Genting International released its FY08 results yesterday

Genting International released its FY08 results yesterday. The group reported a net loss of S$124.8m versus a net loss of S$381.5m in the previous year. Lower earnings were attributed to Genting’s UK casino operations which had been adversely affected by the weaker Pound against the Singapore dollar, as well as lower business volumes.

The company also added that the cost of building a casino in theme park in Singapore has increased to S$6.6bn from S$6bn and will have a significant impact on 2009 earnings. We expect the stock to face downward pressure going forward due to the absence of any near term positive catalysts.

Source

CIMB Report - 15 April 2008

Singapore What's on the table

China Fishery Group (S$1.49) - Improving efficiency of fishmeal operations China Fishery has announced the acquisition of its eighth fishmeal plant for US$19.9m. The new plant with a steam-dried fishmeal processing capacity of 110 tonnes/hour is located in the central-southern part of Peru, complementing its existing fishmeal processing plants along the northern coast.

The new plant is expected to improve overall efficiency as it would allow the company's fishing vessels harvesting in nearby waters to dislodge their catch quickly and return to the fishing grounds. However, we maintain our EPS estimates for now as the ability to procure anchovies and not processing capacity is the critical factor. Maintain Outperform. The company continues to trade at a discount to our unchanged target price of S$3.30, still based on 14.0x CY09 P/E, in line with the industry’s normal trading band.

Quick takes

• Pacific Andes (S$0.49) - Acquisition of eighth fishmeal processing plant
• SGX (S$7.93) - 3QFY08 results - Encouraging signs in a downturn
• Singapore Press Holdings (S$4.43) - 2QFY08 results - Still going strong

News of the Day

• Japan shares open higher
• Brazil oil find may be biggest in 30 years
• Wachovia loss hits banks, cancels oil gains
• Record $8bn worth of government tenders up for grabs
• Stronger S$ may weigh down interest rates
• Tuan Sing set to gain from sale of two Aussie hotels
• Dayen to sell Indonesian coal concession
• C&O Pharma in venture with US outfit

CIMB Report - 04 April 2008

What’s on the table

Construction Sector - Caution on opportunistic developers With rising property prices over the past few years, many opportunistic property developers have jumped into the fray to capitalise on quick profits. However, the tide has since turned following the US subprime problems in mid 07, leading to a massive weakening in buyer sentiment.

With continued rising construction costs exacerbated by higher steel prices, these construction companies turned developers are likely to be saddled with properties that are below current benchmark prices. We maintain our Overweight call but recommend that investors focus on pure-play construction companies or specialist contractors. Our top picks are Tat Hong Holdings, Tiong Woon Corporation and CSC Holdings.

Quick Takes

Dry Bulk Shipping - Will conversions cause freight rates to collapse?

Corporate News

• Genting Group to take part in the Philippines’ first integrated casino resort
• Pacific Healthcare increases stake in The Clinic @ Cuppage to 100%
• Al-Futtaim bags Robinson after Lippo accepts offer
• Wilmar in JV with Ukraine, Russia firms
• Japan Land unveils new focus
• Japan Asia Hldgs, unit serious about share buy-back: chief
• Noble raises $209m from private placement

CIMB Report - 25 March 2008

What’s on the table

StarHub (S$3.07) - Concerns are lifting The wall of worry due to SingTel's mioTV threat, mobile number portability (MNP) and Next-Generation Broadband Networks (NGNBN) risks have unduly weighed on StarHub's share price over the past 12 months.

We see signs that these concerns are receding, setting the stage for a sustained share price advance beyond the 12-month trading range. Looking ahead, cable TV could post upside surprise. StarHub has beefed up its line-up with 14 new channels since mid-07 which is likely to spur new subscribers and take-up of add-on packages.

In addition, the Sports Group repricing provides significant ARPU tailwind in 2008. Scope for dividend/capital return upgrades by consensus estimates of 18 cts/share (5.9% yield) towards our expectation of 30 cts/share (9.8% yield) should be an additional catalyst.

