T HE debut of Kim Heng Offshore and active pen- ny stock trading were the main features of yes- terday’s session, where the Straits Times Index exhibited its now-famil- iar directionless drift be- fore ending almost unchanged at 3,133.74, 0.02 point lower. Dollar turnover, which has been low for many months, picked up yes- terday to just under $1.2 billion, up from Tuesday’s $955.7 million. Unit turnover also improved from 3.3 bil- lion to just over four billion units. De- spite the elevated activity, the broad market was weak, recording 180 ris- es versus 234 falls excluding war- rants. The market’s latest entrant, off- shore marine firm Kim Heng, which offered its shares at 25 cents each, contributed 83 million units in turn- over, the counter finishing its first day as a listed entity at 29.5 cents. It traded at a high of 32 cents and a low of 29 cents. Other penny stocks which saw ac- tion included KLW, Albedo, HanKore and Charisma Energy – all familiar names to those who have been watch- ing daily trading over the past month or so. Among the larger falls in the penny segment was Federal Interna- tional’s 0.4 cent or 6.5 per cent fall to 5.8 cents that came with 74 million shares traded. As for blue chips, the session was largely a non-event. One dealer, when asked if there was anything of note happening in blue chips since trading appeared quiet, replied: “De- scribing the day as being quiet is a massive understatement because to be honest, there is absolutely nothing happening.” In the Reits sector, Cache Logistics fell 0.5 cent to $1.12 with 1.58 million traded. OCBC Investment Research said that in view of impending Fed ta- pering, it has reduced its estimate of Cache’s fair value from $1.30 to $1.20 to reflect a higher equity risk premium and risk-free rate but re- tains its “buy” recommendation. AM Fraser, in the meantime, is- sued a “buy” on Cache, saying that with an annualised yield of 7.7 per cent, Cache ranks highly among the industrial Reits in terms of distribu- tion yields. “We note that this also represents a 519 basis point spread over the 10-year Singapore Government Bond yield – a comfortable level in our view,” said the broker. Among telcos, M1 has been in fo- cus lately, following the release of its results and announcement of a spe- cial dividend. CIMB yesterday said it had cut its 2014-15 earnings per share estimates for M1 by 6-14 per cent and its discounted cash flow tar- get price by 7.3 per cent to $3.80. “M1 remains an Add with its divi- dend surprise and rapid take-up of tiered data plans acting as likely cata- lysts,” said CIMB. M1 yesterday gained nine cents to $3.45 with two million shares traded. In its morning notes yesterday, IG Markets said that from a tracking of S&P 500 returns since 1950, there were several instances where the in- dex returned 29 per cent or more. “In all these instances 1954, 1958, 1975, 1995 and 1997, the perform- ance for the years following would be less, but still positive,” said IG. “This is probably what will pan out for this year, it will end up as an up-year but without the margin of safety on lower valuations – the up- side is capped. Since 1950, there’s on- ly been 16 times out of 63 years that the S&P500 performed negatively.” Overall dollar and unit turnover gains ground, but the broad market is weak at 180 rises to 234 falls STOCKS Penny stocks in play as STI drifts R SIVANITHY [email protected]Senior Correspondent 0.320 0.310 0.300 0.290 9.30am 11am 12.30pm 2pm 3.30pm 5pm Source: Bloomberg Kim Heng Offshore & Marine Market debutant (S$) 29.5¢ (+4.5¢) Jan 22
Transcript
Mapletree Logistics TrustJan 22 close: S$1.045Maybank Kim Eng Research, Jan 21
WITH gearing at 33.9 per cent, Ma-pletree Logistics Trust (MLT) has adebt headroom of S$450 million be-fore hitting the 40 per cent leverageratio. But it has not had much luckwith acquiring assets from its spon-sor, Mapletree Investments Pte Ltd(MIPL), in the past year despite MI-PL having 13 sizeable logistics de-velopments in Asia.
