DJ MARKET TALK: Singapore's STI May Stall; 3050-3088 Band Likely 

0054 GMT [Dow Jones] Singapore's STI may stall as traders drift back from the long weekend, amid a lack of firm cues and with much of Asean still on holiday. "The bias is on the downside. I think markets are overextended. Unless we see further indications of quantitative easing, the markets have to give up a lot of their gains. The forward guidance of a lot of corporate results season has not been that good," says Kevin Scully, executive chairman at NRA Capital. The STI ended Friday down 0.03%, or 0.78 point, at 3062.11. The index may remain stuck in a 3050-3088 range. Among stocks likely in focus, Heineken (HEIA.AE) raised its offer to buy joint-venture partner Fraser & Neave's (F99.SG) entire Asia Pacific Breweries (A46.SG) stake, moving to fend off rival bidders and gain control of one of Asia's most profitable beer businesses. Keppel (BN4.SG) said it is set to deliver a multi-purpose offshore wind turbine installer to Seafox Group ahead of time.
 
 

DJ MARKET TALK: F&N, APB May Rise After Sweetened Heineken Bid 

0045 GMT [Dow Jones] Fraser & Neave (F99.SG) and APB (A46.SG) may rise on resuming trade at the market open after Heineken (HEIA.AE) raised its bid for F&N's entire APB holding to S$53/share, countering Kindest Place's S$55/share bid for part of APB. Heineken's bid may be a done deal, says Goh Han Peng, an analyst at DMG & Partners. "The conditions have been tightened to make sure there's no further negotiation from other parties," he says, adding "the breakup fee would deter F&N from in any way trying to scupper the deal." But it may not signal an F&N breakup ahead, he says, noting ThaiBev (Y92.SG) controls a major stake and has more say than any other shareholder. "It still sees some ways for them to cooperate on the F&B side... they'll probably want to work together." He adds, "the property unit in F&N could be spun off. In a way, that will represent some monetization or breakup of the group, but not so much on the F&B side." He expects part of the S$4.00 per F&N share proceeds to be paid out. F&N and APB last changed hands at S$8.40 and S$50.57 respectively.
 
 
 
August 20, 2012 20:26 ET (00:26 GMT)
DJ Tiong Seng Unit Gets S$137 Million Construction Contract 

SINGAPORE--Tiong Seng Holdings Ltd. (K2P.SG) said Tuesday its unit has secured a 137 million Singapore dollars ($109.4 million) contract from the Singapore Institute of Management.
The contract, given to Tiong Seng Contractors (Pte.) Ltd., involves a planned building extension project at the school, the construction group said in a statement. 

 
 
 
 

F & N / AP BREW

S$8.40-FRNM.SI / S$50.57-APBW.SI

 We believe the saga (battle for control of APB) is

drawing to a close.

 Heineken has made a final offer of $53 a share

for F&N’s entire 40% stake (32.4% or 83.67 mln

shares deemed and 7.26% or 18.75 mln shares

direct ) in APB, to be completed in 120 days or by

Dec 15th, failing which F&N has to pay Heineken

$56 mln in break fee (representing a standard 1% of

the $5591.3 mln transaction value).

 This works out to an effective 4.1% more per APB

share than if F&N were to accept privately-owned

Kindest Place’s $55 a share offer for its direct 7.3%

stake, and Heineken’s original offer for the deemed

stake.

 The question is, will Thai Beverage (with 26.4%

stake in F&N of which the initial 22% was funded

entirely by debt) succeed in blocking the deal at an

EGM to be convened by F&N, even with the help of

Kirin of Japan, whose “silence” thus far has been

noticeable. Kirin owns a 14.97% stake in F&N.

 If so, it will be status quo, as in, Asia Pacific

Investments (50-50 owned by F&N and Heineken)

owns 64.8% of APB, while Heineken and F&N directly

own 9.5% and 7.3% respectively, leaving a free float

of 18.44%.

 A simple majority is needed for F&N to proceed with

the sale, to be followed by a mandatory takeover

offer by Heineken for the rest of APB.

 To help ensure “success”, we expect F&N’s board to

do better than what it has said so far about the $5.6

bln proceeds (which works out to $3.92 per F&N

share ) from the sale of the 39.66% stake in APB.

 We believe minority shareholders, especially the many

institutional shareholders such as Prudential (through

Eastspring), Blackrock (each with >5%), expect all

if not the bulk of the proceeds to be distributed

to them.

