Wednesday, December 9, 2009

Singapore Stock Summary - 9 Dec 09

STI Index The STI closed at 2,797.21 down 8.29 points on a volume of 2.1 billion shares worth S$1.74 billion. Losers led gainers 250 to 237.

SembCorp Marine (MAINTAIN BUY) AmResearch reitereated a Buy call on SembCorp Marine after it announced that it had signed a contract to sell its West Elara jack-up rig to the Vietsopetro. The impact on the group's order book will be insignificant. SembMarine is however likely to see more upside with improving prospects of a global recovery in the oil & gas sector.

CapitaCommerical Trust (DOWNGRADE TO SELL) Kim Eng recommended a downgrade to sell rating on CCT based on valuation stating that the share price has run ahead of fundamentals and it is a great opportunity to take profit now. It has a target price of S$0.99 for CCT with a preferred entry at S$0.93 for 15% total returns.

KS Energy (MAINTAIN HOLD) OCBC Securities maintained its Hold rating on KS Energy with a fair value price of S$1.20. KS Energy reported that it would be acquiring Aqua Terra Supply and SSH Corporation through its newly form subsidiary KS Distribution. The rationale is to build an integrated Oil and Gas and Marine distribution business that is better placed to penetrating markets such as China, Indonesia and the Middle East. The proposed acquisition requires consent from majority of the shareholders before it can be materialised.

Plantations (MAINTAIN OVERWEIGHT) CIMB-GK Securities maintained its Overweight position on plantations with key picks being Golden Agri, Indofood Agri, Wilmar, Astra Agro, Sampoerna Agro, London Sumatra and Sime Darby. This is because of the higher Crude Palm Oil price, better than expected earnings and M&A activities. Earning prospects for 2010 also look brighter with probably higher selling prices and lower operating cost due to the drop in price of fertilisers.

S-REITs (MAINTAIN NEUTRAL) OCBC Securities maintained its Neutral rating on SREITs stating that valuations in the sector are currently trading at 0.78x book compared to 2006 average of 0.89x. The limited upside coupled with book value risk gives an unexciting risk-reward ratio. Within their coverage universe, OCBC however has Buy ratings on Mapletree Logistics Trusts (FV:S$0.78), Ascott Residence Trust (FV:S$1.25) and Suntec REIT (FV:S$1.40). They have also downgraded Frasers Centrepoint Trust to Hold due to limited upside, acretion uncertainty over pending acquisitions and unexciting risk-reward ratio.

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