Daily Review

LIM & TAN SECURITIES
20 CECIL STREET #09-00 EQUITY PLAZA SINGAPORE 049705
TEL: 65330595
www.limtan.com.sg
RCB REG NO. 197301030W
DAILY REVIEW | 23 DECEMBER 2014
FINANCIAL MARKETS
MAJOR MARKET INDICES
CLOSE
FSSTI
1D
(%)
MTD
(%)
YTD
(%)
3331.0
1.6
-0.6
5.2
17959.4
0.9
0.7
8.3
S&P 500
2078.5
0.4
0.5
12.5
NASDAQ
4781.4
0.3
-0.2
14.5
Dow Jones
FTSE (UK)
6576.7
0.5
-2.2
-2.6
Nikkei
17635.1
0.1
1.0
8.2
Hang Seng
23408.6
1.3
-2.4
0.4
3127.4
0.6
16.6
47.8
15.3
-7.5
14.4
11.2
Shanghai Composite
VIX
SG MARKET SUMMARY
Daily Market Value (S$ 'm)
925.5
Daily Market Volume (mln)
1690.4
52-week STI High
3387.8
52-week STI Low
2953.0
KEY INTEREST RATES
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
3 Mth SGD SIBOR
0.5
0.3
5.7
13.2
3 Mth Swap Offer Rate
0.7
-2.7
61.6
208.1
SG 10 YR Bond Yield
2.3
-2.3
5.7
-9.5
US 10 YR Bond Yield
2.2
-0.2
-0.3
-28.7
As at 8.00am SG time
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
Dow Jones
US FUTURES
17897.0
0.0
0.9
12.3
S&P 500
2072.2
0.0
0.6
14.1
NASDAQ
4292.0
0.0
-0.9
21.3
CLOSE
1D
(%)
MTD
(%)
YTD
(%)
COMMODITIES
Gold
Crude Oil
Baltic Dry
Crude Palm Oil
1176.1
0.0
0.7
-2.5
55.0
-2.8
-16.9
-44.2
794.0
-1.1
-31.1
-65.1
8448.0
-0.3
-1.3
-14.7
FSSTI INDEX
3600
3500
US indices rose between 0.3-0.9% as a surge in technology shares
helped U.S. stocks recover from a seven-day selloff in early December.
Facebook Inc. and Intel Corp. rose more than 1.9 percent to pace gains
among technology shares. The Dow Jones Internet Index advanced
1.1 percent as Twitter Inc. and Amazon.com Inc climbed at least 2.2
percent. 8 of 10 main groups in the S&P 500 rose today.
The Dow Jones Internet Composite Index rose for a fourth straight
day, adding 1.1 percent, to its highest level since Sept 12. The gauge
is up 4.2 percent in 2014, climbing back after a slump of more than
19 percent earlier this year. Energy companies in the S&P 500 fell 1
percent as the price of crude oil declined for the second time in three
days. Chesapeake Energy Corp and Southwestern Energy Co slid
more than 5.4 percent, while Transocean Ltd decreased 1.8 percent.
IDEA OF THE DAY
Jiangsu Changjiang Electronics Technology Co (JCET) will partner
Semiconductor Mfg International Corp (SMIC) and IC Fund in its effort
to acquire STATS Chippac (STATS) from Temasek.
JCET will contribute US$260mln, IC Fund US$160mln and SMIC
US$100mln to set up a holding company to acquire STATS. In
addition, IC Fund will also provide a convertible loan of US$140mln to
this holding company to help narrow the funding gap with the purchase
price of US$780mln. We understand that there will be a bridging loan
currently being finalized with a local bank to help fund the acquisition
as well.
The above co-investment agreement is conditional upon the 3
companies having obtained sufficient funds to implement the proposed
acquisition, the conditions precedent to the pre-conditional offer for
STATS having been satisfied and obtaining the relevant approvals and
authorizations.
The acquisition of STATS will allow JCET to achieve economies of scale
and to compete more effectively with other leading global players in the
out-sourced assembly and test industry. Together with STATS, the 3
companies will allow China to meet the long term strategy of elevating
and enhancing the competence and competitiveness of China’s IC
manufacturing eco-system and expedites the process of the country’s
strategic objective of forming a world-class semiconductor supply chain
in China.
52-week price chart
3400
3300
3200
3100
3000
For IC fund, the investment agreement will provide them with an
opportunity to achieve good financial return on its investment under
the co-investment agreement. A put-option has been set up in the
investment exit agreement, pursuant to which the company is granted
an option to sell the option shares on the terms and conditions set forth.
2900
2800
12/13 01/14 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14 11/14
Source: Bloomberg
While there is still no firm offer despite the above arrangements, we
believe chances are “high” for the deal to go through given the high
“break fee” of close to US$40mln and the co-investment agreement
just set up between JCET, SMIC and IC Fund to facilitate the purchase.