 For instance, most would likely be against F&N deploying

any part of the proceeds in the property business,

given that, without any exception, property stocks trade

at discount to NAV. (City Dev, at $11.47, is on 1.5x

NAV, which is not subject to annual revaluation.)

 Taking into consideration the above, we believe

APB is a SELL above $51, and F&N at around

the $9 level (stock hit intraday high of $8.66 on

Aug 10th, two days after Kindest’s counter offer

for APB).

Daily Review, 21 August 2012 Page 2 of 3

SGX-ST Member, SGX-DT (CNCM)

MIDAS

S$0.355-MIDS.SI

 Key point from Midas’ conference call is that

operationally, both Midas and its 32.5% owned

associate company Nanjing Puzhen will continue to

face challenging times in 2H 2012 but 2013 prospects

look better as both companies start to accelerate their

order book recognition as well as add new orders.

 Current order books for Midas stands at Rmb600mln

while that of Nanjing Puzhen at Rmb8bln.

 Management disclosed that Midas is currently bidding

for about Rmb500mln worth of new orders for Metro

trains and export orders and the company is still

awaiting for the much anticipated high speed train

contracts (stopped for 1.5 years now).

 Their new plant in Luoyang (Henan) is expected to

start commercial production early next year and will

help to cater to new orders.

 Consensus is expecting Midas’ profit to rebound

100% next year to Rmb180mln after halving this year

to Rmb90mln, giving a prospective PE of 12x.

 As this is in line with its peers in Hong Kong and China,

we maintain our HOLD recommendation.

.        Be selective in S-REITs given limited yield compression: Stick to FCOT, FCT, MLT and Suntec REIT

.        Singapore’s July headline inflation could decline but only due to a high base comparison

-----------------------------------

Singapore

Wired Daily

Page 2

F&N’s board has accepted Heineken’s revised offer of

S$53/share for a total consideration of S$5.59bn (6% higher

than previous offer of S$50), subject to shareholder approval.

The deal, including obtaining shareholders’ approval, should

be completed within 120 days from 18 Aug 2012. Given that

the transaction should only be completed in 4Q CY12, our

analyst believes any distributions will be around 1H FY13 at

the earliest. We continue to see Thai Bev as the biggest

obstacle, after having secured a 26.4% stake in F&N. Other

than indicating that it is keen on FNN’s F&B business, there

has been no insight as to its intended “end game” with

respect to the developments thus far. However, we are

quietly confident that the deal should secure the majority of

shareholders’ approval and should eventually be transacted

given the opportunity to maximize value. Maintain Hold, TP

$8.99.

