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MORNING BUZZ 24 February 2015
Market Indicators 19‐Feb
20‐Feb
Market Colour 23‐Feb
Mkt. T/O (S$ mil) ‐ ‐ 1,282.6
Stock Advances ‐ ‐ 234
Sellers faded the strong opening of STI, which closed down 14.36 points by day end. Stock Declines ‐ ‐ 265
This was led by a 2.8% decline in SingTel, due to profit taking after reaching a 52‐week high on the CNY week. Otherwise, gainers and losers were mostly even. Major Indices DJ Ind Avg 17,985.8
S & P 500 2,097.5
2,110.3
Nasdaq Comp 4,924.7
4,956.0
‐ Hang Seng 18,140.4 18,116.8
‐ The gainers included commodities (Olam: +1.5%; Noble Group: +1.4%) and 2,109.7
financials (DBS: +1.03%; SGX: +0.73%) while the losers included Singapore Airlines 4,961.0
(‐2.12%) and REITs (CapitaMall Trust: ‐1.4%; Ascendas REIT: ‐0.81%). With the full 24,836.8
budget delivered only after market close, we pen our thoughts on the market impact in the next section. STI Index 3,421.30 (‐0.42%) While the US markets closed flattish last night, we keep watch on Yellen’s testimony that may signal an earlier rate hike as the U.S. economic data has been coming in strong. An earlier than expected increase in rate hike may dampen demand in yield stocks such as REITs, while banks may stand to benefit if their net interest margins expand. Source: Bloomberg Commodities
Stocks to Watch Current % Chge from Price Close Gold (SPOT) US$ / OZ Oil (NYMEX CWTI|) US$ / bbl Baltic Dry Index 1,203.33
0.86% 49.43
‐1.61% 512.00
‐0.19% 
Our take on Budget 2015 Exchange Rates USD : SGD 1.3593 / MYR : SGD 0.3727 Source: Bloomberg Interest Rates 3‐mth Sibor 0.703%
SGS (10 yr) 2.341%
KGI Fraser Research Team KGI Fraser Securities Pte. Ltd. Please see important disclosures at the end of this publication MORNING BUZZ
Our take on Budget 2015 The Budget 2015 was announced yesterday afternoon, and we will zoom in on the impacts that have a mixture of positives and negatives for businesses. Overall, it is a net positive for businesses that are growing internationally and ready to invest in innovation and increase productivity with the SkillsFuture initiatives, FW worker levy recalibration, and higher funding initiatives for innovation, R&D and start‐ups and support for internationalization. However, business costs may increase for companies that do not move along with the direction set by the government, as the winding down of the wage credit scheme, PIC bonus scheme and CPF enhancement for employees will increase business costs for employers in general. Amongst the potential stock gainers, the construction of Terminal 5 will be positive for OUE Hospitality Trust (OUEHT SP; BUY; TP S$1.04) as it is the only hotel at the airport. We also see SATS (SATS SP) as another likely beneficiary. The construction sector could benefit from the pipeline of government driven projects, as development expenditure of the government is set to accelerate to $30b by 2020, as compared to $20b this year. Costs could also be reduced if they keep their focus on higher skilled FWs and productivity improvements. The manufacturing sector could benefit from the freeze in FW levies hike. Beneficiaries could include companies with local manufacturing presence such as Innovalues (IP SP; BUY; TP S$0.49), Venture Corp (VMS SP), UMS Holdings (UMSH SP) and Hi‐P International (HIP SP). Consumers stocks such as BreadTalk (BREAD SP), Sheng Siong (SSG SP), Osim (OSIM SP) and QAF (QAF SP) could potentially benefit from the new internationalization measures. However, there are stocks amongst the potential losers. In general, we see the lapse of stamp duty concession as a slight negative for Singapore‐based SREITs as their acquisition rate could slow. The green vehicle initiative (Early Turnover Scheme) could be a negative for Vicom (VCM SP; BUY; TP S$8.55) as older commercial vehicles require more frequent inspections than newer and greener ones in general. Overseas Education (OEL SP; HOLD; TP S$0.82) and all other domestically driven businesses could also face some headwinds from higher personnel expenses due to the winding down of WCS and higher CPF contributions. We note that the government has also taken advantage of the low oil price to increase fuel duty, which could imply that the government sees an extended weakness in oil prices. As such, we are wary of potential contract cancellations, and significant cancellations for large‐cap stocks such as Keppel Corp (KEP SP) or Sembcorp Marine (SMM SP) could bring rippling effect to the O&G sector. Source: The Business Times / Bloomberg / Straits Times KGI Fraser Securities Pte. Ltd. 2
