Saturday, April 23, 2011

Weekend Comment Apr 21: Seagate-Samsung tie-up positive for HDD player

THE GLOBAL HARD disk drive industry may see improved profitability following Seagate Technology’s US$1.38-billion ($1.7 billion) acquisition of Samsung Electronics’ HDD business, but the benefits are not expected to be immediate for HDD component suppliers, including those in Singapore, which have more pressing issues to deal with.

Seagate’s cash-and-stock offer, announced on April 19, will reduce the number of HDD makers worldwide to three. Fewer competitors typically mean higher HDD prices, which would bode well for component makers such as Broadway Industrial Group, Armstrong Industrial Corp and Beyonics Technology.

The acquisition follows Western Digital’s US$4.3-billion takeover last month of Hitachi’s HDD business, entrenching its position as the world’s market leader in the HDD space. Seagate and Toshiba, which acquired Fujitsu’s HDD business in 2009, are the remaining global players in the business.

The consolidation is expected to result in less pricing volatility and a better demand-supply environment for the HDD industry. This in turn should help shore up profitability for the sector and benefit component suppliers. HDD players like Western Digital and Seagate typically cut prices and boost capacity to gain market share, often at the expense of margins.

The agreement also gives Seagate greater access to Samsung’s NAND flash memory technology used in solid state drives (SSDs), a more-resilient storage device than HDDs. SSDs are increasingly preferred over HDDs given soaring demand for smartphones and tablet PCs, which use NAND flash memory instead of magnetic disks. Samsung is the world’s biggest maker of such memory chips. As part of the deal, Seagate will supply HDDs for Samsung’s PCs.

Suppliers to Seagate include Beyonics, Broadway, Amtek Engineering and Cheung Woh Technologies. According to CIMB’s Jonathan Ng, business for these companies may increase post-acquisition as “Samsung still sources quite a fair bit from Korean component suppliers, which may not be as cost-effective as sourcing from SGX- and KL-listed suppliers”.

The spillover effect on the local suppliers, however, will not be immediate as Seagate’s acquisition is expected to be completed only at the end of the year. In the meantime, HDD component makers still have to contend with sluggish demand for notebook PCs, a weaker greenback and rising labour and raw material costs.

Beyonics, for instance, recorded a 12.9% y-o-y fall in revenue to $346 million for the three months ended January 2011, as a result of the weaker US dollar and sharply lower selling prices and shipments to HDD customers. Sales of Singapore-listed HDD component makers are usually denominated in the greenback, resulting in lower revenue when they report results in the Singapore dollar. While Broadway’s revenue for the quarter ended December rose 6.5% to $157.7 million, net profit was flat at $10.2 million on lower contributions from the HDD and foamed plastic businesses.

If history is any guide, potential issues over Samsung’s integration with Seagate may also surface, which could mitigate or delay the benefits for the rest of the HDD industry. Seagate bought Maxtor in 2005 in a US$1.9-billion deal that created major integration problems and bogged down the company for several years.

CIMB’s Ng says while Singapore’s HDD stocks lack catalysts in the near term, investors can consider revisiting them towards the middle of the year in anticipation of a seasonally-stronger second half. Meanwhile, analysts note that the non-HDD businesses of companies like Armstrong, Broadway and Amtek are still growing and should lend some support to their share prices for the time being.

In particular, demand from the automotive sector for the services of these companies remains robust, driven in large part by booming car sales in China. Armstrong, for example, says the China market has replaced Singapore as its top revenue contributor, accounting for 32.1% of its group revenue of $225.4 million last year, up from 27.5% in 2009.

Publish date:21/04/11

美联储料难弃宽松 美元走低 新澳元登峰

2011/04/22 5:13:17 PM













Source/转贴/Extract/: ●南洋商报
Publish date:22/04/11

Friday, April 22, 2011

Hyflux preference shares: a good idea?

Business Times - 22 Apr 2011

Hyflux preference shares: a good idea?


ON THE back of strong institutional demand, it was reported, Hyflux appeared very likely to double the amount it planned to raise from its cumulative preference shares from $200 million to $400 million.

The preference shares promises 6 per cent return a year - a princely sum for investors in today's low-interest-rate environment. The first question that comes to mind is: Why such a generous pricing given that its latest borrowing cost is only about 3.85 per cent?

So what will the preference shares mean for Hyflux's finances? Well, 6 per cent on $400 million is $24 million. In the last three years, the water treatment company's free cash flow (that is, excess cash generated by the business after allocating sums for capital expenditure) was $81 million in 2010, $47.5 million in 2009 and $6.2 million in 2008. Adding an outflow of $24 million annually would no doubt be a strain.

Furthermore, Hyflux already has quite a bit of debt on its balance sheet. Total debt amounted to some $600 million. And net debt to equity is at 73 per cent now, before this preference issue.

Then there is the currency issue. In its prospectus, Hyflux said that the funds raised from the preference shares would be used to fund the group's water and infrastructure projects and for general working capital.

For the financial year just past, Hyflux's revenues totalled $569.7 million. Out of that, Singapore projects accounted for only 13.2 per cent. The bulk of the projects - 60.3 per cent - are from Middle East and North Africa (MENA). China accounted for the remaining 26.5 per cent.

For projects outside Singapore, the bulk of the contracts are denominated in US dollars. According to Hyflux's latest annual report, as at Dec 31, 2010, the group had trades and other receivables amounting to US$362.8 million, and cash in US dollars amounting to US$82.1 million. Meanwhile, it had loans and borrowings which totalled US$243.4 million, and trades and other payables of US$132.8 million.

So its net US dollar exposure is just $68.7 million.

However, with the issue of the preference shares that are denominated in Singapore dollars - 400 million of it if the issue comes to pass - Hyflux will have a significantly higher obligation in Sing dollars, while continuing to earn the bulk of its revenues in US dollars.

The Sing dollar, as we know, has been on this inexorable climb against almost all other currencies in the world. In the past 10 years, it has gained 3.3 per cent a year against the US dollar.

It just doesn't seem like a good idea to earn from a depreciating currency in order to meet obligations in an appreciating currency.

It might, however, make more sense if the funds were to be used for the $890 million seawater desalination plant project which Hyflux recently won from PUB. That's the group's largest contract to date.

Even then, 6 per cent seems a tad aggressive given that Hyflux is also looking for other water and infrastructure projects in China, India and potentially in South-east Asia and Australia too.

In the final analysis, the preference shares may be good for the preference shareholders, but not that great for the ordinary shareholders. For one thing, it will drain cash available for dividends - not that Hyflux is known for being a high-yielding stock.

Since 2009, Hyflux has underperformed the general market by some 10 per cent. (Since 2010, it's been about 20 per cent.) Given its still relatively high estimated PE ratio of 20 times, and the numerous risks - be it currency, liquidity or geopolitical risks associated with MENA - the odds appear to continue to be stacked against any outperformance.

Publish date:22/04/11

Frasers Centrepoint Trust results improve for Q2, H1

Business Times - 22 Apr 2011

Frasers Centrepoint Trust results improve for Q2, H1


FRASERS Centrepoint Trust (FCT) yesterday reported better results for both the second quarter and half year ended Mar 31.

Gross revenue in Q2 rose 2 per cent from the previous year to $28.8 million, with the increase coming mainly from Northpoint 2 and YewTee Point which were bought last year.

Contributions from these malls helped offset the drop in takings from Causeway Point, which is undergoing asset enhancement works.

Net property income slipped 1.3 per cent to $20.1 million. Distribution to unitholders rose 7.8 per cent to $16 million.

Distribution per unit (DPU) in Q2 was 2.07 cents, up slightly from 2.06 cents in the previous year.

For the first half of the year, gross revenue increased 9.5 per cent year-on-year to $56.4 million, and net property income was up 6.7 per cent to $38.7 million.

Distribution to unitholders grew 15.5 per cent to $31 million. As a result, DPU in H1 was 4.02 cents, higher than 3.97 cents a year ago.

FCT's portfolio occupancy rate in Q2 dropped to 82.9 per cent from 92.1 per cent a quarter ago as refurbishment works at Causeway Point continued. At the mall itself, just about 69 per cent of space was taken up at Mar 31.

Chew Tuan Chiong, CEO of FCT's manager, said at a briefing yesterday that Causeway Point is now 68 per cent occupied but that should climb gradually to over 80 per cent towards end-June.

Upgrading works were 33 per cent completed in March, and tenants had pre-committed to 99 per cent of space undergoing refurbishment. FCT projects that the average rent at Causeway Point post-refurbishment would be $12.20 per square foot - 20 per cent higher.

FCT is still aiming to acquire Bedok Point this calendar year. The mall opened in December last year and 'we wanted to see at least some months of stabilisation,' Mr Chew said.

FCT gained one cent on the stock market yesterday to close at $1.50.

Publish date:22/04/11

China Gaoxian appoints special auditors as key execs step down

Business Times - 22 Apr 2011

China Gaoxian appoints special auditors as key execs step down

Interim CEO, new CFO named; PwC to work with statutory auditors E&Y


CHINA Gaoxian has launched a special audit as its financial status remains murky, while several senior management executives are stepping down with immediate effect.

PricewaterhouseCoopers has been appointed special auditors to review its financial affairs for fiscal 2010 and the quarter ended March 31.

Pending the results of the special audit, China Gaoxian chief executive and chairman Cao Xiangbin has agreed to step down as CEO, while the board has accepted the retirement of chief financial officer Raymond Wong. Two other executive directors Lau Chung Kong and Liu Yijie also stepped down from the board.

'Although certain additional information has been given to the auditors, such information was incomplete and as such, the auditors were still unable to reconcile the bank balances,' said the Chinese textile maker yesterday.

'Consequently, the auditors remain unable to conclude on the cash and bank balances and the underlying sales and purchases and capital expenditure transactions.'

One of its subsidiaries appeared to have additional bank loans but there is insufficient information for statutory auditors Ernst & Young to ascertain when these bank loans were taken up and how the proceeds have been used.

The special auditors will report their findings on a periodic basis to the audit committee (AC), the Singapore Exchange and the Korea Exchange, while statutory auditors Ernst & Young will work with the special auditors to complete the audit for fiscal 2010, the group said.

Non-executive director Jerome Tham will take over as interim CEO. Chen Guo Dong, who has been assisting Mr Wong since January 2010, has been appointed CFO with immediate effect. He will report directly to Mr Tham and the AC.

Trouble at China Gaoxian started brewing in March, when its auditors could not verify or confirm the bank balances for two Chinese subsidiaries for the fiscal year ended Dec 31, 2010, triggering a trading suspension of its shares.

Other S-chips that recently reported accounting irregularities in rapid succession include Hongwei Technologies, China Hongxing and Sino Techfibre.

China Gaoxian's AC has been in active discussions with Mr Cao since the accounting problem was flagged, the group said.

During the visit by the AC members to the group's subsidiaries, they found that factory operations in Huzhou in Zhejiang province and Fuzhou in Fujian province are still ongoing. The management has also confirmed that there were no disruptions to their operations.

China Gaoxian said that it plans to appoint a new Korean independent director to its board and to reconstitute its board committees.

It has also appointed Rajah & Tann LLP as Singapore legal counsel, Jipyong & Jisung as Korean legal counsel and Tian Yuan Law Office as China legal counsel to advise the board and assist in any legal matters.

