LIM & TAN SECURITIES

16 COLLYER QUAY #15-00 INCOME @ RAFFLES SINGAPORE 049318

TEL: 65330595
www.limtan.com.sg
RCB REG NO. 197301030W

DAILY REVIEW | 08 JANUARY 2016

FINANCIAL MARKETS

MAJOR MARKET INDICES

CLOSE

1D
(%)

MTD
(%)

YTD
(%)

FSSTI

2729.91

-2.65

-5.30

-5.30

Dow Jones

16514.1

-2.32

-5.23

-5.23

S&P 500

1943.09

-2.37

-4.93

-4.93

NASDAQ

4689.426

-3.03

-6.35

-6.35

FTSE (UK)

5954.08

-1.96

-4.62

-4.62

Nikkei

17767.34

-2.33

-6.65

-6.65

Hang Seng

20333.34

-3.09

-7.21

-7.21

Shanghai Composite

3125.002

-7.04

-11.70

-11.70

24.99

21.37

37.23

37.23

VIX

Daily Market Value (S$'m)

1565.3

Daily Market Volume (mln)

1613.1

52-week STI High

3549.9

52-week STI Low

2726.9

KEY INTEREST RATES

CLOSE

1D
(%)

MTD
(%)

YTD
(%)

3 Mth SGD SIBOR

1.2

0.0

0.5

0.5

3 Mth Swap Offer Rate

1.6

-0.3

-5.1

-5.1

SG 10 YR Bond Yield

2.4

-3.8

-6.3

-6.3

US 10 YR Bond Yield

2.1

-1.1

-5.5

-5.5

As at 8.00am SG time

CLOSE

1D
(%)

MTD
(%)

YTD
(%)

Dow Jones

16421.0

0.0

-5.3

-5.3

S&P 500

1934.1

0.1

-5.0

-5.0

NASDAQ

4292.8

0.1

-6.4

-6.4

CLOSE

1D
(%)

MTD
(%)

YTD
(%)

1109.3

0.0

4.5

4.5

US FUTURES

COMMODITIES

Crude Oil

33.3

-2.1

-10.2

-10.2

Baltic Dry

445.0

-4.7

-6.9

-6.9

6335.0

-1.4

-9.6

-9.6

Crude Palm Oil

Yahoo! Inc slid 6.2%, the most since May. Boeing Co and General
Electric Co dropped more than 4.1%, two of Dows three worst
today. Energy shares in the Standard & Poors 500 Index declined to
a five-year low. The S&P 500slid 2.4% falling to its lowest since Oct
1 in the worst four-day start to a year in data going back to 1928.

IDEA OF THE DAY

SG MARKET SUMMARY

Gold

US stocks tumbled to three-month lows, with the Dow Jones Industrial

Average dropping more than 390 points to post its biggest two-day
retreat since August, amid a China-led rout that continued to engulf
markets around the globe. Banks and technology companies paced
the retreat, marking their biggest declines in four months, with
Citigroup Inc and Apple Inc down more than 4.2%.

FSSTI INDEX
3600
3500

52-week price chart

3400
3300
3200
3100
3000
2900
2800
2700
01/15 02/15 03/15 04/15 05/15 06/15 07/15 08/15 09/15 10/15 11/15 12/15