Share Buy-Back

Company D.O.T. Buy/Sell No.of shares S$/shr

Pan-United Corporation Ltd 17-Aug-12 Share Buy-Back 120,000 0.6080

HG Metal Manufacturing Ltd 17-Aug-12 Share Buy-Back 1,191,000 0.0800

Viking Offshore and Marine Ltd 17-Aug-12 Share Buy-Back 50,000 0.1080

G.K. Goh Holdings Limited 17-Aug-12 Share Buy-Back 87,000 0.7200

CDW Holding Limited 17-Aug-12 Share Buy-Back 300,000 0.0920

Overseas-Chinese Banking Corp 17-Aug-12 Share Buy-Back 100,000 9.3800

Hisaka Holdings 17-Aug-12 Share Buy-Back 1,374,000 0.3228

Wee Hur Holdings Ltd 17-Aug-12 Share Buy-Back 1,050,000 0.2850

Pan-United Corporation Ltd 16-Aug-12 Share Buy-Back 113,000 0.6085

Hisaka Holdings 16-Aug-12 Share Buy-Back 3,600,000 0.3249

See Hup Seng Ltd 16-Aug-12 Share Buy-Back 985,000 0.1967

Straco Corporation Limited 16-Aug-12 Share Buy-Back 90,000 0.2100

CDW Holding Limited 16-Aug-12 Share Buy-Back 5,000 0.0910

Global Testing Corporation Ltd 16-Aug-12 Share Buy-Back 100,000 0.0600

Overseas-Chinese Banking Corp 16-Aug-12 Share Buy-Back 100,000 9.4000

Second Chance Properties Ltd 16-Aug-12 Share Buy-Back 3,983,000 0.3900

KSH Holdings Limited 16-Aug-12 Share Buy-Back 206,000 0.2200

Wee Hur Holdings Ltd 16-Aug-12 Share Buy-Back 2,654,000 0.2800

HG Metal Manufacturing Ltd 16-Aug-12 Share Buy-Back 1,200,000 0.0800

HG Metal Manufacturing Ltd 15-Aug-12 Share Buy-Back 200,000 0.0800

Macquarie Int'l Infra Fund Ltd 15-Aug-12 Share Buy-Back 2,740,000 0.5537

CSC Holdings Ltd 14-Aug-12 Share Buy-Back 200,000 0.1010

HG Metal Manufacturing Ltd 14-Aug-12 Share Buy-Back 850,000 0.0808

KSH Holdings Limited 14-Aug-12 Share Buy-Back 482,000 0.2100

Koh Brothers Group Limited 14-Aug-12 Share Buy-Back 83,000 0.2050

Macquarie Int'l Infra Fund Ltd 14-Aug-12 Share Buy-Back 1,299,000 0.5500

Overseas-Chinese Banking Corp 14-Aug-12 Share Buy-Back 100,000 9.4200

Pan-United Corporation Ltd 14-Aug-12 Share Buy-Back 130,000 0.6050

Second Chance Properties Ltd 14-Aug-12 Share Buy-Back 527,000 0.3850

Viking Offshore and Marine Ltd 14-Aug-12 Share Buy-Back 112,000 0.1040

Source: SGX Masnet

Singapore

Wired Daily

Page 3

Substantial Shareholders’ Transactions: 10 Aug – 16 Aug 2012

*Deemed Interest

Source: Business Times; SA: Share Allotment; ST: Share Transfer, B/R: Bonus/Rights Issue; OE: Option Exercise; PL: Placement Shares

