12 Oct 2012 08:47

*DJ Lian Beng Group Target Cut To S$0.54 From S$0.63 By Maybank-Kim Eng 

 

12 Oct 2012 08:00

• DBS has sold almost halved its stake in Bank

of the Philippine Islands for S$757.3 mln,

thereby realizing a $450 mln profit.

• DBS’ stake in the Philippine bank is now 10.4%.

• DBS bought its 20.4% stake back in 1999 when

John Olds was the CEO.

• We believe the partial divestment, made easy

by the Philippines stock market’s strong

performance in recent times, is in line with new

Basel III rules (especially relating to banks

investments in other banks) that will kick in in

2013.

• Note the Philippines is today a creditor nation

compared to the number of debtor nations in the

world today, especially Europe. Also, American

banks have been proactive in selling down their

stakes in Chinese banks in recent years.

• But the question has to be will the disposal of the

remaining stake be a matter of time, especially

once its plan to acquire Temasek’s stake in PT

Danamon bank is made clearer.

• We maintain DBS is attractive at $14 level, where

 

FNN

 

 

 

S$8.89-FNN.SI

 

 

 

 

 

 

 

 

 

 

•   F&N explained Rule 5 of the Takeover Code that disallows  it to sell the hospitality  and 

serviced  residence  business to OUE  (bidding price $1.4 bln).

 

 

•   F&N has described  the business  as an integral part of its property business.

 

 

 

 

 

 

 

 

 

 

•   Key question  has to be, is not Asia Pacific Breweries an even greater integral part of the F&B 

business, and the board was ready to accept Heineken’s  first offer of $50 a share, which was 

subsequently  raised to $53, thanks to the Thais.

 

 

•   The price drop yesterday after the release of the Offeree Circular reminds one of reaction to 

OCBC’s disclosure  many many years ago of its RNAV, and indeed reinforces the market adage to “buy 

on expectation / sell on news”.

 

 

 

 

 

 

 

 

•   2 major PC chip companies (Advanced Micro Devices and Intersil Corp) warned that sales to PC 

customers fell more than previous expectations due to cannibalization  by tablet computers and 

smart-phones   as well as  weaker than expected demand from emerging markets  such as China  and 

India and Europe.

 

 

•   While the above should  come  as no surprise given similar warnings from other PC companies 

such as Intel, Seagate and Western Digital in the last 2 weeks, AMD still dropped  10% in after 

hours after already  having declined  40% in the past year and Intersil Corp fell 5% adding to its 

30% decline in the past year.

 

 

 

 

 

 

 

•   Gartner  yesterday revised down their 3Q’12 PC shipment forecasts from 5% yoy decline to 8% yoy 

decline  to 87.5mln units citing the worse than expected demand environment.

 

 

•   We continue to maintain our cautious stance on PC related stocks such as  Broadway  (70-80% 

exposure), Cheung Woh  (60%) and Armstrong (30-40%).

 

CHINA

 

 

 

 

 

 

 

•   Bloomberg reported that spokesperson from China’s 4 biggest banks said that they are resisting 

pressure from  the  government to  lower borrowing costs as  they seek to  maintain profitability 

of their lending operations.

 

 

•   Officials from the top 4 lenders said that they are only limiting discounts up to 10% from the 

official benchmark rate versus the maximum allowed of

30% and only limiting it to their best corporate clients.

 

 

 

 

 

 

 

 

•   The above is in line with our understanding from recent feedback from several small and medium 

sized enterprises operating in China that credit for them and their customers remain very tight 

thus

limiting their  near-medium  term  recovery prospects.

 

 

 

Regional Morning Notes

 

Friday, Octobe

 

CHINA Sector

Ports                                                                                               

  Page 2

Headwinds remain despite encouraging September data in Yangtze River

Delta.

Update

Brilliance China Automotive (1114 HK/BUY/HK$8.84/Target: HK$10.00) Page 4

9M12 sales beat expectation; we raise target price to HK$10.00.

Poly Property (119 HK/BUY/HK$4.12/Target: HK$5.75)                                    Page 7

Key takeaways from NDR.

MALAYSIA Results

Top Glove (TOPG MK/BUY/RM5.15/Target: RM6.10)                                       Page 10

FY12: Sustaining a growth trajectory. Positive on sales volume growth amid favourable demand and 

supply dynamics with slight margins improvement ahead.

SINGAPORE Sector

Oil Service                                                                                     

Page 13

Key takeaways from marketing trip.

THAILAND Results

TISCO Financial Group (TISCO TB/SELL/Bt48.50/Target: Bt45.00)          Page 15

3Q12: Despite strong loan growth, bottom line is flat qoq on the back of a strong jump in OPEX. 

