market lull – Near-term support lifted to 3155 and maintain technical view for STI to head for 3438 by 1Q11. Prefer O&G, CPO, hospitality and infrastructure spending.

The local bourse is currently in the mist of the holiday lull period. We maintain our view for trading activity to pick up again around the Christmas period and for the STI to resume its major rising trend towards 3438 by 1Q11. We lift near-term support modestly to 3155 from 3125.

Downside is limited. Make use of the current holiday lull to accumulate stocks in anticipation of the upcoming rally that can last till 1-2 weeks before the Lunar New Year, which falls on early February next year.

We like rig builder Keppel Corp, which we believe could win contracts to build 4-11 rigs from Petrobras while SembCorp Marine could end up with zero or 7 drillship contracts. We also like Cosco Corp because the company is poised to gain from the recovery in offshore orders next year.

Our plantation analyst expects CPO prices to resume its uptrend from the end of this year through 1Q11, supported by both the weak USD, strong demand from China and supply shortage of substitute soybean. We are bullish on the plantations sector, as higher soybean prices would ultimately boost palm and soybean oil prices. Stock picks are Indofood Agri and First Resources.

We expect the trend for strong visitor arrivals to continue into 2011 driven by new attractions in Universal Studios@Sentosa, the gear-up to host larger conferences and meetings, the opening of Gardens by the Bay and the International Cruise Terminal. Hospitality related stocks should continue to deliver strong earnings and our picks are Genting Singapore, SIA, UOL and CDL HT.

Finally, we see infrastructure spending staying strong in 2011 driven by public sector projects from HDB, LTA and JTC. Our stock picks in this area are Tiong Seng, Pan United Corp, Yongnam and OKP Holdings.

CIMB:China Taisan – Technical BUY

CIMB: Small (cap) bets for 1H11

Sunday, December 12, 2010

唱旺新台灣20101212》匯率逼近30 台股上看9000點

唱旺新台灣20101212》匯率逼近30 台股上看9000點(1)

唱旺新台灣20101212》定存未達3.5% 房價不會跌?(2)

唱旺新台灣20101212》台灣打房像柳樹 風頭過後續漲(3)

唱旺新台灣20101212》漲不停 台灣正面臨通貨膨脹(4)

唱旺新台灣20101212》七上八下後 胡立陽:直奔9600點(5)

Source/转贴/Extract/: youtube
Publish date:12/12/2010

唱旺新台灣20101212》七上八下後 胡立陽:直奔9600點

Source/转贴/Extract/: youtube
Publish date:12/12/2010

七上八下後 胡立陽:直奔9600點

唱旺新台灣20101212》七上八下後 胡立陽:直奔9600點

Source/转贴/Extract/: youtube
Publish date:12/12/10
Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
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