Publish date:22/04/11

Zhulian 1QFY11 Results – within expectations (zj)

Zhulian Corporation Berhad
Price : RM1.75
Recommendation : Buy

1QFY11 Results – within expectations

• Zhulian’s 1QFY11 results were within our expectations with net profit of RM22.0 mln reaching 24% of our FY11 projection of RM91.3 mln.

• 1QFY11 revenue of RM86.2 mln was up 1.6% y-o-y but flat q-o-q. The marginal increase in revenue y-o-y was attributed to increased demand both in local and overseas markets, offset by currency loss arising from the weakening of USD.

• Similarly, the weakening of USD, coupled with rising raw material prices had pushed 1QFY11 operating profit lower by 21.5% y-o-y to RM19.5 mln, and resulted in operating profit margin being compressed to 22.6% from 28.8% a year ago. The USD has weakened approximately 10% in the past 12 months leading up to end February 2011. To recap, Zhulian’s export sales to Thailand, Indonesia and Singapore are denominated in USD and hence, was affected by the depreciating USD. Fortunately, rising contribution from its associate (+19% y-o-y) helped mitigated the impact, with net profit falling by a smaller percentage of 11.4% y-o-y to RM22.0 mln.

• On a brighter note, notwithstanding the challenging operating environment, we remain positive on the Group’s prospects. We opine that the Ringgit is unlikely to appreciate by double-digit in the next three quarters, and therefore the impact from currency fluctuation should be more subdued in the near future. Additionally, the rollout of new products should help create excitement and stimulate demand from customers. Amongst the new products planned for FY11 include new traditional herb supplements, Beyond Food Junction Detoxifying Unit, enhanced version of Beyond Microplasma Air Purifier, and imported kitchenware products. The Group will also remain focused on increasing productivity and efficiency in order to keep operating cost in check.

• Zhulian’s operations continue to be supported by a solid and healthy balance sheet with no borrowings. NTA/share and net cash/share stood at 78 sen and 29 sen respectively as at end February 2011.

• We maintain our current FY11 revenue and net profit estimates of RM332.4 mln and RM91.3 mln respectively.

• As expected, Zhulian declared a first interim single-tier dividend of 3 sen. We are projecting a full year net dividend of 12 sen per share based on the Group’s 60% dividend payout policy. Our dividend forecast translates into a prospective net yield of 6.9%.


We maintain our Buy call on Zhulian with an unchanged fair value of RM2.18, derived from pegging the peer-benchmarked target PER of 11x against our FY11 net profit forecast. We continue to like Zhulian for its i) earnings growth prospects, especially in the overseas markets, ii) solid balance sheet, iii) higher-than-peers net profit margin, and iv) undemanding valuation at prospective FY11 PER of 8.8x supported by an attractive net yield of 6.9%. In our opinion, Zhulian offers a cheaper exposure into the MLM business by comparison to market leader, Amway Holdings, which is trading at a PER of 19x.

Source/转贴/Extract/: ZJ Research
Publish date:22/04/11

FCT Steady performer (CIMB)

Frasers Centrepoint Trust
S$1.49 Target: S$1.86
Steady performer

• In-line; Maintain Outperform. 2Q11 DPU of 2.07scts was in-line with our and street expectations, forming 25% of our full-year estimate. 1H11 DPU of 4.0scts also met expectations at 48% of our full-year estimate. We expect a stronger 2H11 after Causeway Point went through its most intensive period of refurbishment in 1H11. We fine-tune our FY11-13 DPU estimates by 0-2% but keep our target price intact at S$1.86 (discount rate: 7.9%). With its portfolio of well-located retail malls, we expect FCT to remain a beneficiary of strong job and wage growth locally. Ongoing asset enhancement at Causeway Point and upside in higher turnover rents should support organic growth while an impending injection of Bedok Mall from its sponsor could provide acquisition catalyst. We maintain Outperform and see catalysts from announcements of accretive acquisitions.

• NPI of S$20.9m was down 1% yoy, on reduced income at Causeway Point (undergoing refurbishment), partially offset by a full quarter of contribution from Northpoint 2 and Yew Tee Point. Management noted that 2Q11 marked the most intensive period of refurbishment at Causeway Point, with occupancies falling to a low 69% vs. 86% in 1Q11. Construction is 33% completed. Management expects occupancies at the mall to climb to 80% by end-3Q11 and hit 90% by end-FY11. On the DPU level, FCT managed a 1% yoy growth on lower income retention (S$0.3m vs. S$1.1m in 2Q10) and a larger proportion of manager’s fees paid in units (100% in 1Q11 and 2Q11 vs. 20% in 4Q10).

• Positive rental reversions. FCT achieved an overall 12% rental reversion over preceding leases in 2Q11, with positive rental reversions seen across all its assets. Tenant interest remains strong at Causeway Point with 99% of the space undergoing refurbishment pre-committed. With strong tenant interest, management believes that it could beat its original average rental expectation of S$12.20 psf at Causeway Point.

• Refinancing to bring down interest cost. S$260m of FCT’s debt (55% of total borrowings at interest cost of 4.12%) will be due for refinancing in Jul 11. With indicative rates trending round 95bps above 5-year SOR (i.e. 3%), a successful refinancing will reduce FCT’s cost of debt.

Source/转贴/Extract/: CIMB Research
Publish date:21/04/11


Created 04/22/2011 - 11:20

















Publish date:22/04/11

新元兑美元 连续两日创新高






Source/转贴/Extract/: 《联合早报》
Publish date:22/04/11

US dollar nears all-time low

12:05 AM Apr 22, 2011
NEW YORK - The United States dollar tumbled for the third straight day on Thursday, as investors dumped the greenback and left little standing in the way of an all-time low against a broad measure of currencies.

The US dollar was taking a hit from all directions as investors fretted over ultra-low US interest rates, the threat of a credit rating downgrade, and the competition of the euro as an alternative reserve currency.

"If you look at all these big picture things, there's no reason to buy dollars right now," said Mr Ronald Simpson, director of currency research at Action Economics in Tampa, Florida.

The US dollar index, which tracks the greenback versus a basket of currencies, fell 0.4 per cent to 74.086, having slipped to 73.735, the lowest since August 2008.

The chart outlook for the greenback looked dire after it tumbled through a 74.17 trough hit in Nov 2009, a move that may spark a run towards the 70.698 all-time low hit in 2008.

"In the ugly dog currency competition the US dollar is looking like the really ugly dog. The euro zone at least looks to be doing something about their debt problems," said a London-based head of FX sales.

Expectations the Federal Reserve will keep US interest rates at near zero for the foreseeable future, even as other major central banks have begun raising rates or are about to tighten have pressured in the US dollar in recent weeks.

Adding to the US dollar's woes were a threat by Standard & Poor's on Monday to cut the country's prized triple-A credit rating.

The euro climbed to a 16-month high against the US dollar near US$ 1.4650, partly helped by M&A-related demand and an increase in risk appetite. The euro last traded at US$1.4543, up 0.2 per cent.

Analysts said the euro looked on course for a move towards US$1.50 if the current momentum continues despite the possibility of a Greek debt restructuring.

The single currency has vaulted from US$1.4155 hit on Monday, and analysts said that few in the market were brave enough to counter insatiable euro demand from Asian sovereigns, which have been seen swooping in to buy the currency whenever it sells off.

Market participants say central banks have recycling dollar proceeds into the euro, Aussie and other currencies.

Asian authorities have increasingly had to intervene to buy US dollars to limit the gains in their currencies and then shift them into other currencies and assets.

This has helped the euro to brush off ongoing worries about the euro zone crisis, underscored this week by speculation that Greece may have to restructure its debt.

The Australian dollar soared to a 29-year high while the Canadian currency pushed up to its strongest since late 2007, though traders warned the moves could reverse as investors take profit on short dollar positions before the long Easter weekend. The US dollar lost 1 per cent against the yen to 81.67 yen. - REUTERS

Publish date:22/04/11

Thursday, April 21, 2011

CMT No surprise in 1Q11 (DMG)

CapitaMall Trust:
No surprise in 1Q11
(NEUTRAL, S$1.86, TP S$2.00)

1Q11 DPU in line with expectations. CapitaMall Trust (CMT) reported 1Q11 DPU of 2.29S¢ (- 3.0% QoQ; +2.7% YoY), equivalent to 22% of our FY11 DPU estimate. Net property income rose 8.2% YoY (+4.1% QoQ) mainly due to new contributions from Clarke Quay (acquired in Jul 2010) and higher rental rates achieved from new and renewed leases. In the subsequent quarters, we expect CMT to register stronger numbers on the back of 1) contributions from the newly acquired Iluma (completed in Apr 2011), and 2) positive rental reversions. However, given the yield spread is at seven-year mean of 3.1% (forward yield – 10-yr bond yield), we are maintaining NEUTRAL with unchanged TP of S$2.00, derived based on DDM (COE: 8.4%, terminal growth: 3.0%).

New contribution from Iluma beginning 2Q11. At NPI yield of 3.8%, we expect Iluma’s DPU contribution to be 11-17S¢ for FY11-FY12. However, with the linking up of Iluma and Bugis Junction, we believe occupancy rate and NPI yield will gradually rise.

JCube on target for completion by 4Q11. Asset enhancement work for JCube is ontrack for completion by end of 2011. Once operational, JCube will add another 204k sqft of NLA to CMT’s portfolio (~4.0% of current portfolio). Based on assumption that JCube can command gross rent of S$12.00 psf pm, we have factored in DPU contribution of ~0.7S¢ from JCube in FY12.

Absence of upside catalyst at the moment. At current share price, CMT is trading at 5.5% forward yield and 3.1% spread – equivalent to the mean spread over the last seven years. We think the share price is fully valued at this juncture with limited upside. Key upward rerating catalysts will be accretive acquisition or development projects

Source/转贴/Extract/:DMG & Partners Research
Publish date:21/04/11

Hui Xian Reit rakes in 10.5b yuan in IPO

Business Times - 21 Apr 2011

Hui Xian Reit rakes in 10.5b yuan in IPO

Slew of renminbi Reits expected in HK in coming weeks

(HONG KONG) Billionaire Li Ka-shing's Hui Xian Real Estate Investment Trust (Reit) raised 10.48 billion yuan (S$1.98 billion) in an initial public offering (IPO), pricing Hong Kong's first yuan- denominated IPO at the low end of its indicative range, two sources said.

A surge in yuan-denominated deposits in Hong Kong, coupled with a growing list of yuan-dedicated funds, could be a boon for companies looking to sell Reits denominated in the Chinese currency.

A source involved in the Hui Xian IPO sees 'a queue of renminbi Reits' in the weeks ahead as other companies look to benefit from growing demand from those investors.

However, pricing at the low end indicates demand for Hui Xian shares may not have been as strong as previously anticipated as investors looked for other high-yield alternatives in which to park their funds.

Still, the outlook for growth in commercial rents in China, coupled with an expected strengthening of the yuan, or renminbi, should bode well for Hui Xian, analysts said.

'The Reit is being underappreciated because people are looking at the yield comparison with other Reits, which I don't think is the right way to look at it, because the growth rate is a big swing factor,' said Nicole Wong, regional head of property research at brokerage CLSA.

'The yield is slightly lower, but the growth going forward for China assets is going to be much stronger than for Hong Kong assets. Plus there will be a renminbi appreciation angle as well,' she added.

Hui Xian sold two billion units at 5.24 yuan each, at the bottom of the 5.24 yuan to 5.58 yuan indicative price range, the sources with direct knowledge of the matter said yesterday.

The Reit was priced to yield 4.33 per cent in 2011 and 4.73 per cent in 2012, according to a term sheet of the offering seen by Reuters.