The weakening yen remains aconcern because Japan is home toabout 25 per cent of MLT’s assetsand accounted for 21 per cent of itsrevenue in Q3 FY2014. Moreover,its forex hedging has been concen-trated mainly in FY2014 and man-agement did not disclose the swaprates for future years.
MLT said it has converted twosingle-user assets (SUAs) into mul-ti-tenanted buildings (MTBs) inFY2014, with another two to be con-verted by March 2014. It plans toprogressively shift its SUA-to-MTBratio from 59 per cent:41 per centcurrently to 50 per cent:50 percent. This would shorten its weight-ed average lease expiry periods inthe coming years (Q3 FY2014: 4.8years), as MTBs have shorterthree-year leases against at leastfive years for SUAs and are betterable to capture the upside of a grow-ing rental market.
We forecast DPU to grow at anunexciting one per cent compound-ed annual growth rate over FY2014to FY2016. MLT said active leaseand asset management will remaina key management priority, espe-cially in Singapore in view of the up-coming supply of 3.9 million sq ft ofwarehouse space in 2014. In termsof acquisition, we are still waitingto see if MLT will target sponsor in-jections such as Mapletree ShahAlam Logistics Park in Malaysiaand Mapletree Zhengzhou Interna-tional Logistics Park in China.
We cut our FY2014-16 DPU fore-casts by 0.3-0.5 per cent in anticipa-tion of lower growth prospects andhigher borrowing costs. The stockhas corrected by 6 per cent in theprevious quarter. Maintain “sell”with a lower dividend discount mod-el-derived target price of S$0.98.
SELL
Ascendas ReitJan 22 close: S$2.18DBS Group Research, Jan 21
A-REIT’s Q3 2014 results were inline with our expectations. Topline
and net property income grew 6.4per cent and 3.7 per cent toS$154.4 million and S$108.5 mil-lion respectively. This was largelydue to contributions from its proper-ties, namely Nexus@one-north andA-Reit City@Jinqiao, supported byorganic portfolio growth. Rental re-versions remained robust and con-tinued to see an uplift of about 9.7per cent, owing to low passingrents.
Occupancy rates saw a slight dipto 89.7 per cent (83.6 per cent formulti-tenanted properties). Mean-while, distributable income came in4.9 per cent higher at S$85.1 mil-lion, but DPU dipped 3.54 Singa-pore cents owing to a larger sharebase and nil contribution from itsChina investments (half-year repa-triations).
A-Reit continues to offer asteady growth profile overFY2014/15 due to: (i) uplift comingfrom 21.6 per cent of its income tobe renewed in FY2015 which are14 to 41 per cent below currentmarket levels; (ii) an active pipelineof development and asset enhance-ment projects (AEI). As of Decem-ber 2013, A-Reit had a pipeline ofS$148 million (S$59 million yet tobe funded) worth of ongoing assetenhancements and developmentprojects.
The phased completion of its var-ious development and AEI projectsin the subsequent quarters willmean that its growth is likely to seea more significant increase comeFY2015. In addition, we under-stand that A-Reit is likely to acquirethe remaining stake in Aperia, a de-velopment project in Kallang, bythe middle of 2014. We estimatethe trust will have sufficient debt-funded capacity to fund these initia-tives and should see gearing settleat 34 per cent, which is within man-agement’s optimal gearing level.
A-Reit proposed a reduction inits manager’s fees, through: (i) are-calculation of its determinationof its base fee, and (ii) a new tieredperformance fee structure that en-sures payment only upon a DPUgrowth 2.5 per cent. This new struc-ture aligns itself in favour withunitholders and is estimated to re-sult in an 1.1 per cent uplift in ourforward estimates. In addition,A-Reit will change its distributionfrequency to semi-annual basis.
We continue to like A-Reit’ssteady earnings growth profilewhich is visible and achievable,while maintaining a conservativegearing profile of less than 35 per
cent, in our view. Maintain “buy”,with target price at S$2.44 basedon discounted cash flow.