Goldtron 16-Aug-12 Tan Kok Hiang Buy 2000 0 0 0.03

San Teh 16-Aug-12 Kao Ching Fong Nee Pan * Buy 1000 0.29 39.8 40.09

San Teh 16-Aug-12 Kao Shin Ping Buy 1000 0.29 16.21 16.5

Aspial Corporation 15-Aug-12 Koh Wee Seng Buy 100 0.37 14.19 14.2

ES Group 15-Aug-12 Low Chee Wee Buy 45 0.17 21.31 21.35

Global Premium 15-Aug-12 Lim Chee Chong Buy 100 0.24 0.05 0.06

Jiutian Chemical 15-Aug-12 Anyang Longyu Buy 450 - 28.46 28.49

PCI 15-Aug-12 Peh Kwee Chim * Buy 325 0.45 76.16 76.33

PCI Ltd 15-Aug-12 Chuan Hup Buy 325 - 76.16 76.33

Serial System 15-Aug-12 Goh Bak Heng Buy 206 0.11 35.09 35.11

Stamford Tyres 15-Aug-12 Dawn Wee * Buy 50 0.33 31.2 31.22

Stamford Tyres 15-Aug-12 Wee Kok Wah Buy 50 0.33 15.91 15.93

BRC Asia 14-Aug-12 Lingco Holdings Buy 440 0.13 5.23 5.28

Hotel Royal 14-Aug-12 Lee Keng Thon Buy 35 2.49 0.6 0.64

LH Group 14-Aug-12 Tan Yong Kee Sell 2000 - 0.99 0.94

Liongold 14-Aug-12 Dato Md Wira Dani Buy 200 1.25 5.09 5.11

Liongold 14-Aug-12 Dato Md Wira Dani * Buy 200 - 5.09 5.11

M Development 14-Aug-12 Value Capital Asset Mgt Sell 12831 - 10.04 8.45

Marco Polo Marine 14-Aug-12 Lee Wan Tang * Buy 2000 0.34 56.3 56.89

Marco Polo Marine 14-Aug-12 Lai Qin Zhi * Buy 2000 0.34 57.03 57.61

Serial System 14-Aug-12 Goh Bak Heng Buy 12 0.11 35.08 35.09

Stamford Tyres 14-Aug-12 Dawn Wee * Buy 251 - 31.09 31.2

Stamford Tyres 14-Aug-12 Wee Kok Wah Buy 251 0.33 15.8 15.91

Stamford Tyres 14-Aug-12 Dawn Wee * Buy 63 - 31.06 31.09

Transpac Industrial Hldgs 14-Aug-12 Vincent Chen Sell 17 1.63 0.08 0.08

Ascendas India Trust 13-Aug-12 Matthews Int'l Funds * Buy 5580 - 9.37 10.04

Aspial Corporation 13-Aug-12 Koh Wee Seng Buy 376 0.37 14.17 14.19

China Essence Group 13-Aug-12 Sanlam Universal Fund Plc Sell 102 - 9 8.97

China XLX Fertilizer 13-Aug-12 Liu Xing Xu * Buy 3475 0.32 34.34 34.69

China XLX Fertilizer 13-Aug-12 Pioneer Top Hldgs Buy 3475 - 34.34 34.69

CSE Global 13-Aug-12 Amundi S.A. Sell 25 - 6 5.99

Jasper Investments 13-Aug-12 Phillip Jeffrey Saile Sell 2000 0.06 0.25 0.21

LH Group 13-Aug-12 Tan Yong Kee Sell 5000 - 1.12 0.99

Liongold 13-Aug-12 Dato Md Wira Dani * Buy 1000 1.24 4.97 5.09

Sincap Group 13-Aug-12 Fu Hao Buy 81 0.11 53.86 53.91

Stamford Tyres 13-Aug-12 Wee Kok Wah Buy 63 0.33 15.77 15.8

Transpac Industrial Hldgs 13-Aug-12 Vincent Chen Sell 53 1.65 0.11 0.08

City Developments 10-Aug-12 Aberdeen Asset Mgt Asia * Sell 306 - 13.01 12.98

LH Group 10-Aug-12 Tan Yong Kee Sell 3000 - 1.2 1.12

Oceanus Group 10-Aug-12 Yu De Hua * Sell 2000 - 17.42 17.34

Oceanus Group 10-Aug-12 Yu Yang Sell 2000 - 8.18 8.1

Trust 10-Aug-12 Ooi Eng Peng Buy 150 0.5 0 0.01

Serial System 10-Aug-12 Goh Bak Heng Buy 284 0.11 35 35.03

Transpac Industrial Hldgs 10-Aug-12 Vincent Chen Sell 43 1.58 0.13 0.11

Singapore

Wired Daily

Page 4

Announced Dividends and Capital Issues: 17 Aug 2012 – 26 Sep 2012 (by Ex-Date)

