Saturday, April 16, 2011

Infrastructure theme may be sound play

Business Times - 16 Apr 2011

Infrastructure theme may be sound play

Timing may be just right given projections of heavy investments in the sector in Asia over the next decade


BETWEEN 2001 and last year, India's gross national product in local currency at current market prices grew by an average 12.7 per cent a year, according to data from the International Monetary Fund. Despite the rapid economic growth and continued bright prospects, investments in infrastructure has lagged significantly behind.

Hence, electricity generation in India is 16 per cent to 20 per cent short of what is needed to meet peak demand, due to persistent underinvestment and poor maintenance. This can be seen in most emerging Asian countries, perhaps with the exception of China.

In Indonesia, infrastructure investments dropped from 5 per cent to 6 per cent of GDP in the early 1990s to 2 per cent to 3 per cent of GDP for much of the last 10 years. According to global consulting firm McKinsey, the consequent deterioration in energy, transport, housing, communications, and water facilities has restrained economic growth by 3-4 percentage points of GDP.

But things are about to change, it said in a recent report. 'Across the Asian region as a whole, we calculate that around US$8 trillion will be committed to infrastructure projects over the next decade to remedy historical underinvestment and accommodate the explosion in demand.'

Traditionally, most Asian infrastructure projects have been funded by governments or domestic banks. Foreign investors were mostly excluded. Those that were allowed to participate faced severe restrictions, including complex regulatory and legal regimes, uneven workforce quality, and occasional political interference, the consultancy noted.

'In the wake of the financial crisis, however, we have started to see signs that global private capital is increasingly welcome. The combined effects of increased stimulus spending and reduced tax receipts have increased deficits, with the result that restrictions on foreign investment are easing and a growing number of projects are being carried out under public-private partnerships (PPP). We estimate that over the next 10 years, fully US$1 trillion of the US$8 trillion of projected infrastructure projects will be open to private investors under PPPs.'

The questions for owners of global capital are how to identify the opportunities, how to mitigate the main risks, and how to develop appropriate entry strategies, said McKinsey.

It added that more than 80 per cent of the demand for infrastructure investment in emerging Asia over the next 10 years will come from energy and transport, the sectors most critical to supporting heightened economic activity.

Much of this new investment will be in advanced technologies. For example, Asia may leapfrog developed economies in its adoption of clean-energy technologies, thanks to falling costs and improving effectiveness.

So there is this huge upcoming opportunity for international investors to fund the infrastructure developments in emerging Asia. But my question is: Is there money to be made by private investors in investing in infrastructure projects?

A few of the infrastructure-related stocks or funds listed on the Singapore Exchange have less than stellar performance. For example, the infrastructure play of the 1990s, Ipco, crashed spectacularly. And more recently, CitySpring Infrastructure Trust has seen its value shrink by 10.7 per cent a year between February 2007 and March 2011.

Macquarie International Infrastructure Fund, on the other hand, rewarded investors with a -0.33 per cent return a year in the five years to March 2011.

Publish date:16/04/11

Buoyant growth in office and hospitality Reits seen

Business Times - 16 Apr 2011

Buoyant growth in office and hospitality Reits seen


EXPECT exciting double-digit growth in Singapore office and hospitality real estate investment trusts (Reits), Credit Suisse says in a report released this week.

The report also noted that office rents have continued their upward trajectory, albeit at a slower pace this quarter, in line with its expectations.

According to Jones Lang LaSalle (JLL) and CB Richard Ellis (CBRE), Grade A office rents average about $10 per square foot per month, up 4-7 per cent quarter-on-quarter, compared with the 7-10 per cent growth seen in Q4 2010. CBRE's data sees the Grade A vacancy rate rising to 4.8 per cent in the first quarter of 2011.

Taking into account the 2.87 million sq ft influx entering the market this year, Credit Suisse posits that occupancy will bottom to 85.6 per cent this year before recovering to the 90 per cent levels in 2013/14.

Correspondingly, it expects rents - particularly for Grade A offices - to rise at a steeper pace beyond 2011 in anticipation of a possible shortage in the prime central business district in 2014.

Commenting on the Mapletree Commercial Trust (MCT) listing which is rescheduled for April 27, Credit Suisse notes that while it is predominantly a retail Reit today, it has the potential to become an office Reit in the distant future.

MCT's initial public offering will consist of three commercial assets - VivoCity, the Bank of America Merrill Lynch Harbour Front and the PSA Building.

About 70 per cent of MCT's $2.82 billion total assets and 73.8 per cent of FY3/11 estimated net property income are attributable to VivoCity.

The draft prospectus, however, included more details on the recently completed 1.7 million sq ft Mapletree Business City (MBC), which had a committed occupancy of 68.7 per cent as at Feb 1. MBC was valued at $1.035 billion as at Nov 30, 2010. MCT has right-of-first-refusal for MBC.

Based on MCT's parent's portfolio assets, MCT has right-of-first-refusal for some 5 million sq ft of office net lettable area. Considering this prospective injection pipeline, Credit Suisse suggests that MCT could be more of an office Reit in the future.

At the offer price of $0.84 to $0.91, MCT would be the eighth largest S-Reit by market cap at $1.56 billion to $1.7 billion. It will also be the seventh largest in terms of asset size. In terms of yield comparison among office and retail Reits in Singapore, based on the offer price and the forecast distribution per unit, MCT offers between 5.4 and 5.9 per cent yield.

This is Mapletree Investments' fourth Reit listing in Singapore. MCT is looking to raise between $873.8 million and $923.7 million.

Credit Suisse is positive on office and hospitality Reits, expecting more double-digit growth on the back of a strong economic environment. It has 'outperform' ratings on CapitaComm Trust, K-Reit Asia, and CDL Hospitality Trust.

For retail Reits, it has an 'outperform' rating on CapitaMall Trust. It also likes Frasers Centrepoint for its exposure to the suburban retail segment, which it is most positive on.

Publish date:16/04/11

Better outlook for new Reits in next 3-5 yrs

Business Times - 16 Apr 2011

Better outlook for new Reits in next 3-5 yrs

Asia-Pacific survey shows the industry's players are more positive than they have been since 2007


PLAYERS in the real estate investment trust (Reit) industry are feeling more positive about prospects for new Reits in the next three to five years than they have been since 2007.

This is one of several findings from the Asia-Pacific Reit Survey conducted by corporate trustee The Trust Company and law firm Baker & McKenzie. The study polled 137 people including property owners, fund managers and lawyers in January and February this year.

Asked about their outlook for Reits in the next three to five years, 60 per cent of respondents said they expect new Reits to be launched. This exceeds last year's 55 per cent and is the highest level registered since 2007's 67 per cent.

For the next one to two years though, just 20 per cent of respondents thought new Reits would enter the market, unchanged from a year ago.

The market for initial public offerings has been shaky in the past few months, with political turmoil in the Arab world and natural disasters in Japan popping up.

In March, volatile markets forced Mapletree Commercial Trust to shelve its listing. It later filed its preliminary prospectus with the authorities early this month.

The outlook for Reit expansion remains fairly positive. Around 48 per cent of respondents predicted that existing Reits will grow bigger in the next one to two years, up slightly from 47 per cent last year.

A smaller proportion - 37 per cent - said they expect Reits to grow in size in the next three to five years. This is down from last year's 43 per cent.

Reits in Singapore have been on an acquisition spree since the economy recovered from the global downturn.

'Following two tumultuous years in the history of Reits, we have seen a marked increase in the number of property transactions in the market - a trend we are also seeing across Asia,' said The Trust Company's managing director (Singapore) Sin Li Choo.

In a ranking of 13 Asia-Pacific markets' potential for Reits, Singapore came out first, keeping its spot last year. Australia was a close second, while Hong Kong was third.

Publish date:16/04/11

CRCT does better in Q1, sees rosy outlook in China

Business Times - 16 Apr 2011

CRCT does better in Q1, sees rosy outlook in China


CAPITARETAIL China Trust (CRCT) yesterday posted improved results for the first quarter ended March 31.

Gross revenue climbed 11.1 per cent year-on-year to 159.1 million yuan (S$30.4 million) largely from higher occupancy rates and higher tenant sales at some malls.

Net property income increased 13.6 per cent to 106.6 million yuan.

The results were slightly eroded by the Singapore dollar's appreciation against the yuan. Converted to Sing dollars, gross revenue grew a smaller 4.7 per cent while net property income rose 7.1 per cent.

Income available for distribution was $13.5 million, up one per cent from a year ago. Distribution per unit (DPU) for the period was 2.15 cents, above last year's 2.14 cents.

On an annualised basis, Q1's DPU was 8.72 cents. Seen against CRCT's closing unit price of $1.25 on March 31, the annualised distribution yield is 7 per cent.

The counter lost one cent on the stock market yesterday to end trading at $1.26.

CRCT is confident about the outlook for China's retail market, pointing out that the Chinese government committed to boosting domestic consumer demand in its 12th Five-Year Plan in March.

'Retail sales in China grew 15.8 per cent year-on-year in the first two months of 2011. Retail sales, driven by growing urbanisation and rising disposable income, are expected to remain robust,' said Victor Liew, chairman of CRCT's manager.

CRCT added that the authorities are also investing more in transport infrastructure and public transport, which is expected to improve accessibility and 'retail footfall'.

CRCT's portfolio comprises eight malls across five cities in China.

It said it will explore yield-accretive acquisitions to expand its portfolio, and continue rolling out asset enhancement initiatives. Its gearing in the first quarter was 32.6 per cent, up from 31.1 per cent in the fourth quarter of 2010.

Publish date:16/04/11

Mapletree Commercial IPO priced at $0.88 a unit

Mapletree Commercial Trust is set to raise at least $898 million in an initial public offering in Singapore after pricing the IPO slightly above the mid-point of an indicative price range, a source with direct knowledge of the deal said.

The trust, managed by Singapore state investor Temasek’s (TEM.UL) property arm, priced the IPO at $0.88 a unit against an earlier indicative price range of $0.84-$0.91, the source told Reuters. The source declined to be identified because the pricing detail had not been made public.

The company plans to sell 1.02 billion units, excluding an over-allotment option, according to its prospectus.

