Wednesday, December 9, 2009

Singapore Stock Summary - 8 Dec 09

STI Faces Downside Risk based on Technicals Phillip Securities Research reported that STI faces downside risk due to RSI divergence with market setting up for weakness in the short term.

China XLX Fertiliser (UPDATE) Due to the dual stock listing in HKSE on 8 Dec 2009, China XLX Fertiliser has surged to S$0.77. The surge is probably due to its conservative valuation in comparison to its peers that are listed in the HKSE which are listed at higher PERs than China XLX Fertiliser.

First Ship Lease Trust (UPDATE) Due to the Dubai World credit crisis, FSL Trust has decided not to issue up to US$200 million senior notes due 2016. The notes issue will be revisited when market circumstances change. This update will likely drag down the other two shipping trusts: Pacific Shipping Trust and Rickers Maritime Trust.

Singapore Telecom Sector (MAINTAIN UNDERWEIGHT) CIMB maintained its underweight on the Singapore Telecom Sector with M1 as the top pick, followed by Starhub and finally by SingTel. Among the risks cited are ARPU (Average Revnue per User) erosion in broadband for SingTel and StarHub, and the risk of losing more compelling content at StarHub.

SIA Engineering (MAINTAIN BUY) Kim Eng re-rated SIA Engineering to a target price of $3.75. Reasons for the re-rating was the increase in global air traffic and the soon to be completed integrated resorts early next year.

Soilbuild Group (MAINTAIN BUY) OCBC maintained its Buy call on Soilbuild Group Holdings Ltd after it announced about its S$51.7m new business space development project with a subsidiary of CSC Holdings. This is estimated to increase RNAV by 3 cents and fair value has been increased to S$1.36.

Yongnam Holdings Ltd (MAINTAIN OUTPERFORM) CIMB maintained its Outperform rating on Yongnam citing that it expects 2010 to be an even better year with Yongnam bidding for more than S$1b worth of contracts. It expects Yongnam to breach the S$600m mark in 2010 for its order books. While it expects Yongnam gross margins to dip due to intensifying competition in the industry, this would be mitigated by a stronger competitive position.

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