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OSPL - MARKET PULSE: Consumer Sector, Singapore Economy, KS Energy (16 Nov 2012) | | | | | |
MARKET PULSE: Consumer Sector, Singapore Economy, KS Energy
16 Nov 2012
KEY IDEA
Consumer sector: 3Q comeback; rally in the fourth?
Summary: As a recap, consumer-related companies within the FTSE Straits Times Consumer Services Index fared better than expected in 3QCY12. While
revenue growth was pretty much in line with consensus estimates, effective cost management resulted in earnings per share exceeding projections by
8.2%. Overall retail sales figures for Sep (excluding motor vehicles) continued to post encouraging data with the third month of gains in the most
recent four. Furthermore, retail segments more vulnerable to swings in the economy exhibited a slowing pace of declines. Given the improving
environment, we upgrade the sector to NEUTRAL. We continue to favour defensive plays with high dividend yields (Sheng Siong [BUY; FV: S$0.49]) and
stocks with diversified geographical revenue streams (Viz Branz [BUY; FV: S$0.74]). We will avoid stocks with high F&B services exposure such as
BreadTalk Group [SELL; FV: S$0.49], which has food court and restaurant operations. (Lim Siyi)
MORE REPORTS
Singapore Economy: 1.5% growth in 2012 and 1.0-3.0% in 2013
Summary: The Singapore economy grew by 0.3% YoY in 3Q12, worse than the street’s expectations of a 0.9% growth and 2Q12’s 2.5% increase. On a
seasonally-adjusted annualized basis, the economy contracted by 5.9% QoQ, compared to the 0.5% expansion in 2Q12. The pullback in growth was largely
due to the decline in externally-oriented sectors such as manufacturing and wholesale trade. Manufacturing declined by 9.6% QoQ with a contraction
in the electronics. Construction also contracted by 17.2% with a decline in private sector building activities. Meanwhile, services contracted by
3.5% QoQ. The MTI expects Singapore to grow by 1.5% in 2012, though growth may be slightly lower than forecast if weakness in externally-oriented
sectors persist. For 2013, the official growth forecast is 1.0-3.0%, but key risks include the fiscal cutback in the US and the Eurozone debt
crisis. (Low Pei Han)
KS Energy: Another profitable quarter
Summary: KS Energy (KSE) reported a 21.9% increase in revenue to S$161.3m and a net profit of S$14k in 3Q12 vs. a net loss of S$11.5m in 3Q11. 9M12
revenue and gross profit accounted for 80% and 78% of our full year estimates, respectively. Net profit was also within our expectations. 3Q12 marks
the group’s second quarterly net profit after nine consecutive quarters of net losses. Management is still reticent about funding plans for its
convertible bonds that may be redeemed in Mar. It also mentioned that operating conditions from now till early 2013 are likely “to remain
challenging”. After tweaking our estimates and rolling forward our valuation to 1.2x FY13F NTA, our fair value estimate slips from S$0.83 to S$0.78.
Maintain HOLD. (Low Pei Han)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- US stocks continued their losing streak on Thursday as investors fretted about the fiscal cliff and the impact of Hurricane Sandy on the economy.
The Dow and the S&P 500 Index each slid 0.2%, while Nasdaq fell 0.4%.
- The euro zone slid into recession for the second time in four years due to the debt crisis, with 3Q12 GDP declining 0.6% YoY.
- Triyards Holdings has won a US$90m order from an Asia-based customer for a mobile offshore platform service unit, taking its orderbook to over US
$700m.
- Global Logistic Properties has raised S$414m through the sale of 160m new shares at S$2.59 each, to fund its investment in properties in Brazil.
Its share price fell 4.8% to S$2.59 on the news.
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MARKET WATCH 16th Nov 2012
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