U.S. stocks ended mixed Tuesday, but the Dow still managed to finish at a
record high for the sixth straight day.


The Dow Jones industrial average has now climbed for eight straight
sessions, its longest winning streak since February 2011. The blue chip
index finished the day up 3 points, at a record high of 14,405.06. Earlier
in the day, the Dow reached a fresh intraday record above 14,470.


The S&P 500 slid 0.2% on Tuesday and is now within 1% of its all-time
closing high set in 2007. The Nasdaq fell 0.3%.


Stocks have been supported by better-than-expected economic data and signs
the Federal Reserve will keep its stimulus policies in place for some time.


But with all three major U.S. indexes up between 7% and 10% so far this
year, analysts say a pullback at this stage shouldn't come as much of a
surprise and should be considered healthy.



Meanwhile, in the continuing saga of Washington's budget wars, House Budget
Committee Chairman Paul Ryan released his budget proposal Tuesday.


Costco (COST, Fortune 500) shares rose after the bulk retailer announced
better-than-expected earnings for its fiscal second quarter, although its
revenue increase came in short of forecasts.


Yum Brands (YUM, Fortune 500) shares rose after the company -- which owns
Taco Bell, KFC and Pizza Hut brands -- reported a smaller-than-expected
drop in same-store sales at its China locations.


Shares of Cabela (CAB) spiked after the sporting goods retailer issued
strong earnings guidance.



Best Buy (BBY, Fortune 500) shares were also higher after Goldman Sachs
resumed coverage of the stock with a buy recommendation.


Urban Outfitters (URBN) shares gained even after the company reported
earnings just short of analysts' forecasts for the third time in the last
five quarters.


Apple (AAPL, Fortune 500) shares edged lower after a late-day spike Monday.
Worries about slowing demand for the iPhone 5 and what Apple plans to do
with all its cash has been pressuring the stock. On Tuesday, Jefferies
analyst Peter Misek lowered his price target to $420 from $500


Related: Fear & Greed Index in extreme greed


European markets ended mixed, and Asian markets ended lower. Chinese stocks
fell by about 1% while Japan's Nikkei ended down 0.3%.


The dollar rose versus the British pound but fell against the euro and the
Japanese yen.


Oil and gold prices gained almost 1%.


The price on the 10-year Treasury rose, pushing the yield down to 2.02%
from 2.06% late Monday.

MARKET PULSE: SPH, SMRT, KepCorp, Midas

13 Mar 2013

KEY IDEA

Singapore Press Holdings: Mall strategy to drive meaningful re-rating
On Sunday evening, SPH announced that it is exploring a REIT listing on the SGX Mainboard. We believe the REIT would likely be a Singapore focused
retail mall trust, with Paragon and Clementi Mall being injected and Seletar Mall positioned as a pipeline asset. A key implication: we could see
significant divestment gains, and consequently a special dividend and/or a distribution in specie of REIT units to shareholders. Assuming SPH
retains a 51% stake in the REIT, we estimate potential divestment gains of S$625m to S$744m or 39 to 46 S-cents per share. We upgrade the stock to a
BUY rating with a fair value estimate of S$4.94. We see a particularly attractive risk-reward proposition currently. Downside is likely capped given
a dividend yield of 5.4% here, while a significant re-rating is likely given potential near term catalysts such as a special dividend, and over the
longer term, management’s further execution on its retail mall strategy. (Eli Lee)

MORE REPORTS

SMRT Corporation: Restructuring pains
We estimate the impact of SMRT’s wage increments for non-executive staff (~60% of its workforce) and its ~2,000 bus drivers to cost an approximate S
$34.8m/year (assuming full qualification of incentive payments) from FY14 onwards. While SMRT’s wage burden increases considerably, the bulk of the
wage increments will theoretically qualify for some relief under the Government-proposed Wage Credit Scheme. Nonetheless, we lower our forecasts to
incorporate the increase in staff costs, and our valuation falls to S$1.56 from S$1.71 previously. Despite a likely fare increase by end-May,
ongoing restructuring by SMRT continues to yield pressure on operating expenses (i.e. wages and repairs/maintenance). Therefore, we are unlikely to
see an inflection point emerging for the counter in the near-term, and shareholders will have to accept lower dividends as this restructuring
proceeds. Maintain HOLD. (Lim Siyi)

Keppel Corporation: US$1.2b Naftogaz contract fails to turn effective
Keppel Corporation (KEP) announced that the conditional contract between Keppel FELS Ltd and Ukraine’s Naftogaz to construct two semisubmersible
drilling rigs will not be taking effect. Though the US$1.2b worth of contract was inked in Dec last year, it was also mentioned earlier that the
contract will only be effective if certain conditions were met. As they were not fulfilled within the timeline that was specified, the contract will
not turn effective. We do not view this as a cancellation of order, and we note that the contract amount was also not part of Keppel’s announced net
order book of S$12.8b as at 31 Dec 2012. Though there may be a negative knee jerk reaction with this news, we maintain our BUY rating with S$12.68
fair value estimate and a forecasted dividend yield of 3.7% over a one-year time frame. (Low Pei Han)

Midas Holdings: Secures CNY109.6m worth of metro contracts
Midas Holdings (Midas) announced last evening that it has secured a total of CNY109.6m worth of contracts to supply aluminium alloy extrusion and
fabricated parts to five metro projects in China. The value of each contract ranges from CNY10.6-31.7m, with four of these awarded by Midas’ 32.5%
owned JV company Nanjing SR Puzhen Rail Transport (NPRT). Management had previously highlighted that NPRT had seven projects which it has yet to
award contracts to aluminium alloy extrusion suppliers. Hence we see potential for more contract wins by Midas from NPRT in the near future. We had
also stated in our previous note that Midas has been actively negotiating for metro/subway and international railway contracts to buffer the current
standstill from the high-speed railway side. We retain our forecasts as we have already assumed such contract wins in our assumptions. Maintain BUY
and S$0.595 fair value estimate on Midas, based on 1.2x FY13F P/B. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- ARA Asset Management wants to double assets under management over five years as its private funds buy more properties.

- Stronger revenue and a gain on fair value of marketable securities more than doubled Freight Links Express’ third-quarter net profit to S$8.72m.

- Shares in WE Holdings, which plunged by almost half to 6.8 cents on Monday, took another beating yesterday as placement shares issued at about 3.7
cents started trading.

- The Minister for Environment and Water Resources said that neither water supply nor landfill will be limiting factors to Singapore’s population
growth.

- Health Minister told Parliament yesterday that four more hospitals and up to 12 more polyclinics will be built by 2030 to ensure that Singapore
has adequate healthcare coverage.