Company Type Particulars Ex Date Paid/ Payable

ABR HOLDINGS LIMITED DIVIDEND SGD 0.3 ONE-TIER TAX 17-Aug-12 07-Sep-12

COMFORTDELGRO CORPORATION LTD DIVIDEND SGD 0.029 ONE-TIER TAX 17-Aug-12 31-Aug-12

ELEC & ELTEK INT CO LTD DIVIDEND USD 0.09 ONE-TIER TAX 17-Aug-12 06-Sep-12

PERENNIAL CHINA RETAIL TRUST DIVIDEND 010112 - 300612 SGD 0.019 TAX EXEMPT 17-Aug-12 12-Sep-12

PETRA FOODS LIMITED DIVIDEND SGD 0.0263 ONE-TIER TAX 17-Aug-12 03-Sep-12

PSL HOLDINGS LTD DIVIDEND SGD 0.001 ONE-TIER TAX 17-Aug-12 04-Sep-12

RICKMERS MARITIME DIVIDEND 010412 - 300612 USD 0.006 TAX EXEMPT 17-Aug-12 05-Sep-12

TRANSIT-MIXED CONCRETE LTD DIVIDEND SGD 0.01 ONE-TIER TAX 17-Aug-12 07-Sep-12

UNITED OVERSEAS INSURANCE LTD DIVIDEND SGD 0.03 ONE-TIER TAX 17-Aug-12 03-Sep-12

GREAT EASTERN HLDGS LTD DIVIDEND SGD 0.1 ONE-TIER TAX 21-Aug-12 05-Sep-12

INNOVALUES LIMITED DIVIDEND SGD 0.006 ONE-TIER TAX 21-Aug-12 12-Sep-12

CHALLENGER TECHNOLOGIES LTD DIVIDEND SGD 0.01 ONE-TIER TAX 22-Aug-12 07-Sep-12

ES GROUP (HOLDINGS) LIMITED DIVIDEND SGD 0.002 ONE-TIER TAX 22-Aug-12 04-Sep-12

PRUDENTIAL PLC DIVIDEND GBP 0.084 22-Aug-12 04-Oct-12

SARIN TECHNOLOGIES LTD DIVIDEND USD 0.0125 LESS TAX 22-Aug-12 05-Sep-12

UOB-KAY HIAN HOLDINGS LIMITED DIVIDEND SGD 0.005 ONE-TIER TAX 22-Aug-12 14-Sep-12

CSC HOLDINGS LTD DIVIDEND SGD 0.0009 ONE-TIER TAX 23-Aug-12 07-Sep-12

MACQUARIE INT'L INFRA FUND LTD DIVIDEND SGD 0.0275 23-Aug-12 10-Sep-12

MAXI-CASH FIN SVCS CORP LTD DIVIDEND SGD 0.005 ONE-TIER TAX 23-Aug-12 07-Sep-12

NY01100F 160901 INTEREST 3.75% 23-Aug-12 03-Sep-12

NY03100A 180901 INTEREST 4% 23-Aug-12 03-Sep-12

NY05100N 200901 INTEREST 3.25% 23-Aug-12 03-Sep-12

NY07100X 220901 INTEREST 3.13% 23-Aug-12 03-Sep-12

NY09100H 240901 INTEREST 3% 23-Aug-12 03-Sep-12

NZ07100S 270301 INTEREST 3.50% 23-Aug-12 03-Sep-12

NZ10100F 300901 INTEREST 2.88% 23-Aug-12 03-Sep-12

Q & M DENTAL GROUP (S) LIMITED DIVIDEND SGD 0.003 ONE-TIER TAX 23-Aug-12 07-Sep-12

SERIAL SYSTEM LTD DIVIDEND SGD 0.0022 ONE-TIER TAX 23-Aug-12 05-Sep-12

SUPER GROUP LTD. DIVIDEND SGD 0.02 ONE-TIER TAX 23-Aug-12 07-Sep-12

ARA ASSET MANAGEMENT LIMITED DIVIDEND SGD 0.023 ONE-TIER TAX 24-Aug-12 11-Sep-12

CHASEN HOLDINGS LIMITED DIVIDEND SGD 0.006 ONE-TIER TAX 24-Aug-12 06-Sep-12

HAW PAR CORP LTD DIVIDEND FIRST & INTERIM SGD 0.06 ONE-TIER TAX 24-Aug-12 12-Sep-12

HONG LEONG FINANCE LIMITED DIVIDEND SGD 0.04 ONE-TIER TAX 28-Aug-12 14-Sep-12

OVERSEAS UNION ENTERPRISE LTD DIVIDEND SGD 0.03 ONE-TIER TAX 28-Aug-12 13-Sep-12

QAF LTD DIVIDEND SGD 0.01 ONE-TIER TAX 28-Aug-12 12-Sep-12

SINGAPORE REINSURANCE COR LTD DIVIDEND SGD 0.005 TAX EXEMPT 28-Aug-12 12-Sep-12

CAPITAMALLS ASIA LIMITED DIVIDEND SGD 0.01625 ONE-TIER TAX 29-Aug-12 13-Sep-12

FREIGHT LINKS EXPRESS HOLDINGS DIVIDEND SCRIPDIVSCHEME SGD 0.0045 ONE-TIER TAX 29-Aug-12

GLOBAL INVESTMENTS LIMITED DIVIDEND SGD 0.0075 TAX EXEMPT 29-Aug-12 10-Sep-12

LEE METAL GROUP LTD DIVIDEND SGD 0.005 ONE-TIER TAX 29-Aug-12 14-Sep-12

OSIM INTERNATIONAL LTD DIVIDEND SGD 0.01 ONE-TIER TAX 29-Aug-12 12-Sep-12

OSIM INTERNATIONAL LTD DIVIDEND SGD 0.01 ONE-TIER TAX 29-Aug-12 12-Sep-12

TAN CHONG INT'L LTD DIVIDEND HKD 0.02 29-Aug-12 13-Sep-12

SAKARI RESOURCES LIMITED DIVIDEND USD 0.02 TAX EXEMPT 30-Aug-12 13-Sep-12

STAMFORD TYRES CORPORATIONLTD DIVIDEND SGD 0.015 ONE-TIER TAX 30-Aug-12 18-Sep-12

UNITED OVERSEAS BANK LTD DIVIDEND SGD 0.2 ONE-TIER TAX 30-Aug-12 13-Sep-12

