Strategy, 3013 December October 2013 2014 Morning Matters – 13 October 2014 To access today’s reports, please click on the links below Vard Holdings (NEUTRAL) - Lower Oil Prices Hurting Deepwater Investments – 10 October 2014 Scoop of The Day Parkson Retail Asia (PRA SP) has decided to take up the mandatory offer by Joint Offerors in its 47.5%-owned Sri-Lankan associate. PRA will receive cash of SGD27.6m, and book a one-time gain of SGD0.6m over the book value. PRA originally invested around SGD13.5m in ODEL back in 2012. We do not see a major impact on the company, given that the associate only contributed 1.4% of FY14 net profit. On the other hand, the proceed further boosts PRA's net cash position (SGD150.1m), allowing them to continue paying out healthy dividends (SGD5.5 cents per share for June FY14). We expect the company to be on the lookout for other investment opportunities in the region. Analyst: James Koh, +65 6232 3839 Previous Report: Parkson Retail Asia Results Review (NEUTRAL) - Outlook Remains Challeging (22 August 2014) Other Stories Vard Holdings (VARD SP, NEUTRAL, TP: SGD0.80) Lower Oil Prices Hurting Deepwater Investment Company Update We turn more negative on Vard (VARD SP) as oil prices are likely to remain near the lower end of Saudi Arabia’s guidance, ie discouraging deep water investments. Stay NEUTRAL, with 10x blended FY14F/FY15F P/E SGD0.80 TP, as we cut FY14-15 expected order wins to NOK12bn-11bn and dial margin assumptions down on a higher mix of new staff and lower-margin contracts. These slash our EPS estimates by 15%/21%. Analyst: Lee Yue Jer, CFA +65 6232 3898 Previous Report: Vard Holdings Results Review (NEUTRAL) - Long Road To Recovery (23 July 2014) While you were sleeping US Wrap: U.S. markets closed lower on Friday as the S&P 500 declined 1.15%, while the Dow Jones Industrial Average and Nasdaq were down 0.69% and 2.33% respectively. According to the Labor Department, U.S. import prices declined 0.5% in September, against economists’ forecast for a figure of 0.7%. Security software maker, Symantec, tumbled 6.4% to USD21.94 after it mentioned that it plans to split itself into two separately traded companies. The U.S. 10-year Treasury bond is now yielding 2.28%, down 3 basis points. See important disclosures at the end of this report 1 13 October 2014 Morning Matters Chart: Singapore STI Index Table: Singapore Market Indices Value 1day change 1day % change YTD % change 3,400 3,250 Description Market indices Straits Times Index 3,224 (35.4) -1.1% 1.8% 3,200 SG Midcap Index 746 (8.6) -1.1% 3.4% 3,150 SG Small Cap Index 520 (6.4) -1.2% -4.1% SG Catalist Index 830 (13.6) -1.6% -22.8% 222 (2.8) -1.2% -1.5% 3,350 3,300 3,100 3,050 3,000 Sector indices 2,950 2,900 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 SG China Index SG Consumer Index 326 (2.0) -0.6% -32.4% 1,226 (19.2) -1.5% 6.3% 1day change 1day % change SG Healthcare Index SG O&G Index 675 (14.4) -2.1% -12.7% 3,221 (36.0) -1.1% SG Real Estate Index 732 (7.6) -1.0% 3.4% Baltic Dry Index 963 (11.0) -1.1% SG REITs Index 749 (5.8) -0.8% 4.9% WTI crude (USD/bbl) 85 (1.1) -1.3% SG Technology Index 1,230 7.1 0.6% 437 (3.3) -0.7% 14.7% SG Telecom Index 985 (14.6) -1.5% 1.8% SG Utilities Index 471 (4.5) -1.0% 0.6% Description STI Futures Oct14 Gold (USD/oz) USD/EUR Value 0.79 -0.13% USD/JPN 107 0.38% USD/SGD 1.27 0.22% Analysing The News COMPANY NEWS COMMENT RATING Sembcorp Marine (SMM SP) Sembcorp Marine announced that its whollyowned subsidiary Jurong Shipyard Pte Ltd has secured a USD696m contract