BUY
Keppel T&TJan 22 close: S$1.79CIMB Research, Jan 21
FY2013 net profit of S$63.2 millionwas broadly in line with our expec-tation and formed 102 per cent ofour full year estimate. We revise upour FY2014 to 2016 EPS by 2-3 percent for the higher-than-expectedmargins, with a slightly higher sumof parts-based target price ofS$1.94.
However, we downgrade thestock from “add” to “hold” as we be-lieve that the positives have largelybeen priced in. The share price hasrallied since Keppel T&T (KPTT) an-nounced its intention to inject its da-ta centres into a Reit in H1 2014,which we think has been overdone.While we are positive on the news,we believe it will take time for KPTTto reinvest the funds raised fromthe IPO to make a meaningful im-pact on its earnings.
HOLD
– Compiled by CAI HAOXIANG
Glossary:DPU – distribution per unitEPS – earnings per shareEbit – earnings before interest & taxEbitda – earnings before interest, tax,depreciation & amortisationFY – fiscal/financial yearH1, H2 – first or second halfNAV – net asset value9M – nine monthsP/B – price/book value (ratio)PE – price/earnings (ratio)Q1, Q2, Q3 – first, second, or thirdquarterq-o-q – quarter-on-quarterROE – return on equityRNAV – revised net asset valueTP – target pricey-o-y – year-on-yearYTD – year to date
Disclaimer: All analyses,recommendations and other
information herein are publishedfor general information. Readers
should not rely solely on theinformation published and shouldseek independent financial advice
prior to making any investmentdecision. The publisher accepts no
liability for any loss whatsoeverarising from any use of the
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Brokers who wish to send in theirreports can email us at
THE debut of Kim HengOffshore and active pen-ny stock trading werethe main features of yes-terday’s session, wherethe Straits Times Indexexhibited its now-famil-iar directionless drift be-
fore ending almost unchanged at3,133.74, 0.02 point lower.
Dollar turnover, which has beenlow for many months, picked up yes-terday to just under $1.2 billion, upfrom Tuesday’s $955.7 million. Unitturnover also improved from 3.3 bil-lion to just over four billion units. De-spite the elevated activity, the broadmarket was weak, recording 180 ris-es versus 234 falls excluding war-rants.
The market’s latest entrant, off-shore marine firm Kim Heng, whichoffered its shares at 25 cents each,contributed 83 million units in turn-over, the counter finishing its firstday as a listed entity at 29.5 cents. Ittraded at a high of 32 cents and a lowof 29 cents.
Other penny stocks which saw ac-tion included KLW, Albedo, HanKoreand Charisma Energy – all familiar
names to those who have been watch-ing daily trading over the past monthor so. Among the larger falls in thepenny segment was Federal Interna-tional’s 0.4 cent or 6.5 per cent fall to5.8 cents that came with 74 millionshares traded.
As for blue chips, the session waslargely a non-event. One dealer,when asked if there was anything ofnote happening in blue chips sincetrading appeared quiet, replied: “De-scribing the day as being quiet is amassive understatement because tobe honest, there is absolutely nothinghappening.”
In the Reits sector, Cache Logisticsfell 0.5 cent to $1.12 with 1.58 milliontraded. OCBC Investment Research
said that in view of impending Fed ta-pering, it has reduced its estimate ofCache’s fair value from $1.30 to$1.20 to reflect a higher equity riskpremium and risk-free rate but re-tains its “buy” recommendation.
AM Fraser, in the meantime, is-sued a “buy” on Cache, saying thatwith an annualised yield of 7.7 per
cent, Cache ranks highly among theindustrial Reits in terms of distribu-tion yields.
“We note that this also representsa 519 basis point spread over the10-year Singapore Government Bondyield – a comfortable level in ourview,” said the broker.
Among telcos, M1 has been in fo-
cus lately, following the release of itsresults and announcement of a spe-cial dividend. CIMB yesterday said ithad cut its 2014-15 earnings pershare estimates for M1 by 6-14 percent and its discounted cash flow tar-get price by 7.3 per cent to $3.80.