According to Bloomberg report yesterday, Grupo BTG Pactual and

other investors in a troubled drilling-rig supplier will meet this
month and decide whether Sete Brasil Participacoes SA will file for
bankruptcy protection after oil prices collapsed and it was cited in a
sprawling corruption scandal.
Shareholders may vote to seek legal protection from creditors for the
venture in a Jan. 21 meeting, which would be the first step toward an
eventual liquidation of the Rio de Janeiro-based companys assets.
However, we understand that a vote for a filing is unlikely this month
since under Brazilian law; the company might also avoid liquidation
through a restructuring either inside or outside the bankruptcy
process.
As a recap, Sete Brasil fell into financial distress after it was unable to
secure long-term financing from state development bank BNDES amid
allegations of kickbacks and after its only client, state-run oil producer
Petrobras, started slashing overall investments. The company said it
will continue to work to put together a viable restructuring plan, while
shareholders weigh the different strategic scenarios to be pursued.
Shareholders who invested a total of 8.25 bln reais (US$2.1 bln) in
capital and creditors owed a US$3.6 bln short-term loan maturing
in Feb may be forced to book losses should Sete file for bankruptcy
protection. In addition to BTG, investors include Banco Santander SA
and Banco Bradesco SA among others. Creditors such as Bradesco,
Banco Itau BBA SA, Banco do Brasil SA, Santander, Standard Chartered
Plc and Caixa Economica Federal have repeatedly rolled over Sete
Brasils loans since Oct 2014 in a bid to help the company survive.
In addition, Sete Brasil is also late in paying shipyards it hired to
build its rigs. We noted that Keppel Corp ($5.82, down 41 cents) and
SembMarine ($1.55, down 10.0 cents) have so far collected only 28%
and 40% of the total contract value respectively. Both KEP and SMM
are funding their working capital through debt now and with the
lengthening cash conversion cycle, we believe both companies could
see their net gearing spiked up further.
These Petrobras orders currently accounted for approximately 40%
of Keppel / SMMs net order books. In a worst case scenario of a
complete cancellation of all the Sete rigs on order, there could be
potential impairments if they are being marketed for sale to others
in the secondary market as the rigs are unlikely to fetch the original
contracted price of about US$800 mln each.
Give the new risks and realities that have emerged and coupled with
oil price so depressed at sub US$30 per barrel, we think KEP and SMM
and to a lesser extent, Sembcorp Industries ($2.76, down 16 cents)
will face immense pressure at least for the next two years or so. But
valuations wise, all three companies are already below the GFC levels
with KEP at 1x P/B, SMM at 1.1x P/B, SCI at 0.8x. (during the GFC,
average P/B was between 1-1.5x)

Source: Bloomberg

Singapore Research Team

Tel: 6533 0595
Email: research@limtan.com.sg
Please see research disclaimer on last page

Page

OTHER HIGHLIGHTS
Standard & Poors Ra ngs Services (S&P) followed in the footsteps
of Moodys and lowered its long-term corporate credit ra ng on
Noble Group Ltd ($0.345, down 0.035) to BB+ from BBB-. At
the same me, it lowered the long-term issue ra ng on Nobles
outstanding senior unsecured notes to BB from BBB-. In addi on,
it also lowered the long-term Greater China regional scale ra ng on
the company to cnBBB from cnBBB+ and on its notes to cnBB+
from cnBBB+. The ra ngs remain on CreditWatch with nega ve
implica ons.
The downgrade reflects the companys liquidity posi on which is
below what S&P expect for a strong liquidity posi on, despite the
sale of its agricultural unit. In S&P view, the companys credit standing
in the capital markets and with lenders has weakened, reflected in
its depressed securi es prices. The ra ng remains on CreditWatch
nega ve because the outlook for the companys capital raising could
be challenged by the weak commodity markets. S&P notes that the
company has a good track record in execu ng on its capital plans,
including the recent sale of Noble Agri Ltd. However, the current
depressed commodity markets and heightened risk aversion by
lenderS could complicate the companys fund raising plans for the
next few months. In addi on, S&P believe the companys earnings
and cash flow visibility is limited and there could be heightened
downside risks to the base-line expecta on as the commodi es
industry downturn looks to be prolonged.
S&P expects Nobles profitability to face constraints in the next 12
months. The companys earnings visibility is low amid a challenging
opera ng market with heightened vola lity.
While traders such as Noble are less vulnerable to weakness in
commodity prices than commodity asset owners, nonetheless, Noble
is not immune to the weak opera ng environment. In par cular, the
credit quality of the companys trading counterpar es may decline
and therefore increase its risk profile and earnings vola lity. Since
Moodys downgrade at the end of Dec15, Nobles share price has
fallen 14%. The latest downgrade by S&P coupled with con nued
selling pressure of global equi es and commodi es may see further
downside pressure.
Advanced Integrated Mfg ($0.255, unchanged) announced that its
wholly-owned subsidiary, Hao Mart Pte. Ltd. (previously known
as IMS Corpora on Pte. Ltd), has entered into an asset purchase
agreement for the acquisi on of a minimart business located at Blk
310 Yishun Ring Road #01-1230 Singapore 760310 for S$100k.
This acquisi on is expected to provide an addi onal revenue
stream for the Group, and is part of the Groups strategy to pursue
diversifica on to strengthen the Groups opera ons and financial
posi on and to ensure con nued growth and success of the Group.