to convert a shuttle tanker into a floating, production, storage and offloading (FPSO) vessel for OOGTK Libra & Co KG. We believe that the selling on Sembcorp Marine is overdone and valuations are looking attractive. Sembcorp is trading at 68x EV/EBITDA and 11-13x P/E for FY1416F. Positive surprises could arise from the repair segment as well as rebounding operating margins. Maintain BUY with lowered SGD4.50TP. BUY (TP: SGD4.50) Myanmar is one of the potentially sizable consumer markets to emerge among developing economies. With 50m people and a growing middle class with disposable income, the country offers significant consumer opportunity for Yoma Strategic to grow KFC over the long term. We do not have a rating for this stock at the moment. NON-RATED This vessel is expected to be completed in 3Q16 and will have the capacity to produce 50,000 barrels of oil per day and 4m cubic feet of natural gas per day. It will be chartered to Petrobras for work on the Libra field. Yoma Strategic Holdings (YOMA SP) Yoma have announced that they are partnering with Yum! Brands to bring the first KFC restaurant to Myanmar in 2015. KFC is among the first handful of quick service restaurants that have plans to enter the Myanmar market. 13 October 2014 Morning Matters Important Dates COMPANY New entitlements: Lian Beng Group Lian Beng Group UMS Holdings Tee Land Cordlife Group Guocoland Limited Guocoleisure Limited FJ Benjamin Parkson Retail Asia Olam International Olam International Eu Yan Sang Silverlake Axis Silverlake Axis ENTITLEMENT DETAILS Dividend SGD 0 01 ONE-TIER TAX Dividend SGD 0 0125 ONE-TIER TAX Dividend SGD 0 01 ONE-TIER TAX Dividend SGD 0.0075 ONE-TIER TAX Dividend SGD 0.01 ONE-TIER TAX Dividend SGD 0.05 ONE-TIER TAX Dividend SGD 0.02 Dividend SGD0.0025 ONE-TIER TAX Dividend SGD0.025 ONE-TIER TAX Dividend SGD0.05 ONE-TIER TAX Dividend SGD0.025 ONE-TIER TAX Dividend SGD0.022 ONE-TIER TAX Dividend SGD0.012 ONE-TIER TAX Dividend SGD0.006 ONE-TIER TAX EX-DATE 30 Sep 14 30 Sep 14 7 Oct 14 9 Oct 14 21 Oct 14 24 Oct 14 28 Oct 14 28 Oct 14 3 Nov 14 4 Nov 14 4 Nov 14 4 Nov 14 7 Nov 14 7 Nov 14 Recent Stories To access the following reports, please click on the link: OSK|DMG: Morning Matters – Scoop of The Day: Singapore REITs Sector - 10 October 2014 Singapore REITS (OVERWEIGHT) - MAS Kickstarts Next Growth Engine For REITs – 10 October 2014 Sembcorp Marine (BUY) - Oversold On Drillship And Oil Price Jitters – 9 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: Keppel Corp - 9 October 2014 Keppel Corp (BUY) - Still Winning Orders Despite Market Concerns - 9 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: Petra Foods - 8 October 2014 Petra Foods (BUY) - Building a Strong Position - 7 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: CapitaLand - 7 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: Singapore Office Sector - 3 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: M1 - 2 October 2014 M1 (BUY) – Still ‘Appletizing’ - 2 October 2014 Singapore Banks (NEUTRAL) - Protests in HK May Dampen Sentiment On – 2 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: Hafary - 1 October 2014 Hafary Holdings (BUY) - Enhancing Abodes, One Tile At a Time – 1 October 2014 OSK|DMG: Morning Matters - Scoop of The Day: Nam Cheong - 30 September 2014 Marco Polo Marine (BUY) - Wedding Bells And a Baby In 14 Months - 30 September 2014 Nam Cheong (BUY) - Record Sales Amidst Wedding Bells - 30 September 2014 OSK|DMG: Morning Matters – Scoop of The Day: Riverstone Holdings - 29 September 2014 