Mapletree Commercial, whose asset includes Singapore’s largest shopping mall VivoCity, offers investors a chance to tap into the growth in Singapore’s retail market and to ride on a recovery in the city-state’s office sector.

The offering includes 302.2 million units, which will be sold to cornerstone investors AIA Group (1299.HK), Hillsboro Capital, Itochu Corporation (8001.T) and NTUC FairPrice.

Citigroup, DBS Bank, Deutsche Bank and Goldman Sachs are the joint global coordinators and, along with CIMB, are also joint bookrunners and issue managers.

Publish date:15/04/11

Friday, April 15, 2011

Will Hyflux's 6% dividend on prefs be the new gold?

Business Times - 15 Apr 2011

Will Hyflux's 6% dividend on prefs be the new gold?


HYFLUX's first preference share issue seems to be the best thing in the stock market since slice bread going by the chatter of retirees during their morning walks at the iconic Botanic Gardens yesterday.

A day after the company launched the deal, not a few private bankers have gotten hot and bothered under the collar from being yelled at by frustrated clients who were told the allocations to Hyflux's prefs were all gone.

The fuss was of course the rich 6 per cent coupon or dividend offered by Hyflux's seven-year prefs, with an upside to 8 per cent if the prefs are not redeemed in April 2018. The hoi polloi will get their shot at the deal via ATM application at a minimum $10,000.

Not surprisingly then that, by early afternoon yesterday, the issuer's sole lead manager and bookrunner, DBS Bank, closed orders from more than 70 institutional clients which included offshore interest, as orders reached almost seven times. Yesterday's Monetary Authority of Singapore monetary policy review, which further tightened the Sing dollar, was obviously not lost on foreign investors. The Sing dollar climbed to a record $1.2491 to the US dollar from $1.2557 on Wednesday.

In a call with The Business Times, DBS's head of fixed income Clifford Lee said the bank had received orders close to $1.4 billion or almost seven times the $200 million offer size. The plan was to offer $200 million cumulative, non-voting preference shares with an option to upsize to $400 million depending on demand. Of the $400 million, the placement tranche for institutions and private banks does not exceed $200 million and retail gets $200 million.

In all likelihood, the retail tranche will receive strong demand too because it will be hard to resist the princely 6 per cent given the practically zero interest for bank savings. Singaporeans can also use part of their investible CPF monies to buy the Hyflux prefs which, at 6 per cent, beat the tier 2.5 per cent and 4 per cent interest rates paid on CPF accounts.

How did DBS arrive at 6 per cent? Mr Lee said the pricing discussions looked at Hyflux's five-year senior debt current yield of 3.61 per cent. Paying 2.4 per cent more for a seven-year debt seemed reasonable. Discussions also took Reits' yields into account as investors look to Reits to provide a stream of stable income. Top-quality Reits are yielding slightly more than 5 per cent but these are also proven investments with good liquidity.

So what are the risks? Hyflux is not paying 6 per cent for fun. Sure, raising money via prefs keeps its existing stakeholders - shareholders and bankers - happy. Shareholders don't suffer dilution and bankers are placated as Hyflux's borrowings don't rise.

Prefs investors should know that their securities rank behind senior debt which are bank loans and bonds and only ahead of shareholders. That means if Hyflux goes belly-up, banks and bondholders get paid first, prefs holders are next if there's anything left, and last in line are shareholders.

Investors tend to associate Hyflux with a utility because it builds and operates water plants. Its most recent contract was an $890 million agreement to build, own and operate Singapore's second seawater desalination facility. But it also suffered a setback in war-torn Libya. With the country's uncertain future, Hyflux will let a US$100 million contract it won last November lapse, while discussions for a potential billion-dollar deal to build two other desalination plants in Libya will not proceed.

The other risk is liquidity. So far, despite efforts by the Singapore Exchange to promote fixed income trading, which includes prefs, secondary trading remains thin.

The problem is supply. Unlike traders, investors in such instruments normally buy and hold. But Mr Lee said efforts are being made to ensure a diversified investor base in order to help liquidity. In addition, DBS will make the market when there is no buyer.

Interest rate risk is yet another factor. Currently, regional interest rates, except in Singapore, are moving up to deal with inflationary pressures. Eventually, Singapore too will see interest rates rise when the US economy begins to grow.

Will 6 per cent be the new gold? Mr Lee sure hopes so, suggesting that after Hyflux's groundbreaking issue, more corporates will follow.

Publish date:15/04/11

MAS signals room for stronger Sing dollar

Business Times - 15 Apr 2011

MAS signals room for stronger Sing dollar

Exchange rate policy band shifted up but slope and width unchanged


(SINGAPORE) The Monetary Authority of Singapore (MAS) yesterday tightened monetary policy by shifting the exchange rate policy band upwards, intensifying its fight against inflation as advance estimates show the economy surging in the first quarter.

The Singapore dollar rose to yet another high against the greenback on the news, reaching S$1.2516 at 7pm according to Bloomberg data. It had appreciated to as much as S$1.2464 in the afternoon.

In its half-yearly monetary policy statement, MAS signalled further appreciation for the Sing dollar, saying that it will move the exchange rate policy band upwards and re-centre it below the prevailing level of the Singapore dollar nominal effective exchange rate (S$NEER). It left the band's slope and width unchanged.

'Economic activity is likely to be sustained at a high level for the rest of the year, even as the underlying growth momentum moderates,' MAS said. According to official estimates, the economy grew 8.5 per cent year on year in Q1, well above market consensus.

'With factor markets tight, domestic cost and price pressures will remain firm,' the central bank said. It expects headline inflation to 'stay elevated' and moderate gradually to around 3 per cent by Q4. For the whole year, consumer price index (CPI) inflation could be in the upper half of the 3-4 per cent forecast range, it added.

CPI inflation was 5.2 per cent in the first two months of the year, largely driven up by rising COE premiums and imputed rentals. According to MAS, high oil and food prices, coupled with wage pressures, will be factors to watch next.

'Although the pass-through of wages to services costs has been relatively muted so far, the pass-through could strengthen given firm economic conditions,' it said.

While many private-sector economists had seen the re-centring of the band coming, they were expecting a bigger shift. The last few times MAS moved the band, it re-centred the band at - not below - the prevailing level of the S$NEER.

MAS said that its latest move takes into account the tighter policy stance it adopted in April and October last year, 'which will continue to have a restraining effect on the economy and prices'.

Market estimates of the upward shift range from 1 to 2 per cent. Some observers suggested that global uncertainties could also have tempered the degree of tightening. 'This reflects a greater sense of caution over the tail risks to growth and a desire to avoid excessive strength in the SGD,' said Barclays economists in a note.

HSBC said that there are 'elevated' uncertainties surrounding the global economic outlook because of unrest in the Middle East, and it is 'understandable that MAS decided to leave a bit extra room on the downside for now'.

A few economists, such as those from Credit Suisse and DBS, expect the USD/SGD to go down to 1.19 by the end of the year. Barclays economists see the pair drifting towards 1.21 in 12 months and recommend that investors take up a long Sing dollar cash position versus a euro-US dollar basket.

MAS's tightening move could encourage other central banks in Asia to follow, 'putting greater downward pressure on USD-Asia, and particularly on USD-SGD, in the coming weeks', HSBC economists suggested.

Publish date:15/04/11

Surprise Q1 GDP spurt paves way for strong year

Business Times - 15 Apr 2011

Surprise Q1 GDP spurt paves way for strong year

Even with expected Q2 hiccup, 2011 growth is poised to hug upper end of 4-6% official forecast


(SINGAPORE) Against expectations, the pace of economic activity surged in the first quarter, and is now expected to remain robust through the year, although Q2 may see a temporary dip.

While the official growth forecast for 2011 remains 4-6 per cent, the Monetary Authority of Singapore (MAS) - which yesterday tightened monetary policy to ward off rising inflationary pressures - said full-year GDP growth is 'likely to be at the upper end' of the range.

According to the Ministry of Trade and Industry (MTI), flash estimates based on only the first two months' data show a strong, broadbased 8.5 per cent GDP expansion. While this is below the preceding Q4's 12 per cent rate, it is well above market forecasts of around 6 per cent.

In sequential terms, the economy grew 23.5 per cent in Q1 from Q4 2010 - a big jump from Q4's 3.9 per cent pace, and powered by an 80 per cent surge in manufacturing output. The electronics and precision engineering clusters were key drivers, with increased business investment in the region, MTI said.

The market's earlier bearish forecasts for Q1 reflected concerns over the impact of the recent spike in oil prices and even the calamity in Japan.

But MAS yesterday said that despite the increased uncertainty, the global economy would likely grow at a moderate pace in 2011.

Noting the 'step-up in the level of economic activity in Q1', the central bank expects Singapore's economic output to be sustained at a high level across the board for the rest of the year, even as the underlying growth momentum eases.

A 'temporary slowdown is forecast for Q2', MAS said, without elaborating. Economists say the dip would be due to high base effects and slowing manufacturing demand.

Barclays Capital, for one, is looking at a possible GDP contraction in Q2, citing the 'abnormally high base' of pharmaceutical output a year ago, which is likely to depress headline industrial output figures this year.

DBS Bank's Irvin Seah also believes that Q2 growth will be the weakest in the year, given the drag from high oil prices and the Japan crisis.

But the underlying growth pace should pick up again in the second half, he says, driven by ongoing recovery in the US and resilient regional demand.

In any case, going by MAS's remarks in its policy statement yesterday and its latest moves on the Sing dollar, it's apparent that inflation - rather than any short-term growth concern - remains the focus.

'With factor markets tight, domestic cost and price pressures will remain firm,' MAS said. It expects the headline inflation rate to stay elevated, moderating 'only gradually' to around 3 per cent by Q4 2011.

For the full year, MAS continues to expect inflation to come in at the upper half of its 3-4 per cent forecast.

The strong Q1 GDP estimates prompted Citigroup economist Kit Wei Zheng to raise his forecast of 2011 growth by two points to 7 per cent.

'This latest jump places GDP levels 1.2 per cent above the previous Q2 2010 peak, and 15 per cent over the Q1 2008 pre-recession high,' he notes.