Our estimate is effectively backed by free cashflow and the management is highly committed to returning capital to shareholders. Reiterate Outperform with unchanged DCF-based target price of S$3.76. StarHub remains our top Singapore telco pick.

Quick Takes

· Regional Aviation - Risk-reward favours rebound in aviation stocks
· Oil & Gas Sector - Adjusting USDollar assumptions
· Consumer Price Index - Slight cooling in February Corporate News
· JPMorgan ups Bear Stearns bid by four times
· Cosco’s Financial Controller resigns
· MBK extends AsiaPharm offer to end of March
· Sing Lun told of general offer talks
· Aluminium unit of Midas wins 62m yuan deal

CIMB Report - 18 March 2008

What’s on the table

Ascott Residence Trust (S$1.26) – Initiating coverage - In all the right places

ART is a serviced residence real estate investment trust focusing on serviced residences and rental housing markets in Asia. The length of stay at ART’s properties is above the industry average, given ART’s target market of business and leisure travellers, as well as residential tenants.

This largely reduces the earnings fluctuations commonly seen in the short-stay hospitality sector. ART is poised for growth via acquisitions and growth in revenue per available unit (REVPAU) from 2008 to 2010.

We expect ART to acquire S$400m of properties in 2008, to reach a target portfolio of S$2bn by end-2008. In addition, its REVPAU is expected to increase by 3-8% across the region from 2008 to 2010.

On this basis, we forecast a DPU CAGR of 9% for 2008-10. We initiate coverage on Ascott Residence Trust with Outperform and DDM-derived valuation of S$1.74. We arrive at our target price of S$1.74 using DDM valuation (discount rate at 8.4%, terminal growth rate at 3%). This represents a total return of 45% from a forward yield of 6.5% in FY08 and potential price upside of 38%.

News of the Day

· Fed's emergency moves fail to quell Asian fears
· New home sales slump to 9-month low in Feb
· Al-Futtaim raises offer for Robinson to $7 a share
· Swiber clinches five-year contract worth US$250m
· Jet fuel prices set to stay high: SIA chief
· Bharti does not plan to make steep tariff cuts
· Anwell wins Blu-Ray manufacturing deal in Hong Kong
· Novo, HG Metal in MOU on steel supply
· DBS rolls out deal for social enterprises

CIMB Report - 25 Feb 2008

What’s on the table

SembMarine (S$3.53) - 4QFY07 results - Margin expansion still on the cards SMM’s 4Q07 net profit (S$0.8m) was much below our expectations (S$68m) and consensus (S$155m) due to higher-than-expected tax provisions from the conservative treatment of tax credits for written-off forex losses in 4Q07.

Core earnings of S$122m were 13% below expectations due to weaker-than-expected Brazil associate contributions. A key positive was margin expansion. Management expects 2008 order wins to be stronger than in 2007 (S$5.4bn) from offshore/conversions and semi-subs.

We upgraded our order-win assumptions to S$5bn from S$4bn and raised our FY08-09 earnings estimates by 1-4%. Accordingly, our target price rises from S$4.58 to S$4.90, still based on blended valuations. Maintain Outperform.

Quick Takes

· Fibrechem Tech (S$0.91) - 4QFY07 results - Higher material costs show up
· Capitaland(S$6.1 -4Q07 results- Decent results but weighed-down valuations
· Meiban Group (S$0.39) - 4QFY07 results - Still cheap
· Petra Foods (S$1.29) - 4QFY07 results - Short-term pain
· Dry Bulk Shipping - Baosteel strikes agreement with Vale Corporate News
· China Hongxing net profit surges 94% for FY2007 to Rmb416.5m
· C&G Industrial recorded 18.3% gross profit growth to Rmb53.2m
· Ooi family plans to hold on to Kim Eng stake
· Unifiber inks deal with new partner

CIMB Report - 21 Jan 2008

What’s on the table

Singapore Strategy - Feedback from Europe marketing We completed our Singapore Navigator marketing in five cities in Europe. Clients generally agreed with our cautious views on Singapore.

