Top pick for the day - Japan’s Nikkei 225

Still bullish?

Japan’s Nikkei 225 (NKY) failed to moved above the ST channel resistance recently but a breakout above the said resistance is still on the cards. 

Singapore Banks - Rise In Short-Term Rates Has Begun

MAS' easing of monetary policy coupled with the strengthening USD would see a shift towards SGD funding. Given the tightening domestic liquidity, we believe short-term rates would remain on an uptrend ahead of US rate hikes from mid-2015. We expect a gradual improvement in bank NIMs from 2H15. DBS is our preferred sector pick as it offers the best leverage to rising short-term rates.

Singapore Aviation - Earnings Preview On SIA And SATS

We expect SIA to report almost a 6-fold rise in net profit due to lower fuel prices and improved associate earnings. On the other hand, SATS is expected to report a 1.7% yoy decline in pre-tax profit. STE has been buying back shares and this could be a sign of confidence. STE is also a beneficiary of the weaker S$. 

Maintain BUY on SIA and HOLD on SATS and STE. Upgrade to MARKET WEIGHT on the sector.

Wilmar International - Good End To The Year

Wilmar is scheduled to release its 4Q14 results on 12 Feb 15. The expected net profit of US$300m-350m is on track to meet our expectation. China operations are expected to contribute as Consumer Pack should see another strong quarter with good sales volume and margins. Crushing margin is expected to be weaker qoq but will still be better than 1H14’s. Sugar will still contribute substantially in 4Q14 due to the delayed harvesting in 3Q14. 

Maintain HOLD. Target price: S$3.55. Entry price: S$3.05.

CapitaRetail China Trust - Another quarter of sterling tenant sales growth

CRCT’s FY14 results in-line, driven by Grand Canyon. Tenant sales surpassed national average, on top of strong rent reversion. Aside from continued rental growth and acquisitions, the stock is proxy to RMB appreciation. Maintain OW with a higher PT (+3%) as we roll-over estimates.

SMRT Corp - Improving Operations But Limited Upside

SMRT’s 9MFY15 (Mar) profit of SGD70m (+56% YoY) beat our estimate, aided by rising revenue across most segments and strong cost control. Maintain NEUTRAL as benefits from low energy costs seem to be priced in and the outcome of the rail financing model may not act as a re-rating catalyst. Our revised TP of SGD1.80 (from SGD1.50) offers a 4% upside. We raise our FY15-16 earnings estimates by 10-18% on higher rental revenue in FY16F and lower energy costs.

Tiger Airways Holdings - Roaring back to health

■ Capacity discipline to boost load factors and yields, leading to sustained earnings recovery

■ Lower fuel costs to kick in more significantly from this quarter onwards

■ Revitalised balance sheet and stronger shareholder support from SIA provides firm footing for future

■ Upgrade to BUY with S$0.39 TP

Sunningdale Tech - Getting Ready For 2015

VALUATION

■ Sunningdale Tech is trading at 11.1x FY13 PE with a dividend yield of 3.5%.

FINANCIAL RESULTS

■ Although 9M14 revenue dipped 3.9% yoy, 9M14 net profit jumped 71.6% to S$16.5m due mainly to a S$5.2m gain on disposal of non-current assets. Cash flow generation continue to remain strong, with free cash flow of S$8.6m generated for 9M14.

Venture Corporation - Growing And Differentiating Despite Adversity

Venture is aiming for mid to high single-digit growth in top-line and bottom line for 2015. Disruptions from M&As involving its customers have abated. The depreciation of the Malaysian ringgit and Singapore dollar will help Venture maintain its net margin within the targeted 6-8%. Over the longer term, Venture can count on the Life Science segment for growth. Maintain BUY with a higher target price of S$8.75.

Hi-P International - Buy On Dips

Hi-P expects lower revenue in 4Q14 vs 4Q13 due to a drop in demand from certain customers (which we suspect to be Blackberry and Motorola), as well as lower forecasted yields on new products during the production ramp-up. Maintain BUY on dips with a SGD0.87 TP (22.5% upside). While we lower our FY14 revenue/NPAT estimates by 12%/13% respectively, we still expect a strong 4Q and an earnings turnaround going forward.

Top pick for the day - Silver

The trend is still up

The recent rally in Silver (XAG) stopped after failing to close above the 200-day SMA but there is no sign of weakness yet. 

The recent pullback on its hourly chart (left) has seen prices reached a key support trend line.