[Dow Jones] STOCK CALL: Cosco Corp. (F83.SG) may emerge as the
surprise winner of Petrobras (PBE.BA) rig boom despite Keppel Corp.
(BN4.SG) being the first yard to win one of Petrobras 12 rig charters, says
Credit Suisse. Broker says Norwegian driller Sevan (SEVAN.OS), tapped for a
Petrobras charter, has 2 newbuild options with Cosco; "Sevan is already
contracted to Petrobras and Petrobras has awarded a second semi-sub charter
contract to Sevan. It would not surprise us if Sevan were to use its option
with Cosco for the construction of the new semi-sub." Broker tips Cosco to
secure at least one, if not two contracts, conservatively worth US$170
million apiece. Maintains Outperform rating, S$4.40 target price. Share
+0.6% at S$3.36.
If Cosco were to win these contracts, it would be a huge boost to its share price. Keep an eye out for the news and results
Wednesday, June 4, 2008
Wilmar falls after UBS downgrade
Wilmar International fell as much as 3.9 percent after UBS
downgraded its rating for the palm oil firm to "neutral"
from "buy", citing a lack of short-term upside to its share price.
Wilmar, the world's largest palm oil trader, hit an intraday
low of S$5.20 with over 1.8 million shares traded.
UBS analyst Alain Lai said in a broker note Wilmar's share
price is fairly valued after it rose 52 percent from a low of
S$3.60 on March 18.
But he raised the plantation firm''s price target to S$5.90
from S$4.55, citing long-term exposure to a surging Chinese
oilseed and edible oil demand.
"We think there is strong upside to Chinese edible oil and
soybean demand. Wilmar''s 20-25 percent marke share of the
Chinese soybean crushing market and 40 percent share of palm oil
refining capacity imply it is best positioned to benefit," Lai
said.
downgraded its rating for the palm oil firm to "neutral"
from "buy", citing a lack of short-term upside to its share price.
Wilmar, the world's largest palm oil trader, hit an intraday
low of S$5.20 with over 1.8 million shares traded.
UBS analyst Alain Lai said in a broker note Wilmar's share
price is fairly valued after it rose 52 percent from a low of
S$3.60 on March 18.
But he raised the plantation firm''s price target to S$5.90
from S$4.55, citing long-term exposure to a surging Chinese
oilseed and edible oil demand.
"We think there is strong upside to Chinese edible oil and
soybean demand. Wilmar''s 20-25 percent marke share of the
Chinese soybean crushing market and 40 percent share of palm oil
refining capacity imply it is best positioned to benefit," Lai
said.
Potential currency devaluation in Vietnam - Keppel Land
Vietnam’s inflation rate soared to 25% in May, the highest since 1992. There are rising concerns that this may result in a financial crisis and the Vietnamese currency, the dong, could see a hefty devaluation. There are talks that Vietnam’s currency crisis could rival Thailand’s currency crisis in 1997. We have examined Singapore stocks in our coverage and there are four stocks that significant business presence in Vietnam. They are Keppel Land, Ascot Residence Trust, Low Keng Huat and SembCorp Industries.
Singapore Property Developers
Singapore property developers have ventured into Vietnam across all major property segments that include residential, office, retail, hotel and serviced residences. The table below provides the exposure of the property developers under our coverage. Keppel Land is the most exposed to Vietnam drawing 19% of its gross RNAV from Vietnam. The exposure of other property developers is quite small and limited up to 3% of their gross RNAV.
Keppel Land
We understand from Keppel Land management that the company does not borrow funds for its Vietnamese projects locally due to the high funding costs involved (around 12-15% levels). Instead it follows the approach of group borrowing mainly in S$ at relatively low interest rates (blended borrowing rate around 3.2% as at 1Q08) to fund the needs of its various subdivisions. This approach however is prone to risks associated with a severe devaluation of the Vietnamese currency.
We further understand that prices and rentals are quoted in US$ but the collection is done in Vietnamese Dong offering some protection against currency fluctuations. However, in the event of a severe devaluation of the Vietnamese Dong, the affordability constraints will pose a downward pressure on the prices and rentals.
Singapore Property Developers
Singapore property developers have ventured into Vietnam across all major property segments that include residential, office, retail, hotel and serviced residences. The table below provides the exposure of the property developers under our coverage. Keppel Land is the most exposed to Vietnam drawing 19% of its gross RNAV from Vietnam. The exposure of other property developers is quite small and limited up to 3% of their gross RNAV.