Maintain SELL

 

 

Key Indices

 

Prev Close    1D %   1W %     1M %   YTD %

DJIA                    13326.4     (0.1)      (1.8)         0.0         9.1

S&P 500               1432.8       0.0      (2.0)       (0.1)       13.9

FTSE 100             5829.8       0.9        0.0         0.6         4.6

AS30                     4505.2    (0.1)        0.7         2.8         9.6

CSI 300                2302.5    (0.9)        2.3       (0.8)       (1.8) FSSTI                   

3032.7    (0.0)      (1.7)         0.1       14.6

HSCEI                 10231.2       1.9        3.9         7.8         3.0

HSI                      20999.1       0.4        0.4         4.6       13.9

JCI                        4285.0       0.1        0.3         2.7       12.1

KLCI                     1655.5    (0.2)      (0.4)         2.6         8.1

KOSPI                  1933.1    (0.8)      (3.0)       (0.9)         5.9

Nikkei 225             8546.8    (0.6)      (2.3)       (4.6)         1.1

SET                       1294.9       0.4      (0.9)         2.8       26.3

TWSE                   7451.7    (1.8)      (3.0)       (1.6)         5.4

BDI                            903       3.2        6.9       36.4     (48.0) CPO (RM/mt)           

2264       1.6        7.0     (18.3)     (28.4) Nymex Crude

(US$/bbl)                   92       0.3        2.8       (4.8)       (6.5)

Source: Bloomberg

 

   Top BUYs/SELLs                                       

 

Current    Target         Pot Company                  Ticker            Price      Price          

+/- (lcy)       (lcy)         (%)

Top BUYs

China Mobile              941 HK           84.75    100.00        18.0

Kunlun Energy           135 HK           13.82      16.80        21.6

Sinopharm                 1099 HK         26.30      28.20          7.2

Multi-Purpose Hldgs  MPU MK          3.66        4.20        14.8

DBS                           DBS SP          14.14      19.50        37.9

Krung Thai Bank        KTB TB          18.40      21.75        18.2

PTT                            PTT TB        315.00    405.00        28.6

Top SELLs

China Merchants Hldgs  144 HK           23.40      19.60     (16.2) Tiger Airways             TGR 

SP           0.75        0.51     (32.0)

 

 

Key Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GDP (% yoy)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011    2012F     2013F

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US                                                        1.7          1.5          1.5

Euro Zone                                            1.4       (0.5)          0.4

Japan                                                 (0.8)          2.0          1.5

Singapore                                            4.9          2.0          3.0

Malaysia                                               5.1          5.0          4.7

Thailand                                               0.1          6.0          3.4

Indonesia                                             6.5          6.1          6.3

Hong Kong                                           5.0          1.5          3.5

China                                                   9.3          7.6          8.0

2011    2012F     2013F

WTI                         (US$/bbl)           97.5         102         111

Aluminium               (US$/mt)          2,420      1,993      1,963

Copper                    (US$/mt)          8,851      7,865      8,225

Gold Price London  (US$/ounce)    1,568      1,645      1,775

Iron Ore                   (USc/dmtu)         168         126         128

CPO                        (US$/mt)          1,025      1,030      1,110

BDI                                                   1,548      1,700      1,800

Source: Bloomberg, UOB Kay Hi

 

 

Venue               Beg    Close

Indonesia and Thailand Property       Singapore       12 Oct   12 Oct

Analyst Presentation

Greater China Energy Sector            Kuala Lumpur  15 Oct   16 Oct

Analyst Presentation                        Brunei             17 Oct   17 Oct

Luk Fook Holdings International        Singapore       16 Oct   17 Oct

Corporate Roadshow

Singapore Oil Service Sector            Hong Kong      16 Oct   17 Oct

Analyst Presentation

BW Plantation                                 Toronto           22 Oct   23 Oct

Corporate Roadshow

Hong Leong Industries                     Kuala Lumpur  25 Oct   25

 

 

 

 

 

                                                     

        

 

 

 

 

 

 

Ports – China

 

 

Headwinds Remain Despite Encouraging September Data In

Yangtze River Delta

 

Ports in Yangtze River Delta released encouraging throughput growth for September, thanks to seasonality, but a long-term slowdown is irreversible in the port industry as China is losing market share in low-end manufacturing to ASEAN. BUY COSCO Pacific (1199 HK) on greater exposure to Bohai Rim, and HPHT (HPHT SP) on attractive dividend yield. SELL CMHI (144 HK) on discouraging growth and expensive valuations.