DBS's Mr Seah is staying with his 7 per cent growth forecast for 2011. The services sector will not only be the key growth driver, it will likely generate three-quarters of the new jobs this year, he says.

Barclays' Leong Wai Ho, however, 'prefers to remain more circumspect' - while noting the possibility of 'slight upside risks', he is sticking to his 5 per cent GDP growth forecast for 2011.

The strong Q1 advance GDP estimates were driven by 'one-time factors', Mr Leong says, citing the robust jump in electronics output and wider refining spreads after the Japan earthquake and tsunami.

'Should oil prices remain high, these factors are unlikely to persist in the second half of 2011,' he says.

Publish date:15/04/11

MAS New planes cannot come fast enough (CIMB)

Malaysian Airline System Bhd
RM1.82 @14/04/11
Target: RM2.30
New planes cannot come fast enough

• Maintain OUTPERFORM. MAS took delivery of its first A330-300 yesterday, and it will take cumulative delivery of 12 new-generation planes by year-end. MAS has also adopted a series of measures to cope with higher fuel prices, including raising fuel surcharges to cover some 50% of the cost increase since the start of the year and scaling back its 2011 capacity growth from 10% to only 4%. Unfortunately, these measures will not come fast enough to prevent a set of weak 1H results due to cost pressures and the impact of Japan’s earthquake on demand. Nevertheless, we maintain our OUTPERFORM call and our target price of RM2.30 (based on an unchanged core P/E multiple of 7x) because of our continued long-term confidence in MAS’s fleet renewal. Potential re-rating catalysts include continuing reforms to boost structural profitability. Our earnings forecasts are unchanged.

• New aircraft deliveries to reduce costs and enhance revenue. We noted MAS’s satisfaction with the progress of its fleet renewal programme at yesterday’s welcoming ceremony. The new A333 is miles ahead of its older counterpart, boasting enhanced creature comforts in all classes. Greater operating efficiency should lower unit cost on a new-for-old replacement. On some regional routes, the new A333s will replace B777s, which will be used for longer flights to Europe and South Africa.

Fleet renewal on track
Delivery of first new A330-300. We were invited to witness MAS’s delivery of its first new A330-300 (A333) yesterday. The event was graced by Transport Minister Dato' Seri Kong Cho Ha, MAS Chairman Tan Sri Dr Munir Majid, Managing Director Tengku Dato’ Azmil Zahruddin and other dignitaries.

MAS appeared pleased that its fleet renewal plan is going as planned. It has so far received four new B737-800s (B738s) and a new A333. It will take delivery of another three B738s and four A333s this year. In total, the airline will get by year-end 12 new aircraft in the form of seven B738s and five A333s.

To recap, MAS has 35 firm orders for the B738 against 37 legacy B737-400s, and 15 firm orders for the A333 against a legacy fleet of 14 A330s. In addition, it has 20 options for the B738 and 10 options for the A333, which it may exercise in the interests of fleet growth beyond simple one-for-one replacement. MAS also has an order for six A380s that will be delivered from April 2012 compared to a legacy fleet of 10 B747-400s. Finally, it has 17 B777-200s for which it has not yet ordered any replacement as these are relatively new with an average age of 11 years. The airline is evaluating the A350XWB and the B787 Dreamliner as potential replacements.

The new A333

Sinificant improvement in creature comforts. The new A333 has the same state-of the art enhancements as we previously saw in its new B738s, with personal video-ondemand entertainment systems for all seats, USB ports, three-pin plugs, and so on. MAS’s existing A333s do not have personal entertainment systems for economy-class passengers. Seating capacity has been reduced by about 5% from 297 seats in the legacy plane to 283 seats in the new plane as MAS gives more space to the business class. The present configuration of 44 business class and 253 economy class seats will be reduced to 36 business class and 247 economy class seats. The stronger product offering will hopefully attract more passengers to MAS. On 13 April, MAS noted in its Invest Malaysia presentation slides that each year, more than 100,000 passengers fly from Kuala Lumpur to Singapore to catch outgoing flights. Some of these passengers may be lured back to MAS once its product catches up with the best-in-class airlines like SIA.

Technical and cost enhancements. The new A333 boasts an enhanced Pratt & Whitney engine and is capable of carrying a higher payload, which means more space for cargo. A newer plane will definitely reduce fuel consumption and maintenance cost. Its better reliability compared to an older plane will mean that it will be in the air longer and utilisation can be improved.

Deployment. The new A333 will be used for the Australia, China, Japan, Korea, Middle East, and India routes. Brisbane will be the first to receive the new plane, followed by other cities like Perth, Shanghai, Beijing, Osaka and Delhi. The plane also has a greater flying range of 10 hours compared with only eight hours for the legacy plane, making it possible to use the plane as a replacement for the B777- 200s that currently serve many cities in Australia and elsewhere in Asia. In turn, the B777s can be redeployed to expand markets in Europe or South Africa as it is a longhaul aircraft. Furthermore, the use of A333s in place of B777s will reduce fuel consumption as the B777 is heavier than the A333.

Short-term pressures
Fuel surcharges claw back only half of cost escalation. Despite the progress made in MAS’s fleet renewal exercise, the airline will, along with its peers, suffer as a result of higher fuel prices. We understand from MAS that fuel surcharge increases since the start of 2011 have clawed back just half of the fuel cost escalation, which is within our expectations of 40-50% recovery.

Recognising the threat to profitability, MAS is scaling back its capacity expansion plans from 10% this year to just 4%. This is slightly below our current estimate of 5% ASK growth. The reduction in capacity expansion is likely to result in MAS returning more of its legacy planes to its lessors as the new planes arrive. If the airline had decided to continue with its original capacity expansion, it would probably have to keep a substantial number of its older planes by extending their leases. Hence, the silver lining of the high price of fuel is that MAS is being pushed to achieve greater fleet efficiency at a faster pace. Japan demand down. Another source of near-term pressure is the Japanese earthquake and nuclear worries. As demand to Japan is not recovering, MAS has reduced the flights from Kuala Lumpur to Narita from 11 a week to just seven. We view positively MAS’s cuts to its capacity expansion plans and frequency cuts to Narita as these are necessary adjustments in the present tough conditions.

Valuation and recommendation
Maintain OUTPERFORM. MAS is taking action on several fronts to manage the threat to its profitability including raising fuel surcharges, reducing frequencies to Japan and scaling back its capacity expansion plans for 2011. But these are not enough to prevent a likely weak set of 1H results. Although MAS is, in our aviation universe, the most exposed to higher oil prices, we maintain our OUTPERFORM rating because of our confidence in MAS’s fleet renewal which will transform its fleet into one of Asia’s youngest in just three years. Potential re-rating catalysts include the cost benefits of the younger fleet and other reforms that will boost revenue. Our target price remains at RM2.30, pegged to an unchanged 7x core P/E, which is at around 40% discount to our target P/E multiple of 11x for market leader SIA.

In our last report dated 28 March, we slashed our core net profit forecast for 2011 by 49% and cut 2012-13 by 13-21% as we upgraded our jet fuel price assumptions to US$125/barrel for 2011 and US$130/barrel for 2012-13. As our official fuel price forecasts remain unchanged, we maintain our EPS forecasts in this report. However, we highlight that jet fuel prices have since surged to US$138/barrel and MAS is the most sensitive airline in our universe. Every US$5/barrel increase in the jet fuel price assumption can cut our 2011 core net profit forecast by 67% and our 2012 forecast by 21%, on the basis of no further increase in fuel surcharge (Figures 5-6). If we assume that higher fuel surcharges cover half of the cost increase, then the earnings sensitivity will halve to 34% for 2011 and 11% for 2012. Hence, if jet fuel prices sustain at current levels for the rest of the year, it may almost wipe out our core profit forecast for 2011.

The longer-term positive is that MAS’s fleet renewal is going well and this should set MAS up for structurally improved profitability through lower fuel and maintenance costs, as well as better customer satisfaction and hopefully, improved sales. MAS is targeting 10-15% lower cost/ASK by 2015. The airline is significantly behind its rivals, with the lowest passenger yield and the higher cost/ATK in 2010 compared to a sample of its full-service peers (Figure 4). This indicates how much potential MAS has. Fleet renewal will be the game changer as the average age of MAS’s fleet is expected to fall from 13 years in 2011 to just five years in 2015 and sales should pick up in line with the better product offering. Unfortunately, fleet renewal is a gradual process and the benefits may not flow through fast enough to offset the negative macro developments in 2011.

Source/转贴/Extract/:CIMB Research
Publish date:15/04/11

Masterskill Maiden overseas venture (Alliance)

Masterskill Education Group
Target Price: RM2.60

Maiden overseas venture
_ On 12th Apr 2011, Masterskill Education Group Bhd (Masterskill) signed an MoU with PT Sejahteraraya Anugrahjaya Tbk (PTSA) and Dato’ Sri Edmund Santhara, Masterskill CEO to set up a JV in Indonesia for the purpose of establishing the Universitas Masterskill- Mayapada (UMM) in Indonesia. The MOU would be in effect for a period of 3 months.

_ Under the JV, PTSA would be the largest shareholder, holding 40% stake while the remaining would be held equally by Masterskill and Dato’ Sri Edmund Santhara respectively. The total paid-up capital would be US$10m (RM30m). PTSA would be responsible to obtain all approvals and consents for the establishment and operation of UMM, which would offer programmes in nursing and allied health education. In addition, PTSA via a tie-up with PT Bank Mayapada Internasional and other financial institutions would provide a student loan scheme to eligible students for their full course studies in UMM. Masterskill in turn would provide the standard operating procedures, curriculum and guidelines relating to the programmes in nursing and allied health education provided by UMM.

_ Our view: generally positive, but short on details and near-term meaningful contribution unlikely. We laud the overseas venture given the 1) huge potential market in Indonesia, 2) severe shortage of nurses and healthcare professionals in Indonesia and 3) below-par standard of education in healthcare, which presents a good opportunity for Masterskill to develop nursing and allied health science courses in Indonesia. In addition, UMM students would also benefit from the clinical training provided by Mayapada Hospital, which is indirectly owned by PTSA. However, specific details are scant and we expect the Indonesian venture to contribute meaningfully from FY14 onwards. Thus, Masterskill’s fundamentals are unchanged at this juncture. Maintain TRADING BUY with TP of RM2.60 intact.