Global Yellow Pages ($0.155, down 0.7 cents) announced that its
indirect wholly-owned subsidiary, Global Food Retail Group (GFRG),
has entered into a collabora on agreement with Aimers Co Ltd
(ACL). Both par es agree to cooperate to jointly develop the retail
business under the Wendys brand and its related products, and
the Gang Ti business which involves the retail sale of fried chicken,
drinks and other food products under the Gang Ti trademark. The
company understands that ACL, a company incorporated in the
Republic of Korea, currently operates the Gang Ti business in Korea
and is the legal and beneficial owner of the intellectual property
rights in and to the Gang Ti business. This proposed collabora on is
not expected to have a material impact on the companys financial
performance for FY16.
CNMC Goldmine ($0.188, unchanged) announced that its Sokor
Gold Project has produced a total of 31.2k ounces of fine gold for
FY15, represen ng the highest produc on output on record for a
financial year since the start of the companys gold produc on in
Jul-10. As compared to the previous record set in FY14 of 26.1k
ounces of fine gold, this reflects an increase of approximately
19.5%.
With reference to the previous announcements that it is to purchase
Hong Kong stockbroking firm Winfield Securi es Limited, iFast Corp
($1.19, down 10.5 cents) updated that this proposed acquisi on
has been completed on 06-Jan-16. The purchase considera on
has been revised from the es mated HK$14.7mln to HK$15.8mln
a er reviewing the updated accounts of Winfield Securi es at
comple on date.
HTL Intl ($0.685, unchanged) announced that Guangdong Yihua
Timber Industry has proposed to acquire the company through
the oer of S$1.00 per share by way of scheme of arrangement.
However, this oer is condi onal upon the proposed acquisi on
being approved by the shareholders of Yihua Timber in a general
mee ng; the proposed acquisi on being sanc oned by Na onal
Development and Reform Commission of Guangdong Province; the
proposed acquisi on being approved by Shantou Administra on of
Foreign Exchange; and the proposed acquisi on being approved by
Department of Commerce of Guangdong Province.
Yihua Timber has already entered into an agreement with HTLs
controlling shareholder, BEM Holdings, Phua Yong Tat, Phua Yong
Pin and Phua Yong Sin for this proposed acquisi on. Addi onally,
Yihua Timber has also entered into an undertaking agreement with
BEM and have agreed certain steps to be taken to implement this
proposed scheme. Guangdong Yihua Timber Industry is a company
incorporated in the PRC and listed on the Shanghai Stock Exchange.
The Yihua Group is primarily engaged in the manufacture,
processing and sale of wooden products (including wooden
furniture and wooden floors). It distributes its products within the
Chinese domes c market and to overseas markets.