By comparison, other Reits listed in Hong Kong offer higher returns, although all of those are denominated in Hong Kong dollars. Link Reit is forecast to yield 4.5 per cent in 2011, Regal Reit 4.8 per cent, GZI Reit 6.9 per cent, Prosperity Reit 5.8 per cent and Champion Reit 5 per cent.

Investors holding yuan deposits in Hong Kong get paid rates of 0.4 per cent to 0.6 per cent, while yuan- denominated bonds yield between one per cent and 3 per cent, making IPOs denominated in the Chinese currency an attractive option for yield-hungry investors.

Yuan deposits in Hong Kong totalled 407.7 billion yuan at the end of February, more than quadrupling from a year earlier, with the authorities and analysts expecting the amount to rise to nearly one trillion yuan by the end of 2011.

Hui Xian Reit will be managed by Hui Xian Asset Management Ltd, a joint venture between Citic Securities, Singapore's ARA Asset Management and Cheung Kong (Holdings) Ltd, the property company controlled by Mr Li Ka-shing.

Hui Xian controls the Oriental Plaza complex in Beijing, which includes a shopping centre, two serviced-apartment towers, a high-end hotel and eight office buildings. The Reit is set to start trading on April 29.

Office rents in Beijing are a fraction of the rents in Hong Kong or Shanghai because of an abundance of space in the Chinese capital, but that situation should reverse in coming years, CLSA's Ms Wong said.

'That kind of oversupply has ended and office supply for the next few years is going to ease, so we think office rents will normalise,' she added.

The IPO was split, with 80 per cent sold to institutional investors and hedge funds overseas and 20 per cent to retail investors in Hong Kong, the terms said\. \-- Reuters

Publish date:21/04/11

FSLT keeps quarterly DPU at 0.95 US cent

Business Times - 21 Apr 2011

FSLT keeps quarterly DPU at 0.95 US cent

Q1 distribution represents annualised yield of 11.5%


FIRST Ship Lease Trust (FSL Trust) posted a distribution per unit (DPU) of 0.95 US cent for its first quarter this year, a 36.7 per cent decrease year on year from 1.5 US cents - but one that has stayed the same since Q2 2010. The quarterly distribution comes up to US$5.7 million in total, and represents a payout of 49.4 per cent of the net cash from operations for the quarter ended March 31.

The DPU represents an annualised tax-exempt yield of 11.5 per cent based on a unit closing price of S$0.41 on April 20 and an exchange rate of US$1.00 = S$1.24, said FLS Trust.

Net cash generated from operations for the quarter sank 29.3 per cent from US$16.3 million to US$11.5 million. Gross revenue for the quarter stood at US$23.9 million, a dip of 2.4 per cent compared to a year ago, as lower spot-market revenue from its tankers - FSL Hamburg and FSL Singapore - continued to make its presence felt.

'The results for this quarter were affected by the lower-than-expected performance of the two tankers that are deployed in the spot market,' said Philip Clausius, CEO of FSL Trust Management. 'The freight rates in the product tanker market have been below expectations and particularly weak in late-January and February. We will continue to monitor the situation closely and will explore longer-term employment options for these two tankers.'

The two vessels earned freight revenue of US$3.1 million in Q1 this year, less than the US$3.8 million lease revenue in Q1 last year when both vessels were still on bareboat charters. This contributed to a net loss of US$2 million for the quarter compared to a net profit of US$0.7 million in the corresponding period the year before.

The trust's portfolio has 23 vessels, out of which 21 are on long-term bareboat leases. It has substantial remaining contracted revenue of US$575.7 million, with an average remaining lease term of 6.9 years.

As at April 1, the trust had an outstanding secured debt of US$445.1 million. Two loan tranches with an outstanding amount of US$226.2 million in total as at end-March will be maturing on April 2, 2012. The trustee-manager said yesterday that it has started discussion with its lending banks on the refinancing of the loan tranches and that the discussion is 'progressing well'.

Publish date:21/04/11

Business as usual for Singapore Inc. (CIMB)

Singapore 11th General Election
Business as usual for Singapore Inc.

• Singapore’s elections have had a muted impact on the economy...

Singapore’s 11th general elections (GE) will be held on 7 May. Unlike elections in neighboring countries, GEs in Spore generally have little or no impact on overall economic growth. A look at consumption and production indicators, especially those that might be related to “election effect” prior and after the GEs, suggests hardly any correlation with the election periods. Political parties may print a few new banners or hold tea parties to introduce the new members, but we are clutching at straws when we come to evaluating the impact of GE.

• …Oppositions are too poor and incumbents are too tight fisted. This is partly because of tight rules regarding donations to political parties and election-related spending. Opposition parties are largely limited by their budget, with many having to fork out money personally in order to run a campaign in the few constituents that they are running in. On the other hand, the incumbent People’s Action Party (PAP) has also refrained from engaging in “pork-barrel” politics given the limited opposition they face.

• Rather than engaging in pork-barrel politics, the incumbents use the annual government budget to provide benefits, if there are any to be handed out. In 2001, the government allocated $5.3bn to “special transfers”, up from $1.8bn the previous year. In 2006, “special transfers” totaled $3.6bn vs. $2.7bn in 2005. In 2011, “special transfers” amounted to $8.7bn, up from 2010’s $7.2bn.

• Market reaction most muted. Our Singapore HOR, Kenneth Ng, has already busted the urban myth that an increase in the share of the incumbent’s popular vote leads to the STI rising in the subsequent month. Unlike regional countries where election results have investment implications on the perceived stability of the country (and its cost of equity) and investment implications on politically-linked stocks, the investment implications in Singapore are more spurious.

• We maintain Overweight and FSSTI target of 3,560. Overall, for the market, our strategist senses a gradually more bullish mood and expects the FSSTI to breach our FSSTI target of 3,560 by 3Q11. While headwinds remain, our end-CY11 FSSTI target (1.9x CY11 P/BV - slightly above mean and 14.3x CY12 P/E – below mean) are conservative and could be surpassed in 2H11 when the market refocuses on Asia. Our Overweight position on Singapore is premised on: 1) its below-mean valuations; and 2) its exposure to global growth. We do not expect elections to play a significant part in the FSSTI performance in 2Q but instead, focus on the above factors as our main consideration for stock market performance. We expect a very strong market later this year.

Source/转贴/Extract/: CIMB Research
Publish date:19/04/11

AIMS-REIT Results Review (S&P)

AIMS AMP Capital Industrial REIT
Price: SGD0.21

Results Review
• FY11 (Mar.) results slightly above expectations. AIMS AMP Capital Industrial REIT (AACIR) posted a 31.3% YoY rise in net property income to SGD52.7 mln in FY11 (vs. our FY11 forecast net property income of SGD50.3 mln) on the back of a 43.8% YoY rise in revenue to SGD73.2 mln.

• Higher occupancy. AACIR posted a higher occupancy of 99.0% vs URA Industrial Average’s occupancy of 92.1%, and also an improvement from 98.5% and 96% in 3QFY11 in FY10 respectively. Its weighted average lease expiry has however declined to 3.4 years from 4.4 years in FY10. 46.3% of AACIR’s tenancy leases are expected to expire in FY13. Nonetheless, non-renewal risk is somewhat minimized with sub-leases accounting for 91.8% of leases expiring in FY13, and 48% of the sub-leases have been renewed with lease periods ending beyond FY13.

• Lower interest margin. AACIR has lowered its interest margin from 3.5% to 2.16% and also increased debt maturity to 3.7 years following its refinancing of its SGD175 mln facility with improved terms. In addition, AACIR has broadened and also diversified its funding sources by securing SGD280 mln of new loans from two local banks and two foreign banks.

Earnings Outlook / Estimates Revision
• Adjusting FY12 net profit forecast. We have raised our FY12 net property income forecast to SGD55.5 mln from SGD51.6 mln, and introduce our new FY13 net property income forecast of SGD60.7 mln. Operationally, AACIR should see higher income in FY12 due to high occupancy and also positive rental reversion for its industrial
properties. AACIR has indicated that it will continue to focus its investments in Singapore, and it is looking to redevelop some of its existing industrial properties to improve its return. About two-thirds of its portfolio has underutilized plot ratio. As such, AACIR could potentially expand the lettable area of its portfolio of properties without new acquisitions.

Investment Risks
• Global economy and epidemic. An epidemic such as SARS in 2003 or a global economic downturn such as what followed the 2008/2009 financial crisis will have an adverse impact on global travel, the financial system and businesses, and, in turn, on demand for warehouses and factories in Singapore.

• Singapore focus. As all the properties in its portfolio are located in Singapore, and more specifically, industrial properties, any downturn in the industrial property market in Singapore will put AACIR’s existing leases under pressure.

Source/转贴/Extract/: Standard & Poor’s Equity Research
Publish date:20/04/11

CMT Execution on track (DBSV)

Capitamall Trust
BUY S$1.86
Price Target : S$ 2.06
Execution on track

At a Glance
• Results within expetations, lifted by organic growth and Clarke Quay on yoy basis
• Expect steeper growth trajectory from 2Q
• Maintain Buy, TP $2.06

Comment on Results
Within expectations. CMT reported an 8.2% rise in NPI to $105.7m on a 10.7% increase in revenue to $154m. This was largely due to new contributions from Clarke Quay acquired last year and organic improvement with renewal rentals which were 7.5% higher than previous corresponding period. During the quarter, CMT renewed 179,441sf of space or 5% of portfolio NLA. Occupancy remained relatively stable at 99.3%. Distributable income came in 3% higher to $73.2m and reflected an 89% payout as the group held back $9.5m of income. This translates to a DPU of 2.3ct, accounting for 23% of our full year forecast.

Steeper growth trajectory from 2Q expected. Looking ahead, the group has a remaining 18% and 33% income expiring in FY11 and FY12 respectively. We anticipate it would be able to achieve similar rental growth as seen in 1Q11, thanks to robust economic condition and healthy wage growth, which should fuel rising consumption. Furthermore, income in FY11 would be further boosted by new contributions from Iluma, acquired in April this year. Although bought at a 3.8% NPI entry yield, we believe the group would be able to ramp up Illuma’s existing 85% occupancy and improve returns in the near term. In addition, gradual completion of redevelopment JCube by end-2011 and The Atrium by end-2012 would lift earnings in the medium term. Gearing remains healthy at 40.7%.

The group has recently bought back $106m of CBs due 2013 and has $485m of such CBs outstanding. Recent issue of $300m retail bonds and $350m of 2014 CBs have allayed investors concerns over refinancing risks and higher interest costs.

Maintain Buy. We continue to like CMT for its execution track record and pole position in the retail real estate sector. The stock is trading at 5.2% and 5.7% FY11 and FY12 yield. Maintain Buy with TP of $2.06.

Source/转贴/Extract/: DBS Vickers Research
Publish date:21/04/11

First REIT Maiden contribution from new hospitals (OCBC)

First REIT
Maintain BUY
Previous Rating: BUY
Current Price: S$0.74
Fair Value: S$0.80

Maiden contribution from new hospitals

1QFY11 DPU of 1.58 S cents. First REIT (FREIT) reported its 1QFY11 results with gross revenue increasing 95.6% YoY and 90.5% QoQ to S$14.6m, forming 27.4% of our full year forecast. The better-than-expected gross revenue growth was largely due to recognition of deferred rental income from the Adam Road Hospital as a result of its divestment (completed on 25 Mar 2011). Total distributable income was within expectations, having increased 88.5% YoY and 82.1% QoQ to S$9.9m, meeting 25.1% of our FY11 estimates. This translated into a DPU of 1.58 S cents, representing a 54.7% YoY decline but a 81.6% QoQ increase. However, the YoY comparison is not a meaningful indicator due to the effects of the 5-for-4 rights issue carried out in Dec 2010. This latest DPU equates to an annualised yield of 8.7%.