Source/转贴/Extract/: ALLIANCE RESEARCH
Publish date:14/04/11

S$ touches new high as MAS tightens policy

by Millet Enriquez
04:47 AM Apr 15, 2011
SINGAPORE - The Singapore dollar yesterday hit a new record against its US counterpart after the Monetary Authority of Singapore (MAS) further tightened its monetary policy on the view that "domestic cost and price pressures will remain firm".

The move came amid strong first-quarter economic expansion in Singapore and robust growth in the region. Analysts believe the policy is meant to counter inflation, which is expected to come in at the upper end of the Government's forecast range of 3 to 4 per cent this year.

The Singdollar rose to an all-time high of S$1.2452 against the US dollar after the policy announcement from S$1.2550 before. Late in the day, it had retreated to S$1.2500.

The central bank, which manages the value of the Singdollar against a basket of other currencies, said it was recentring its exchange rate policy band upwards.

The recentering will be below the prevailing level of the Singdollar Nominal Effective Exchange Rate and there will be no change to the slope and width of the band, it said.

Observers say that this will translate into a modest rise in the Singdollar from its current levels. Before the announcement, the Singdollar had already gained over 2 per cent against the greenback so far this year.

The MAS said economic activity would likely be sustained at a high level for the rest of the year, even as the underlying growth momentum moderates.

It added that yesterday's policy adjustment took into account the tighter policy stance in April and October last year.

Analysts said the move was less aggressive than expected but that the pre-emptive approach would likely put a lid on rising costs.

Ms Thio Chin Loo, senior FX & IR strategist Asia, BNP Paribas, said: "This appreciation bias will help to keep cost pressures down and that will help to work in favour of the headline inflation staying low. For the ordinary Singaporean, I think it means that, hopefully, with a strong Singdollar, that cost push prices will be fairly maintained. So, in terms of let's say shopping in the shopping centres, retailers may not need to raise prices too much because a strong Singdollar helps to curb imported inflation."

Some analysts said a modest rise in the Singdollar is not likely to hurt export competitiveness. And a firmer currency may even benefit exporters and businesses that source for goods and services from abroad.

Mr Emmanuel Ng, vice-president, Treasury Research & Strategy, OCBC Bank, said: "Currently, we have a S$1.2285 forecast for December. But given that we are still in a weak US dollar environment and MAS is still also on an appreciation stance for the Singdollar basket, we're probably be looking to revise downwards to maybe about S$1.21 to S$1.20 by end of this year."

Compared with other regional currencies, some analysts say the Singdollar, the world's 12th most traded currency, remains an attractive investment option for long-term exposure.

Publish date:15/04/11

Thursday, April 14, 2011

胡老師百寶箱 地心引力線實戰(大盤)

20110413 東森財經新聞 夢想街57號 胡老師百寶箱 地心引力線實戰(大盤)

Source/转贴/Extract/: youtube
Publish date:13/04/11


Source/转贴/Extract/: sina
Publish date:26/10/09

理財之道 - 黃婉曼訪問曹仁超

Source/转贴/Extract/: sina
Publish date:08/01/2011

57金錢爆(烏來大地震 台股重挫?)

2011-0412-57金錢爆(烏來大地震 台股重挫?)

Source/转贴/Extract/: youtube
Publish date:12/04/11

核災跳到最高級 生物隨時死晒


【本報訊】日本核災大升級,當局昨日宣佈將福島第一核電廠的核事故一次過調升兩級,由第 5 級跳至最高的第 7 級,成為人類歷來最嚴重核能災難,與 1986 年烏克蘭切爾諾貝爾核災同級。核電廠洩漏的輻射量,最高 峯 時達到每小時 1 萬萬億貝可,專家指如此輻射量可導致附近生物即時死亡。儘管日本首相菅直人呼籲民眾不用恐慌,但其政府忽然一改不肯升級的立場,福島核災民和日本傳媒都直斥政府對核災一直­撒謊隱瞞。

Source/转贴/Extract/: youtube
Publish date:13/04/11

2011-04-14 - 核電廠周邊地區 未來 20年無法住人

核電廠周邊地區 未來 20年無法住人
311餘震 震多 10年

在日本政府把福島核事故級別提升至最高的第 7級後,儘管國際原子能機構( IAEA)強調福島核危機跟 1986年切爾諾貝爾核電廠爆炸不能相提並論,但美國專家指日本起碼要等到十年餘震才會消失,福島核電廠周邊今後 20年都不適宜人居住,意味地震噩夢仍會纏擾多日本人至少十年。

日本《富士晚報》昨天(周三)報道,氣象廳地震情報企劃官長谷川洋平指出,福島縣濱通到茨城縣北部向來是較少發生地震的地帶,但該處自 311大地震後地震頻仍,印證了美國地質勘探局地球物理學家斯坦因( Ross Stein)的預測,大地震使部份斷層部份隱沒帶受壓,震央周邊廣大範圍歪斜,震央南方和北方都有可能出現大型地震,要餘震平息的話,可能還要等多十年。

洩漏輻射量如切諾 20%

首相菅直人昨天跟內閣官員松本健一會晤時,也對福島核電廠周邊地區不感樂觀,「眼下已經不能居住了,不僅現在,未來 10年甚至 20年內都無法供人居住」。

日本原子能安全保安院指,福島核電廠洩漏了 37萬萬億貝可輻射,相當於切爾諾貝爾 10%,但專家指數字應是 20%。不過, IAEA副總幹事弗洛里指,福島事故跟切爾諾貝爾事故有很大分別。切爾諾貝爾反應堆是在操作中出事,發生強烈爆炸,將輻射物質釋放到高空,再擴散到全球。但福島核電廠的反­應堆在地震後已停止運作,反應堆壓力外殼亦沒有爆炸,洩漏的輻射其實很少,不能與切爾諾貝爾比。

法國輻射防護與核能安全研究所( IRSN)所長古爾默龍( Patrick Gourmelon)亦認為,兩宗核災不能相提並論。他說:「目前看來,福島事故雖然非常嚴重,但還未到切爾諾貝爾的程度,未來也不會。」中國環保局就指出,福島核電廠輻­射洩漏對中國的影響,只及切爾諾貝爾核災的 1%,對中國民眾沒有即時威脅,毋須採取任何額外安全措施。

清理核災或需要 100年

不過有專家估計,兩宗核災同樣需要長時間清理,切爾諾貝爾要 80年,福島涉及四個反應堆,隨時要用上 100年。

東京電力公司前晚開始抽走在福島核電廠 2號反應堆內的高輻射積水,轉移到附近的冷凝器貯存。首階段先抽走約 700噸高輻射積水,需時約 40小時。 1號至 3號反應堆合共有多達 60,000噸高輻射積水要抽走,未來工作仍非常漫長。東電從 4號反應堆的廢料池抽取了 400毫升水化驗,以確定反應堆內的核廢料棒全損程度。另外,茨城縣北部昨日發生黎克特制 5.8級餘震,子彈火車一度停駛。


Source/转贴/Extract/: youtube
Publish date:14/04/11

Hyflux selling $200m of preference shares

Business Times - 14 Apr 2011

Hyflux selling $200m of preference shares

The 6% cumulative shares are priced at $100 each; minimum purchase is $10,000


HYFLUX is offering for subscription up to $200 million of preference shares carrying a dividend rate of 6 per cent per annum. The company has the option to double the offer size to $400 million.

The cumulative Class A preference shares (Class A CPS) are priced at $100 per share. The minimum purchase under the public offer is 100 shares ($10,000), with subsequent multiples of 10 shares ($1,000). CPF members can use up to 35 per cent of their CPF investible savings for the public offer.

The shares are perpetual, 6 per cent cumulative, non-convertible and and non-voting. The dividend, if declared, will be paid semi-annually subject to certain conditions.

Hyflux has the option to redeem the shares on or after April 25, 2018. If they are not redeemed then, the dividend rate will be stepped up to 8 per cent.

Of the total shares, the company may offer up to $20 million worth to Hyflux directors, management and employees, and its subsidiaries under the reserve offer. However, the offer under the reserve offer and placement tranche may not exceed $200 million.

Proceeds from the offer will be used to fund the company's newest projects in Singapore and China, and deals that may be secured later this year, said Hyflux chief financial officer Cho Wee Peng.

Mr Cho added that the characteristics of Class A CPS are more suitable for Hyflux's needs. 'Overall gearing for the group remains at a comfortable level,' he said.

DBS is the sole lead manager and bookrunner of the offer, and Stamford Law Corporation will advise the company.

Group president and chief executive officer Olivia Lum said: 'We view the Class A CPS offering as one of the more suitable options for our needs, and more importantly, non-dilutive to existing Hyflux ordinary shareholders.'

The public can apply for the Class A CPS from 9am today through the automated teller machines of DBS (including POSB), OCBC, UOB and its subsidiary Far Eastern Bank, or Internet banking websites of DBS and UOB.

The offer closes at noon on April 20, and the shares are expected to be listed and traded on mainboard from April 26.

Publish date:14/04/11

Hutchison Port trust struggles to top IPO price

Business Times - 14 Apr 2011

Hutchison Port trust struggles to top IPO price

Amid weak market, stock price dips after bankers stop stabilisation action


HUTCHISON Port Holdings (HPH) Trust has not touched anything above its IPO price of US$1.01 per unit since its listing nearly a month ago.

Units of the business trust closed yesterday at 95.5 US cents apiece, down 2.55 per cent, with some 100 million units traded. This followed the close of price stabilisation by its bankers this week. On Tuesday, stabilising manager Deutsche Bank said it has ceased to stabilise the unit price, after buying a total of 540 million units - all units offered under the greenshoe option.

Amid a poor market showing - as investors grappled with the nuclear fallout from Japan's massive earthquake - the stock went underwater on listing day. It touched US$1.01 between last Thursday and Monday, but gave up its gains afterward.