“M1 remains an Add with its divi-dend surprise and rapid take-up oftiered data plans acting as likely cata-lysts,” said CIMB. M1 yesterdaygained nine cents to $3.45 with twomillion shares traded.
In its morning notes yesterday, IGMarkets said that from a tracking ofS&P 500 returns since 1950, therewere several instances where the in-dex returned 29 per cent or more.
“In all these instances 1954, 1958,1975, 1995 and 1997, the perform-ance for the years following would beless, but still positive,” said IG.
“This is probably what will panout for this year, it will end up as anup-year but without the margin ofsafety on lower valuations – the up-side is capped. Since 1950, there’s on-ly been 16 times out of 63 years thatthe S&P500 performed negatively.”
FALLSBY CENTS
CLOSE DOWN %
GLD 10US$ 11947 -125.3 -0.8
DBXT FTVietnam 10US$ 2772 -61.4 -1.7
JMH 5570 -60.1 -0.8
CIMBAsean40 100US$ 956 -49.9 -3.9
JSH 3370 -38.4 -0.9
Lyxor ThaiSET 10US$ 11229 -38.4 -0.3
DBXT MSTHAI 10US$ 1745 -28.1 -1.2
DBXT MSMSIA 10US$ 1458 -25.6 -1.4
DBS.ES.1401 1712 -24.0 -1.4
DBS Grp 1715 -22.0 -1.3
BY PERCENTAGECLOSE % DOWN
KepCorp MBeCW140203 1 -58.3 -1.4
KepCorp MBePW140204 1.2 -55.6 -1.5
DBS MB eCW140204 1.3 -51.9 -1.4
SingTelMBePW140401 2.2 -42.1 -1.6
NOL MB eCW140303 0.7 -41.7 -0.5
ElektromotW150710 0.3 -40.0 -0.2
Infinio 0.2 -33.3 -0.1
Goodland W160217 15 -25.0 -5.0
CapitalaMBeCW140401 2.5 -24.2 -0.8
China Haida 2.3 -23.3 -0.7
MOST ACTIVE STOCKS
VOLUME
KLW Hldgs 999,546,000
Albedo 299,990,000Memstar 231,853,000
Charisma Energy 222,238,000AdvanceSCT 148,589,000
CCM Grp 130,413,000HanKore 128,943,000
JEP 89,554,000KimHeng Offshore 82,869,000Unionmet 82,194,000
TOTAL 2,138,936 2,278,014 4,416,950 1,007,398 181,693 1,189,091
GLOBALQUOTE - - 3,116 - - 1,696
Sing & foreign $ stocks. Value calculated using Monday's exchange rates.
[LONDON] The Australian dollarjumped the most in a week after a gov-ernment report showed inflation wasfaster than economists forecast, boost-ing bets that the central bank will re-frain from cutting interest rates.
The euro approached a two-monthlow against the dollar on speculationthat the European Central Bank (ECB)will cut interest rates to fight disinfla-tion. The Bloomberg Dollar Spot In-dex snapped a six-day advance beforea report that analysts said will showthe number of American first-timeclaimants for jobless benefits in-creased and house prices fell. The yenapproached a one-week low againstthe dollar after the Bank of Japanpledged to maintain record stimulus.
The Aussie rose 0.8 per cent to88.73 US cents at 6.41am New Yorktime after falling to 87.57 US cents onMonday, the weakest since July 2010.The euro was little changed atUS$1.3560 after reaching US$1.3508on Monday, the least since Nov 25.The shared currency bought 141.49yen. It touched 140.33 on Monday,the weakest since Dec 6. The Japa-nese currency slid 0.1 per cent to104.35 per dollar.
Australia’s trimmed mean gaugeof core consumer prices in the fourthquarter rose 0.9 per cent from the pre-vious quarter, the Bureau of Statisticssaid in Sydney. The median forecastof economists was for a 0.6 per centgain.