Maiden contributions from newly acquired hospitals.

Besides the recognition of the deferred rental income, FREIT's improved performance was attributed mainly to the maiden contributions from its two new hospitals acquired last Dec, namely Mochtar Riady Comprehensive Cancer Centre (MRCCC) and Siloam Hospitals Lippo Cikarang. The former is the first private specialised cancer centre in Indonesia with state-of-the-art equipment. We expect MRCCC to experience a ramp-up in earnings in the future since it only started its operations this year. This would benefit FREIT moving forward, given that its master lease entitles it to enjoy a variable upside potential, the magnitude of which depends on a function of turnover growth.

Expect future acquisitions to be funded by debt. FREIT has recently strengthened its balance sheet with the sale of its Adam Road Hospital. Its gearing ratio currently stands at a healthy 12.6% as at 31 Mar 2010. We expect FREIT to fuel its growth moving forward via new acquisitions in FY11. This is because FREIT is seeking to raise its profile and has set a target of achieving an asset base of S$1b within the next two to three years. Any future acquisitions are likely to be funded by debt. We estimate that FREIT still has sufficient debt headroom of S$218.0m to undertake new acquisitions.

Maintain BUY. Looking ahead, management opines that the growing demand for quality healthcare services in Indonesia would present good opportunities for FREIT's growth. We finetune our assumptions marginally after taking into account the latest results. However our RNAV-derived fair value estimate remains unchanged at S$0.80. Maintain BUY with potential total returns of 16.5%.

Source/转贴/Extract/: OCBC Investment Research
Publish date:21/04/11

MCT IPO (limtan)

IPO S$0.88

􀁺 Comparing with Suntec Reit, the closest “competitor”, Mapletree Commercial’s IPO (164.835 mln units available for public subscription, of which 30.769 mln are “reserved”) is worth going for. (Both Mapletree Commercial and Suntec have exposure to retail and office segments.)

􀁺 Its projected 2011 yield of 5.65% (4.97 cents per unit, rising to 5.42 cents for ye Mar ’13) compares with Suntec’s 6.1%. (Capitamalls Trust, a pure retail reit, offers almost 5% at $1.86 yesterday.)

􀁺 More importantly, as far as investment in S-Reits goes, Mapletree Commercial offers superior growth prospects in the not-too-distant future.

􀁺 Mapletree Investments, the sponsor, has an asset which is pretty “ripe” to be sold to Mapletree Commercial: the already completed and now 68.7% occupied Mapletree Business City, with NLA of 1.72 mln sf ft valued at $1.04 bln, which will raise the latter’s portfolio significantly.

􀁺 VivoCity, the key asset in Mapletree Commercial’s portfolio, has net lettable area (NLA) of 1,037,576 sf valued at almost $2 bln.

􀁺 Suntec will need time to fully digest the last acquisitions: one-third stake in One Raffles Quay and Marine Bay Financial Centre Towers 1 & 2, which come with long leases.

􀁺 Mapletree Commercial’s IPO will close at 9am on Monday Apr 25th.

Source/转贴/Extract/: Limtan
Publish date:21/04/11

CMT Good set of 1Q11 results with estimated DPU of 2.29 S-cents. (OCBC)

CapitaMall Trust:
Maintain BUY
Previous Rating: BUY
Current Price: S$1.86
Fair Value: S$2.02

Good set of 1Q11 results with estimated DPU of 2.29 S-cents.

CapitaMall Trust’s (CMT) posted its 1Q11 results yesterday, which is slightly above our expectations. Gross revenue met 27% of our full-year forecast and was up 10.7% YoY and 1.7% QoQ to S$154m. This was largely the result of the acquisition of Clarke Quay and higher rental rates achieved from new and renewed leases. 1Q11 DPU is 2.29 S-cents, which is 2.7% higher than the 2.23 S-cents reported a year ago, representing an annualised yield of 4.99%. CMT’s rental renewal rates this quarter also saw positive growth of 7.5% over preceding rental rates. In terms of NPI, we noted that Funan Digital Mall and IMM Building delivered their highest numbers to-date, with an increase of 9.8% and 9.0% respectively QoQ and 4.0% and 4.1% respectively YoY. CMT’s portfolio is well-positioned to benefit from anticipated growth in domestic retail sales amidst improved economic conditions. The expected increase in visitor arrivals in 2011, on the back of STB’s forecast of 12m-13m in 2011 (up from 11.6m in 2010), is also likely to boost retail demand going forward. Maintain BUY with an increased RNAV-derived fair value of S$2.02 (prev: S$2.00).

1Q11 estimated DPU of 2.29 S-cents. CMT posted its 1Q11 results yesterday, which is slightly above our expectations. Gross revenue met 27% of our full-year forecast and was up 10.7% YoY and 1.7% QoQ to S$154m. This was largely the result of the acquisition of Clarke Quay and higher rental rates achieved from new and renewed leases. Net property income of S$105.7m also rose 8.2% YoY and 4.1% QoQ. Amount available for distribution was up 2.6% YoY and 15% QoQ. Following its past practice, CMT retained S$9.5m of the taxable income available for distribution, which is typically released to unitholders at the end of the FY. The retention is a provision to meet an expected increase in refinancing costs in subsequent quarters. 1Q11 estimated DPU thus works out to 2.29 S-cents, which is 2.7% higher than the 2.23 S-cents reported a year ago, representing an annualised yield of 4.99%. As at 31 Mar 2011, CMT has an aggregate leverage of 38.2%. Adjusting for the repurchase of CMT’s S$106m convertible bond on 4 Apr and issuance of S$350m convertible bond on 19 Apr, CMT’s pro-forma gearing edges up to 39.9%.

Portfolio Performance. CMT registered strong portfolio occupancy of 99.2% as at 31 Mar 2011, compared to 99.3% in the last quarter. Occupancy was slightly dented by the non-renewal of tenants at Clarke Quay, IMM Building and Lot One. Nonetheless, CMT’s rental renewal rates this quarter saw positive growth of 7.5% over preceding rental rates. Compared to 4Q10, most malls also delivered higher revenues in 1Q11. However, we are seeing the topline of Atrium@Orchard dipping 8.4% QoQ, probably affected by the asset enhancements works which commenced in Jan 2011 and slated to be completed in 3Q12. In terms of NPI, we also noted that Funan Digital Mall and IMM Building delivered their highest numbers to-date, with an increase of 9.8% and 9.0% respectively QoQ and 4.0% and 4.1% respectively YoY. Construction works for JCube, which commenced in the 2Q10, is also progressing well. The works are on schedule to be completed by 4Q11 and there is already strong leasing interest for the mall, targeted to open in 1Q12.

Maintain Buy. CMT’s portfolio is well-positioned to benefit from anticipated growth in domestic retail sales amidst improved economic conditions; a stronger-than-expected GDP increase of 8.5% in 1Q11. The expected increase in visitor arrivals in 2011, on the back of STB’s forecast of 12m-13m in 2011 (up from 11.6m in 2010), is also likely to boost retail demand going forward. Maintain BUY with an increased RNAV-derived fair value of S$2.02 (prev: S$2.00).

Source/转贴/Extract/: OCBC Investment Research
Publish date:21/04/11

PST Steady as she goes! (DBSV)

Pacific Shipping Trust

At a Glance
• 1Q11 distribution remained steady at 0.81 UScts per unit or ~71% of distributable cash flow
• Financing for all newbuild vessels arranged
• Expect DPU growth from 4Q11 onwards
• Maintain BUY at unchanged TP of US$0.40

Comment on Results
Good start to the year. Revenue and operating profit came in virtually unchanged on a y-o-y basis, but net profit improved 4% to US$6.9m owing to the lower interest costs as PST continued to pay down its debt steadily. Subsequently, net distributable cash (after loan amortisation) for 1Q11 came in slightly higher at US$6.7m vs. US$6.5m in 1Q10. The 70% payout ratio was maintained, and the Trust paid out US$4.8m or 0.81UScts per unit in 1Q11, a 2% increase y-o-y.

Outlook & Recommendation
Debt financing for all new vessels has been secured. To recap, PST has announced 3 separate acquisition deals in FY10 to drive growth and diversification of the fleet - two new Capesize bulk carriers for delivery in Sep 2011, 2 Multi Purpose vessels for delivery in Sep/Dec 2012 and 5 Supramax bulk carriers for delivery in Nov 2012 – Apr 2013. While the total capital commitments for the 3 deals amount to about US$333m over the next 2 years, the Trust has already secured a total of US$282m in bilateral financing commitments from six banks to finance the deals, which implies a high debt-tovalue ratio of close to 85% and signals the faith of lenders in PST’s capital management and business strategy.

Growth expected from 4Q11. We remain positive on these yield accretive acquisitions and expect DPU growth at near 12% CAGR over FY10-12, even after accounting for a potential equity issue of US$40-50m in FY12. Maintain BUY with an unchanged TP of US$0.40. PST remains our top pick in the shipping trust sector.

Source/转贴/Extract/: DBS Vickers Research
Publish date:19/04/11

Rickmers Accelerated loan repayments continue (DBSV)

Rickmers Maritime
HOLD S$0.415
Price Target : S$ 0.37
Accelerated loan repayments continue

At a Glance
• DPU payout for 1Q11 maintained at 0.60UScts; in line with our expectations
• Accelerated repayment of loans continue, with another US$12.6m repaid in 1Q11
• Unlikely to meet conditions for removal of DPU cap in near term, maintain HOLD with TP of S$0.37

Comment on Results
Stable cash flows in 4Q. RMT’s topline fell 3.5% y-o-y owing to the lower charter rate for the vessel Kathe C. Rickmers, which was fixed at only US$8,288 to CSAV for the first year up to March 2011. Currently, the rate has been revised up to US$23,888 as CSAV exercised the option to renew the lease by 1 more year amid an improving charter market. Distributable cash flows remained stable on a y-o-y basis at US$16.3m for 1Q11.

DPU stayed at 0.6UScts, loan repayments continued. As the Trust repaid about US$12.6m of borrowings in 1Q11 – ahead of scheduled repayment of about US$8m – distribution to unitholders remained steady at US$2.5m for 1Q11, translating to a DPU of 0.6UScts, at the upper end of the DPU cap imposed by lenders.

Outlook & Recommendation
DPU cap could stay for a while. The Trust will continue to accelerate its deleveraging program in FY11, and borrowings could reduce from US$669m at end-FY10 to about US$624m at end-FY11. However, during the 3-year waiver period, the Trust’s DPU cap would be in place as long as the Value-to-Loan ratio on the IPO facility and subsequent top-up facility (about US$416m of which are outstanding currently) are below the covenant limit of 133%. According to our estimates, the value of the 10 vessels, which forms the security for the above facilities, is unlikely to cross that barrier in the near term, even after accounting for the gradual decline in borrowing level. Thus, we maintain our HOLD call on the stock, and our TP remains unchanged at S$0.37, pegged to 8% FY11 target yield. As highlighted earlier, balance sheet remains the key focus for management and acquisition driven growth will have to wait.