Market watchers say that concerns over the weakening greenback against the Singapore dollar still weigh on the stock. Distribution from the trust will be paid out in HK dollars, which is pegged to the faltering US dollar - which means forex losses if the Singapore dollar continues to strengthen as expected.

Foreign funds have been the main buyers of the stock, said UOB-Kay Hian executive director Chan Tuck Sing. 'This could partly be due to its parentage,' said Mr Chan, referring to HPH's honcho Li Ka Shing. 'Response from the local boys has not been that strong.'

The Singapore Exchange's move to facilitate the quotation and trading of HPH Trust in both Singapore dollars as well as US dollars, can mitigate some concerns, Mr Chan said. 'But with an issue of this size, local interest will barely make a dent.' He added that the stock's poor showing could be due to funds adjusting over-allotment from the IPO, which raised some US$5.45 billion.

A BT analysis earlier also noted that while HPH Trust offers fairly attractive yields - with a forecast seasonally annualised DPU for 2011 at 45.88 HK cent - the trust is not obligated to make minimum levels of payout as the real estate investment trusts (Reits) do.

Reits must pay out at least 90 per cent of their distributable income to unitholders to qualify for tax transparency on the amount they pay out.

The hefty IPO was widely seen as a coup for Singapore, which had established perimeters for the listing of business trusts ahead of long-time competitor, Hong Kong, where HPH's business is based.

This has mounted pressure on Hong Kong regulators to review its listing rules to accommodate business trusts, with Hong Kong's telecoms giant PCCW - led by Li Ka Shing's son Richard Li - lobbying for changes in this area to try listing its trust there.

Publish date:14/04/11

Tsunami -resistant stocks (KE)

Some people are of the opinion that investing in stocks is riskier and yields a lower return than investing in their own business. Take, for example, 27-year-old Barnabas Huang, who was featured in The Sunday Times on 20 March 2011. He ventured into ornamental fish breeding at the tender age of 14 when most of his peers are grappling with common tests and co-curricular activities. A series of business flops later, young Barnabas is now the proud owner of NutriFirst, an online store selling sports supplements. Last year, the company netted $1.6m in sales and $500,000 in assets. In a word, the business generates an annual return of 25-30%. Now, Barnabas owns two private properties, drives an Audi A6 2.4 auto, dabbles in gems and has plans to buy 10 more properties. He said he has never invested in stocks. He simply has no time for this sort of thing.

But what if you are not Barnabas? What if you do not relish being an entrepreneur?

In my case, I am just a regular salaried employee. I don’t think I will ever get to own 10 properties. But that is not because I lack ambition; my desire is to retire comfortably at age 45 and pursue my dream of running a bakery.

To be sure, one can enjoy an early retirement through prudent investments in stocks (plus, of course, spending within one’s means and not chalking up excessive credit card debts). One caveat is that you need to do research on the stocks before you invest in them.

It is always good to keep defensive stocks in your portfolio so that when the tsunami comes, be it a financial tsunami or the real tsunami, the dividends you receive will help minimise the erosion to your capital gains. Also, be gutsy enough to invest in high beta stocks, ie, stocks whose returns are highly correlated with the change in the overall market’s returns. This way, you get to enjoy the strong upside when the market turns in your favour.

By defensive stocks, I mean those that have a track record of stable and high dividend payout ratio.
I have compiled a list of stocks that currently trade on a cum-dividend basis, based on the final and special dividends declared for 2010. My preference is for stocks that generate a dividend yield of more than 4%. StarHub has been included, despite its relatively low yield of 1.9%, because the company pays dividends quarterly. That will work out to 7.6% pa return! Here’s a tip: Note the ex-dividend date. If an investor does not own the stock before the ex-dividend date, s/he will not be eligible for the dividend payout.

Another thing to scrutinise is the company’s dividend track record. You can then decide for yourself whether the future earnings are able to sustain the payout. This usually hinges on the outlook for the company and the industry.

A word of caution: Not all companies in the list here fulfill the basic criterion of stable and consistent annual dividend payout that will qualify them as defensive stocks. Some have been included because they paid a special and final dividend in 2010 as a result of record profits. Top companies that maintain high dividend payout ratios but are left out of the list include Singapore Press Holdings, SingTel, Singapore Exchange, SIA Engineering, SMRT Corp and Singapore Post. These are companies whose fiscal year-end does not fall in December.

Now that I have received my bonus, I am determined to make the money work very hard for me by investing in some defensive stocks! Yes, one does not have to be a Barnabas Huang to get rich (oh, does it sound like sour grapes?), because with diligent research on stocks, I know I can be assured of comfortably decent returns.

ps : The list is not exhaustive. We tried our best to sieve out stocks that have a consistent track record of paying dividends and we may have left out some of your favourite stock holdings.

Source/转贴/Extract/: Anni Kum, Kim Eng Research
Publish date:24/03/11

Invest Malaysia 2011 (MB)

Invest Malaysia 2011

Strengthening the roadmap. Khazanah Nasional’s Plenary Session at Day 2 of the Invest Malaysia conference showcased government linked companies (GLC) transformation successes as the programme enters the final phase which is also a critical period of national transformation, under the government’s resolve to transform Malaysia into a highincome economy by 2020. As the GLC transformation programme enters the 7th year of its 10-year passage, the transformation programme, in aggregate, is “well on track and on schedule”.

Value creation. Value creation will continue to be a key agenda under the GLC transformation programme via continuing partnerships with the private sector and strategic divestments. Khazanah’s portfolio net worth jumped 39% in 2010 to RM75b with a CAGR of 13% since the GLC transformation programme started in 2004, with the newer investments posting above 20% CAGR, versus the older investments’ 5% CAGR. Khazanah’s near-to-mid term plans include the relisting of Integrated Healthcare-Parkway, with Japan’s Mitsui as a strategic shareholder. Meanwhile, results of the bidding for Khazanah’s 32% stake in POS Malaysia will be announced upon the Khazanah’s board approval.

Private investment to drive economic transformation. The Economic Transformation Programme (ETP) set the target of RM1.4 trillion investments in 2011-2020, with 92% coming from the private sector. MIDA is tasked with the overall responsibility of spurring private investments in manufacturing, non-financial services, and oil & gas sectors. It will be corporatized in July 2011 to empower and enable the organization to deliver this task. We are positive on this year’s private investment outlook. Business spending upcycle will be the theme of Malaysia’s growth story this year, underpinned by the evidence of ETP execution gathering momentum and positive signs on FDI. We expect private investment to retain its double-digit growth this year at 11.9% (2010: +13.8%) and keep the Malaysian economy on track with a 5.5% growth in 2011 (2010: +7.2%).

Source/转贴/Extract/: Maybank Investment Bank
Publish date:14/04/11

Invest Malaysia 2011 (MB)

Invest Malaysia 2011

Embarking on the passage of transformation
A giant leap. PM Najib’s Keynote Address at yesterday’s Invest Malaysia conference sent a positive and affirmative message on the government’s resolute to transform Malaysia into a high-income economy by 2020. The PM also took the opportunity to showcase his report card detailing the progress and achievements of the strategic policies and radical initiatives announced over the past two years. There is no change to our economic and Malaysian equities growth forecasts (YE KLCI: 1,710 pts). Positive news flows especially on the ETP implementation are potential market rerating catalysts, in our view.

Positive take-aways. Invest Malaysia’s “Change Perspective” theme focused on the deliveries of both the government and economic transformation programmes formally introduced in January 2010 and October 2010 respectively. The key take-away is an over-achievement in terms of key performance indicators (KPI) for the Government Transformation Programme (GTP) by 120% in the first year of the GTP, and RM95b worth of investments committed (12% out of the total RM794.5b target) for the Economic Transformation Programme (ETP) within just six months of its launch.

Overall, long on announcements AND execution. We are encouraged by the progress in GTP and ETP implementation thus far. It goes a considerable way towards dispelling one typical perception or “stereotype” that Malaysia is long on announcements but short on execution, as we see evidence that the Government is “walking the talk” to turn the “message” into a “passage” of transformation.

Spicing up the equities market; CMP2. Disposal of GLIC stakes in non-core assets remains an agenda, and we believe, this relates too, to GLIC stakes in PLCs to raise market liquidity and depth. Meanwhile, Felda’s sugar operations will be listed in July this year, and this could raise more than RM1b, according to recent press reports. The 2nd Capital Market Masterplan (CMP2) launched yesterday at the Invest Malaysia conference targets 8-11% CAGR for capital market size by 2020. Its broader strategies tie in with the ETP’s Financial Services NKEA. Themed “Growth with Governance”, CMP2 has been devised for further capital market growth with governance as the backbone.

Source/转贴/Extract/: Maybank Investment Bank
Publish date:13/04/11

MAS Transformation slipped by oil (MB)

Malaysian Airlines
Buy (unchanged)
Share price: RM1.85
Target price: RM2.55 (unchanged)

Transformation slipped by oil
Business reform on advance stage. MD Dato Seri Tengku Azmil’s presentation sent a clear message, many of MAS past and current efforts will start to bear fruits from this year. The high oil price and volatility is an extra burden, but notwithstanding fuel, unit cost is expected to reduce by 15% in the next 2-3 years. Furthermore, management is confident that it will achieve better yields stemming from improved products, better route network and a new improved yield management system.

Highlights from IM 2011:
 New aircraft key to MAS salvation. MAS will receive nine aircraft in 2011 (4 B737-800 and 5 A330-300). These aircraft will help to reduce unit cost (ex-fuel by 15%) and potentially yield higher revenue. These aircraft will be fitted with best in class products and will greatly enhance customer experience. This should attract higher passenger growth and enable MAS to boost yields.

 Muted capacity growth. Capacity growth will be largely contained to low single digits. This is intentional as the management is less keen to experiment due to high oil prices and to focus on other key business reforms. The operative word is to get more revenue with the same asset base. MAS will focus on getting higher load factors and yields to drive topline and bottomline growth.

 Operational reforms. The Company has instilled many operational reforms. Among the notable ones are using Kota Kinabalu as a hub, optimizing fuel uplift process, using right-sized aircraft on each route and eliminate multi-hop flights to direct flights. The Company investments in IT to simplify and modernize check-in and distribution process are yielding positive results and may provide savings in excess of RM100m p.a.