Riverstone Holdings (BUY) - Capacity Set To Expand – 29 September 2014 Libra Group (BUY) - Loaded For Expansion – 29 September 2014 OSK|DMG: Morning Matters – Scoop of The Day: Lee Kim Tah - 26 September 2014 OSK|DMG: Morning Matters – Scoop of The Day: ValueMax - 25 September 2014 ValueMax Group (BUY) - New Value Driver In Motion – 24 September 2014 billion&below – Small Cap Weekly - 23 September 2014 OSK|DMG: Morning Matters - Scoop of The Day: Far East Hospitality Trust - 23 September 2014 OSK|DMG: Morning Matters - Scoop of The Day: Singapore Property - 22 September 2014 PAYMENT 16 Oct 14 16 Oct 14 28 Oct 14 3 Nov 14 7 Nov 14 18 Nov 14 17 Nov 14 19 Nov 14 13 Nov 14 13 Nov 14 13 Nov 14 21 Nov 14 27 Nov 14 27 Nov 14 13 October 2014 Morning Matters Diary of Events US Data 13-Oct-14 US Data 14-Oct-14 15-Oct-14 US Data MBA Mortgage Applications (Oct 10) 16-Oct-14 US Data Initial Jobless Claims (Oct 11) Continuing Claims (Oct 4) SG Data SG Data SG Data SG Data SG Data SG Results SPH REIT Y14 SG Results SG Results SPH Y14 SG Results Ascendas REIT Q2 15 M1 Q3 14 Keppel REIT Q3 14 SG Results CapitaCommercial Trust Q3 14 CapitaMall Trust Q3 14 Keppel Corp Q3 14 First REIT Q3 14 22-Oct-14 US Data MBA Mortgage Applications (Oct 17) 23-Oct-14 US Data Initial Jobless Claims (Oct 18) Continuing Claims (Oct 11) 24-Oct-14 US Data New Home Sales (Sep) New Home Sales MOM (Sep) 20-Oct-14 21-Oct-14 17-Oct-14 US Data US Data US Data SG Data SG Data SG Data Automobile COE Open Bid Cat A (Oct 22) Automobile COE Open Bid Cat B (Oct 22) Automobile COE Open Bid Cat E (Oct 22) SG Data SG Data SG Results Frasers Commecial Trust Y14 Keppel Land Q3 14 SG Results Hutchison Port Holdings Q3 14 Keppel Corp Q3 14 MapleTree Logistics Trust Q2 15 Mapletree Industrial Trust Q2 15 SGX Q1 15 SG Results AIMS AMP Capital Q2 15 Sheng Siong Group Q3 14 SG Results Cambridge Industrial Trust Q3 14 Cache Logistics Trust Q3 14 SG Results GuocoLeisure Q1 15 GuocoLand A1 15 Wing Tai Holdings Q1 15 Ezra Holdings Y14 Suntec REIT Q3 14 Starhill Globnal REIT Q3 14 Frasers Centrepoint Y14 US Data 27-Oct-14 US Data 28-Oct-14 29-Oct-14 US Data MBA Mortgage Applications (Oct 25) 30-Oct-14 US Data Initial Jobless Claims (Oct 26) Continuing Claims (Oct 19) 31-Oct-14 SG Data SG Data SG Data SG Data SG Data SG Results SG Results Raffles Medical Group Q3 14 Healthway Medical Group Q3 14 OSIM International Q3 14 CDL Hospitality Trust Q3 14 SG Results SG Results Capitaland Q3 14 DBS Group Q3 14 OCBC Q3 14 MTQ Corp Q2 15 Eu Yan Sang Q1 15 Indofood Agri Resources Q3 14 UOB Q3 14 SG Results SMRT Corp Q2 15 Jaya Holdings Q1 15 CapitaLand Q3 14 Hi-P International Q3 14 Gallant Venture Q3 14 Soilbuild Construction Q3 14 US Data DMG & Partners Research Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage DISCLAIMERS This research is issued by DMG & Partners Research Pte Ltd and it is for general distribution only It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness Opinions and views expressed in this report are subject to change without notice This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities DMG & Partners Research Pte Ltd is a wholly-owned subsidiary of DMG & Partners Securities Pte Ltd, a joint venture between OSK Investment Bank Berhad, Malaysia which have since merged into RHB Investment Bank Berhad (the merged entity is referred to as “RHBIB” which in turn is a wholly-owned subsidiary of RHB Capital Berhad) and Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of Deutsche 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