Singapore Research Team
Tel: 6533 0595
Email: [email protected]
Please see research disclaimer on last page
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1
OTHER HIGHLIGHTS
Memstar Technology ($0.025, up 1.0 cent) has entered
into a US$420 mln reverse takeover deal with the
owners of Longmen Group, a China-based developer of
unconventional natural gas. Separately, it will also enter
into a placement agreement with Eric Lim Poh Hock, Lin
Yucheng, Zhou Jingming, Meng Li and Lim Tchen Nan
whereby the company agreed to allot and issue 490mln
new shares at S$0.0136 each. The net proceeds of
S$6.614 mln will be mainly used for Refundable Deposit in
connection with the proposed RTO as well as for general
working capital purposes. While the Target Group remains
loss-making, management believes that the proposed
transaction is able to satisfy the SGX-ST’s requirements
for a new listing and will provide the company with an
opportunity to venture into a new business area, with
proven gas reserves of US$917 mln.
Koyo International ($0.163, down 1.4 cent) said that its
wholly-owned subsidiary, Koyo Engineering (S.E.Asia), has
been awarded a contract worth about S$2.45 mln by OUB
Centre Ltd for the provision of maintenance of Mechanical
and Electrical systems at One Raffles Place, for a period of
2 years with an option to renew the contract for 1 year. The
contract date will start from 1 Jan 2015 and is expected
to contribute positively to the company’s earnings in FY15
and FY16. Meanwhile, AVSC Technologies - an indirect
wholly owned subsidiary of the company, has also received
full payment amounting to S$2 mln following the successful
completion of the contract for the supply and delivery of
reclamation materials.
Del Monte Pacific ($0.50, unchanged) has proposed to
undertake a renounceable underwritten rights issue in
Singapore and a stock rights offering in the Philippines
to raise gross proceeds of up to US$180 mln, in a move
to deleverage and strengthen its balance sheet. The
Issue Price will be priced at a discount within the discount
range of 20% to 25% to a reference price. Its majority
shareholder, NutriAsia Pacific Ltd (which own about 66.8%
stake) intends to subscribe for its pro-rata entitlements in
the rights issue. Del Monte intends to use the net proceeds
of the rights issue to repay the bridging facility of US$165
mln from the Bank of the Philippine Islands. The company
had obtained the loan to partially finance the acquisition
of the consumer food business that was completed in Feb
this year.
Sarine Technologies ($2.41, down 17 cents) was queried
by the SGX yesterday pertaining to the unusual price
movements in its shares. The company replied that as
stated previously in its 3Q14 results, the diamond industry,
has been, and is likely to continue to be, during 4Q14 and
early 2015, adversely affected by credit shortage, increase
in polished diamond inventories and the divergence in the
prices of rough stones and polished diamonds. Based on
recent publications made by leading figures and analysts
in the diamond industry and based on queries made to
the company following such publications, it appears that
such trends have indeed continued. We therefore opine
that the company’s share price would continue to remain
weak given the negative business outlook.
AEI Corp ($0.12, unchanged) announced that it is to place
out 20mln new shares at S$0.13 apiece to Well Global
Investments, an investment holding company and is also
the JV partner of the company in the shares of Global
Tongyi. The placement price represents a 8.3% premium
over its last traded price while net proceeds of S$2.6mln will
be used to finance the company’s investment opportunities
or acquisitions of other businesses. Following the move,
the share capital of the company would increase from
251.2mln to 271.2mln. Assuming the placement was
completed in FY13, EPS of the company would decrease
from 0.8 cents to 0.7 cents while NAV per share would
decrease from 22.2 cents to 21.5 cents.
China New Town ($0.052, unchanged) announced that
after having performed preliminary assessment and
impairment testing on its unaudited management accounts,
it is expected that a provision for impairment of land
development for sale of RMB622mln will be made at one
of its controlled subsidiaries as at FY14. While the actual
amount has not been confirmed, it is expected to directly
impact the company’s FY14 financials. It is forecasted that
such impairment provision would reduce the company’s
FY14 net profit by RMB339mln. The company added that
as land development for sale belongs to its core business,
its impairment provision was accounting adjustments made
in accordance with the relevant review and reassessment
requirements at the end of each reporting period. However,
the finalized amount of the impairment provision is not
expected to have any material impact on the net cash
balance and financial strength of the company.