 Yield managers up the ante. There is a new system and team that handles the yield management. The immediate target is to obtain growth and bridge the gap against other regional (Thai, Garuda) airlines. A 1 sen improvement in yield will add RM384 to operating income.

 25% fuel hedged. MAS have hedged 25% of its fuel requirements at ~USD94/bbl and this will provide it with some cushion against its competitors. Due to the high market volatility, obtaining additional fuel hedges will be costly and therefore fuel surcharge is the more apt method to recover cost. MAS has been raising fuel surcharge on selected routes and is continually monitoring the situation and make necessary amendments.

Source/转贴/Extract/: Maybank Investment Bank
Publish date:14/04/11


Rcommendation BUY
Target Price (MYR) 0.91
Current Price (MYR) 0.78
52 week High (MYR) 0.83
52 week Low (MYR) 0.64

Major Shareholders (%)
Central Coldstorage Saraw ak Sdn Bhd 21.3
SK Tiong Enterprise Sdn Bhd 14.1
Chong Nyuk Kiong Enterprise Sdn Bhd 7.0

CCK Consolidated Holdings Berhad (“CCK”) was established on 5 August 1996 as an investment holding company and was listed on 10 December 1997. The company’s major lines of business are poultry, seafood and wholesale food retailing of the above products and others. CCK operates forty wholesale and retail stores, trading departments and factories throughout Sarawak, Sabah and Peninsular Malaysia.

Risks to our recommendation and target price include: i) further increases in the price of feedstock, ii) increases in interest rates, which would crimp personal spending, and iii) a sharp slowdown in the general level of economic activity in Malaysia. Also, there is the issue of rising food costs which up to now have benefitted food producers like CCK; rises in foodrelated feed stock may begin to crimp margins and growth rates in food demand.

We maintain our BUY recommendation on CCK with a fair value estimate of MYR 0.91. Value investors will be attracted by the combination of steady earnings growth and consistent profitability at very undemanding earnings multiples. Looking ahead, average ROE is likely to be maintained comfortably above 13%, whilst P-BV is currently standing on 0.9x trailing book value and 0.8x current year book value.

Compared to many of its peers, CCK has higher net margins and a higher payout ratio. In fact one of the many attractive features of CCK is its handsome dividend yield. At current prices the expected dividend yield is well north of 5%. As mentioned above, rising food prices are pinching consumers in many countries, while additional increases in feed costs would pose a risk. At current prices, however, investors are getting a substantial margin of safety on a lovely business.

CCK Consolidated Holdings Berhad (“CCK”) was established on 5 August 1996 as an investment holding company and was listed on 10 December 1997. The company’s major lines of business are poultry, seafood and wholesale food retailing of the above products and others. CCK operates forty wholesale and retail stores, trading departments and factories throughout Sarawak, Sabah and Peninsular Malaysia.

Poultry Division - CCK is one of Sarawak's largest integrated poultry farming unit consisting of breeder, hatchery and broiler farms. It operates the only automated poultry abattoir which complies with the requirements of the Hazard Analysis and Critical Control Points (HACCP) system, capable of processing approximately 4,000 birds per hour.

Seafood Division - for this division, CCK is in the main involved in prawn agriculture and prawn processing primarily for export. The aquaculture farms exceeds 200 acres with approximately 45 ponds in operation. Its farm factories and abattoir are also HACCP certified.

Retail Business - the other core business is retailing in fresh chicken and other cold storage items such as imported beef, lamb and fish.

As at FY Jun 2010, CCK had 47 wholesale and retail outlets in operation throughout Sarawak, Sabah and Peninsular Malaysia. The total number of outlets is expected to increase to 50 by FY Jun 2011.

Risks to our recommendation and target price include:
i) Increases in the general level of interest rates would dampen the outlook for CCK Consolidated Holdings Bhd (“CCK”). With a total debt/equity ratio well below 30%, however, CCK is fairly well insulated from all but very sharp increases in interest rates. In addition, Bank Negara Malaysia so far seems intent on mitigating inflationary pressures with a strong ringgit, rather than relying on interest rate policy.

ii) Increases in the level of oil and grain prices pose another risk to food demand. Energy prices, especially fossil fuels such as crude oil and coal are reaching painful levels in many countries around the world. In addition, food prices are also at very elevated levels which may well lead to lower levels of consumption. If crude oil prices rise another 20-30% from the current level of USD 120-130 per barrel we may well see another major economic shock and with it a more pronounced drop in demand for both oil and food.

iii) A slowdown in the economies of Malaysia’s major trading partners, China, Singapore, US, and Japan would also be a negative. Although CCK does not yet export a large percentage of sales, a slowdown in Malaysia’s principal trading partners would result in lower overall activity in Malaysia.

iv) Tighter consumer budgets. The middle and lower income classes are already feeling the pinch from elevated food prices in many countries, including Malaysia. A sizeable portion of CCK’s revenue is derived from poultry, which tends to do well as families shift to lower cost proteins.

v) Higher animal feed prices. The price of animal feed is rising along with other food prices. So far, the strong MYR has mitigated much of the increase in CCK’s animal feed costs; animal feed is largely imported and denominated in USD.

Source/转贴/Extract/: Wilson & York Global
Publish date:12/04/11

Sunway City Fast becoming a regional player (ECM)

Sunway City -Buy
Fast becoming a regional player
SunCity made another giant step towards the launching of its second China project in Tianjin following the procurement of a business licence to form an equity JV company yesterday with a 60% stake. Reiterate BUY. TP of RM5.10 is subject to review for an upgrade. Valuation remains undemanding with FY11 P/E of 11.5x, P/B of 0.8x.

_ SunCity announced yesterday that its joint venture with Sino-Singapore Tianjin Eco- City Investment and Development Co., Ltd. (SSTEC) had obtained the business licence on 17 December 2010 to form a joint venture company known as Tianjin Eco-City Sunway Property Development Co., Ltd. The JV company has a total investment and registered capital of CNY1.276bn (RM591m) and CNY638m (RM295m) respectively.

_ The JV company will develop 69 acres of land in Sino-Singapore Tianjin Eco-City which is located in Tianjin, People’s Republic of China.

_ Recall that SunCity had entered into a MOU with SSTEC in Oct 2009 and subsequently a collaboration agreement in May 2010 to jointly develop 102 acres of land which forms part of the 7,500 acres Sino-Singapore Tianjin Eco-City project. The mixed residential and commercial project has an estimated GDV of CNY10bn (RM4.6bn) and will be launched in 2012.

_ With the formation of the JV company, the first parcel of 69 acres of land will be transferred into the JV company. The remaining 33 acres will be injected into the JV once development of the first parcel is completed.

_ SunCity will take a 60% equity stake in the JV company and as such, its share of equity injection will be CNY383m (RM177m). Funding for the equity injection is not an issue as SunCity has secured USD50m (RM151m) loan recently.

_ No changes to earnings estimate pending further clarity on timing of launches.

Valuation and recommendation
_ We continue to rate Sunway City a BUY as valuation is undemanding at FY11 P/E of 11.5x and P/B of 0.8x.

_ We believe the impending merger with Sunway Holdings to create the third largest listed property developer by market capitalisation will re-rate the company. _ Our target price of RM5.10 (based on the swap price for the merger with Sunway Holdings) is unchanged but will be reviewed for upgrade.

Source/转贴/Extract/:ECM Libra Capital
Publish date:14/04/11

SPH Rising cost caps profit growth (DBSV)

HOLD S$3.98
Price Target : 12-month S$ 4.20 (Prev S$ 4.37)

Rising cost caps profit growth
• 2Q within expectations, but watch for rising cost
• Ad revenues registered growth, albeit at slower rate
• Clementi Mall fully let, a good mall notwithstanding its price; expect to achieve S$14 psf avg rents
• Trim earnings by 4%/1% on higher costs; Maintain Hold, TP: S$4.20. 6% dividend yield should support price.

2Q10 results within expectations. 2Q net profit ended at S$75.4m (-33.5% yoy, -16% qoq) mainly due to absence of Sky@Eleven (Sky11) development profits and effect of cost increases. Revenue dipped by 5% yoy to S$287.8m. Excluding the effect of Sky11, revenue would have grown by 7.5% yoy. As expected, total print ad revenues growth slowed to 6.6% in 2Q11, with flat performance from Classifieds but lifted by Display ads (+8% yoy) and Magazines (+20%). Due to higher staff costs, newsprint charge-out rates and others, 2Q11 EBIT margin fell to 31% vs 2Q10’s 36% (excluding Sky11’s contribution). Interim DPS of 7 Scts was declared.

Clementi Mall: Average rental of S$14psf achieved.
Clementi Mall is expected to achieve average rental rate of S$14 psf when fully operational by the financial year-end. This compares favourably with other sub-urban malls such as NorthPoint and Causeway Point (~S$10 – 12.50 psf pm), but below Tampines Mall and Junction8 (~S$14.50 psf pm), which are more matured. Our weekday visit last week showed that crowd was decent, and the opening of the bus interchange should provide more footfalls. We understand management will continue to look out for more investment properties, particularly retail malls.

Trim earnings on higher costs; Hold, TP: S$4.20. We lowered our forecasts by a marginal 4% /1% for FY11F/12F, on higher staff costs and newsprint charge-out rates (US$670/mt). Our sum-of-parts TP is lowered to S$4.20 (previously S$4.37). Despite growing top-line, higher costs will cap bottom-line growth. Maintain Hold, share price will be supported by its attractive dividend yield of 6%, based on our 24 Scts DPS forecast for FY11F.

Results Comments
2Q11 results within expectations. 2Q net profit ended at S$75.4m (-33.5% yoy, -16% qoq) mainly due to the absence of Sky@Eleven (Sky11) property development profits and effect of cost increases. Revenue dipped by 5% yoy to S$287.8m. Excluding impact from Sky11, revenue would have registered a 7.5% yoy growth (2Q10: S$267.7m).

