Mermaid Maritime - Deep dive in vessel scheduling

We recently hosted a one-day non-deal roadshow for Mermaid in Singapore. Given its long-term contracts and the emergence of a significant shareholder at the parent level, most investors believed that the company’s earnings are on the cusp of a strong turnaround.

We trim our FY14-15 EPS by 2-4% to account for the lower earnings of Mermaid’s tender rigs. We maintain our Add rating and target price, still based on 1x CY14 P/BV (its 3-year mean). The catalysts are the stronger subsea earnings and capex plan materialisation.

Top pick for the day - Australia’s ASX200

Turning down in a big way?

It is possible to count a 5-wave move for the ASX200 from the 2011 low of 3,765 to 5,457… which completes the second leg of the corrective move off the 2009 low.

The 3-wave corrective move off the 2009 low marginally surpassed the 62% Fibonacci Retracement levels of the 2007-2009 fall, which is a common retracement level for a B-wave.

Asia Pacific - Economic Compass 2014

Managing growth transitions

2014 will be a watershed year for the global economy and financial markets as investors continue to keep an eye on the Fed's untested dialing-back of monetary stimulus. We expect the monetary exit to be orderly as long as the withdrawal is well timed, carefully calibrated and clearly communicated. Amid the tail risks and event risks in the US, we believe that the emerging economies will successfully manage their growth transitions in an environment of tightened liquidity or capital inflows and rising interest rates. 

The domestic drivers, aided by a moderate recovery in exports, are expected to support the uneven growth momentum in emerging economies.

Airlines - AirAsia and SIA stand out most

From a value perspective, there is no beating the most successful LCC and the best quality FSC in ASEAN. Our calculations show that both are trading at just 8-9% above their liquidation values and, despite the near-term headwinds, long-term investors should pay attention.

This is without even including the immense value of their brands in the equation. We maintain Underweight on the airline sector, with our only Outperform pick being Cathay Pacific. Our Underperforms include MAS, Cebu Air, Thai Air, China Southern and China Eastern. De-rating catalysts include tough competition and widespread yield pressures.

Religare Health Trust - Positive on growth, wary of forex

We brought RHT on a non-deal roadshow in KL and investors were largely positive on the growth prospects and stability of the assets. Concerns continue to stem from forex exposure. RHT trades at c.10% FY14 yield and 1.0x P/BV. We maintain our DPU estimates and DDM-based target price (discount rate of 11.7%). Continue rating as Add with surprise in earnings deliveries and acquisition as catalysts.

Singapore Hospitality - A modest recovery

• Visitor arrivals in 2014 to continue growing

• Modest improvement in operating metrics but upside to be capped by new hotel openings

• Top picks: Genting Singapore and CDREIT

S-REITs - Not the time to bottom-fish yet

Not the time to bottom-fish yet. The S-REITs sector has been a laggard in 2013 (-7.8% price return YTD), underperforming the STI by 6.4%. This is in stark contrast to its stellar performance in 2012 when the sector recorded a 41% price return and outperformed the STI by 20%. 

S-REITs currently trade at FY13F yields of 6.5% and FY14F yields of 6.7%, below their historical average of 7.0%. While the yields may seem attractive, we think it is too early to revisit the sector given the impending QE taper.

Top pick for the day - S&P500

No Santa rally this year?

A 5-waves move can be seen on the recent sharp fall on the S&P500… and any bounce would be likely be corrective in the immediate term. 

We could count 5-waves from 1,813 to 1,779 and the current rebound may still have one more leg up to complete this corrective move.

Strategy Flash Note - MAS’s financial stability review

The gist of the MAS’s latest financial stability report is that global growth has stabilised on the back of unconventional monetary policies, but considerable risks lie ahead (when those policies come to an end) as there has been a build-up of private- and public-sector debt.

The MAS recognises that Singapore household and corporate balance sheets are fine, but remains watchful of the property market and reckons that the banking sector needs to guard against liquidity risks and credit-quality deterioration. Most of the MAS’s comments are not new and have been addressed in our 2014 outlook report. Our end-CY14 FSSTI target remains 3,600, based on 14.4x CY15 P/E.

Shipping and Shipbuilding - What‟s good for shipyards is not good for container shipping

Containership orders have been very strong in 2013, and we expect orders to continue into 2014-15, benefitting primarily the Korean shipyards. Container shipping, on the other hand, will likely face a challenging 2014, as oversupply accumulates.

We stay Overweight on the Offshore and Marine sector, and Neutral on Container Shipping. HHI is our top Outperform pick, followed by DSME, as they gain from more containership orders, among other catalysts. OOIL remains our top pick in the container shipping space on valuation grounds and on its internal strengths, though immediate investor interest may be limited. Our forecasts for OOIL and CSCL have been lowered here.

Smallcap-pedia - 2014 ideas

In the big-cap space, companies have healthy balance sheets but their earnings have sputtered somewhat. We believe that the only way to outperform is to select companies using the bottom-up approach, identifying those with the right business models and products.

CDL Hospitality Trusts - Another slice of paradise

■ Second foray into Maldives

■ Strong growth potential; yield on cost to reach a high of 7.7% by 2015

■ Maintain BUY, TP S$1.84