Source/转贴/Extract/: DBS Vickers Research
Publish date:19/04/11

S&P cuts US credit outlook to Negative (DBSV)

The US credit outlook was cut by ratings agency S&P to negative on concerns that U.S. policymakers may not be able to reach agreement on how to address the country's expanding budget deficit and rising government indebtedness.

The cut in the country’s credit outlook rattled US equity investors with the Dow correcting by more than 2% at one point during the overnight trading session. (closing 1.1% down) . However, the usual pairing of a declining dollar coupled with rising bond yields didn’t materialize. Global equities were sold down and US bond yields remained flat as investors sought a safe haven in bonds, while the lingering problems on the fringes of Europe helped support the dollar.

The S&P cut provided a good excuse, in any case, for investors to take profit on US equities, markets which had risen 5% YTD before last night (despite on-going concerns over oil prices, Middle East tensions, US political squabbles, mixed economic signals, QE2, and high EM inflation).

We believe this is the beginning of the unwinding of the USD carry trade provided by QE2 liquidity (which is supposed to switch off by end June). Next week on the 26th, the Fed’s FOMC will decide on the fate of QE2. At the same time, the current US debt ceiling is likely to be hit by May 16th and will need to be raised by July to avoid a potential US credit default. We continue to expect weak economic growth in the US, with earlier rising expectations of a strong US recovery rapidly flagging, especially when President Obama will likely have to agree to cut budget spending and raise taxes to get the budget through.

On a positive note for the dollar, over the near term, this cut in the country’s outlook could heap additional pressure on US politicians to fast track agreement on a number of budget initiatives. In addition, the US has been given up to 2013 to tackle its fiscal problems, providing much needed breathing space. As such, we believe this buys time for the US dollar, and is thus a positive for the currency but a negative for commodities and risk trades. . Brace for more volatility in the near term.

We believe Asian equities will outperform developed markets’ equities for three reasons. Firstly, the growth / inflation trade off should favour Asian markets; secondly Asia currencies are on an appreciating path; and thirdly Asian market valuations are attractive. Investment flows will be drawn to this region.

Comments from Philip Wee, DBS Currency strategist
(extracted from DBS Daily Breakfast Spread, 19 April) Negative outlook for US AAA debt is not positive for the US dollar medium-term FX: Standard & Poor’s decision to put the US’s AAA sovereign debt rating on negative watch took markets by surprise. Yesterday’s knee-jerk reaction was to sell equities and seek the US dollar as a safe haven currency. EUR/USD fell to an intra-day low of 1.4155 from the day’s open of 1.4417, not helped by the usual worries over the troubled peripheral nations within the Eurozone.

All said, though, yesterday’s movement did not set any medium-term trend for the US dollar. S&P’s rating move underscores the overvaluation of the US dollar based on its fiscal deficit/federal debt outlook. While we do not want to underplay the challenges faced by the EU peripheral nations, we remain mindful that the four key countries – Greece, Ireland, Ireland and Spain – have already suffered close to 30 sovereign ratings downgrades. Put simply, the US has more downside than the EU here.

US’s fiscal deficit/debt problems are not the US’s alone. The rest of the world needs to realize that the US can no longer sustain its role as the consumer of last resort for the global economy indefinitely. Two years after exiting the 2008 global crisis, there is a greater urgency for emerging markets, especially those with large surpluses, to focus and rely more on domestic demand growth. Believing that the US needs to move from domestic to external demand, the IMF is calling for further declines in the US dollar against undervalued currencies (Chinese yuan and some Asia ex Japan currencies) to help reduce the US current account deficit.

Overall, it was significant that S&P did not consider either the Obama or Ryan plan sufficient to return the US to a sustainable fiscal path. This brings up one important question. Can the US government find enough demand for its bonds after the Fed completes its second round of treasury bond purchases (a.k.a. QE2) by end-June? Apart from the Fed, the other known buyers are foreigners who only do so when the US dollar is falling against their currencies. Yesterday’s market reaction also sent a message that the sustainability of world growth also depends on the willingness of major deficit and surplus economies to work towards addressing global imbalances.

Comments from Jens Lausche, DBS Fixed Income strategist
(extracted from DBS Daily Breakfast Spread, 19 April) Treasuries gained despite Standard & Poor’s yesterday lowering its outlook for US ratings to negative from stable US: Standard & Poor’s yesterday lowered its outlook for U.S. ratings to negative from stable on “a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013.” The announcement initially saw long-end Treasury yields rise 10bps, but this move was short-lived, and both
10Y and 30Y yields closed below Friday’s closing levels. With public debt having risen sharply and the budget deficit remaining at a record high, Standard & Poor’s is not telling the market anything new.

In fact, market concerns regarding US debt at this point lie with the government running out of borrowing room, which would cause default in July and not medium-and long-term budgetary challenges. With the Treasury Department projecting that the government will reach the $14.3 trillion federal debt ceiling (on its ability to borrow) in mid-May the government would have to turn to emergency measures and suspend services from early July, if the ceiling is not revised higher. That is the immediate concern and the market is taking the view that federal debt ceiling will be dealt with to ensure the US will meet its financial obligations. Given what is at stake and that the problem is
political in nature, this seems reasonable at this point. Needless to say, as long as Congress does not revise the ceiling, the risk of a confidence crisis persists.

Source/转贴/Extract/: DBS Vickers Research
Publish date:19/04/11

通脹風吹到服務業 敲響升息警鐘





 一位經濟分析師回應《中國報》詢問指出,服務業乃非貿易(non tradable)領域,屬于內需主導的行業,成本不受外圍因素影響。

















Source/转贴/Extract/: 中國報
Publish date:20/04/11

'Li Ka-shing's yuan IPO raised S$2b in HK'

'Li Ka-shing's yuan IPO raised S$2b in HK'
04:46 AM Apr 21, 2011
HONG KONG - The first stock sale denominated in yuan marked a different kind of milestone for Li Ka-shing: It was the first time in at least eight years the billionaire had to settle for the lowest amount sought in an initial public offering of a property trust.

Mr Li's Hui Xian Real Estate Investment Trust raised US$1.6 billion (S$2 billion) in an IPO after selling units at the low end of a price range, two people with knowledge of the matter said. The three other REITs backed by Mr Li that sold stock in IPOs since 2003 raised the maximum targeted, data compiled by Bloomberg show.

With Hui Xian forecast to yield 4.26 per cent, the lowest among Hong Kong-traded REITs, investors betting on yuan gains can open a bank account across the Chinese border and get similar interest on a two-year time deposit. Limited prospects for early gains may also have deterred individual buyers, said Mr Kenny Tang, executive director of AMTD Financial Planning.

"Li Ka-shing is usually able to get off everything he puts out there, but this deal may have been too pricey," said president of Hong Kong-based South Ocean Management Brook McConnell.

Hui Xian's underwriters - BOC International Holdings, Citic Securities and HSBC Holdings - set aside 20 per cent of the total offering for individuals, double the typical retail allotment in Hong Kong IPOs.

The decision was driven by expectations that Hui Xian would be popular among retail investors, people familiar with the process said.

'Idle' Deposits

There is about 200 billion yuan (S$38 billion) of "idle" Chinese-currency deposits in Hong Kong that could flow into the IPO, according to a sales document sent by one of the underwriters before marketing started. That would be almost 100 times the amount of stock reserved for them.

Instead, individual investors applied for about 2.5 times the shares available, people with knowledge of the matter said. Mr Li's last IPO of a REIT in Hong Kong, in December 2005, drew retail orders of 300 times the stock on offer.

Mr Li, 82 and Hong Kong's richest man, is seeking to take advantage of China's efforts to promote international use of its currency and swelling yuan deposits in Hong Kong. The sale drew institutional investors including Och-Ziff Capital Management Group LLC, people with knowledge of the matter said last week.

"In Hong Kong, the market has almost no investment opportunities in renminbi products, except the renminbi bond funds, and the yield on this product is more attractive," said Mr Danny Yan, a fund manager at Haitong International Asset Management, which oversees US$600 million. He said the fund planned to subscribe for Hui Xian shares.

Plastic Flowers

So-called Dim Sum bonds denominated in yuan and sold in Hong Kong yielded an average 1.918 per cent as of Tuesday, according to data from HSBC. The interest rate on a one-year yuan time deposit at HSBC in Hong Kong is 0.6 per cent or less.

Hong Kong will have more yuan-denominated share sales as deposits of the currency rise, KC Chan, the city's secretary for financial services and the treasury, said in a Bloomberg TV interview yesterday. He said Hui Xian is a "very good product" even though REITs "don't generate as much excitement as regular IPOs."

Hui Xian, controlled by Mr Li's Cheung Kong (Holdings) and Hutchison Whampoa, is backed by the Oriental Plaza in Central Beijing. Covering 1.1 million sq ft, Oriental Plaza consists of eight premium office towers, a shopping mall, a Grand Hyatt Hotel and serviced apartments, according to its website. Cheung Kong spokeswoman Winnie Cheong did not return a call seeking comment.


The tepid response from Hong Kong individuals is a departure for Mr Li, dubbed 'Superman' by local media for his ability to generate returns. Having opened a plastic flower factory after World War II, Mr Li has built an empire spanning ports, real estate, hotels, infrastructure and energy - a feat that landed him on the 11th spot on Forbes annual global rich list last month with US$26 billion of estimated wealth.

Among five previous Li-backed IPOs in Hong Kong since 2000, only one failed to raise the maximum targeted: Phone carrier Hutchison Telecommunications International cut the price of a sale in October 2004 after investors balked at the valuation.

The stock market performance of the other REITs Mr Li took public may have added to investor wariness about Hui Xian.

Shares of Prosperity REIT jumped 20 per cent on their first day of trading on Dec 16, 2005. Since then, they have dropped 27 per cent, compared with a 56-per-cent advance in Hong Kong's benchmark Hang Seng Index. The trust now has an indicated yield of 5.81 per cent, according to data compiled by Bloomberg.

'Die-Hard Fans'

Suntec Real Estate Investment Trust and Fortune Real Estate Investment, the REITs Mr Li took public in Singapore in 2003 and 2004, have underperformed the city-state's benchmark stock index since their IPOs, data compiled by Bloomberg show.

"There maybe some die-hard fans who will jump onto anything put out by Cheung Kong or Hutchison, but if you look at the last two REITs they've brought to the market, the performance haven't been that good, said Mr Lantis Li, an analyst at Capital Securities Corp.

Hui Xian's ownership claim to the assets backing the trust expires in 2049, according to the IPO prospectus. That may further dent the allure of the sale as it limits investors' ability to benefit from yuan gains, according to CLSA Asia- Pacific Markets.

Another concern is potentially limited volume of trading in the secondary market, limiting the potential for IPO investors to make a profit, said Ronald Wan, Hong Kong-based managing director of China Merchants Securities Co.

A better way to benefit from the Hui Xian REIT may be to invest in Cheung Kong, Mr Li's flagship company. The IPO will lift Cheung Kong's net asset value and lower its indebtedness, CLSA, the brokerage arm of France's Credit Agricole SA, said on April 14, rating the stock "buy". Cheung Kong owns 33.4 per cent of Oriental Plaza.

"To get rich with Li Ka-shing, it's better to invest with him than buy from him," Mr Andrew Riddick, an analyst at CLSA, said in the April 14 notes. Bloomberg

Publish date:21/04/11

Pessimistic over SGX

Investment houses lower SGX's target price after Q3 profits drop
by Linette Lim
04:46 AM Apr 21, 2011
SINGAPORE - The Singapore Exchange's (SGX) (picture) dismal financial performance for the fiscal third quarter has prompted a number of investment houses to revise downwards their 12-month targets for the bourse's share price.