Most agreed with our Overweight stance in Transport & Telcos and our Underweight stance in Manfacturing and Property, though significant falls in property stocks triggered queries on entry levels for selected property stocks.

Reception to our bullishness on Multi-Industry was mixed, clients generally agreed that the fundamentals of the sector remained bright though concern stemmed from the relative large ownership levels in this sector. Clients also agreed on our views on Financials - that it was cheap but not time yet. With STI having fallen 14% ytd, valuations are starting to look interesting and we suggest that investors should look for entry levels now rather than continue to pile into defensives.

Quick Takes

• Ascendas REIT (S$2.19) - 3QFY08 results - Record occupancy lifts DPU
• Land Transport Sector - Part 1 of 3: Changes to the bus system
• Global Equity Technicals - The party’s over?

News of the Day

• Genting International in talks to build a hotel in the Sports Hub
• Pacific Healthcare opens fourth integrated specialist centre
• Avery invests $100m in 'upmarket' dorm
• Al-Futtaim makes cash offer for Robinson and Co
• E3, Jade buy 49% of Jilin refinery for 241m yuan

CIMB Report - 18 Jan 2008

What’s on the table

Wilmar International (S$4.49) - Price control concern offers buying opportunity Wilmar’s share price slipped 8% yesterday partly on concerns over the potential negative impact of a new price control measure in China, we believe.

We think the sell-down is overdone and expect Wilmar to weather this new measure better than most of its peers as the group enjoys better economies of scale and has a strong record of buying input at competitive prices.

Furthermore, Wilmar may be able to offset weaker profit margins through higher sales volume, further strengthening its market position in China. There is no change to our earnings forecasts, target price of S$5.70 (25.8x CY08 P/E) or Outperform rating.

Potential share-price catalysts include the removal of price restrictions in China and possible earnings-accretive M&As.

Quick Takes

• SIA Engineering (S$4.35) - Secures S$116m maintenance contract
• Singapore Press Holdings (S$4.37) - In an enviable position
• Straits Asia Resources (S$2.93) - FY08 pricing largely capped
• Non-Oil Domestic Trade - Lousy end to the year News of the Day
• Bush, Bernanke back economic rescue plan
• Hotels, eateries top profit growth in 2007
• Technics unit gets $22m contract
• Hong Leong Asia expects 20% annual revenue growth
• Three Allco Reit properties gain $121m in value
• A-Reit's portfolio hit record occupancy of 99% at end-2007
• AIS sees 1m new subscribers despite competition

CIMB Report - 15 Jan 2008

What’s on the table

Raffles Education Corp (S$2.79) - Initiating coverage - In a class of its own We resume coverage with Outperform and DCF-based (10.1% WACC, 3% terminal growth rate) valuation of S$4.00, implying 43% upside.

REC runs 29 colleges in the Asia-Pacific under five education brand names with total enrolment of some 44,000 students, making it one of the largest publicly-listed education companies in Asia with a diversity of courses that include design, psychology, business management, as well as vocational and technical education in nine countries.

Key investment highlights include:

1) Earnings CAGR of 45% over FY08-10, underpinned by economies of scale from operating leverage, organic growth and contributions from recent acquisitions;
2) Successful execution of OUC is critical; and
3) Potential catalysts could come from S$200m worth of acquisitions per year over three years.

In the event that REC's proposed one-to-two stock split is approved, our target price could be adjusted to S$2.00.

Quick Takes

· Jiutian Chemical Group (S$0.27) - Weak industry pricing power…for now
· Chemoil Energy (US$0.4 - New Chairman/CEO appointed
· Singapore Press Hldgs (S$4.60) - 1QFY08 results - Steady earnings delivery

News of the Day

· Converting hotels into condos just got harder
· Qian Hu Q4 earnings surge 81.6%
· Pacific Shipping Trust sees 15% rise in fleet value
· Holcim pays US$3.8m for 50% stake in ecoWise unit
· Bio-Treat makes headway in fight with ex-chairman
· Ellipsiz issues profit warning

CIMB Report - 14 Jan 2008

What’s on the table

Banyan Tree Holdings (S$1.71) – Sanctuary of returns We initiate coverage with Outperform and sum-of-the-parts valuation of S$2.75, implying 61% upside. BTH is a leading niche resort operator in Asia-Pacific with two award-winning brands that offer investors exposure to the high-end traveller market.