MORNING BUZZ
Apendix 1: Corporate Action Dividends
Company
Results Period
Ann Date
DPS
Ex‐Date
Book Close
Payable
Share Price 23‐Feb‐15
Yield (%)
Ma cqua ri e Int'l Infra s tructure Fund 18‐Feb‐15 FY14 SGD 0.009000
3‐Mar‐15
5‐Ma r‐15
16‐Ma r‐15 SGD
0.097
9.3
M1
19‐Ja n‐15 FY14 SGD 0.119000
17‐Apr‐15
21‐Apr‐15
30‐Apr‐15 SGD
3.910
3.0
6‐Feb‐15 FY14 SGD 0.400000
21‐Apr‐15
23‐Apr‐15
7‐Ma y‐15 SGD 25.100
1.6
Grea t Ea s tern Hl dgs 6‐Feb‐15 FY14 SGD 0.050000
21‐Apr‐15
23‐Apr‐15
7‐Ma y‐15 SGD 25.100
0.2
23‐Ja n‐15 FY14 SGD 0.360000
22‐Apr‐15
24‐Apr‐15
6‐Ma y‐15 SGD
8.670
4.2
Keppel Tel ecoms & Tpt
20‐Ja n‐15 FY14 SGD 0.035000
22‐Apr‐15
24‐Apr‐15
5‐Ma y‐15 SGD
1.795
1.9
Keppel Tel ecoms & Tpt ‐ Speci a l
20‐Ja n‐15 FY14 SGD 0.115000
22‐Apr‐15
24‐Apr‐15
5‐Ma y‐15 SGD
1.795
6.4
Sembcorp Indus tri es 17‐Feb‐15 FY14 SGD 0.110000
23‐Apr‐15
27‐Apr‐15
18‐Ma y‐15 SGD
4.220
2.6
Grea t Ea s tern Hl dgs ‐ Speci a l
Keppel Corp * Include Ordinary, Cash, Special, Bonus, Variable and Base
Rights & Bonus Issues
Company
Rights Issue
Ex‐Date
Book Close
Del Monte Pa ci fi c
493 Rts Sha re @ S$0.325 ea ch Rts s ha re for every 1,000 exi s ti ng ord s ha res hel d
5‐Feb‐15
9‐Feb‐15
Rights Trading Period
From
To
12‐Feb‐15
24‐Feb‐15
Source: SGX Annoucement
Buyout
Company
Offer Price
Remarks
Closing Date
Offeror
CH Offs hore
SGD 0.550
Ca s h
5.30 p.m. on 27 Feb 2015
Energi a n Pte. Ltd.
euNetworks Group SGD 1.16
Ca s h
5.30 p.m. on 13 Ma r 2015
EUN Hol di ngs , LLP
Keppel Land *
SGD 4.38
Ca s h
5.30 p.m. on 12 Ma r 2015
Keppel Corpora ti on
LCD Gl oba l Inves tments Ltd
SGD 0.33
Ca s h
5.30 p.m. on 12 Ma r 2015
AF Gl oba l Pte. Ltd.
Popul a r Hl dgs
SGD 0.32
Ca s h
5.30 p.m. on 25 Feb 2015
Gra nd Apex Hol di ngs Pte. Ltd.
Source: SGX Annoucement
Keppel Land: A Base Offer Price of SGD 4.38 in cash for each Offer Share. A higher Offer Price of SGD 4.60 in cash, if KCL is able to reach the
Compulsory Acquisition Threshold.
KGI Fraser Securities Pte. Ltd. 3
MORNING BUZZ
Apendix 2: Financial Calendar Monday
Tuesday
Wednesday
23‐Feb
24‐Feb
SG: Budget 2015
Q4: Asian Pay Television Trust / Chip Eng Seng / Genting Spore / IFS Capital
SG (Jan 2015): CPI
*Q2: China Environmental Resources
Thursday
25‐Feb
SG: 4Q14 GDP
(Not later than 25 Feb)
SG (Jan 2015): Index of Industrial Production Q4: Amara Hldgs / HTL Int'l / Sheng Siong / StarHub
2‐Mar‐15
3‐Mar
Friday
26‐Feb
27‐Feb
Q4: China Merchants Hldgs / Golden Agri‐Resources / Ho Bee Land / Indofood Agri Resources / Li Heng Chemical / Otto Marine / ST Engrg / Super Grp / Vard Hldgs
Q4: China Sunsine / CSE Global / Hong Leong Finance / Hotel Royal / Innovalues / Mewah Int'l / Noble Grp *Q4: China Kangda / Courage Marine / Elec & Eltek / Golden Ocean Grp / / QAF / UOL Group *Q4: China New Town Devpt Co / Midas Hldgs / Sinarmas Land / Yuexiu Delong Hldgs
Property
Ireit Global (For the period fm 1 Nov 13 to 31 Dec 14)
4‐Mar
5‐Mar
6‐Mar
STI Review
Q4: Dairy Farm Int'l / Jardine Matheson Hldgs / Jardine Strategy / Mandarin Oriental Int'l
*Q4: Hongkong Land
9‐Mar
10‐Mar
11‐Mar
12‐Mar
13‐Mar
16‐Mar
17‐Mar
18‐Mar
19‐Mar
20‐Mar
SG: Prices of Private Residential Units Sold by Developers
*Q4: TPV Technology
23‐Mar
24‐Mar
25‐Mar
26‐Mar
27‐Mar
SG (Feb 2015): Index of Industrial Production SG (Feb 2015): CPI
* Tentative
Source: Company; Bloomberg
KGI Fraser Securities Pte. Ltd. 4
MORNING BUZZ
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KGI Fraser Securities Pte. Ltd. 5