Slower rate of growth from print revenues, as expected. Total print ad revenues showed a 6.6% growth in 2Q11. Classified ads revenue was almost unchanged at $52.8m but lifted by Display ads (S$107.2m, +8% yoy) and Magazines & others (S$16.2m, +20% yoy). Within display ads, the strongest categories were from banking & finance, property and transportation (automobiles). Telecommunications and FMCG were at the bottom of the league.

Rental revenue posted strong growth of 15%. Revenue from property rental at S$39.5m was 15% higher yoy, thanks to $4.2m (+12.9%) higher rental income from Paragon, which benefited from the façade enhancement, as well as maiden rental income from Clementi Mall.

…costs are trending higher, EBIT margins down by 5ppt to 31%. Along with revenue growth, costs have increased as well. Staff costs and materials, consumables increased by 8% and 12% yoy, respectively, to S$90.3m and S$38.4m. Along with higher premises costs, impairment and amortisation,

2Q11 EBIT margin fell by 5% to 31%, vs 2Q10’s 36% (excluding Sky11’s contribution).

Newsprint charge-out expected at US$675/mt. Average newsprint charge-out has increased to US$651/mt in 2Q11, from US$607/mt (1Q11) and US$521/mt (2Q10).

Management expects average newsprint charge-out for FY11F to be around US$675/mt. The Group has locked in their newsprint requirements till around Dec’11. We expect the increase in newsprint to be partially moderated by a strong SGD.

Interim dividend of 7 Scts declared, as expected. This was similar to last year. Along with this, we are expecting a final/ special DPS of 17 Scts, rounding up FY11F total dividend to 24 Scts/share (FY10: 27 Scts). This equates to a payout ratio of 92%, and a dividend yield of 6%, based on last closing price of S$3.98.

Clementi Mall – site visit; fully let
Average rental of S$14psf achieved. We understand the target of an average rental rate of S$14 psf should be achieved when the mall is fully operational by financial year-end. This compares favourably with other sub-urban malls such as NorthPoint and Causeway Point (~S$10 – 12.50 psf pm), but below Tampines Mall and Junction8 (~S$14.50 psf pm), which are more matured. This does not surprise us after our visit to the mall earlier last week. A good mall, notwithstanding price paid. We checked out Clementi Mall last week to get a sense of the location, crowd and store offerings. Notwithstanding the price paid, we believe there is potential in the area given its large population catchment area. The crowd during the weekday was decent (though there could be some element of novelty), with residents (given their casual dressing) and students making up the majority.

100% tenanted, with some stores still undergoing renovations. We observed that some stores are still undergoing renovation works. Tenant mix is mainly catered to the suburban crowd. Anchor tenants are Fairprice Finest (NTUC), BHG, Best Denki and National Library.

Bus interchange when completed will bring higher footfall. We observed that the bus interchange, located on level one of the mall is not operational yet. As the mall is the link between bus interchange to MRT station, we believe there is potential for high footfall traffic volume.

Trimmed earnings slightly on higher costs; maintain Hold with TP: S$4.20. We have adjusted our forecasts down marginally by 4%/1% for FY11F/12F, after factoring in higher staff costs and newsprint charge-out. As a result of our earnings adjustment, our sum-of-parts TP is lowered to S$4.20 (previously S$4.37). Despite increasing topline, higher costs will cap bottomline growth. We maintain our Hold call as the share price remains supported by its attractive dividend yield of 6%, based on our DPS forecast of 24 Scts for FY11.

Source/转贴/Extract/: DBS Vickers Research
Publish date:14/04/11

Masterskill Inks MoU For Indon Venture (OSK)

Masterskill Education Group
Inks MoU For Indon Venture

Fair Value RM3.44
Previous RM3.44
Price RM2.28

Masterskill announced on Bursa yesterday that it has entered into a MoU with its CEO Dato’ Sri Santhara Kumar and PT Sejahteraraya Anugrahjaya Tbk (PTSA) to collaborate in efforts to establish and develop academic exchange and co-operation in the teaching and training of Masterskill students at the Mayapada Hospital owned by PTSA. The MoU will also involve forming a joint venture for the purpose of establishing Universitas Masterskill – Mayapada in Indonesia.

Background on PTSA. PTSA owns and operates the Mayapada Hospital in Tangerang, near Jakarta. Masterskill had recently bought a 1.3% stake worth USD1m at IDR120/share in PTSA, whose share price has surged >35% since its IPO on 11 April 2011.

Collaboration reaffirmed. In our last report entitled “Potential Indonesia Venture?”, we highlighted that Masterskill would look to co-operate with PTSA in the provision of clinical training for existing students. Yesterday’s proposed collaboration jives with our expectation and we continue to believe that the investment will prove fruitful in the long run as the demand for healthcare services is likely to increase in tandem with the country’s economic growth, which has averaged >5.0% p.a. over the last 5 years.

Joint venture the catalyst. Masterskill will claim an effective stake of 30% in the proposed joint venture, which will be formed for the purpose of establishing Universitas Masterskill – Mayapada in Indonesia. Discussions are at the preliminary stage although the size of the investment, the student capacity and implementation timeline are still not known at this juncture. Initial investment is likely to be to the tune of USD3m in paid-up capital. We also gather that contribution to earnings, if any, will commence earliest by 2HFY12. Note that Dato’ Sri Edmund Santhara is the CEO of Masterskill and also the single largest shareholder of the group, with an effective stake of 22.1%.

26 medical universities in the region. Given the lack of information related to the proposed medical school, we did some ground checks on the number of public and private medical varsities in the Jabodetabek region, in which PTSA’s Mayapada hospital has a presence. The region has 26 universities offering medical courses. Although the number seems large at first glance, we found that there are some 28m residents in the region, which puts it on par with Malaysia’s 27 medical schools with a total population of 28m. We also understand from sources that the average medical student per varsity is typically lower for Indonesian universities, given the literacy rate and standard of living.

Huge potential as Malaysia approaches saturation. We are adamant that Masterskill’s venture into the enormous Indonesian medical education market would provide a new growth catalyst as Malaysia approaches a saturation point in the long run. Leveraging on PTSA’s local “knowhow” in demographics and compliance with regulatory approvals, Masterskill would be able to replicate its Malaysian operating model in Indonesia by providing curricula and guidelines on its existing nursing and allied health programs in the new establishment. Nonetheless, we are keeping our forecasts unchanged for now, pending more affirmative indications on the execution timeline.

Maintain our TRADING BUY call at an unchanged FV of RM3.44 at 12x FY11 PER. As the cheapest within our education sector coverage, the stock is trading at an alluring FY11 PER of 8.1x with a dividend yield of 6.2%. We continue to see this as an opportune time to accumulate as its Indonesian venture would likely grow over the next 2-3 months.

Source/转贴/Extract/Excerpts: OSK Research
Publish date:14/04/11

SPH: Good execution, but lack of price catalysts

Singapore Press Holdings (SPH) reported 2Q11 PATMI of S$75.4m. After stripping away one-time items, earnings were below our forecast of S$91.9m. This was due to higher staff costs and expenses from increased premises costs and overheads. The board also declared an interim dividend of 7 cents per share. Revenues from the Newspapers and Magazines segment were up 5.2% to S$234 – in line with expectations, though staff costs put pressure on operating margins (31.4%). Clementi Mall contributed an estimated S$1.2m in rental revenue this quarter. It is fully leased with an average rental of S$14 psf and we expect full revenue contributions of around S$29m in 4Q11. Given multiple headwinds, we think management has executed admirably but believe the share price has already reflected fundamentals, notwithstanding the 6.8% dividend yield. Due to a lack of positive catalysts ahead, we downgrade SPH to HOLD with a fair value estimate of S$4.32.

Cost increments pull 2Q11 earnings below estimates. Singapore Press Holdings (SPH) reported 2Q11 PATMI of S$75.4m. After stripping away one-time items, we calculate recurring PATMI to be S$78m, below our forecast of S$91.9m. This was due to higher staff costs of $90.2m (up 8.3% YoY) as management increased headcount and restored salaries/bonuses. In addition, the “other operating expenses” item was up 40% YoY to S$54.4m partly due to increased premises costs and overheads. However, we are not overly worried as these are mostly one-time increments related to Clementi mall and salary restorations. The board also declared an interim dividend of 7 cents per share.

Core business faces margin pressures. 2Q11 revenues from the Newspapers and Magazines segment were S$234m (up 5.2% YoY) - in line with expectations. The growth was mostly driven by display ads which increased 12.8% YoY to S$112.4m. Overall circulation was flat YoY - an encouraging development given rapidly falling readership in most other markets. Salaries and quarterly variable bonus provisions (pegged to profitability) were fully restored this quarter, contributing to core operating margins of 31.4% which are still healthy but below our forecasts.

Clementi mall starts to contribute. Clementi mall contributed an estimated $1.2m in rental revenue this quarter. The mall is fully leased with an average rental of $14 psf and is slated to fully open in May 11. Rental revenue from the Paragon increased 12.9% YoY to S$38.2m in 2Q11 as a result of the façade enhancement and higher rates. We expect positive rental reversion to continue and have growth rates in the low teens in 3Q11-4Q11, followed by slowing single-digit growth in FY12.

Great execution, but lack of price catalysts; downgrade to HOLD. We value SPH using a sum of the parts (SOTP) method. SPH’s core newspaper/magazine was valued with a DCF methodology, assuming a WACC of 7.2% and 1.5% terminal growth rate. In addition, we value the Paragon and Clementi mall at S$2.28bn and S$559m, respectively. Given the headwinds of staff costs and falling circulation trends, we think management has executed well to maximize the value of its core business while growing a successful retail property segment. However, we believe the share price has already reflected these fundamentals, notwithstanding the 6.8% dividend yield. Due to a lack of positive catalysts ahead, we downgrade SPH to HOLD with a fair value estimate of S$4.32.

Source/转贴/Extract/: OCBC Investment Research
Publish date:14/04/11

Singapore leads gains in Asian currencies after revaluation

Singapore’s dollar led gains in most Asian currencies as the city-state’s central bank said it would allow faster appreciation to combat inflation after its economy grew quicker than economists forecast.