Key investment highlights include:

1) Tripling of room keys and doubling spa treatment rooms by 2010. 65% of new room keys located in Middle-East and China which are among the fastest growing affluent populations in the world;
2) 2006-2009 core earnings CAGR of 21% will be driven by ROE-enhancing management contracts. BTH is poised to deliver superior recurring ROE to other Asian hotel operators, triggering a re-rating of BTH's current EV/EBITDA valuations to premiums of 5-39% to its peers, up from the current discount of 21-25%;
3) Key catalysts include earnings delivery and active news flow on deal pipeline expansion.

Quick Takes

· OECD Leading Index - Nov 07: Downswing in all major OECD economies

News of the Day

· Industry players feel pinch of rising hotel rates
· Rank Group in the sights of another buyer after Guoco Group
· Singapore Airlines takes delivery of its second A380
· TUI denies report of merger talks with NOL
· MapletreeLog buys warehouse in South Korea
· E3 Holdings in bid to inject fresh life with China expansion drive

CIMB Report - 11 Jan 2008

What’s on the table

Cosco Corporation (S$5.70) – Secular winner on abundant yard space The recent formation of a new JV, Cosco Lianyungang Shipyard, is in line with Cosco’s objective of expanding its group shipyard capacity to meet increasing demand for shipbuilding and shiprepair services.

The growth in the international seaborne dry bulk trade for commodities will likely continue into 2008, sustaining orders for higher-tonnage bulk carriers as shipowners maximise their operational efficiencies by increasing tonne-miles.

We have raised our FY09 earnings estimate by 5% to incorporate the new yard and higher order-win assumptions. Maintain Outperform with target price raised to S$9.09 from S$8.60, still based on sum-of-the-parts valuation and incorporating revised market values for the shipping segment.

Quick Takes

· Jadason Enterprise (S$0.135) - Slow start
· Lian Beng Group (S$0.74) - 1HFY08 results - Waiting with bated breath

News of the Day

· New STI off to a sedate start as US worries loom
· Phoenix site to rise again as hotel-retail complex
· Hotel sector shaping up for bumper takings
· CityVibe put up for sale at $140m
· SIA introduces another daily flight between Changi and Sydney
· DBS involved in US$140m India deal
· New contracts boost CSC's order book to $330m
· Banyan goes to UAE's Saraya Islands
· Ong Soon Kiat back at the helm of Goldtron

CIMB Report - 08 Jan 2008

What’s on the table

Ho Bee Investments (S$1.35) – Compelling valuations A JV between Ho Bee and IOI Group has submitted a bid for the last condominium site on Sentosa Cove.

As the tender largely calls for design concept rather than price, we believe Ho Bee stands a good chance of getting the award based on its track record in Sentosa. We understand that take-up for The Turquoise has been good with 47% of the units sold at ASPs of S$2,500psf.

Ho Bee's four mainland projects - Elmira Heights, The Orange Grove, Holland Hill Mansions and Dakota Crescent - will also be launched in 2008. We believe our ASP assumptions are conservative, providing scope for upside surprises.

The stock is trading at a 34% discount to our end-CY08 RNAV estimate and offers 51% upside potential. We maintain our target price of S$2.04 (10% discount to RNAV estimate) and Outperform rating.

