Stock Exchange: June 2015

Thursday 25 June 2015

Your daily market summary for 25-Jun-2015.
The STI Index closed at 3,349.87, down by 1.46 points or 0.04%

The Straits Times Index (STI) Intraday Chart 2015-06-25

Top 20 Volume

Code	Stock	Rem	Last	Change	Change%	Volume	Value
5EK	ARMARDA GROUP LIMITED		0.002	-0.001	-33.33%	295783000	886379
K2M	DEBAO PROPERTY DEVELOPMENT LTD		0.082	+0.002	+2.50%	71839800	5852751
N21	NOBLE GROUP LIMITED		0.735	+0.020	+2.80%	37665100	27400104
ATN	THE STRATECH GROUP LIMITED		0.044	-0.002	-4.35%	37376800	1675289
5WA	INTL HEALTHWAY CORP LIMITED		0.300	-	-	37335600	11105408
41S	MAGNUS ENERGY GROUP LTD.		0.048	-0.003	-5.88%	26924600	1344756
5DN	EZRA HOLDINGS LIMITED	CR	0.265	+0.005	+1.92%	26900000	7215034
Z74	SINGTEL	CD	4.200	-0.040	-0.94%	24369100	102576382
5GC	CNA GROUP LTD.		0.032	-0.002	-5.88%	24239000	792866
J10	JAYA HOLDINGS LTD		0.044	-0.001	-2.22%	21942400	969255
NS8U	HUTCHISON PORT HOLDINGS TRUST (USD)		0.635	-	-	19942200	12716334
G13	GENTING SINGAPORE PLC		0.910	-0.005	-0.55%	16495000	15078605
E13	ELLIPSIZ LTD		0.121	-	-	16415600	2003452
505	ASIAMEDIC LIMITED		0.115	+0.003	+2.68%	16213500	1873608
5TT	KEONG HONG HOLDINGS LIMITED		0.465	+0.010	+2.20%	14109100	6521634
5OU	CHINA ENVIRONMENT LTD.		0.173	-0.002	-1.14%	13505200	2365989
5ME	EZION HOLDINGS LIMITED		1.045	-0.020	-1.88%	12696900	13309434
F3V	SINO CONSTRUCTION LIMITED		0.036	+0.001	+2.86%	12490500	435967
545	VALLIANZ HOLDINGS LIMITED		0.055	-	-	11051600	598444
MC0	GLOBAL LOGISTIC PROP LIMITED	CD	2.590	-	-	10156300	26431727

Ascott Residence Trust (ART) announced its proposal to acquire three serviced residences and four rental housing properties in Australia and Japan from its sponsor Ascott Limited for a total purchase consideration of S$246m.
This translates into an EBITDA yield of 5.1%.
On a pro forma basis, the acquisitions are expected to raise ART’s FY14 distribution income by S$3.9m and DPU by 2.9%.
ART intends to fund the acquisitions with a combination of debt financing and the issuance of perpetual securities.
We are positive on the acquisitions as the transactions are expected to be DPU accretive and would enhance ART’s geographical diversification and penetration into growing markets.
As these are interested person transactions, ART would need to obtain unitholders’ approval at an EGM. We thus maintain our BUY rating and S$1.44 fair value estimate for now.

(Wong Teck Ching Andy)

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Widening discount Concerns of a fourth telco entrant in Singapore has led to the steep fall in M1’s share price in recent months. This in turn has affected KPTT’s share price, due its 19% stake in M1.
But we believe KPTT 's selldown has been overdone as it is trading at a 7% discount to the market value of its combined stakes in M1 and Keppel DC REIT – implying that the market is ascribing no value to its core logistics and data centre businesses.
At 10.6x FY16 P/E, we believe the current share price offers value and presents a good entry point.
We keep our Add call but lower our SOP-based target price to S$1.86 to reflect the lower market value of KPTT’s stakes in M1 and Keppel DC REIT.
Potential catalysts include capital recycling as KPTT divests its data centre assets to Keppel DC REIT.

We are in favour of China Merchants Holdings’ (CMH) intended acquisitions of three toll roads in Guangxi as the acquisitions would
1. provide earnings diversification to CMH’s existing toll roads;
2. increase the average remaining concession period of CMH’s toll portfolio and
3. allow earnings enhancement by CMH via refinancing the debt associated with the acquired toll assets.
Due to insufficient information, our estimates have yet to incorporate the impact of the acquisitions. Our target price (based on CY15 residual income valuation) is raised to S$1.18 as we rerate CMH and lower our discount rate applied from 9.5% to 9% to reflect the reduced concentration risk and the potential enlarged market cap of CMH.
We upgrade our call from hold to Add.

FY15F PE (x): 18.4
FY16F PE (x): 20.3

Ezra’s cash call has lifted its refinancing risks.
However, its high gearing of 1.27x amidst the current industry downturn and a high cost structure make the situation challenging. A possible sale & leaseback of the Lewek Constellation would unlock US$200m in equity to bolster internal liquidity.
On the flipside, the high vessel dayrate will add to cost burden.
Subsea outlook has deteriorated. We cut FY15/FY16 earnings estimates by 35- 47%.
Maintain HOLD with cum-rights target price of S$0.31.