The Monetary Authority of Singapore said it will re-center the currency’s band upwards, after gross domestic product increased at an annualized rate of 23.5% in the first quarter from the previous three months, more than double the 11.4% predicted in a Bloomberg survey of economists.

“There’s been a lot of bullish trade riding on the back of the Singapore policy review,” said Suresh Kumar Ramanathan, a strategist at CIMB Investment Bank in Kuala Lumpur. “The market is left to guess where the mid-point of the Singapore currency band is, so any upside will likely be limited.”

The Singapore dollar jumped 0.5% to 1.2492 per dollar as of 12:08 p.m. local time, according to data compiled by Bloomberg. The Taiwan dollar rose 0.3% to NT$28.990 ($1.249) and Indonesia’s rupiah gained 0.1% to 8,655.

Taiwan’s dollar strengthened for a second day on speculation exporters are converting their earnings to take advantage of the currency’s recent weakness.

“We see this as a temporary strengthening in the Taiwan dollar,” said Suan Teck Kin, an economist at United Overseas Bank in Singapore. “You have these export earnings being converted into Taiwan dollars.”

China’s yuan traded near its strongest level in 17 years on speculation the central bank will tighten monetary policy further to tame inflation. The currency was little changed at 6.5339 per dollar.

Policy makers will likely ask banks to set aside more cash as reserves in the “near future,” the China Securities Journal said in a front-page commentary. A government report tomorrow will show the consumer price index rose 5.2% in March from a year earlier, the most since July 2008, according to the median estimate of economists surveyed by Bloomberg.

The government will also report tomorrow that gross domestic product rose 9.4% from a year earlier last quarter, after increasing 9.8% in the previous three months, according to another Bloomberg survey.

“GDP growth is still going to be strong and price pressures remain,” said Patrick Bennett, a Hong Kong-based strategist at Standard Bank Group “China will respond by tightening policy with a combination of stronger currency, hikes in interest rates and the reserve ratio.”

South Korea’s won declined on speculation policy makers will step in to restrain the currency if it rises to the 1,080 per dollar level. The currency fell 0.1% to 1089.10 per dollar, touching 1,085.50 earlier, the strongest level since April 11.

Elsewhere, Malaysia’s ringgit and the Philippine peso were little changed at 3.0240 and 43.247, respectively, according to data compiled by Bloomberg. India and Thailand’s financial markets are closed for holidays.

Source/转贴/Extract/: Publish date:

Perennial relaunches Singapore IPO, cuts issue size

A China-focused business trust managed by former CapitaLand (CATL.SI) shopping mall chief Pua Seck Guan is relaunching its Singapore IPO but will scale back the size to $840 million from $1.1 billion.

Perennial China Retail Trust, which owns shopping mall assets in China, joins Mapletree Commercial Trust in relaunching initial public offerings in Singapore after postponing them last month due to volatile equity markets, indicating that investor confidence may be returning.

Mapletree Commercial Trust, managed by Singapore state investor Temasek’s (TEM.UL) property arm, is set to raise as much as $924 million from its offering.

Perennial China is offering 1.1 billion units, according to an email seen by Reuters on Thursday. The revised offering is below the $1.1 billion that Perennial wanted to raise previously.

Roadshow and bookbuilding for Perennial China’s IPO will begin on April 26 and the trust is expected to debut on the Singapore exchange on May 12, according to a term sheet seen by Reuters.

In its earlier prospectus lodged with MAS, Perennial China said it will have stakes in five properties, three of them in the northeastern Chinese city of Shenyang.

Only one of the five properties, the Shenyang Red Star Macalline Furniture Mall, is completed, while another mall is scheduled to start operations in the second quarter of this year.

Perennial China offers “a pure-play exposure in the high retail sales growth in the People’s Republic of China,” the trust said in its earlier prospectus.

The IPO is being managed by Citigroup (C.N), DBS (DBSM.SI), Goldman Sachs (GS.N) and Standard Chartered (STAN.L), according to the e-mail.

Publish date:14/04/11

Singapore tightens policy as GDP shows Asia remains robust

Singapore tightened monetary policy on Thursday as it reported a stellar first quarter for the economy, another sign of strength in a region that is driving global growth while also stepping up the fight against inflation.

The Singapore dollar shot to a record high after the Southeast Asian city-state reported growth of 8.5% year-on-year in the first three months of 2011, far above the forecasts of 10 economists polled by Reuters.

On a seasonally adjusted quarter-on-quarter annualised basis, the economy grew a breakneck 23.5%, the fastest pace since April-June 2010, Singapore’s Ministry of Trade and Industry said.

“GDP growth was stronger than our expectations, largely because of stronger manufacturing growth of 13.9%, against January-February growth of 7.7%,” said Bank of America Merrill Lynch economist Chua Hak Bin.

“This suggests manufacturing surged in March, despite Japan’s earthquake,” he added.

The MAS said tighter policy would continue to restrain prices, but added that inflation this year will likely remain elevated and come in at the upper half of its 3-4% forecast range.

Singapore’s speedy growth should be a bellwether for other emerging economies in the region and comes on the back of strong economic data from China.

China said on Thursday that March power consumption rose 13.4% from a year ago, while first quarter trade numbers out recently showed a sharp jump in exports and imports by the world’s second-largest economy.

In stark contrast, Japanese corporate confidence plunged by a record in April and is seen worsening further after last month’s earthquake and tsunami devastated Japan’s northeast and triggered a nuclear crisis, a Reuters poll showed.

“Business sentiment deteriorated sharply as expected, as manufacturing activities in not only the quake-hit region but other areas completely stopped after the quake,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

“Although some production has resumed, the level of capacity utilisation remains low, suggesting companies will remain pessimistic for some time.”

The resilience of Asia outside Japan should also help offset any drag from the United States, where recent disappointing data has seen forecasts for first-quarter growth nudged lower.

Singapore modestly tightened monetary policy by sanctioning an immediate rise in the value of its dollar to record highs, becoming just the latest Asian nation to use currency strength to fight commodity-driven inflation.

The Singapore dollar (SGD=D3) — the world’s 12th most actively traded currency — rose to an all-time high of S$1.2452 against the U.S. dollar on the news. It was trading around S$1.2555 before the central bank released its half-year monetary policy statement.

The authority re-centered its exchange rate policy band upwards, although to below the prevailing nominal effective exchange rate. It also left the slope and width of the band unchanged.

“They have raised the inflation forecast for this year, so the tweaking of monetary policy is appropriate, given that it looks that the economy may perform better than expected and therefore exert stronger pressure on the inflation front,” said Song Seng Wun, a senior economist at CIMB.

The Monetary Authority of Singapore (MAS) conducts policy by managing the value of the local dollar against a basket of other currencies, which it deems as more effective than setting interest rates given the city-state’s high level of imports.

The Singapore dollar had already gained close to 2% against the dollar so far this year prior to Thursday’s policy statement, hitting a series of record highs as MAS and many other Asian central banks allow their currencies to appreciate to contain imported inflation.

Singapore’s annual inflation spiked up to 5.5% in January, far higher than analysts’ expectations, but moderated somewhat to 5.0% in February.

MAS’s policy surprised some economists who had expected a re-centering at the currency’s current level, which would have been more aggressive. Yet analysts still expected further gains in the local dollar from here.

“At this juncture, we will still be keeping our year-end dollar-sing forecast at 1.22,” said Emmanuel Ng, fx strategist at Oversea-Chinese Banking Corp.

MAS said its policy adjustment took into account the tighter policy stance adopted in April and October last year, which will continue to have a restraining effect on the economy and prices.

Nine of 12 economists polled by Reuters before the meeting had predicted Singapore would tighten policy in some way at the review.

Asia’s central banks are grappling with rising inflation even as high oil prices threaten to slow global economic growth.

South Korea’s central bank revised its 2011 inflation forecast upward on Wednesday, a day after keeping interest rates steady, while Indonesia on Tuesday said it was letting the rupiah rise as part of efforts to contain inflationary pressures.

Market watchers were divided on whether Singapore will tighten policy further in October but most said other Asian countries will likely have to raise interest rates further in coming months.

“MAS and Malaysia’s central bank were early starters when it came to tightening monetary policy in 2010. Most other Asian central banks started later, and they still have got more work to do throughout 2011,” said Endre Pedersen, managing director for Asia fixed income at Manulife Asset Management in Hong Kong.

Publish date:14/04/11

MAS allows stronger currency to curb inflation

Singapore will allow its currency to appreciate further to combat inflation after the economy grew faster than forecast in the first quarter, the central bank said in its semi-annual exchange-rate review.

The “policy will ensure price stability in the medium term while keeping growth on a sustainable path,” the Monetary Authority of Singapore said in a statement. There will be no change to the slope and width of the currency’s trading band, it said. Ten out of 20 analysts in a Bloomberg News survey predicted the move. Six forecast no change from the “gradual appreciation” stance adopted in October, while four expected faster gains by steepening the band.

“Inflation is still the focus,” Irvin Seah, an economist at DBS Group Holdings in Singapore, said before the policy announcement. “Policy has to be preemptive and constantly ahead of the curve to be effective.”

Singapore’s dollar advanced 0.5% to $1.25 against its US counterpart as of 8:06 a.m., according to data compiled by Bloomberg. The currency reached $1.2496, the strongest level since at least 1981, when Bloomberg began tracking the data.

Gross domestic product rose at an annual rate of 23.5% last quarter from the previous three months, when it climbed 3.9%, the trade ministry said in a statement. That compares with the 11.4% median estimate in a Bloomberg News survey of 14 economists.

The monetary authority uses the exchange rate rather than interest rates to conduct policy, adjusting the pace of appreciation or depreciation against an undisclosed band of currencies. A steeper slope allows faster appreciation over time, while lifting the band’s midpoint amounts to a one-off revaluation. Policy makers revalued the currency last April and steepened the slope in October.

The central bank said the Singapore dollar has been trading in the upper half of the existing trading band and that the centre of the new band will be below the current level against the basket of currencies.

“This is less aggressive than in April 2010,” when the policy band was re-centered at the prevailing exchange-rate level, Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong, wrote in a note. Even so, he predicted further strengthening in the currency.

Publish date:14/04/11
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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