TSIT WING INTL HOLDINGS LTD DIVIDEND HKD 0.015 31-Aug-12 21-Sep-12

HIAP HOE LIMITED DIVIDEND SGD 0.005 ONE-TIER TAX 03-Sep-12 21-Sep-12

UOB 5.05%NCPS 100 DIVIDEND 150312 - 140912 5.05% ONE-TIER TAX 03-Sep-12 17-Sep-12

DESIGN STUDIO FURNITURE MFRLTD DIVIDEND SGD 0.0075 ONE-TIER TAX 04-Sep-12 21-Sep-12

KINGSMEN CREATIVES LTD DIVIDEND SGD 0.015 ONE-TIER TAX 04-Sep-12 24-Sep-12

MULTI-CHEM LIMITED DIVIDEND SGD 0.0055 ONE-TIER TAX 04-Sep-12 20-Sep-12

SAKAE HOLDINGS LTD. DIVIDEND SGD 0.005 ONE-TIER TAX 04-Sep-12 20-Sep-12

CAPITARETAIL CHINA TRUST DIVIDEND 010112 - 300612 SGD 0.0482 05-Sep-12 26-Sep-12

ASTI HOLDINGS LIMITED DIVIDEND SGD 0.0015 ONE-TIER TAX 06-Sep-12 26-Sep-12

MEGACHEM LIMITED DIVIDEND SGD 0.003 TAX EXEMPT 07-Sep-12 28-Sep-12

POPULAR HOLDINGS LIMITED DIVIDEND SGD 0.008 ONE-TIER TAX 07-Sep-12 26-Sep-12

NOVO GROUP LTD. DIVIDEND SGD 0.01 ONE-TIER TAX 10-Sep-12 04-Oct-12

POH TIONG CHOON LOGISTICS LTD DIVIDEND SGD 0.05 ONE-TIER TAX 12-Sep-12 28-Sep-12

RIVERSTONE HOLDINGS LIMITED DIVIDEND MYR 0.022 ONE-TIER TAX 12-Sep-12 05-Oct-12

FRAGRANCE GROUP LIMITED BONUS OFFER OF 1 FOR 1 14-Sep-12

TOTAL ADR 10 DIVIDEND APPROXIMATE USD 0.587795 19-Sep-12 18-Oct-12

GP INDUSTRIES LIMITED DIVIDEND SGD 0.015 ONE-TIER TAX 20-Sep-12 04-Oct-12

N507101E 121001 INTEREST 2.50% 20-Sep-12 01-Oct-12

N507101E 121001 ENTITL. REDEMPTION 100% 20-Sep-12 01-Oct-12

N508100V 130401 INTEREST 1.63% 20-Sep-12 01-Oct-12

N509100N 141001 INTEREST 1.38% 20-Sep-12 01-Oct-12

N511100W 160401 INTEREST 1.13% 20-Sep-12 01-Oct-12

N710100Z 170401 INTEREST 2.38% 20-Sep-12 01-Oct-12

NA12100N 420401 INTEREST 2.75% 20-Sep-12 01-Oct-12

SINGAPORE EXCHANGE LIMITED DIVIDEND SGD 0.15 TAX EXEMPT 26-Sep-12 12-Oct-12

LIAN BENG GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 03-Oct-12 19-Oct-12

LIAN BENG GROUP LTD DIVIDEND SGD 0.01 ONE-TIER TAX 03-Oct-12 19-Oct-12

FRAGRANCE GROUP LIMITED DIVIDEND SGD 0.0005 ONE-TIER TAX 05-Oct-12 18-Oct-12

UMS HOLDINGS LIMITED DIVIDEND SGD 0.01 ONE-TIER TAX 11-Oct-12 31-Oct-12

GLOBAL PREMIUM HOTELS LIMITED DIVIDEND SGD 0.002 ONE-TIER TAX 16-Oct-12 30-Oct-12

BOARDROOM LIMITED DIVIDEND SGD 0.02 ONE-TIER TAX 30-Oct-12 23-Nov-12

K1 VENTURES LIMITED DIVIDEND SGD 0.005 ONE-TIER TAX 31-Oct-12 14-Nov-12

PARKSON RETAIL ASIA LIMITED DIVIDEND SGD 0.03 ONE-TIER TAX 06-Nov-12 23-Nov-12

NX09100W 190601 INTEREST 2.50% 22-Nov-12 03-Dec-12

NX11100X 210601 INTEREST 2.25% 22-Nov-12 03-Dec-12

Source: SGX

SINGAPORE EQUITY

Investment Research

DMG & Partners Research 2Q12 Results Wrap Private Circulation Onl

MARKET STRATEGY

More downgrades post 2Q results release

Whilst earnings were mostly in line, there were more earnings and

recommendation downgrades than upgrades. Two-thirds of the corporates

reported earnings in line with our expectations. 15% of the companies recorded

2QCY12 net profit above our forecasts whilst 18% were below our

expectations. For net profit revisions, there were more downgrades (20%)

versus upgrades (9%), a reflection of managements’ guidance of weaker

growth ahead. 13% of the stocks had their recommendations downgraded

whilst only 7% were upgraded.

Tougher earnings environment for corporates. Banks’ management now

guide for slower loan growth than their guidance three months back, a reflection

of the slower economy. This also led us to cut SIA cargo yields expectations.

