DBS Equity Research (Spore): Wired Daily 23 June 2014

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STI – 3270 failure points to risk of further decline to next immediate support at 3220

QT Vascular – An emerging balloon catheter producer
STI has fallen below the important near-term support of 3270. Technically, unless the STI is able to recover above 3283 soon, last week’s fall ups the risk of a further decline to the next immediate support at 3220. The price of Brent crude rose to USD115pbl last week, the highest in 11 months as the fighting in Northern Iraq continued. Iraq’s oil production as a percentage of the world’s total is 3.6% and out of this, about ¾ is in the south that has been spared of the current unrests. While the current unrests are unlikely will not have a significant impact on global oil production, the concern is that the situation deteriorates, civil war breaks out within the country and Middle East unity is undermined. Over the weekend, gunmen seized more territory along Iraq’s borders with Jordan and Syria. ISIL militants and Sunni supporters now control territory in Iraq from Mosul in the north to Rutba in the west.
Beyond Iraq’s country specific supply risk, on the demand side, our chief economist believes that rising incomes means Asia’s energy demand over the long term can only continue to soar. China’s current per-capita energy consumption is only 1/8th of US while that for India’s is just 1/12th. These developments should underpin O&G stocks.
For Singapore, our analyst’s picks for the offshore O&G services space are Ezion, POSH, Vard, Pacific Radiance and Nam Cheong.
China June preliminary HSBC Manufacturing PMI will be released this morning. Consensus expects a reading of 49.7, still in contraction territory but with a tat improvement over the prior month’s 49.4. Singapore’s May CPI will be released this afternoon. Consensus expects 2.6% y-o-y increase.
We issue a NON-RATED Equity Explorer report on QT Vascular (QTVC), an emerging balloon catheter producer. Its flagship product is the Chocolate PTA, a percutaneous transluminal angioplasty (PTA) Balloon approved for the treatment of Peripheral Artery Diseases (PAD). Its products are distributed through Japan’s Century Medial, China’s Weihai Weigao and Johnson & Johnson. Market penetration and adoption of its balloon catheters will drive growth going forward. QTVC is awaiting approvals for some of its products in Japan and China. If approved for sale, these products could positively impact its future earnings and stock price. Factors that may cause the company’s earnings to underperform include competition from stents and other balloons, failure to attain product approvals, poor take-up rates from commercialisation of products, adverse clinical trial data on QTVC’s products, and loss of distributorship.
Repi Soap and Detergent (Repi) and Wilmar International have signed a joint investment agreement for the upgrading of an existing manufacturing facility in Ethiopia that will house an edible oil refinery and packing plant, production plants for specialty fats, soft oils, soaps and detergents, as well as a facility for sesame seed processing. Repi and Wilmar will each have a 50% participation in the joint investment.
Innopac Holdings is proposing a renounceable nonunderwritten rights issue of up to 6,930.4m new shares at an issue price of S$ 0.01 for each rights share and up to 3,465.2m free detachable warrants on the basis of two (2) rights shares and one (1) free detachable warrant for every one (1) issued share. Each warrant carries the right to subscribe for one (1) new share at an exercise price of S$ 0.012 for each warrant share. The rights issue price of S$ 0.01 represents a discount of approximately 45% to the last closing price. The net proceeds of approximately S$ 68.9m will be used to fund the expansion and growth of existing businesses, acquisitions and new investments; and for general working capital purposes.
Sunningdale Tech is issuing 153.0m new shares at an issue price of S$ 0.1633 per subscription share, representing gross proceeds of approximately S$ 25m. The investors are Yarwood Engineering & Trading and Mr. Sam Goi Seng Hui. The issue price represents a discount of approximately 10% to the last weighted average price. The gross proceeds will be used as working capital to fund the growth and expansion of the company’s business, and to increase the company’s capacity for any acquisitions in the future.
With more consumers letting their fingers do the shopping, transport firms Singapore Airlines (SIA) and SMRT Corp have launched e-commerce sites for their customers. SIA announced a retail site for its KrisFlyer and PPS Club members, enabling them to rack up air miles when they use the KrisFlyer Spree website (www.krisflyerspree.com) to shop at over 2,000 retailers such as Bloomingdale’s and Marks & Spencer. Meanwhile, SMRT has launched I’m On Board, or iMOB, at www.iMOB.sg, which offers a variety of lifestyle and
consumer products, along with special deals and promotions.
RH Petrogas, which a month ago disclosed that an investor had approached its controlling shareholders for a potential takeover of the company, said that there have been no further discussions or progress on the matter since then.
MoneyMax Financial Services is investing RM15.63m to hold a 51% stake in a network of Malaysian pawnshops in its first overseas investment.
HLH Group plans to acquire 13,541sqm of freehold land in Cambodia for US$ 14.9m. The land is situated in Phnom Penh, Cambodia, in the heart of Phnom Penh City Centre. The group plans to develop office tower, luxury condominiums, and F&B and retail buildings on the land.
Ipco International is expected to report a loss before tax for the full financial year ended 30 April 2014.
The loss is mainly attributable to:
1) Unrealised fair value loss on financial assets at fair value through profit or loss; and
2) Allowance for impairment loss on available-for-sale financial assets.
ISDN Holdings, an integrated engineering solutions provider for diverse industries, hydropower business is expected to benefit from a recent upward revision of electricity tariff rates to be paid to mini-hydropower developers by the Indonesian Government. In early May this year, the Indonesian energy authority announced an increase in the amount that it will pay electricity producers with capacity of 10MW or less from the current base rate of Rp 656 (USD 0.06) to Rp 1,075 (USD .09) per Kwh.

Yamada Green Resources is proposing to acquire19% equity interest in Zhangzhou Meisei Foods Co. for RMB36.4m. Meisei is principally engaged in the manufacturing and supply of a wide variety of agricultural processed food products including different types of processed bamboo shoots, pickled vegetables and other processed vegetables. Meisei is recognized as one of the leading processed bamboo shoots suppliers in Fujian Province.

Source: DBS

Towards Financial Freedom (SGX)

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