DJ MARKET TALK: Singapore's STI Likely To Rise; 3020-3060 Likely 

0055 GMT [Dow Jones] Singapore's STI is likely to rise, tracking buoyant cues from Wall Street and regional markets already trading after positive U.S. economic data. "Global growth (particularly in China) is showing signs of bottoming out and we should see a modest pickup in 4Q12, barring downside risks on the G2 fiscal front," says Ng Weiwen, macro analyst at Phillip Securities, in a note. The STI ended Thursday down 11.76 points, or 0.4%, at 3026.61. The index is likely to remain in a 3020-3060 range. Among stocks likely in focus, Global Logistic Properties (MC0.SG) plans to raise about Y100 billion by spinning off 30 of its 68 Japanese properties to a J-REIT. Hi-P (H17.SG) reported a 3Q12 net profit of S$3 million, down 53.8% on-year, but swinging from a 2Q12 loss; the decline may be well-expected after its profit warning. SC Global (D2S.SG) reported 3Q12 profit was flat on-year.
 
 
 

DJ MARKET TALK: GLP Likely To Extend Gains; Plans J-REIT Launch 

0048 GMT [Dow Jones] Global Logistic Properties (MC0.SG) is likely to extend Thursday's gains after its post-market announcement of its long-awaited move to spin-off some Japan properties into a J-REIT. GLP plans to raise about Y100 billion by selling 30 of its 68 Japanese properties to the J-REIT. In a September report, Nomura had estimated selling only 30% of the Japanese assets to a J-REIT would add US$0.07/share to NAV. GLP could have an eye to the BOJ's recently expanded asset-purchase program, which includes J-REITs, as possibly helping to support the listing once it's launched. The stock ended Thursday up 3.5% at S$2.66

 
 

*DJ DBS Group Upgraded To Buy From Sell By Maybank-Kim Eng
 

Today’s Focus

• Supply Chain Managers - Sector looks attractive despite

some headwinds. Top pick: Noble, TP: S$1.60

Noble and Olam have underperformed the FSSTI by 32-35%

since Jan11. With Chinese GDP growth bottoming out in

3Q12 and now expected to accelerate next year to 8.5% from

8% this year (according to our DBS Group economists), the

macro backdrop for supply chain managers is definitely

looking up. In addition, with several commodities now trading

near their marginal cost of production, the risks of a negative

shock to earnings from a severe price correction has receded.

Noble is set for a re-rating on continued improvement in

earnings and possible M&A. FY12-14F profits raised by 10-

12%, given the expansion into higher margin metals trading

and prospects of an improved Chinese economy next year.

Maintain BUY, TP lifted to S$1.60 from S$1.30 as we roll

forward to FY13F. Noble is due to report its 3Q12 results on 8

Nov. We expect a marginal lift in profit to US$146-152m from

US$144.9m in 2Q12. Olam, on the other hand is looking more

subdued near term as it readjusts its cost base after a

significant period of investment. FY13F-15F core profits were

raised by 5-22% on new coffee plantations and Indian sugar

capacity. We are cautious on Olam’s near term share price

performance as we expect 1QFY13 results on 14 Nov to be

weak, down 21-27% y-o-y due to the impact of higher

overheads experienced in 4Q12. Maintain HOLD, TP: S$ 2.00

(Prev S$ 1.80).

Golar LNG has announced that it will convert an existing Moss

LNG carrier at Keppel Shipyard into a floating liquefied natural

gas vessel (FLNGV). Along with this, it has options to convert

two additional vessels with Keppel under the same agreement.

Golar LNG is one of the world's largest independent owners

and operators of LNG carriers. Note that at this point in time,

Keppel Corp has yet to make an official announcement on this

project. While no contract value has been disclosed, we believe

this project could be worth >US$500m, significant enough to

move the needle for non-Petrobras order wins, which stands at

S$2.5bn YTD.