 

What’s New

Regional Morning Notes

 

Friday, October 12, 2012

 

MARKET WEIGHT

(Maintained)

 

Sector Update

 

Top Sector Picks

Company                  Rec       Target          Share Price                        Price (HK$)                               (HK$)

CMHI                      SELL        19.60            23.40

COSCO Pacific         BUY        14.80            10.68

Source: UOB Kay Hian

 

Price Charts

•      Container throughput at Yangtze River Delta (YRD) ports managed to recover in September by posting an encouraging yoy growth against a yoy decline in August. Shanghai and Ningbo delivered 5.6% and 20% container throughput growth in September, after an unexpected yoy decline of 6% and 11% in August.

 

Port Throughput Growth In Sep 12

(lcy)

30

 

28

 

26

 

24

 

22

 

20

CHINA MERCHANTS HLDGS INTL

China Merchants Hldgs Intl/HSI Index

(%)

130

 

120

 

110

 

100

 

90

TEU                                                                       Container

Throughput

yoy % chg

 

18                                                                                                                                                                               80

15

Volum e (m )

Shanghai                                                              2,909,000                                  6

Ningbo                                                                  1,585,000                                20

Chiwan                                                                     382,000                                11

Source: MOT, UOB Kay Hian

 

•      According  to  our  channel  check  with  container  manufacturers,  dry

10

5

0

Oct 11      Dec 11      Feb 12      Ap r 12      Jun 12      Aug 12

 

Source: Bloomberg

 

(lcy)                    COSCO PACIFIC LTD                                 Cosco Pacific Ltd/HSI Index (%)

container prices softened to US$2,350/unit for 4Q12, down from 3Q12’s

US$2,700 level.

 

Action

•      Headwinds  remain  but  sector  still  has  cheap  plays.  Maintain MARKET WEIGHT on China’s ports sector. The sector is battling headwinds, such as China’s sluggish exports ahead and more newsflow of China losing market share in low-end manufacturing to ASEAN countries. In our view, valuation is now key for individual stocks. We suggest  looking  at  COSCO  Pacific  (CP/1199  HK),  which  has  cheap

14

 

13

 

12

 

11

 

10

 

9

 

8

 

7

20

15      Volum e (m )

10

5

0

130

 

120

 

110

 

100

 

90

 

80

 

70

valuations and greater exposure to Bohai Rim ports. Avoid China Merchants Holdings International (CMHI/144 HK) which is focusing on YRD and Pearl River Delta (PRD),

 

•      CP (BUY/HK$10.68/Target: HK$14.80) remains our top pick. CP is our top pick within China’s port sector on: a) its greater exposure to Bohai Rim where the container throughput growth has outpaced PRD and YRD, driven by firm domestic consumption, b) being more leveraged to the potential recovery of dry container prices in 2013, and c) attractive valuation of 8.8x 2013F PE and 0.9x 2013F P/B.

Oct 11      Dec 11      Feb 12      Ap r 12      Jun 12      Aug 12

Source: Bloomberg

 

 

Analysts

 

Lawrence Li

+8621 5404 7225 x813 [email protected]

 

Aochao Wang

+8621 5404 7225 x802 [email protected]

 

Peer Comparison

 

 

Company               Ticker          Curr     Price @      Target        Rec

 

 

Market

Cap           --------- PE (x) ---------        P/B (x)

 

 

EV/EBITDA (x)

 

 

ROE (%)

 

Div Yield (%)

www.uobkayhian.com.sg 12 October 2012

Market News

The FSSTI lost 1.15 pts to 3,032.66, as most Asian stocks fell

after Japanese machinery orders dropped more than estimated and S&P downgraded Spain’s credit rating. Nam Cheong

US markets closed flat as enthusiasm over the fall in jobless

claims faded. The DJIA declined 0.1% to 13,326 and the S&P

500 index gained 0.02%. The Labor Department reported that unemployment benefits fell 30,000 to 339,000, the lowest si

Last close: 3,032.7 (-0.04%)

Stocks on the move…

Thai Beverage - Entering A New Growth Phase

(THBEV SP/NOT RATED/S$0.41)

We believe TB is an emerging regional consumer company rather than just an alcohol company…

Weekly Support and Resistance Watch

We look at the S&R levels of 20 stocks with the largest traded value and highlight the below…

Stocks Trading Near Support Levels (S$, otherwise stated)

Company Last Close Support

Source: NextView

Can FSSTI close the gap?

• The FSSTI appears to close higher after hovering near the immediate support level at 3,020 in the last trading session. Do k

CapitaLand Limited

(CAPL SP, C31) Wilmar International (WIL SP, F34)

3.18 3.11

3.06 3.00

Support: 2,970

Resistance: 3,140

In the last trading session…

• The FSSTI lost 1.15 pts and opened lower at 3,026.7. The

Stocks Trading Near Resistance Levels (S$, otherwise stated)

Company Last Close Resistance

intraday range was from 3,021.9 to 3,037.6.

