SG Daily - Singapore Airlines: No Virgin at Special Dividends; HOLD, TP
$10.32 | Del Monte Pacific: Pineapples to ripen in 2014, Not Rated





Singapore Daily

Singapore Airlines: No Virgin at Special Dividends; HOLD, TP $10.32
SIA SP | Mkt Cap USD10.3b | ADTV USD6.3m
Ø Singapore Airlines (SIA) announced recently that they are looking to
divest their 49% stake in Virgin Atlantic (VA), an investment they made
for GBP600m some thirteen years ago.
Ø Our take: fair value of the stake is likely to be closer to SGD1b, and
this could result in an attractive special dividend.
Ø Our VA valuation suggests an attractive special dividend should a cash
sale be sealed. We do list two criteria for investors to watch for:
confirmation of the transaction which is in-line or even exceeding our
SGD1b estimates, and for the deal to be paid in cash.
Click here for full report
[email protected]
Del Monte Pacific: Pineapples to ripen in 2014
DELM SP | Mkt Cap USD529.8m | ADTV USD0.04m
Ø Since Nutri-Asia of Philippines purchased an 85% stake in Del Monte
Pacific (DEML) in 2006, it has been quietly diversifying its business
streams and fixing a few legacy issues.
Ø While DEML has a strangle hold in its home market, the Philippines,
with its Del Monte brand, it has been endeavouring to break into new
markets with two pillars in place – S&W and FieldFresh.
Ø While DEML has a minimum dividend payment policy of 33%, it has
generously paid out 75% of its earnings over the past 7 years. It is
currently trading at its historical FY11 P/E of 14.3x; with 9M12 earnings
growth of 33.7% YoY.

Click here for full report
[email protected]










Roadshows & events
Regional


10-11 Dec
HK
Thai Strategy | Andrew Stotz
10-11 Dec
SP
China Property | Karen Kwan









Visited last week*
Company
Initial Impression
Analyst
Del Monte
Positive
Greg/Alison
CRCT
Positive
Wilson
Frasers Centrepoint Trust
Positive
Kian Lin
Midas
Positive
Wei Bin
Japan Food
Positive
James

* includes conference calls



Click HEREto download PDF report






 

U.S. stocks closed slightly higher for a second day Thursday, thanks to
strength from the technology sector, including Apple's 1.6% rise. But the
gains were limited as investors refrained from making big bets as long as
the fiscal cliff remains unresolved.


The Dow Jones industrial average and S&P 500 rose 0.3%, while the
tech-heavy Nasdaq added 0.5%.


President Obama told members of the Business Roundtable on Wednesday that
there has been "some movement" on the Republican side toward allowing rates
to rise on high-income taxpayers. If this continues, he said, "we can
probably solve this in about a week."


If lawmakers fail to strike a deal before the end of the year to avert the
$500 billion in scheduled tax increases and spending cuts, they risk
pushing the U.S. economy into recession.


"Normally, the markets like certainty," said Doug Cote, chief market
strategist at ING Investment Management. But investors "are unlikely to
react positively" to what appears to be the country's first "scheduled
recession, absent Congressional action," Cote said.


Investors also continued to keep an eye on the latest labor reports leading
up to the closely watched monthly jobs report due Friday. The Labor
Department reported Thursday that the number of Americans filing for
first-time unemployment benefits dropped 25,000 to 370,000 last week.


Economists surveyed by CNNMoney predict that Friday's report will show the
U.S. economy added only 77,000 jobs in November, a sharp drop from the
previous month, when 171,000 jobs were created.


On the corporate front, Apple (AAPL, Fortune 500) shares rose, following a
two-day loss of 8%. In an interview with NBC's Brian Williams scheduled to
air Thursday evening, Apple CEO Tim Cook said Apple will begin
manufacturing one of its existing Mac line of computers exclusively in the
United States next year.


Yoga apparel maker lululemon athletica (LULU)'s third-quarter earnings
topped expectations. Though guidance for the fourth quarter fell short of
forecasts, its shares gained more than 7%.


Shares of Zynga (ZNGA) surged after the company said it had filed an
application for a gaming license in Nevada, taking a step towards
real-money gaming, or RMG. Zynga has been struggling to make money off what
appears to be the waning popularity of its social-network based games.










Fear and Greed Index back in Fear mode


European markets closed higher, with Nokia (NOK) leading the way after
China Mobile (CHL)agreed to sell the Finnish company's flagship smartphones
the Lumia 920.


The European Central Bank slashed its growth and inflation forecasts for
2013, raising the prospect of a further easing in monetary policy next
year, after it kept interest rates on hold Thursday.


Asian markets ended mixed. Japan's Nikkei got a boost from a weakening yen
and new polls ahead of Election Day.


The dollar gained ground versus the euro and the British pound, but slipped
against the Japanese yen.


Oil for January delivery declined 1.8% to settle at $86.26 a barrel. Gold
for February delivery rose 0.5% to settle at $1,701.80 an ounce.


The price of the 10-year Treasury rose, pushing the yield down to 1.58%
from 1.59% late Wednesday. (Embedded image moved to file: pic26857.gif)To
top of page




 

Today's Headline

Prime office rentals at basement prices, for now


The rental gap between Grade A offices and Grade B office space islandwide
has narrowed this year. Rents in older buildings at prime locations have
held up as their occupancy levels remain stubbornly high. This is expected
to change next year when tenants move into new developments and more space
emerges in older buildings.


Data from CBRE shows that the average monthly rental value in its Grade A
basket - which covers the best-quality buildings in Raffles Place, Marina
Bay and Marina Centre - is likely to end the year at about $9.51 per square
foot (psf), from $11 psf in Q4 last year. This reflects a full-year drop of
13.5 per cent.


On the other hand, the rent decline for Grade B offices islandwide - which
refer to older, smaller or lower-specification office blocks - will be much
smaller, at about 2.3 per cent this year. The average monthly rent is
expected to dip from $7.34 psf in Q4 2011 to $7.17 psf this quarter. The
resulting $2.34 psf rent difference between Grade A and Grade B offices
currently is much smaller than a $3.66 psf gap a year ago.


CBRE forecasts that over the next 12 months, Grade A rents will be flat,
averaging $9.50 psf in Q4 2013, while Grade B rents could drop by 5-10 per
cent to as low as $6.45 psf. This will result in the rent gap widening
again to $3.05 psf.


While the gap between Grade A and Grade B rents could narrow in the coming
quarters due to higher supply of Grade B office space, we expect the
outlook for the office rental market to remain relatively muted. Slow
leasing demand amid an uncertain macro climate and new supply of office
space in 2013 could potentially place some pressure on office rents.



News Buzz

· TEE International: Bags 3 new projects
· LionGold: Raise stake in Aussie firm
· Oxley Holdings: Gets nod for upgrade to mainboard
· Etika International Holdings: Tee Yih Jia to invest $15m
· OUE & F&N: Sets Jan 3 deadline for $9.08 F&N offer