Credit Suisse, DBS, Deutsche Bank, UBS and IIFL were among those who lowered the target price for the SGX. DBS lowered its target price from S$11.50 to S$10.50 while Deutsche Bank revised it from S$10.50 to S$9.50.

DMG bucked the trend, maintaining its target price at S$8.90. "The target price was maintained because it is pegged to 22 times our unchanged FY13 EPS (earnings per share)," said DMG analyst Leng Seng Choon, adding that he expects average daily turnover at the exchange to increase over the next few months.

Most houses maintained their calls at "Buy" or "Neutral". Explaining its "Neutral" call, Credit Suisse said, "The SGX lacks near-term organic catalysts and is also exposed to M&A risk after the failed ASX-SGX merger." IIFL was the most pessimistic, issuing a "Reduce" call on the stock and lowering its target price to S$7.40.

"Overall, it was a miserable quarter due to declining securities volume, rising operating expenses, contraction in margins, and a failed merger," wrote Mr Sachin Nikhare and Mr Prabodh Agrawal in an IIFL research note.

In addition to price targets, earnings estimates were trimmed. DBS lowered FY11-13 earnings by 8 to 9 per cent, while IIFL reduced their earnings estimates by 3 to 4 per cent for FY11-12.

The SGX - which announced its Q3 results on Tuesday - saw net profit for the quarter decline 10.2 per cent year-on-year to S$67 million. Excluding ASX-SGX related expenses of S$12 million and a $1.7-million gain from a disposal of premise, underlying net profit increased 3.6 per cent to S$77.3 million. Chief executive Magnus Bocker had said in the results statement that the SGX will expand its services to include OTC clearing of Foreign Exchange Forwards and more metal futures.

According to analysts, net profit was below expectations due to lower-than-expected derivatives revenue and trading volume.

"While derivatives volume was stronger (up 28 per cent quarter-on-quarter), the depreciating US$ to S$ dampened the overall increase in derivatives revenues (up 14 per cent quarter-on-quarter)," wrote Ms Lim Sue Lin in a DBS research note, adding that average daily trading volume was down 8 per cent quarter-on-quarter to S$1.50 billion while average daily trading value declined 4 per cent to S$1.7 billion.

UBS analyst Jai Singh said: "Revenue was in line with our estimate but cost was on the higher side because of higher technology investments. "This included initiatives such as SGXClear, OTC Financial Clearing, and the Reach initiative. We believe the technology-related costs will remain high as the company is likely to continue to strengthen its competitive position post its failure to acquire the ASX."

The SGX reported that revenue increased 10.1 per cent to S$168.8 million, on the back of higher listing and corporate action revenues as well as market data revenues. Under the Reach initiative, the SGX will install the world's fastest securities trading engine by August and is part of the SGX's efforts to expand its membership and distribution network and to promote high frequency trading in the SGX markets

Publish date:21/04/11

金錢爆(泡沫紅茶店 瑞信翻桌)

2011-0418-57金錢爆(泡沫紅茶店 瑞信翻桌)

Publish date:18/04/11

Wednesday, April 20, 2011

TPV Expanding LCD TV business through JV (CIMB)

TPV Technology
S$0.78 Target: S$0.95
Expanding LCD TV business through JV

JV with Philips to take over latter’s LCD TV business
Short-term pain for long-term gain. Although the 70:30 JV with Philips will contribute an additional €3bn in revenue and 2m-2.5m units of LCD TVs p.a. (Philips’s inhouse volume), TPV’s bottomline may be negatively affected in 2012. This is because Philips’s LCD TV business incurred a loss of €130m in 2010. However, TPV has demonstrated its ability to improve cost structures and turn around loss-making businesses when it acquired Philips’s PC monitor operations in 2005. Nevertheless, we will not include the numbers into our forecast until the deal is concluded at end- 2011. However, we finetune our FY11-13 profit forecasts by -7% to +2% for a higher gross profit margin and opex. Accordingly, our target price is reduced from S$$1.01 to S$0.95, still based on 0.95x CY11 P/BV. We maintain our OUTPERFORM call and see firming panel prices as a potential catalyst.

The news
Forming 70:30 JV with Philips to take over the latter’s LCD TV business. Royal Philips Electronics (NYSE:PHG, AEX:PHI) announced that it has entered into a term sheet to transfer its television business to a joint venture with TPV Technology as part of a long-term strategic partnership. The new company will be 70% owned by TPV and 30% by Philips.

The joint venture will be responsible for the design, manufacturing, distribution, marketing and sales of Philips’s television business worldwide, with the exception of mainland China, India, United States, Canada, Mexico and certain countries in South America. As part of the transaction, Philips will grant the joint venture the right to use the Philips brand under certain strict quality and customer care standards for the television business worldwide, excluding the above-mentioned territories. In exchange, Philips will receive revenue-based royalty payments. The existing brand licence agreements in China, India and North America will not move to the joint venture.

Key terms and conditions of the transaction:
• Philips will grant the JV the right to use the Philips brand for an initial term of five years with an automatic renewal for another five years, subject to the JV meeting certain key performance indicators.

• The JV will not pay any royalty in 2012 and will pay royalties of at least €50m annually from 2013 onwards. For the financial year 2013, the annual royalty payable will be 2.2% of sales. From the financial year 2014 onwards, the annual royalty payable by the joint venture will be 2.2% of sales, which can be increased with a variable component up to a maximum of 3% of sales, subject to certain performance criteria.

• Upon the completion of the transaction, TPV will purchase 70% of the shares in the JV for a deferred purchase price, which will be calculated as a multiple of four times the JV’s average EBIT over the financial years 2012 until the year Philips exercises its right to receive the purchase price. Philips may exercise this right at any time after three years from the completion of the transaction. In addition, at any time after the sixth anniversary of the date of completion of the transaction, Philips has an option to sell the remaining 30% shareholding in the joint venture to TPV for a consideration using the same formula.

• The signing of definitive agreements is expected to take place in the third quarter with closing expected to take place before the end of 2011. Between the date of this announcement and the signing of the definitive agreements, Philips will engage in the applicable employee consultation procedures and TPV will perform a confirmatory due diligence on the television business. The closing of the transaction is subject to the relevant shareholder and regulatory approvals.

Deal is in line with TPV’s strategy to grow the branded LCD TV business. The acquisition is in line with TPV’s plan to grow LCD TV sales and will also ensure that TPV will not lose its LCD TV ODM business from Philips. We estimate Philips accounted for about 25% of TPV’s LCD TV business in 2010. We understand that Philips still manufactures 20-30% of its LCD TVs inhouse and this volume will be transferred to the new JV. This will enable TPV to narrow the market share gap between the company and the world’s second largest LCD TV maker LG Electronics. Although the LCD TV business is a highly competitive industry, we believe with scale and a lean cost structure, the merged entity can still be successful and return to profitability. This is evident from Vizio’s success in the US market.

Savings through bigger scale and TPV’s better cost structure. We believe TPV is able to significantly reduce the cost structure for the new JV given the possibility of consolidating some of the manufacturing sites and operations. The JV will hence be able to leverage Philips’s brand (which is still one of the top three brands in Europe) and TPV’s manufacturing scale. The deal is expected to be completed at end-2011 and should add more than €3bn in sales to TPV in FY12. Contributions to the bottomline, if any, will be minimal as we believe the full benefits of cost savings will only be realised from FY13 onwards, based on its deal back in 2005. Also, we understand that Philips’s LCD TV business is operating with negative cash cycle days and hence should not further burden TPV’s working capital despite the jump in revenue.

Potential negatives. (1) We see the risk of some existing and potential OEM customers diverting their outsourcing to other ODMs as they may view TPV as competing head-to-head with them with the Philips brand, and (2) Philips’s existing LCD TV business is yielding lower returns than TPV’s and hence may drag down the margin of the combined unit before the benefits of cost cutting and streamlining kick in.

Valuation and recommendation
No immediate impact; maintain OUTPERFORM. The deal is not expected to have any financial impact in FY11 and could add more than US$4bn in sales each in FY12- 13 or 27-28% of our current forecasts. However, contributions to the bottomline, if any, may be limited until we see the full positive benefits of the streamlining effort. We are not including the numbers into our forecast until the deal is concluded at end-2011. However, our sensitivity analysis shows that every 1% negative net margin for Philips’s LCD TV business (assuming flat yoy revenue growth of US$4.4bn) will reduce our FY12 profit forecast by about 15% and vice versa.

Nevertheless, we finetune our FY11-13 profit forecasts by -7% to +2% to adjust for a higher gross profit margin and opex. Accordingly, our target price is reduced from S$1.01 to S$0.95, still based on 0.95x CY11 P/BV. We maintain our OUTPERFORM call and see firming panel prices as a potential catalyst.

Source/转贴/Extract/: CIMB Research
Publish date:19/04/11

A-REIT Grounds for optimism in rising occupancy (CIMB)

Ascendas REIT
NEUTRAL Upgraded
S$1.97 Target: S$2.09
Grounds for optimism in rising occupancy

• Results in line; upgrade to NEUTRAL. FY11 DPU inched up 1% to 13.23 cts, which, at 96% of our estimate and 97% of consensus, was broadly in line. Even though FY11 topline was boosted by some one-off items, management is confident that FY12 earnings will be an improvement on FY11. We raise our business park occupancy assumption for FY12 from 93% to 95% and factor in the acquisitions of Neuros and Immunos and dilution from the private placement in April. This reduces our FY12 DPU by 2% but our DDM-based target price (8.4% discount rate) stays at S$2.09. We upgrade AREIT from Underperform to Neutral given the potential catalyst of higher occupancies driven by a firm economic recovery. The stock is trading at 1.1x P/BV and a forward dividend yield of 7%, which is attractive for a large-cap REIT.

• Net property income (NPI) up 6%. The 8% topline growth was boosted by one-off items including liquidated damages, full-year contribution from development projects
and acquisitions completed in FY10, as well as positive rental reversions of up to 3% p.a. However, NPI growth of 6% was muted by higher operating expenses which included increased utility costs, expiry of property and land rent rebates and changes in lease structure.

• Improvement in occupancy and rents reasons to be positive. Overall occupancy for the portfolio was flat at 96%. But we do note a firm 1% pt improvement in the occupancy of multi-tenanted buildings even though quite a few single-user buildings had been converted into multi-tenanted ones when the tenants either did not renew their leases or went into liquidation. The most significant pickup was seen in business and science park space, which saw an almost 4% pt rise in occupancy to 93.4% in spite of the increase in this asset type when AREIT completed its Changi Business Park development. We believe this speaks volumes of the strong underlying demand and attests to the management’s strong asset management skills.

Source/转贴/Extract/: CIMB Research
Publish date:19/04/11

CapitaCommercial Trust (CCT): Market Street car park redevelopment finally comes into fruition

CapitaCommercial Trust’s (CCT) 1Q11 results were mostly in line with our expectations. Gross revenue met 25.5% of our full-year forecast and was down 10.6% YoY and 1.2% QoQ to S$91m. 1Q11 DPU is 1.84 S-cents, representing an annualised yield of 5.3%. CCT also announced that it will be jointly developing Market Street Car Park (MSCP) into an ultra-modern Grade A office tower. The total project cost is estimated to be S$1.4b (S$1,944 psf on NLA basis). CCT will have a 40% stake in the JV and capital commitment of S$560m. The new office tower is estimated to provide a GFA of 887,000 sqft. We are overall positive on the MSCP redevelopment but remain wary that its land lease is only 59 years following completion in end 2014. We also forecast CCT to continue to experience negative rent reversions in 2011, but this should change in 2012. Reiterate BUY with an increased RNAV-derived fair value of S$1.63 (prev: S$1.61).