Genting continues to adopt a cautious VIP credit policy as they are cautious on

the global economic environment. Even Olam has guided for weaker

contributions from its industrial commodities business of wood and cotton.

Marginal STI upside over the next 12-months. Using sum-of-the-parts

methodology, we derived a 12-month STI target of 3168, marginally higher than

our previous 3162. This gives a small 3% upside from the current 3063.

However, we see greater STI volatility before this target is reached. Sectors

that should outperform are commodity plays, consumer, offshore & marine and

REITS. Within these sectors, our top picks are Noble (earnings to be driven by

agriculture recovery), OSIM (due to new stores and new products driving

growth), Keppel Corp (strong revenue visibility from record order book) and

CCT (high occupancy & low gearing) respectively.

Interesting BUYs from NEUTRAL weight sectors. We are NEUTRAL weight

banks (valuation is less attractive after recent share price surge), telcos

(earnings were less exciting) and land transport (due to cost pressures).

However, we like some stocks within these sectors (1) UOB for its stronger

balance sheet strength, (2) ComfortDelgro for its better cost management &

overseas growth. Within the telco space, Starhub (NEUTRAL) is our preferred.

Figure 1: Our top picks

CapitaCommercial Trust 1.375 38.9 7.0 19.0 BUY 1.50

ComfortDelGro 1.695 22.4 13.8 14.3 BUY 1.85

Hi-P International 0.93 57.8 10.2 7.9 BUY 1.15

Keppel Corp 11.52 28.9 10.9 13.2 BUY 13.80

Noble Group 1.255 13.1 11.1 8.5 BUY 1.60

Olam 2.06 -3.3 13.2 10.6 BUY 2.56

Osim 1.31 15.3 11.2 10.3 BUY 1.75

UOB 20.2 35.2 13.0 12.1 BUY 21.40

Stock Name TP (

See important disclosures at the end of this publication 2

See important disclosures at the end of this publication

DMG Research

Highlights of 2Q12 results

AVIATION – Both SIA and Tiger reported improving numbers despite the seasonally

weaker quarter. The improved earnings was largely due to intensified promotional

activities, which continues to put pressure on yields, emphasizing its load active strategy

to improve aircraft utilization. This has proven successful, and would be the easiest way to

manage costs given the stiff competition amid a challenging economic environment.

However, SIA’s earnings were below expectations, and we cut our earnings forecasts and

downgraded SIA recommendation to NEUTRAL. Tiger remains a BUY.

BANKS - The banks posted earnings that were generally weaker sequentially, mainly due

to lower trading income. UOB did manage a marginal QoQ net profit rise, due to strength

in its fee & commission income. Across the board, net interest margin was narrower

QoQ, due to competition, and management have guided for continued 2H12 NIM

pressure. Banks' management now guide FY12 loan growth to be in the high single-digit,

lower than the mid-teens they guided back in May. With lacklustre net interest income

expected, we maintain NEUTRAL weight on the banking sector. UOB, whose share price

has outperformed peers YTD, remains our top pick, as we believe investors will look to

banks with balance sheet strength, which UOB has an edge given its high provisioning to

loan ratio and conservative lending stance over the past 36 months.

COMMODITIES - The commodity plays recorded earnings that were generally mixed, with

Noble (BUY) performing within our expectations. Its profits were partially boosted by gains

from supply chain assets as well as a tax credit (both due to the Yancoal merger), while

pure Indon coal play Sakari Resources (BUY) reported earnings that came in above our

expectations due to strong performance from its Jembayan mine and other gains. Moving

towards 2H12, we remain positive on commodity plays – Sakari’s earnings is expected to

gain from sequential increases in (1) coal price, and (2) production volume, while Noble's

earnings should experience continued strength in 2H12 with improvement in weather and

extension of sugar crushing period to boost contribution from its agriculture segment.

CONSUMER - Within the Singapore consumer space, companies whose earnings are

within expectations include OSIM International which reported a 20% YoY growth in 2Q12

earnings. Despite coming in-line, we have raised our FY12 earnings by 8% as we are now

more bullish about the sustainability of higher profit margins. Parkson Retail Asia reported

earnings below our expectations due to a slowdown in its Vietnam stores. We however

remain bullish on the stock and prospects appear bright with it venturing into multiple high

growth countries over the next few years. Among the companies that have yet to report

includes Eu Yan Sang and Epicentre. We expect margins to be slightly compressed on a

YoY basis for Eu Yan Sang as it digests its newly acquired Australian operations.