Corporate News

• CapitaLand makes $990m offer to take Ascott private
• Cathay Pacific backs move to derail SIA's China bid
• Design Studio confirms deals as shares surge
• Aqua-Terra to set up rigging and testing facility in Batam
• Another record year for SGX's futures, options market
• Macquarie MEAG to raise S$150m from bond sale
• Singapore Windsor in China silicon manganese project
• SGX listing move lifts Vietnam's Vinamilk
• KSH Holdings unit, China firm in tie-up

CIMB Report - 04 Jan 2008

What’s on the table

China Sports International (S$1.72) – Initiating coverage - Warming up

We initiate coverage of this Chinese sport shoe company with an Outperform rating and target price of S$2.43 on 15x CY09 earnings, which represents a 40% discount to average valuations for Chinese sports-shoe peers. We believe the discount is warranted by its weaker brand name and lower margins than peers.

However, we recommend China Sports for cheaper exposure to China’s burgeoning sporting goods sector. We expect group earnings to grow at 55% CAGR to Rmb272.4m by FY09.

We believe catalysts could come from:

1) an improved sales mix, boosted by higher-margin apparel sales;
2) accelerated store rollout;
3) higher ASPs, thus higher margins; and
4) strengthened brand awareness, boosted by aggressive A&P.

Quick Takes

• Sino Techfibre (S$0.90) - Gnawing on confidence
• SembMarine (S$4.00) - Jurong Shipyard secures semi-submersible contract
• CapitaCommercial Trust (S$2.30) - Parked in Office
• Thai Beverage (S$0.245) - Alcohol Control Act: compromised outcome

News of the Day

• Singapore December PMI fell 2.8 points mom
• Circle Line key to higher plot ratios
• Genting receives approval for gaming operations in Alderney and the UK
• Allco raises $518m for Singapore fund
• Golden Agri-Resources proposes stock split
• Keppel Bay Bridge: a new waterfront icon

CIMB Report - 02 Jan 2008

What’s on the table

Armstrong Industrial Corp (S$0.395) - Positive momentum continues Our discussions with the management confirmed that Armstrong continued to experience robust activities for most of its product segments in the Dec quarter, and is on track to end the year with record earnings.

We have kept our FY07-09 net profit forecasts intact. Our unchanged target price of S$0.55 (41% upside) is still based on 12x CY08 earnings. Reiterate Outperform, and we see catalysts from sterling full year results (to be announced in mid- to late-Feb) and further expansion in automotive components.

News of the Day

• Singapore's Q4 GDP falls 3.2% from Q3 · Ruling on rental income cheers serviced apartment operators
• SIA deal to buy China Eastern ‘unfair’
• Resorts World to sell its entire stake 6.16% stake in Genting International
• SingTel to post exceptional gains for Q3
• UOB seeks to double stake in Vietnam bank
• SembCorp Marine acquires Sabine Industries
• Parkway winds up privately held units

CIMB Report - 19 Dec 2007

What’s on the table

Coal sector - climate change - Dodging a bullet in Bali? One result of the contentious conclusion to the UNCCCP conference is that there will be no immediate pressure on coal consumers and producers from tougher reduce carbon dioxide/GHGs emissions.

The “success” of the US government in preventing specific emission reduction percentages from featuring in the summit text means firm targets may not be finalised until Dec 09, when the next UNCCCP conference convenes in Copenhagen.

While an agreement to cut emissions by 25-40% of 1990 levels by 2020 has been sidestepped, Bali has launched the process of finalising a replacement for the Kyoto Protocol, which will expire in 2012. Thermal coal spot prices strengthened again last week to the US$90/tonne level, above our US$75/tonne assumption for FY08.

However, we retain our current assumptions given price volatility that is producing weekly price movements of up to US$5/tonne. Maintain Neutral recommendation, Banpu and TB Bukit Asam top picks.

We maintain our Neutral recommendation on the thermal coal sector, but note that Banpu and TB Bukit Asam remain attractively valued on our conservative FY08 benchmark price assumption of US$75/tonne. We retain our Outperform recommendation on both these companies. We also have an Outperform on United Tractors, given its growing involvement in coal mining, and buoyant trading conditions at its heavy equipment and contract mining divisions.