FSSTI STOCK SELECTION

HIGHEST CONSENSUS FY15E DIV YIELD (%)

LOWEST TRAILING P/B (X)

1 NOBLE GROUP

9.92

1 GOLDEN AGRI-RESOURCES

2 HUTCHISON PORT-U

8.94

2 NOBLE GROUP

0.35

3 ASCENDAS REIT

7.17

3 HONGKONG LAND

0.57

4 KEPPEL CORP

6.96

4 UOL GROUP

0.61

5 CAPITALAND MALL TRUST

6.11

5 CAPITALAND LTD

0.76

LOWEST CONSENSUS FY15 P/E (X)

0.34

LOWEST TRAILING EV/EBITDA (X)

1 NOBLE GROUP

3.53

1 YANGZIJIANG SHIPPING

3.48

2 YANGZIJIANG SHIPPING

6.55

2 SIA

4.29

3 KEPPEL CORP

7.70

3 KEPPEL CORP

7.52

4 SEMBCORP INDUSTRIES

7.96

4 SEMBCORP MARINE

8.24

5 DBS GROUP

8.79

5 COMFORTDELGRO

8.58

Source: Bloomberg Estimates (FSSTI Universe)

Please see research disclaimer on last page

Page

SHARE TRANSACTIONS
Company

Party

ACQUISITIONS
GSH Corpora on
Ho Bee Land
Hong Fok Corpora on
Interna onal Healthway Corp
SinoTel Technologies
Tiger Airways Holdings
Willas-Array Electronics

Goi Seng Hui

Chua Thian Poh
Cheong Sim Eng
Ching Chiat Kwong
Jia Yue Ting
SIA Ltd
Leung Chun Wah

DISPOSALS
AA Group Holdings
Elektromo ve Group
The Hour Glass

Liao ChunLan
Advance Opportuni es Fund
Jannie Chan

04 - 06 JANUARY
OCTOBER
Transacted
Market
New
Price* ($)
Price ($)
Balance

Stake
(%)

Buy

Sell

103,800
103,000
48,400
655,500
700,000
24,800,100
60,400

0.251
1.998
0.728
0.091
0.128
0.45
0.813

952,591,275
488,721,600
135,372,595
311,916,200
360,366,067
1,418,256,141
19,516,970

48.18
73.36
17.10
18.80
85.20
56.72
25.85

5,205,102
35,000,000
1,500,000

0.104
0.003
0.78

13,863,773
139,083,112
344,791,669

14.40
8.42
48.91

* ND: Not Disclosed

SHARE BUYBACK

Company

AEM Holdings
A-Sonic Aerospace
Courts Asia
GCCP Resources
GP Ba eries
HG Metal Manufacturing
IsoTeam Ltd
OCBC
PACC Oshore Services
Powerma c Data Systems
Q & M Dental Group
SIA Engineering

Please see research disclaimer on last page

No. of shares

Price
($)

Cumulave
Purchases

Of Maximum
(%)

19,300
23,000
54,000
2,900,000
49,900
985,400
1,400,000
200,000
100,000
45,500
363,500
41,600

0.28
0.295
0.38
0.116
0.92
0.039
0.63
8.58
0.30
0.93
0.70
3.70

376,300
3,194,700
13,156,900
36,300,000
5,170,300
24,782,500
2,600,000
7,150,000
7,494,600
405,060
3,028,400
1,271,300

8.5
17.9
24.5
30.4
21.6
19.3
18.2
1.8
4.1
11.6
3.9
1.1

Page

DIVIDENDS (LIST IS NOT EXHAUSTIVE)