Keppel Land
We understand from Keppel Land management that the company does not borrow funds for its Vietnamese projects locally due to the high funding costs involved (around 12-15% levels). Instead it follows the approach of group borrowing mainly in S$ at relatively low interest rates (blended borrowing rate around 3.2% as at 1Q08) to fund the needs of its various subdivisions. This approach however is prone to risks associated with a severe devaluation of the Vietnamese currency.
We further understand that prices and rentals are quoted in US$ but the collection is done in Vietnamese Dong offering some protection against currency fluctuations. However, in the event of a severe devaluation of the Vietnamese Dong, the affordability constraints will pose a downward pressure on the prices and rentals.
Tuesday, June 3, 2008
Mid Day Market Update
Singapore stock market bogged down by investor inertia as Wall Street's overnight fall crimps appetite, keeping players sidelined until firm catalysts emerge. STI down 1.2% at 3150.83 midday after drifting in tight 19-point band for entire morning. Immediate support tipped at 3140, followed by 3100. AmFraser Securities' Najeeb Jarhom says upside for STI in near term may be capped at 3200 as investors expected to take profits around that level after accumulating at 3100; "this pattern may continue throughout much of this holiday and soccer-filled month while waiting for another round of window-dressing at end-June." UEFA Euro 2008 kicks off June 7. Overall market volume thin, with only 566.7 million shares traded. FTSE ST All Share Index off 1.0% at 803.58
DJ MARKET TALK: Goldman Cuts SPC Target To S$8.65 From S$9.20
STOCK CALL: Goldman Sachs cuts Singapore Petroleum (S99.SG) target price to S$8.65 from S$9.20; maintains Buy rating. Broker says new refinery capacity coming on stream is likely to depress refining margins; "we believe that Reliance Petroleum's new refinery, representing almost 50% of our estimate of global oil demand growth in 2009, is likely to have ramifications for refining margins globally." Broker adds gasoline spreads likely to be particularly affected as Reliance's gasoline and diesel output expected to be entirely exported out. Cuts FY08, FY09 earnings estimates by 15.8%, 23.4%, respectively to account for lower assumed refining margins, which leads to lower earnings target price. But says Singapore Petroleum remains one of broker's preferred oil refining plays globally with stock still on conviction Buy list. Share closed down 1.6% at S$6.79 yesterday
Ripples from a potential Vietnam meltdown
CIMB-Singapore Strategy
Investors have been concerned about exposure to Vietnam among major Singapore stocks recently. This is especially so after Vietnam’s inflation rate galloped to +25% recently and the dong’s 12-month forward rates weakened suddenly last week. We profile Singapore stocks with major exposure to Vietnam. A few property stocks are more vulnerable than others, namely ART, F&N and KepLand. Most of the other sectors have limited exposure. Two of the three banks in Singapore also bought 10% stakes in Vietnamese banks not too long ago but contributions are very small. The other stock with some exposure is Olam. Maintain Neutral on the Singapore market with an unchanged STI target of 3,480 for end-2008
Investors have been concerned about exposure to Vietnam among major Singapore stocks recently. This is especially so after Vietnam’s inflation rate galloped to +25% recently and the dong’s 12-month forward rates weakened suddenly last week. We profile Singapore stocks with major exposure to Vietnam. A few property stocks are more vulnerable than others, namely ART, F&N and KepLand. Most of the other sectors have limited exposure. Two of the three banks in Singapore also bought 10% stakes in Vietnamese banks not too long ago but contributions are very small. The other stock with some exposure is Olam. Maintain Neutral on the Singapore market with an unchanged STI target of 3,480 for end-2008
Monday, June 2, 2008
DJ MARKET TALK: Take Profits On Wilmar, Straits Asia -DBS Vickers
[Dow Jones] Investors should consider booking gains in some Singapore palm oil and commodity plays after their recent run up, says DBS Vickers strategist Yeo Kee Yan. Broker says plantation stock Wilmar (F34.SG) is now trading close to fair value, advises investors to exit stock. Adds, First Resources (EB5.SG) is preferred Singapore palm oil play as valuation still looks very attractive. Strategist says coal miner Straits Asia Resources (AJ1.SG) also now looking stretched with stock trading above fair value, suggests investors book profits. Wilmar down 2.0% at S$5.45, First Resources +3.4% at S$1.21, Straits Asia +1.2% at S$4.14.