Olam International

(OLAM SP, O32) Thai Beverage Plc (THBEV SP, Y92)

1.915 2.00

0.41 0.44

• Within the FSSTI 30 stock components, JMH 400US$

(+3.4%) and JSH 500US$ (+2.3%) led the gainers while Olam

International (-3.0%) and Jardine C&C (-2.3%) lost ground.

• Regional bourses ended mixed…

HSI (+0.4%) closed at 20,999.1

Oil Service - Key takeaways from marketing trip.

Ezion (EZI SP/BUY/S$1.33/Target:S$1.87) Kreuz (KRZ SP/BUY/S$0.425/Target: S$0.45)

Nam Cheong (NCL SP/BUY/S$0.25/Target: S$0.30)

The oil service sector, at a 44% discount to its long-term P/B

mean of 1.8x, is ripe for a re-rating…

SSEC (-0.8%) closed at 2,102.9

ASX (-0.1%) closed at 4,505.2

Key dates for SG Economics

12 October GDP (qoq & yoy)

12 October Retail Sales (yoy)

15 October

Electronic Exports (yo

 

 

 

 

 

 

 

Retail Market Monitor

www.uobkayhian.com.sg                                                                               

         12 October 2012

 

 

 

 

 

 

 

 

 

 

 

Market News

 

The FSSTI lost 1.15 pts to 3,032.66, as most Asian stocks fell after Japanese machinery orders 

dropped more than estimated and  S&P  downgraded  Spain’s  credit  rating.  Nam  Cheong gained 8.7% 

to close S$0.25 after it announced two PSV contract wins worth US$52.1m (S$64m) that would be 

scheduled for delivery in 1Q13. In the broader market, losers managed to outpace the gainers 

marginally 189 to 174 with total trading value at S$1.09b.

 

US markets closed flat as enthusiasm over the fall in jobless claims faded. The DJIA declined 0.1% 

to 13,326 and the S&P

500 index gained 0.02%. The Labor Department reported that unemployment benefits fell  30,000 to  

339,000, the  lowest since Feb 08. The US trade deficit also widened in August as a slowdown in 

global growth decreased demand for US goods.

 

 

 

 

 

 

 

 

 

 

 

Last close: 3,032.7 (-0.04%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stocks on the move…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thai Beverage - Entering A New Growth Phase

(THBEV SP/NOT RATED/S$0.41)

We believe TB is an emerging regional consumer company rather than just an alcohol company…

 

Weekly Support and Resistance Watch

We look at the S&R levels of 20 stocks with the largest traded value and highlight the below…

 

Stocks Trading Near Support Levels (S$, otherwise stated)

Company                           Last Close                Support

 

Source: NextView

 

Can FSSTI close the gap?

 

• The FSSTI appears to close higher after hovering near the immediate support level at 3,020 in the 

last trading session. Do keep an eye whether the index could close the gap that was created on 10 

October. We maintain the following support and resistance levels on the longer horizon.

 

 

CapitaLand Limited (CAPL SP, C31) Wilmar International (WIL SP, F34)

 

 

 

3.18                   3.11

 

3.06                   3.00

Support: 2,970

Resistance: 3,140

 

In the last trading session…

•  The FSSTI lost 1.15 pts and opened lower at 3,026.7. The

 

 

Stocks Trading Near Resistance Levels (S$, otherwise stated)

Company                           Last Close           Resistance

 

 

 

 

intraday range was from 3,021.9 to 3,037

 

Olam International (OLAM SP, O32) Thai Beverage Plc (THBEV SP, Y92)

 

 

•  Within  the  FSSTI  30  stock  components,  JMH  400US$ (+3.4%) and JSH 500US$ (+2.3%) led the 

gainers while Olam International (-3.0%) and Jardine C&C (-2.3%) lost ground.

 

•  Regional bourses ended mixed…

HSI (+0.4%) closed at 20,999.1

 

 

Oil Service - Key takeaways from marketing trip.

 

Ezion (EZI SP/BUY/S$1.33/Target:S$1.87) Kreuz (KRZ SP/BUY/S$0.425/Target: S$0.45)

Nam Cheong (NCL SP/BUY/S$0.25/Target: S$0.30)

The oil service sector, at a 44% discount to its long-term P/B

mean of 1.8x, is ripe for a re-rating…

 

 

 

 

 

 

 

 

 

SSEC (-0.8%) closed at 2,102.9

ASX (-0.1%) closed at 4,505.2

 

Key dates for SG Economics

12 October          GDP (qoq & yoy)

12 October          Retail Sales (yoy)

15 October          Retail Sales Ex Auto (mom & yoy)

15 October          Electronic Exports (yoy)

17 October          Non-oil Domestic Exports (mom & yoy)

Source: Bloomberg