Singapore

Wired Daily

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This is a significant breakthrough for Keppel. FLNGV's are

massive projects and have so far been awarded to Korean

shipyards. We believe this award by Keppel underscores its

capability and track record - it has previously converted two of

Golar's Moss LNG carriers to Floating Storage and

Regasification units (FSRUs), one of which was the world's first

FSRU conversion. No change to our Buy call and S$12.65 TP

for Keppel.

Hyflux’s 3Q12 earnings fell short although margins have

improved. Hyflux has a strong bidding pipeline but it needs

more contracts wins to strengthen earnings visibility going

forward. FY12/13F earnings cut by 16%/17% on lower

margin assumptions. Maintain Hold on limited upside to lower

TP of S$1.39 (Prev S$ 1.45).

ARA Asset Management reported lower 3Q12 net profit y-o-y

due to one-off gains recorded last year. Potential REIT

acquisitions in 2013 could compensate for Dynasty REIT’s

disappointment. BUY maintained, TP S$1.70 (Prev S$ 1.72).

ARA’s stable, recurring and visible income business model is

especially attractive in this current uncertain economic

backdrop.

Cambridge Industrial Trust’s 3Q12 results represent 6

consecutive quarters of growth. CREIT has made cS$220m

acquisitions YTD, more expected to come. Maintain BUY, TP

S$0.71 (Prev S$ 0.67).

Global Logistic Properties is sponsoring the establishment of a

J-REIT through the sale of 30 of its 68 assets for JPY209b

(US$2.6b). This will boost fee income platform and recycle

capital. Maintain Buy.

OKP has secured S$39.8m contract to construct Seletar

Airport’s north-east aircraft parking apron, associated taxiways

and ancillary works. The project is scheduled to start now and

last till Dec 2014. With this new order, OKP has won S$125m

of orders to date. This is within our FY12F order win

expectations of S$137.4m. FY12F order book is now increased

to S$385.9m, lasting till 2014. Maintain Hold and TP: S$0.49.

AusGroup has secured fabrication, supply and installation

work with CSBP Limited for the prilling plant upgrade

associated with its ammonium nitrate expansion project. With

this contract award, AusGroup’s orderbook now stands at

AU$306m.

PEC has successfully clinched four new contracts worth

approximately S$30m in total from three existing clients. The

latest wins will boost PEC’s orderbook, which stood at

S$258m as at 30 June 2012, excluding maintenance projects.

The above contracts are expected to contribute to the group’s

earnings for FY Jun 2013.

China’s Purchasing Manager's Index (PMI) for the month of

October rose to 50.2 against 48.9 in September. It was the

first time the reading had crossed 50 since July and backed the

view that activity is gathering momentum in the world's

second biggest economy. Separately, HSBC also released its

PMI data which edged up to 49.5 points last month from 47.9

in September. The index published by the investment bank is

traditionally lower as it takes into account sentiment in China's

small and medium enterprises (SMEs), which are more exportoriented

and have less access to credit and government

support than state- owned enterprises.

US markets rebounded as the ISM manufacturing (actual 51.7,

consensus 51) and consumer confidence (actual 72.2,

consensus 73) data releases pleased investors. US October

employment data will be released tonight. Non-farm payrolls

consensus expectation is 125k while the unemployment rate is

seen edging a tat higher to 7.9%. Separately, China’s Oct

manufacturing PMI edged back to expansion territory of 50.2

from 49.8.

Share Buy-Back

Source: SGX Masnet

Company D.O.T. Buy /Sell No.of shares S$/shr

AEM Holdings Ltd 01-Nov-12 Share Buy-Back 1,393,000 0.0800

Viking Offshore and Marine Ltd 01-Nov-12 Share Buy-Back 27,000 0.1090

Hotung Investment Hldgs Ltd 30-Oct-12 Share Buy-Back 350,000 0.1490

GKE International Limited 29-Oct-12 Share Buy-Back 605,000 0.1568

United Intl Securities Ltd 29-Oct-12 Share Buy-Back 10,000 1.1500