FSSTI STOCK SELECTION
HIGHEST CONSENSUS FY14E DIV YIELD (%)
LOWEST TRAILING P/B (X)
1 HUTCHISON PORT-U
7.72
1 GOLDEN AGRI
0.49
2 ASCENDAS REIT
6.40
2 HONGKONG LAND
0.60
3 CAPITAMALL TRUST
5.58
3 HUTCHISON PORT-U
0.73
4 SPH
5.18
4 CAPITALAND
0.87
5 KEPPEL CORP
5.15
5 JARDINE STRATEGIC
0.90
LOWEST CONSENSUS FY14 P/E (X)
LOWEST TRAILING EV/EBITDA (X)
1 NOBLE GROUP
8.46
1 SIA
2 SEMBCORP INDUSTRIES
9.68
2 COMFORTDELGRO
5.23
7.58
3 KEPPEL CORP
9.96
3 JARDINE C&C
7.59
4 OCBC
10.79
4 SEMBCORP MARINE
8.82
5 OLAM INTERNATIONAL
11.26
5 SEMBCORP INDUSTRIES
9.18
Source: Bloomberg Estimates (FSSTI Universe)
Please see research disclaimer on last page
Page
2
16 - 19 DECEMBER
AUGUST
SHARE TRANSACTIONS
Company
Buy
Sell
Transacted
Price* ($)
Market
Price ($)
New
Balance
Stake
(%)
2,727,509
112,000
1,286,300
10,000,000
14,000
110,000
73,000
1,500,000
-
ND
0.799
ND
0.27
1.47
0.549
0.65
0.275
2.00
1.79
-
174,460,174
95,983,144
732,253,400
131,537,555
121,256,283
1,482,972,960
28,023,000
279,866,334
5.03
58.24
8.95
8.05
7.00
81.50
13.03
21.25
-
3,878,463
12,569,000
3.10
0.529
-
254,258,972
54,894,440
5.97
5.63
Party
ACQUISITIONS
CapitaMall Trust
GP Batteries
IHH Healthcare
International Healthway
Mapletree Industrial Trust
PACC Offshore Services
Poh Tiong Choon
Sino Construction
BlackRock Inc
GP Industries
EPF
Jong Hee Sen
Schroders Plc
Kuok (Singapore)
Adrian Ho
Edward Lee
DISPOSALS
CapitaLand
Ezra Holdings
BlackRock Inc
Mondrian Investment Partners
* ND: Not Disclosed
SHARE BUYBACK
Company
Amara Holdings
Biosensors
Courts Asia
Keppel Corp
Osim International
Pacific Century
SATS
ST Engineering
Wing Tai
Please see research disclaimer on last page
No. of shares
Price
($)
Cumulative
Purchases
Of Maximum
(%)
79,000
646,000
138,000
422,000
11,000
2,003,000
552,000
253,000
400,000
0.51
0.519
0.48
8.54
1.985
0.26
2.86
3.27
1.588
79,000
13,847,000
10,050,000
5,932,000
4,746,000
289,119,000
11,567,000
1,821,000
2,064,000
0.1
8.2
18.1
3.3
6.4
95.0
10.3
0.6
2.6
Page
3
DIVIDENDS (LIST IS NOT EXHAUSTIVE)
Company
Amount
Osim
Hupsteel
Second Chance Properties
Frasers Centrepoint
Fraser & Neave
1¢ interim
1¢ final
1.5¢ final
6.2¢ final
3¢ final
Please see research disclaimer on last page
Last Day
First Day
Cum-Dividend Ex-Dividend
26 Dec
29 Dec
07 Jan 2015
02 Feb 2015
02 Feb 2015
29 Dec
30 Dec
08 Jan 2015
03 Feb 2015
03 Feb 2015
Date
Payable
08 Jan 2015
14 Jan 2015
21 Jan 2015
16 Feb 2015
16 Feb 2015
Page
4
WHAT’S AHEAD
DECEMBER 2014
Sun
Mon
Tue
Wed
Thu
Fri
Sat
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Transcorp Holdings
28
29
30
31
Second Chance
Please see research disclaimer on last page
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5
RESEARCH DISCLAIMER
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this document may be –
i.
Copied, photocopied, duplicated, stored or reproduced in any form by any means or
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without the prior consent of LTS.
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financial situation and particular needs of any specific recipient of this research report. You should independently
evaluate particular investments and consult your independent financial adviser before making any investments or
entering into any transaction in relation to any securities or investment instruments mentioned in this report.
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The information and opinions presented in this research report have been obtained or derived from sources believed
by LTS to be reliable. Their accuracy, completeness or correctness is, however, not guaranteed. Opinions and
views expressed in this report are subject to change without notice, and no part of this publication is to be construed
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are inconsistent with the assumptions, views and analytical methods of the analysts who prepared them.
LTS, its directors, its connected persons and employees may, from time to time, own or have positions in any of the
securities mentioned or referred to in this report or any securities related thereto and may from time to time add to or
dispose of or may be materially interested in any such securities. LTS’s research analysts are primarily responsible
for the content of this report, in part or in whole, and certifies that the views about the companies expressed in
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from receiving any compensation (excluding salary and bonuses) or other incentives and benefits receivable in
respect of this report or for providing specific recommendation for, or in view of a particular company or companies
mentioned in this report.
LTS-SPECIFIC / REGULATORY DISCLOSURE
1. LTS does not have a proprietary position in the companies as recommended in this report as at the close of
22/12/14.
2. The research analysts do not have an interest in the company / companies as recommended in this report as
at the close of 22/12/14.
*
Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures
Contracts owned), directorships or trustee positions.
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