We maintain our Underperform recommendation on Bumi Resources due to concerns over escalating capex plans. We also maintain our Underperform on Straits Asia despite its recent share price correction. The company still has to complete its Jembayan acquisition, which is expected to happen by year-end.

News of the Day

• ECB's US$500b booster sends rates tumbling
• Zagro buys BASF Taiwan's animal nutrition business
• Dayen's Indonesian deal could be worth US$250m
• Link Hi subsidiary clinches supplier qualification
• Abterra buys 22.8% of Chinese mine company

CIMB Report - 14 Dec 2007

What’s on the table

SATS (S$2.62) - Growth from overseas, but not so soon While SATS’s business volume for inflight catering, ground handling and cargo is expected to grow modestly, the pressure on rates from local competition may dampen overall earnings growth.

We do not expect new JVs to be earnings-accretive in FY08-09 due to the initial ramp-up phase. We have reduced our earnings estimates by 3% for FY08-10 on slower earnings accretion expected from overseas JVs and switched our valuation methodology to P/E from blended DDM and P/E in view of the limited dividend visibility.

Our new target price of S$3.02 is based on 16x CY09 P/E, or a 20% discount to the peer average for airports in the Asia-Pacific, given that SATS does not hold a monopoly at Changi Airport. Downgrade to Neutral from Outperform.

Quick Takes

• Adampak (S$0.40) - Risks are increasing Corporate News
• China Eastern Airlines shares plunged 12.7% to HK$6.53
• SIA denies interest in bidding for Italian airline Alitalia
• SIA increases frequency on Singapore-Moscow route
• Temasek plans to merge BII, Bank Danamon
• Tat Hong acquires heavy lifting assets in Australia
• Beyonics' Q1 profit slides 48.1% as revenue falls
• STATS ChipPAC delays US trading end
• Banyan Tree to manage resorts in Omani IR devt
• CNTD reports Q3 loss of 220m yuan
• Koh Brothers wins $78.9m MOE job

CIMB Report - 12 Dec 2007

What’s on the table

SIN Telco - NGNBN Request-for-Proposal: “Free call option” for incumbents The IDA has launched the Request-For-Proposal for Singapore’s Next Generation National Broadband Network (NGNBN). This is for the NetCo which will design, build and operate the passive infrastructure.

The Request-for-Proposal submission is due in Mar 08 and the sole winner will be announced in 3Q08. As expected, the NGNBN industry structure and key bidding parameters will not create disruptive outcomes for the incumbents.

In our view, SingTel and StarHub have effectively received a “free call option” to participate in the NGNBN. SingTel and StarHub face little downside risk from not participating or failing to win bids for the NetCo or OpCo.

We believe that the NGNBN update is neutral at worst for the three Singapore telcos and should be a positive catalyst for SingTel and StarHub.

Quick Takes

• ST Engineering (S$3.7 - Stretched valuations
• Straits Asia Resources (S$3.06) - Adjusting FY08 assumptions News of the Day
• Fed lowers rates by 25bps to 4.25%
• Wall Street tumbles after Fed's modest rate move
• TPV Technology’s net profit up 45.3% yoy
• Chinese shipbuilder JES in IPO to raise $250m
• Keppel Gas secures use of onshore pipeline grid

CIMB Report - 11 Dec 2007

What’s on the table

SIN Telco Sector - NGNBN: Not expecting disruptive outcome for incumbents IDA will be releasing the request-for-proposal (RFP) for the Next-Generation National Broadband Network (NGNBN) after market close today.

We believe that IDA's objective of introducing a landscape that would accelerate innovation through a broader participation of players across the value chain is constrained by three key factors which we highlight in our note.

This is likely to result in an outcome that will not be disruptive to the incumbents, namely SingTel and StarHub.

Maintaining our Overweight rating for the telecommunications sector with StarHub as our top pick, followed by SingTel.

