Traders' Corner - Sino Grandness Food Industry, Tiger Airways, ST Engineering & ISDN

Daily Chart

Sino Grandness Food Industry (SFGI SP, T4B)

Technical BUY with 23.1% potential return

Last price: S$0.69

BUY with a target price of S$0.85 with protective stops placed at S$0.66 as the stock continues to trade above its 300-day EMA with a higher low and may test S$0.76 in the near term. Watch to see if the ADX could attain a reading of 20 and above after a +DI/-DI crossover has been formed and its MACD indicator could also form a bullish crossover near its centerline.

Our retail research has a fundamental BUY with a target price of S$1.02.

Top pick for the day - Wheat

A low-risk trading opportunity?

After a long fall, we think that there is a trading opportunity to the long side for Wheat now. After a long fall from the 744.50 high, we think that a secondary bottom may have formed near the 525 levels. 

Yesterday the bears tried to drag prices lower but the bulls came back strongly, forming a double close key reversal pattern or a bullish engulfing pattern. 

From a trading perspective, one can go long here with a stop placed just below yesterday’s low of 520.25. 

Goldman Sachs - Base metals ex-copper to continue to outperform

Metals ex-copper to outperform on cyclical improvement

We continue to expect further base metals price differentiation over the next 12 months, with copper set to underperform relative to nickel, aluminium and zinc. While the directional views of our base metals forecasts are unchanged, we have raised our nickel, zinc and aluminium forecasts, reflecting a quicker-than-anticipated shift in the relative fundamentals of these commodities. Specifically, a cyclical upswing in demand in combination with low supply growth, following years of underinvestment in new capacity outside of China, has seen zinc and aluminium outperform in 1H14. Meanwhile nickel is being boosted by a large producer’s attempts to encourage value-add capacity domestically.

Singapore Banks - 2Q14 preview: A slow but likely decent quarter

UOB Bank

DBS Bank

OCBC Bank

Decent 2Q earnings

Singapore banks will kick off with UOB reporting on July 31, followed by DBS on Aug 1 and OCBC on Aug 5. For 2Q, we anticipate core earnings growth of -5% qoq /19% yoy driven by pressure on NIMs, lackluster noninterest income and slowing loan growth momentum.

Valuetronics - Great value proposition

■ Compelling at 7x FY15PE and only 3.7x ex-cash plus 5.6% dividend yield

■ Growth is backed by US/Europe recovery and an expanding customer base

■ 40% upside to our TP of S$0.72 at 10x FY15 PE; initiate coverage with BUY.

Ascendas REIT - Executing on growth plans

■ 1Q15 DPU of 3.64 Scts within expectations

■ Portfolio expansion drives 8% y-o-y increase in 1Q15 NPI

■ Positive rental reversions and AEI to underpin future earnings

■ Maintain BUY and S$2.51 TP

Keppel Land - Below expectations; potential MBFC sale could drive Special Div.

What surprised us

KPLD reported core net profit of S$107mn in 2Q14 (+22% qoq, +12% yoy) and S$195mn in 1H14, below expectations at 40% of GSe FY14 estimates on slow Residential sales and revenue recognition.

Sheng Siong Group - Positive margin surprise

■ 2Q14 earnings ahead of expectations as margins outperformed

■ DPS of 1.5 Scents declared

■ Raise FY14F/FY15F earnings by 7%/8% to factor in higher margin

■ Maintain BUY with higher S$0.85 TP

Singapore Small Mid Caps - Keep an eye on recovery, and the other on M&A

■ Small mid caps (SMCs) are trading at premiums to large caps, yet select opportunities still exist

■ Focus on earnings recovery and potential growth; O&G and tech stocks stand out

■ Corporate M&A manoeuvres could catalyse stocks such as United Envirotech.

Accordia Golf Trust - IPO Factsheet

Business

Accordia Golf Trust (AG Trust) is the first business trust comprising investments in golf course assets in Japan to be listed on the SGX-ST. Its initial portfolio includes 89 golf courses (including golf course-related assets) located across Japan, valued at approximately JPY150,908m (approximately S$1,851m). Among the Initial Portfolio Golf Courses, 86.4% are located in the three largest metropolitan areas in Japan, which have better-developed and well-maintained transport infrastructure and can be conveniently accessed by customers.

Tigerair - Results hurt by Mandala's closure but turnaround plan will yield results longer term; prefer CEB, SIA

We believe the worst is nearly over for Tigerair, as it rationalizes its capacity and offloads loss-making associates. We see limited downside and expect Tigerair to emerge as one of the strongest Asian low-cost carriers in the long term, supported by parent SIA, plus synergies with Scoot. However, our top pick is Cebu Air among the Asian LCCs and Singapore Airlines in the Singapore transport sector.