Genting Intl
(Bloomberg) -- Genting International Plc, owner of
the biggest U.K. casino operator, rose the most in six months in
Singapore trading after announcing a venture with Mark Burnett
International Inc. that will develop game shows and reality
programs in Asian countries.
Genting gained 2.5 Singapore cents, or 4.1 percent, to 63.5
cents as of 11:10 a.m., rising the most since Nov. 30. The stock
is headed for its highest close since Feb. 15. Genting shares
have fallen 6.6 percent this year, compared with the 7.7 percent
decline in the benchmark Straits Times Index.
The 50-50 venture, called Mark Burnett Productions Asia Pte
Ltd., will use the facilities and attractions at Resorts World
at Sentosa, an integrated resort being built by a unit of
Genting, for some of its productions.
Mark Burnett produces the reality-television shows,
``Survivor'', ``The Apprentice'' and ``Contender.''
Genting International is a unit of Genting Bhd., Asia's
biggest publicly traded casino operator.
the biggest U.K. casino operator, rose the most in six months in
Singapore trading after announcing a venture with Mark Burnett
International Inc. that will develop game shows and reality
programs in Asian countries.
Genting gained 2.5 Singapore cents, or 4.1 percent, to 63.5
cents as of 11:10 a.m., rising the most since Nov. 30. The stock
is headed for its highest close since Feb. 15. Genting shares
have fallen 6.6 percent this year, compared with the 7.7 percent
decline in the benchmark Straits Times Index.
The 50-50 venture, called Mark Burnett Productions Asia Pte
Ltd., will use the facilities and attractions at Resorts World
at Sentosa, an integrated resort being built by a unit of
Genting, for some of its productions.
Mark Burnett produces the reality-television shows,
``Survivor'', ``The Apprentice'' and ``Contender.''
Genting International is a unit of Genting Bhd., Asia's
biggest publicly traded casino operator.
Singapore Hot Stocks-Genting Int''l soars to 5-mth high
Genting International rose as much as 10.7 percent to a five month high of S$0.675 withover 81 million shares traded, with some dealers citing eased concerns over construction costs for a Singapore casino. Malaysian parent Genting Bhd posted on Thursday a less-than-feared fall in first-quarter earnings.
"The belief is that the development of casino cost over-runs is no longer a concern," a Singapore based dealer said. Sister company Star Cruises gained as high as 8.9 percent to S$0.245 with more than 13 million shares changing hands. Genting International is building a casino at a cost of up to S$6 billion ($4.4 billion), about S$800 million or 15 percent above its initial budget, due mainly to higher construction expenses.
Last month, Genting''s Chairman and CEO told Reuters he does not expect further increases in cost for the casino. "The construction progress at Resorts World at Sentosa is on schedule at the revised budgeted costs of S$6 billion and all the funding for the project has been secured," Kim Eng Securities said in a broker note.
"The belief is that the development of casino cost over-runs is no longer a concern," a Singapore based dealer said. Sister company Star Cruises gained as high as 8.9 percent to S$0.245 with more than 13 million shares changing hands. Genting International is building a casino at a cost of up to S$6 billion ($4.4 billion), about S$800 million or 15 percent above its initial budget, due mainly to higher construction expenses.
Last month, Genting''s Chairman and CEO told Reuters he does not expect further increases in cost for the casino. "The construction progress at Resorts World at Sentosa is on schedule at the revised budgeted costs of S$6 billion and all the funding for the project has been secured," Kim Eng Securities said in a broker note.
STI +0.1%; Reverses Early Loss, Nears 3200
Singapore shares erase early losses to move slightly higher in early trade; STI up 0.1% at 3197.05 vs session low of 3182.14 with immediate resistance tipped at 3200. Index bucking falls for other regional markets as bank heavyweights head higher, but CIMB says charts tip capped upside; "with its indicators showing mixed signals, we do not think that the current rebound would be strong." Support tipped close to 10-day moving average at 3160 if index heads into negative territory again. Broad market volume thin, similar to last week''s levels, with losers just outnumbering gainers 119 to 113.
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