There’s a 23 per cent chance that
the Reserve Bank of Australia will re-duce its record-low 2.5 per centbenchmark rate as of its June meet-ing, compared to 42 per cent odds onTuesday, swaps data compiled byBloomberg show.
The Bloomberg Dollar Spot Index,which tracks the US currency against10 major counterparts, was littlechanged at 1,033.06 after rising to1,037.75 on Tuesday, the highestsince Sept 6.
The euro will weaken to US$1.28and 140 yen by year-end, accordingto the median forecasts of analystssurveyed by Bloomberg.
Inflation in the euro area has un-dershot the ECB’s target of just below2 per cent every month since Febru-ary last year. ECB president MarioDraghi said this month that there re-mains the potential for fresh aid ifneeded and he wants to see sustainedconfidence before he will “declare vic-tory”.
BOJ governor Haruhiko Kuroda’sboard stuck to its pledge to expandthe monetary base by an annual 60trillion yen (S$735 billion) to 70 tril-lion yen yesterday after a two-daymeeting in Tokyo, in line with the fore-casts of all 36 economists surveyed byBloomberg News. The BOJ main-tained its projection that core consum-er prices will rise 1.9 per cent in theyear starting April 2015, excludingthe effect of sales-tax increases, andscrapped a reference to the economyfacing “uncertainty”. – Bloomberg
BROKERS’ TAKECURRENCIES
Aussie dollar leapson inflation report
CapMallsAsia 1.850 +0.010
CapitaLand 2.900 +0.010
CapitaMall 1.890 +0.010
CityDev 9.510 +0.010
ComfortDelGro 1.965 +0.010
DBS Grp 17.150 -0.220
GLP 2.940 +0.040
Genting SP 1.480 +0.010
Golden Agri 0.530 +0.005
HK Land 6.400 +0.030
HPH Trust US$ 0.680 +0.005
JMH 55.700 -0.470
JSH 33.700 -0.300
Jardine C&C 39.030 +0.350
Keppel Corp 11.000 +0.040
Noble Grp 1.020 +0.015
OCBC Bk 9.650 -0.020
Olam 1.505 -0.015
SGX 7.000 -0.020
SIA 9.970 -0.030
SIA Engg 4.970 -0.020
SPH 4.030 +0.020
ST Engg 3.890 +0.010
SembCorp Ind 5.350 +0.060
SembMar 4.220 -0.010
SingTel 3.540 +0.020
Star Hub 4.240 +0.020
Thai Beverage 0.550 -0.005
UOB 20.370 +0.020
Wilmar 3.240 -
Up almost 1%: The Aussie yesterday rose to 88.73 US cents at 6.41amNew York time after falling to 87.57 US cents on Monday. Bets have risenthat the central bank will refrain from cutting interest rates. PHOTO: BLOOMBERG
STOCKS
Penny stocks in play as STI drifts
Closing prices are in trading currencies, butabsolute difference is in S$.
SECURITIES TRADING SCOREBOARDMAIN CATL TOTAL
Up Down Unch Up Down Unch Up Down Unch
Multi Ind 5 6 2 0 0 0 5 6 2
Manufacturing 41 49 42 6 12 9 47 61 51
Commerce 17 20 19 3 8 1 20 28 20
Tpt/Stor/Comms 12 15 9 0 2 0 12 17 9
Finance 8 11 6 1 0 0 9 11 6
Construction 9 7 12 0 3 3 9 10 15
Properties 25 21 9 0 0 0 25 21 9
Hotels/Rsts 7 2 2 0 2 0 7 4 2
Services 15 39 29 6 11 11 21 50 40
Elect/Gas/Water 1 0 2 0 0 0 1 0 2
Agriculture 4 1 1 0 0 0 4 1 1
Mining/Quarry 1 3 0 2 1 0 3 4 0
BLW 21 39 13 4 2 4 25 41 17
REIT 9 3 3 0 0 0 9 3 3
TOTAL 175 216 149 22 41 28 197 257 177
GLOBALQUOTE 0 0 0 0 0 0 0 3 1
Active counters with no volume for today are not included.