1Q11 DPU of 1.84 S-cents. CCT posted its 1Q11 results yesterday, which came in mostly in line with our expectations. Gross revenue met 25.5% of our full-year forecast and was down 10.6% YoY and 1.2% QoQ to S$91m. This was mainly attributed to the reduction in rental income arising from the sale of Starhub Centre and Robinson Point and the lower revenue contribution from Six Battery Road because of expected vacancies to facilitate the asset enhancement works and negative rent reversions. Total distributable income was down 4.1% YoY and 4.7% QoQ at S$52.1m. 1Q11 DPU is 1.84 S-cents, which is 4.7% lower than 1.93 S-cents reported a year ago. On an annualized basis, the latest distribution represents a yield of 5.3%. CCT also repaid the S$100m MTN that was due in Jan 2011 in cash this quarter and brought down its gearing from 28.6% to 27.8%. This gives it comfortable debt headroom of S$663m before hitting the 35% gearing level.

MSCP redevelopment. CCT also announced that it will be jointly developing Market Street Car Park (MSCP) with its sponsor, CapitaLand, into an ultra-modern Grade A office tower. CCT has obtained provisional permission from URA to rezone the premise from “transport facilities” to “commercial use”. The rezoning is subjected to two conditions: (1) payment by CCT of 100% of the enhancement in land value as assessed by the Chief Valuer, and (2) No extension of the existing land lease, which expire on 31 Mar 2073. The total project cost is estimated to be S$1.4b (S$1,944 psf on NLA basis). CCT will have a 40% stake in the JV and capital commitment of S$560m , which will be funded in stages. It will commit S$335m in 2011, and the rest via internal cash resources and debt, keeping pro forma gearing below 31%. The new office tower has a GFA of 887,000 sqft and height of 245m, expected to be completed before end 2014. According to our estimates, CCT’s existing NPI yield in FY10 was approximately 5.46%. CCT has stated that the stabilised yield from the completed development is expected to exceed 6% per annum, which makes the redevelopment yield-accretive.

Reiterate BUY. We are overall positive on the MSCP redevelopment but remain wary that its land lease is only 59 years following completion in end 2014. We also forecast CCT to continue to experience negative rent reversions in 2011 , but this should change in 2012. With its near 100% occupancy and active leasing strategy, CCT is poised to benefit from the rental upside ahead. Reiterate BUY with an increased RNAV-derived fair value of S$1.63 (prev: S$1.61).

Source/转贴/Extract/: OCBC Investment Research
Publish date:20/04/11

CCT Redeveloping Market Street Carpark (DBSV)

CapitaCommercial Trust
BUY S$1.41
(Upgrade from HOLD)
Price Target : 12-Month S$ 1.59 (Prev S$ 1.57)

Redeveloping Market Street Carpark
• Results within street estimates, negative rental reversion kicking in
• Redevelopment of Market Street Carpark provide midterm boost
• Upgrade to BUY with slightly higher TP of $1.59

1Q11 results within expectations. Topline declined by 10.6% yoy and 2.4% qoq to $91m, due to lower revenue contribution from 6 Battery Rd following asset enhancement works as well as negative rent reversions and income vacuum left by the disposal of Starhub Centre and Robinson Point last year. Correspondingly, NPI fell by
9.9% yoy (-1.4% qoq) to S$69.9m. Distributable income dipped a smaller 4.7% yoy to S$52.1m (DPU: 1.84Scts) due to lower borrowing cost.

Negative rental renewals mitigated by healthy leasing activities. Portfolio occupancy remained relatively stable at 98.2% (-1.1% qoq) with the group signing 156,000sf of new office and retail leases in 1Q11. That said, topline will continue to be affected by negative rental reversions for the rest of 2011 with expiring office leases in its 4 major buildings averaging $14.01psf/mth, compared to current market rates of c$8.5-12psf. CCT has a remaining 10.3% of office and 2.1% of retail leases up for renewal in 2011 and another 13% and 6% respectively by 2012.

Redeveloping Market St Carpark gives better returns. The group announced it is jointly redeveloping the Market St Carpark into an office tower with Capitaland and will take a 40% share in the $1.4b project. We believe the projected 6% yield on cost is more accretive than acquiring completed properties at this part of the cycle. Taking into account its share of $560m capital commitments, we expect gearing to remain healthy at c31% when completed. Redevelopment will cut bottomline by 2-4% over FY11- 14 on loss of income to DPU yield of 4.7-4.8%. However, earnings will rise by a healthy 24% yoy in FY15 when the development is completed. More importantly, we believe this exercise would be ROE enhancing and lift current BV by 5% based on mark to market value of c$2600psf.

Upgrade to Buy. We upgrade the stock to Buy as we expect this redevelopment to provide share price re-rating catalyst. Our TP is raised slightly to $1.59 and offers 18% total return.

Source/转贴/Extract/: DBS Vickers Research
Publish date:20/04/11

Zhulian Weaker USD squeezed margins (HwangDBS)

Zhulian Corp Bhd
BUY RM1.78
Price Target : RM 2.50
Weaker USD squeezed margins

At a Glance
• 1QFY11 net profit of RM22m was in-line with expectations
• As expected; declared 1st interim single tier DPS of 3 sen
• Maintain BUY and target price of RM2.50

Comment on Results
Zhulian’s 1QFY11 net profit of RM22m made up 22.5% of our full year net profit forecast of RM97.5m. This was in-line with our and market expectations. 1QFY11 net profit declined 11.8% yoy while revenue was flattish at RM86.2m (vs FY10’s RM86.3m). The drop in net profit was mainly dragged down by a 9.5% decline in USD against RM to RM3.08 and higher operating expenses of RM66.7m (+8.5% yoy). This has more than offset better performance from Zhulian’s 49%-owned Thai associate that grew 19.6% yoy to RM8m. Qoq, revenue grew mildly at 1.6% while net profit fell 9.5% led by higher operating expenses and lower contribution from Thai associate that dropped 10.4% from RM8.9m caused by seasonality. As expected, Zhulian declared first interim single-tier DPS of 3 sen. Overall, EBIT margin fell 6.2 ppt yoy and 2 ppt qoq to 22.6%.

We are keeping our FY11F earnings which has factored in an average MYR/USD forecast average rate of RM3.02. Zhulian remains cash rich with RM133m net cash (against RM132m in FY10), or 29 sen/share as at FY10. This should bode well for its future expansion and could lead to a higher dividend payout. Maintain BUY and TP of RM2.50 (based on 12x FY11 EPS) on Zhulian for its undemanding valuation and attractive net dividend yield of 7% for FY11F.

Source/转贴/Extract/: HWANGDBS Vickers Research
Publish date:19/04/11

Tuesday, April 19, 2011

金錢爆(猛呷 4月14日 海南島放飯)

2011-0413-57金錢爆(猛呷 4月14日 海南島放飯)

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


Created 04/19/2011 - 18:30





銀行類股跌勢最重,馬來亞銀行(MAYBANK, 1155, 主板金融組)和豐隆金融(HLFG, 1082, 主板金融組)各跌5仙和7仙。

數碼網絡(DIGI, 6947, 主板基建計劃組)和國油貿易(PETDAG, 5681, 主板貿服組)等藍籌股也面對沉重賣壓,各下跌22仙和10仙。


















Pengana Capital基金經理施羅德表示,許多國家的信貸都是根據美國債券為折價基礎,若美國信貸評級遭下調,不僅相關效應將擴散全球,通貨緊縮(Deflationary)效應也將隨之延伸至全球其他角落。


Publish date:19/04/11

Strategy – Positioning Post Sarawak Election (HLG)

Strategy – Positioning Post Sarawak Election
FBM KLCI Target – 1,720
What Next?
 With BN retaining its 2/3 (but reduced) majority in the Sarawak election, expectations of an early General Election may not be too far fetch.

 The government is likely to capitalize on the results in Sarawak by expediting diligent roll out and implementation of various construction projects and government land deals under ETP as well as reforms newsflow.

 Petronas to award more contracts in view of its higher capex and domestic centric intentions.

 Stronger economic growth in 2H and Ringgit to appreciate modestly. Ample domestic and global liquidity to underpin all asset classes.

Sectors Implication
 Construction – ETP to gain momentum with plenty contracts to replenish order book. Prefer smaller players.
Top two picks are Mudajaya and HSL.

 Banking – Proxy to most of the above with no asset quality issue. OPR hike to mitigate SRR hike.
Top two picks are RHB Cap and CIMB.

 Plantation – Liquidity, rising CPO and soybean gap and high oil prices. Valuations lagging behind our RM3,200/MT assumption.
Top two picks are Sime and TWS Plant.

 Property – Liquidity, hedge against inflation, attractive packages, MRT and improved Sing-Malay relationship. Deep values in small cap.
Top pick is Glomac.

 Oil & Gas – Petronas’ higher capex and domestic focus intentions, high oil prices and may prompt M&A among domestic players.

 Air Asia, Boustead and TimeDotcom are our other picks that we expect to benefit from the above.

 Domestic – fiscal position, rising interest rate and SRR beyond expectations and General Election.

 External – geopolitical, high oil prices, China over tightening, lingering European debt woes, Japan Nuclear crisis and faster-than-expected pace of QE unwinding.

Summary & KLCI Target
 Remained positive with unchanged year-end FBM KLCI target of 1,720 (15x 2012 earnings).

 Short term trading range of 1747-1,565 arising from unpredictable external factors.

Sector Weight & stock Picks
 Sector weightings are listed in Figure 2 while our fundamental stock picks are listed in Figure 3.

 For short-term, we short-listed stocks with 3-month beta of more than 1.2 for the less risk-averse investors. These are segregated into three categories i.e. Institutional Holdings, Situational / M&A and Values.

Election Reaction?
 The worst FBM100 performers since recent peak could attract interest. However, their performances in 08 show that not all would recover.

What Next?
With Invest Malaysia and the Sarawak Election done and dusted, we take stock of what to expect over the next few months as well as the impact on the equity market. Barisan Nasional (BN) retained its 2/3 (but reduced) majority in the recently concluded Sarawak state election. This is despite earlier comments by the Prime Minister that said BN’s aim is to retain control of the state rather than aiming for the 2/3 majority. With the latest results, expectations of an early General Election may not be too far fetch.

More importantly, we believe the government is likely to capitalize on the results in Sarawak by expediting diligent roll out and implement of various ETP projects as well as award of government land deals. This is to ensure that the economy will be on firmer footing as well as acting as a catalyst to attract foreign investors and sustain the feel good factor in the equity market. Moreover, we also expect sustained newsflow on reforms and transformation to excite investors’ interest. Roll out of projects and/or land deals will directly benefit the Construction and Property sectors as well as indirectly the Banking and Building Material sectors.

In addition, as part of ETP, Petronas has budgeted capex of up to RM275bn over the next five years or RM50-55bn per annum vis-à-vis RM30-40bn previously. Moreover, there is also an apparent shift from overseas investment to focus more on the domestic front. This should benefit the Oil & Gas sector.