LAND TRANSPORT - The Singapore land transport sector posted a mixed bag of results.

As cost pressures continue to plague both our operators, SMRT reported 1QFY13 core

earnings that came in below our expectations due to higher (1) staff and related costs, (2)

depreciation, and (3) repair and maintenance costs. ComfortDelGro's 2Q12 PATMI

however, came in within our expectations despite cost pressures partly aided by strong

earnings from its Automotive Engineering Services segment. ComfortDelGro (BUY)

remains our preferred pick for the sector, given its ability to better control costs, while its

widespread overseas network allows it better overseas growth prospects which we view

as a strong advantage, while SMRT (NEUTRAL) may see limited share price upside with

concerns on cost pressures it faces.

See important disclosures at the end of this publication 3

See important disclosures at the end of this publication

DMG Research

OFFSHORE & MARINE - Strong performance from most big-caps. Earnings for Keppel

Corp, Sembcorp Industries (SCI), and STX OSV were above expectations while

Sembcorp Marine (SMM)'s results were slightly below expectations but we think this is

partly attributed to timing of order book recognition. The positive surprises for Keppel and

SCI came from the non-marine business units (property and utilities). STX OSV also

surprised us with a bumper dividend of S$0.13/share. Looking ahead, O&M margins are

likely to stay strong in 2H12 with positive margin guidance from STX OSV and SMM. With

the confirmation of the billion-dollar rig orders from Sete Brasil, Keppel and SMM are now

sitting on record order book and we believe the situation allows the rig builders to cherry

pick projects with higher margins. Given the strong share price gain by SCI in the past

three months, we switch our sector top pick to Keppel Corp as we see higher upside in

the stock.

REITS – During this reporting season, the REITs in Singapore posted strong earnings

with consistent dividend payouts ranging from an annualized 5-8.5% dividend yield. It was

noted that the earnings from all four sub-sectors of REITs, namely: retail, office, industrial

and hospitality have remained resilient to the volatile global market. Although retail,

industrial and hospitality earnings are in-line with estimates; the surprise came from the

office sector where occupancy takeup rate during 1H12 was stronger than expected;

mainly supported by foreign firms in the energy/commodities and legal sectors. Due to a

better than expected turn in the office sector, together with a high occupancy and low

renewal lease profile for FY12, we believe CCT coupled with its relatively cheap current

valuation and further room for growth, will outperform its peers going forward.

TECHNOLOGY - Due to 1) weaker-than-expected contribution from emerging markets, 2)

tablet cannibalisation and 3) growth drivers such as Windows 8 that may be deferred to

2013, PC industry slumped in the 2Q impacting the entire technology supply chain. As

such, Singapore tech stocks which are mainly component suppliers and services provider

reported weak 2Q results. While Gartner has cut 2012 global PC shipment forecast to

363m (-0.4% growth), shipment for mobile devices is still expected to grow by 5.8% to 1.9

billion units mainly driven by the strong 31.4% growth in high-end premium devices. As

such, we urge investors to stick with names that service the premium mobile OEMs (eg.

Samsung and Apple). Our top pick for the sector is Hi-P international

(S$0.92/BUY/TP:S$1.15), as it is a premium EMS/ODM provider to reputable names such

as Apple and Amazon. With the launch of iPhone 5 drawing closer, we expect more

upside for the counter’s share price in the near future.

TELCOs - The results of the telcos were generally lacklustre for the quarter - M1 posted a

negative surprise due to an accounting anomaly for the recognition of Android subsidies,

Singtel disappointed on regional currency weakness while Starhub saw some consolation

in the form of stronger pay-tv revenue (Euro 2012 induced). The EBITDA margins of the

telcos remained under pressure from higher subscriber acquisition and content costs.

Revenue-wise, mobile growth remained patchy due to the weaker IDD and roaming

revenues (partly the result of the lower roaming tariff between Malaysia and Singapore)

with telcos working to mitigate the pressure on voice. While the telcos had previously

guided for lower customer acquisition cost on the back of the higher take-up of Android

smartphones, this does not appear to be the case and could be a reflection of the type of

plans being signed up by customers. There is risk that margins may come under renewed

pressure from 3Q with the launch of the iPhone 5. With the share prices of telco stocks

across the region rallying on capital management prospects and the shelter that the

sector provides from macroeconomic uncertainties, valuations are already fair at current

levels. We maintain our NEUTRAL weighting on the sector. We believe the investment

community will be wary of M1 after the negative surprise, and our preferred pick is now

Starhub.