Quick Takes

• StarHub (S$2.93) - ARPU growth story
• SingTel (S$3.8 - Market share gainer at M1’s expense
• MobileOne (S$2.05) - Market share erosion on SingTel assault
• China Hongxing Sports (S$0.9 - Dilution and risk concerns priced in
• Sino-Environment Technology (S$2.21) - Core business intact
• Sinomem Technology (S$0.85) - Negatives priced in
• TPV Technology (S$0.99) - Results preview: Expects strong recovery in 3Q News of the Day
• Revamped STI, 18 new indices go live Jan 10
• GIC to pay $14b for a slice of UBS story
• Noble buys into Aussie coal firm
• Hour Glass plans one-into-two share split
• Olam defends its Congo operations

CIMB Report - 10 Dec 2007

What’s on the table

Singapore Property Sector - Approaching steady state Physical properties have done well in 2007. However, we see rising systematic risks as a real issue going into 2008.

Possible US sub-prime spillover, rising land costs and possibilities of further cooling measures from the government are factors that will likely moderate upside surprises in 2008.

On the residential front, we see the mass market providing most upside at current low base driven by flow of displaced buyers from enbloc sales, attractive rental yields and recovery in the HBD resale market. We are less positive on the mid-high segments currently.

Overall, our price forecasts for private mid-high end and mass market housing are lowered from 15% and 25% to 8% and 15% respectively.

While office supply continues to be tight, we see demand and rental growth for prime office space moderating in 2008 given rising decentralization trend and resistance in recent commercial land bids.

That said, we maintain our 30% prime rental growth forecast for 2008 as significant prime office stock are unlikely to come through till 2009-10. We believe stock markets are forward looking and typically move ahead of physical properties by a year.

As such, we downgrade the sector to Underweight from Overweight in a maturing cycle. Going into 2008, we look for developers with specific niches and themes to outperform the sector as a whole.

In our big cap assessment, KepLand remains our top pick in the big cap space for its exposure in booming townships in the region and dominance in Sing offices.

However, we downgrade CapLand from Outperform to Neutral on removal of premiums to end-CY08 estimate.

We believe smaller cap developers are likely to trade at a discount to target valuations in 2008 in anticipation of moderating upside surprises in the current cycle. BukitSemb is our top property pick among the small caps for its low cost land bank and high profile launches coming up.

Quick Takes

• Global Equity Technicals - Rebound at the tail end? News of the Day
• China to order banks to raise cash reserves
• En bloc deals top $13bn but pace is slowing
• Jetstar Asia, Tiger Airways awarded rights for daily service from S’pore to KL
• Richardson family amasses 9.3% in casino and Mecca bingo firm Rank Group
• A-Sonic Aerospace warns investors of losses

CIMB Report - 05 Dec 2007

What’s on the table

Best World International (S$0.90) - Greater access to China Best World plans to acquire a 51% stake in Joymain, which has a direct selling licence in Jiangsu. Consideration of the acquisition is Rmb51m, of which Rmb31m will be offset by the injection of BWL Shanghai and BWL Hunan into the restructured Joymain. The partnership will allow Best World to start direct selling in Jiangsu and penetrate the local market using Joymain’s established brand name. We have lowered our FY07-09 EPS estimates to account for start-up costs related to the China expansion. As we approach end-2007, we have also rolled forward our valuation from 13.6x CY08 P/E (set at a 20% discount to STI target) to 11x CY09 P/E. Our new multiple is now pegged at a 20% discount to the average valuation for bigger direct selling peers, now that Best is competing more closely with these peers in China. Maintain Outperform, target price: S$1.22. Watch out for more acquisitions in China.

News of the Day

• PMI expands for sixth consecutive month
• Government sees potential in Rochor area remake
• China Sunsine completes client list of global top 10 tyre manufacturers
• City Developments' South Beach project to cost $2.5bn
• ComfortDelgro to raise taxi fares
• Startech raising fund through warrants issue for China fashion business
• LG to sell OSIM products at its stores in South Korea
• Goodpack expands container stock
• CapitaLand to expand into offices in Vietnam
• SingTel and SGX launch high speed service for financial institutions
• BBR wins $189.6m contract from URA