On the economic front, we expect stronger economic growth in 2H2011 (projected GDP of +5.8%) vis-à-vis 1H2011 (+5.2%) to arrived at 5.5% for 2011. The expectation of stronger economic growth in the second half is in line with Bank Negara’s view expressed in its Mar MPC statement. Sectoral basis, the manufacturing sector is expected to benefit from robust demand for resource-based products while the services sector will ride on higher consumption-related activities. Growth will also be reinforced by the pick-up in civil engineering projects as well as ongoing property construction. This would continue to benefit domestically driven sectors like Telecommunication and Banking.

As for liquidity, despite the recent SRR hike and expectation of more hike to take the SRR from the current 2% to 4% (pre sub-prime crisis level), there are still ample liquidity in the domestic system.

On the global front, we still expect global liquidity to remain ample throughout 2011, supportive of all asset classes. In the US, we expect the Fed to complete its QE2 in June and maintain the overall QE size until early 2012. We see the more influential voting members, i.e. Bernanke and Yellen, insisting to delay the QE unwinding to 2012 to foster growth momentum, brushing aside inflation concern. For the other G7 members, the pledge of liquidity support for the financial market is expected to continue even though there is scope of rate hike in the UK and Euro zone given the inflationary threat. Ample liquidity will be positive for all asset classes. Coupled with still conducive interest rate environment (albeit further normalization), we envisaged more M&A and/or corporate exercise excitements, property reflation and hedge against inflation and sustained high commodities prices. Sectors that would benefit are Banking, Property, Plantation and Oil & Gas. In addition, ample liquidity has also increase investors’ appetite for under-researched and undervalued stocks where we expect rising interest especially in conglomerates that trade well below their SOPs. We expect Ringgit to tread a modest appreciation path given the sustained large trade surplus reinforced by interest rate and growth differential with the advance economies. We see BNM feeling more comfortable with stronger MYR so long as the appreciation is orderly and in line with regional currencies. This also bodes well with the rate hike scenario as widening interest rate differential may not be as fearful as it was previously thought. We expect MYR to appreciate modestly in the range of RM2.95-3.05/US$ in 2011.

Implication For Selected Sectors Construction (Overweight)
The construction sector was sold down as investors avoided higher beta stocks following fears of Middle East unrest and the Japanese nuclear fallout. However, we believe that these fears are unfounded as we have seen material contracts being rolled-out. The projects planned under the ETP if any, is actually gaining traction and materializing.

We expect the ETP to gain momentum and more projects to be rolled-out (especially after the Sarawak Election) as well as the possibility of new additions into ETP’s proposal. In view of the huge potential orders flooding the market, we see ample opportunities for majority of the construction players to replenish their order book. The potential projects that have yet to be officially awarded.

Within the sector, we prefer smaller players given that their valuations are less demanding while earnings sensitivity to new orderbook is significantly higher. This is because the bigger players have evolved into conglomerates whereby earnings and SOP contributions from their construction arms only constitute 20-30% of total. Our top two picks in the sector are Mudajaya and HSL.

Banking (Overweight)
This is the best proxy to the domestic economic growth as well as added boost from higher growth opportunities from overseas subsidiaries / associates. It is also an indirect beneficiaries given the financing needs (either loans and/or fund raising from the equity or debt markets) of the various ETP projects. Their investment bank division will also benefit from M&A and corporate exercise activities. Moreover, with robust capital ratios, capital management will be another share price catalyst while further liberalization of the sector will also create M&A excitements.

The expected rise in SRR will have negative impact on earnings and sentiment. However, the impact on earnings is not significant (i.e. for every 1%-pt hike in SRR, earnings will be diluted by x-x%) while we believe that the market has already factored in gradual normalization of the SRR from the current 2% to 4%. Moreover, the expected rise in OPR (HLIB is expecting 25bps hike in OPR in May) would help to mitigate the impact of SRR hike.

Given strong loan growth (HLIB is projecting 10% in 2011), rising non-interest income and stability in impaired loans, the marginal negative impact of SRR hike and the controlled pace of increasing overheads are not expected to derail earnings growth. Moreover, historically, during the 97-98 Asian financial crisis and 2001 tech bubble, the main reason for the sharp plunge in earnings (some banks event fell into the red) was the significant jump in NPLs, culminating in ballooning provisions. However, during the latest economic downturn, earnings were hardly impacted given that industry asset quality was largely intact even during the worst of time. With strong asset quality and continued economic growth, the risk of impaired loans curtailing earnings growth is remote.

Top two picks are RHB Cap and CIMB.
Plantation (Overweight)

Although CPO price has retreated from its peak and remain volatile (geopolitical uncertainties in MENA, maturing tree profile in Indonesia, improving weather condition in Malaysia and Indonesia that will boost output and still-strong speculative interest), we are keeping our CPO price assumption of RM3,200/MT for 2011 due to the recent prospective planting report by USDA which projects a lower-than-expected soybean planting intentions in 2011, widening gap between CPO and soybean oil prices and current high crude oil prices that may re-ignite interest in biodiesel. Moreover, the purported B5 implementation in central region of Malaysia, if materialized, would reduce domestic stock level.

Assuming spot CPO plunged to RM3,000/MT overnight and remained at that level for the remaining eight months of the year vis-à-vis YTD average of RM3,617/MT, average for the year would still be RM3,200/MT. Current average P/E for the sector is circa 15x. Based on historical correlation, the 15x is equivalent to average CPO of RM2,700-2,900/MT while RM3,200 is equivalent to 16-17x. Thus, we retain our bulish view on the sector. Top two picks are Sime Darby and Tradewinds Plantation.

Property (Overweight)
Ample liquidity and low savings rate coupled with the recent spike in inflation (which is expected to stay above the 3% level before tapering off in 4Q2011) has resulted in negative real return on savings. This scenario may continue to encourage household to search for alternative saving instruments like properties (which is the best hedge against inflation). This is further augmented by the attractive financing packages offered by banks as well as attractive offers by developers (waiver of S&P fee). While the LTV limit of 70% on 3rd property has resulted in lower applications, it could be due to seasonal factor while on the yoy basis, absolute amount is still higher.

Another catalyst is the MRT project. Besides increasing accessibility, the MRT project will open up new areas for development. It will be beneficial to both developers and consumers. Developers would be able to develop new areas as well as existing pockets of land whereby accessibility is an issue. Consumers would have wider range of locations while overall affordability may improve given that transportation costs, living expenses and convenient form part and parcel of housing affordability.

Moreover, the improved Malaysia-Singapore relationship will also enhance salability of properties in Johor.

While some of the bigger capitalized property stocks has performed well (in terms of share price performance), we believe there are still ample of values to be found in the mid-small capitalization space given that bulk of them are trading at significant discount to their RNAV estimates if not book value as well as single-digit P/E. Out top pick is Glomac.

Oil & Gas (Not Rated)
Given Petronas’ higher capex plan and refocusing in domestic investment as well as high oil prices, there will be plenty of opportunities for industry players. Examples are more marginal oil fields awards, replacement of old infrastructure, refurbishment as well as enhance recovery efforts.

As one of the aim of ETP is to use private investment to drive economic growth, new domestic contracts are likely to benefit local players vis-à-vis foreign players given that the latter is a leakage and have smaller multiplier effect on the domestic economy. This should provide plenty of “action” in the Oil & Gas sector as new contracts will drive earnings growth and lower P/E valuations, essential ingredients for share price performance.

Given that some of the contracts would be sizeable while local players are generally smaller sized, new contracts could be catalyst for M&A excitement as well, especially amidst the ample liquidity and relatively low interest rate environment.

Risks Domestic
1) Rising food and commodities prices will put pressure on inflation, which has already jumped unexpectedly in Feb. With high oil prices and disruptions from Japan’s earthquake, the CPI is likely to remain high. Although we expect the government to proceed with its planned bi-annual subsidy removal exercise, the magnitude may be smaller. This may further stress the fiscal position which may in turn being used as an excuse for more significant retreat of foreign investors;

2) The expected 25-50 bps hike in OPR and further hikes in SRR back to 4%. Although the market has factored in these issues, further hikes beyond the amount could be a shock, especially if SRR is increased to more than 4%; and

3) Uncertainties about the General Election, especially post the 08 election.

1) Geopolitical tension that would keep oil prices at current high level or surge further;
2) Over tightening in China;
3) Lingering European debt woes;
4) Japan Nuclear crisis;
5) US reporting season off to a bad start with Alcoa and Google missing estimates;
6) Latest surge in initial jobless claims; and
7) Faster-than-expected pace of QE unwinding.

Summary & Recommendations
We believe there are ample compelling factors that would buoy the market over the longer term. Earnings growth of 12.2% and 10.1% in 2011 and 2012 will also lower FBM KLCI’s P/E to 13.7x (see Figures 9 & 10), making valuations more compelling.

By ascribing a mid-cycle P/E of 15x to end 2012 earnings, we maintain our FBM KLCI target year end of 1,720 points.

However, due to various potential external shocks and domestic risks, the volatility in the market is expected to continue (especially when valuations is among the highest in the region – see Figure 11) and is likely to be ranged bound between 1,474 (recent low) and 1,565 (recent high). While we believe that investors should take the opportunity to gain entry into fundamentally strong stocks on dips at more palatable valuations, there is also trading opportunity in a range bound market

Sector Weight & Top Picks
Our sector weight is premised on sector that we think will benefit from the above positive driver(s) of the market. As stocks within the same sector would be viewed differently by investors based on SWAP analysis, we believe stock picking is still of utmost important for outperformance. Our sector weight recommendation and a brief reasoning are listed in Figure 12. Our top picks are listed in Figure 13.

High Beta Stocks
Given the expectation of a volatile and ranged bound market, other than the fundamental stock picks that we recommend to gain exposure on dips and position for longer term returns, we have also scanned through high beta stocks for those who are less risk averse that may be interested to enhance performance. From the list, we have short-listed those with 3-month beta of more than 1.2 and segregate them into three categories. The categories are Institutional Holdings, Situational / M&A and Values (see Figure 14).

Election – Which Stocks Reacted The Most?
The FBM KLCI and share prices have corrected ahead of the Sarawak Election (also partly due to external factors). The results in Sarawak suggest that stocks that corrected significantly since 7 Apr 11 could have some technical rebound. We showcase performance of the FBM KLCI and the 100 stocks since the recent peak on 7 Apr 11 in Figure 16. As expected, the “usual suspects” were some of the worst performers. We also note that although HSL is not in the list, it would have been the worst performer (if included in the list) with a 10% loss during the period.

However, investors do have to take note that worst performers do no necessary mean strong recovery as reflected in the study of share prices performance after the 08 General Election. Figure 16 shows the share price performances of FBM100 component stocks vs. the FBM KLCI immediately after the 8 Mar 08 General Election and the subsequent rebound from the bottom on 10 Mar 08 to a temporary peak on 31 Mar 08. We note that among the top 10 worst performing stocks immediately after the 08 General Election, the “usual suspects” dominated. However, although most managed to recover bulk of their losses, not all enjoyed the same fate. The FBM KLCI recovered 6.3% (from the 10 Mar bottom) by 31 Mar 08 but has yet to hit the preelection level. The FBM KLCI only managed to recovered back to the pre-election level on 29 Apr 08 but thereafter the market plunged due to the sub-prime crisis. Also note that the FBM KLCI experience extreme volatility circa one week post the General Election and tested the low of 1,157-pts on 18 Mar 08 before it steadily marched to the temporary peak on 31 Mar 08.

Source/转贴/Extract/: HLIB Research
Publish date:18/04/11
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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