Company

Amount

SPH Reit
Frasers Centrepoint Ltd
Frasers & Neave
Avi-Tech Electronics

1.33 interim
6.2 final
3 final
1.4 special

Last Day
Cum-Dividend

First Day
Ex-Dividend

Date
Payable

08 Jan 16
02 Feb 16
02 Feb 16
12 Feb 16

11 Jan 16
03 Feb 16
03 Feb 16
15 Feb 16

15 Feb 16
19 Feb 16
19 Feb 16
29 Feb 16

SHARE CONSOLIDATION
Company

Consolidaon Rao

Kencana Agri
Memtech Intl
Hupsteel Ltd
Informa cs Educa on

Consolida
Consolida
Consolida
Consolida

on 4 into 1
on 5 into 1
on 5 into 1
on 20 into 1

Please see research disclaimer on last page

Ex Date

Record Date

23 Dec 2015
04 Jan 2016
05 Jan 2016
05 Jan 2016

28 Dec 2015
06 Jan 2016
07 Jan 2016
07 Jan 2016

Page

WHATS AHEAD

Sun

J 2016

Mon

Tue

Wed

4
4Q Advance GDP
Esmates

10

Thu

12

13

14

15

16

22

23

29

30

Cambridge Industrial
Trust

Qian Hu Corporaon
SPH

Keppel DC Reit

20

19

18

Keppel Infrastructure
Trust

First Reit

Keppel Reit

Keppel T&T

CapitaLand
Commercial Trust
Frasers Commercial
Trust

M1

24

Sat

SPH Reit

11

17

Fri

25

26

Cache Logiscs Trust

Mapletree Industrial
Trust

Singapore Dec CPI

Parkway Life Reit

Singapore Dec Index of
Industrial Producon

27

Lonza Group
Mapletree Commercial
Trust

21

Keppel Corporaon
Soilbuild Business
Space Reit

28
Singapore Dec
Unemployment Rate
& Employment

Mapletree Greater
China Commercial

CDL Hospitality Trust

US FOMC Meeng

US FOMC Meeng

31

Please see research disclaimer on last page

Page

WHATS AHEAD

Sun

F 2016

Mon

Tue

Wed

Thu

Fri

Global Logisc
Properes

Sat

UOI

10

11

12

13

14

15

16

17

18

19

20

23

24

25

26

27

UOB

21

22

HTL Internaonal

28

Indofood Agri
Resources

29

Please see research disclaimer on last page

Page

RESEARCH DISCLAIMER
This report is intended for clients of Lim & Tan Securities Pte Ltd [herein after termed as LTS] only and no part of
this document may be
i.

Copied, photocopied, duplicated, stored or reproduced in any form by any means or

ii. Re-distributed or disseminated, directly or indirectly, to any other person in whole or in part, for any purpose
without the prior consent of LTS.
This research report is prepared for general circulation. It does not have 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 your 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, tools and material presented herein this report are not directed at, or intended for distribution to
or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution,
publication, availability or use would be contrary to applicable law or regulation or which would subject LTS to any
registration or licensing requirement within such jurisdiction.
The information and opinions presented in this research report have been obtained or derived from sources believed
by LTS to be reliable. Their accuracy, completeness or correctness is, however, not guaranteed. Opinions and
views expressed in this report are subject to change without notice, and no part of this publication is to be construed
as an offer, or solicitation of an offer to buy or sell securities, futures, options or other financial instruments or
to provide investment advice or services. Therefore, LTS accepts no liability for loss arising from the use of the
material presented in this report where permitted by law and/or regulation. LTS may have issued other reports that
are inconsistent with the assumptions, views and analytical methods of the analysts who prepared them.
LTS, its directors, its connected persons and employees may, from time to time, own or have positions in any of
the securities mentioned or referred to in this report or any securities related thereto and may from time to time
add to or dispose of or may be materially interested in any such securities. LTSs research analysts are primarily
responsible for the content of this report, in part or in whole, and certifies that the views about the companies
expressed in this report accurately reflect his personal views. LTS prohibits the research analysts who prepares
this report from receiving any compensation (excluding salary and bonuses) or oth er incentives and benefits
receivable in respect of this report or for providing specific recommendation for, or in view of a particular company
or companies mentioned in this report.
LTS-SPECIFIC / REGULATORY DISCLOSURE
1. LTS does not have a proprietary position in the company / companies as recommended in this report as at the
close of 07/01/16.
2. The research analysts do not have an interest in the company / companies as recommended in this report as
at the close of 07/01/16.

Includes direct or indirect ownership of securities or Futures Contracts (excluding the amount of securities or Futures
Contracts owned), directorships or trustee positions.

Page