Daily Morning Watch - 31 July 2012

SINGAPORE

The Government of Singapore Investment Corp, the country's sovereign-wealth fund, reported the annualized real rate of return from investments for the 20 years through end-March was 3.9% in US dollar terms, the same as in a year earlier.

Singapore Exchange Ltd (SGX) is consulting the public on proposed rules to introduce margining for securities cleared by the Central Depository (CDP).

US indices closed lower on Monday pressured by consumer durables & apparel and semiconductors & semiconductor equipment sectors. On the US economic data front, Dallas Fed manufacturing activity index dropped to -13.2 (2.0 expected) in July from 5.8 the previous month. Take a look at US stocks, Loews Corp (L -5.18% to $39.54)'s 2Q net income was $56M or $0.14 per share compared to $250M or $0.61 per share in the same period a year ago. In other news, CNA Financial (CNA -3.59% to $26.03) announced 2Q net operating income of $152M ($114M a year ago) or $0.56 per share and net income of $166M ($124M a year ago) or $0.62 per share. Separately, CB&I (CBI -14.15% to $34.94) to acquire Shaw (SHAW +55.45% to $41.49) for $46 per share in cash and stock.

In Europe, euro zone business climate indicator was -1.27 in July (-1.09 expected) vs -0.95 in July. Consumer confidence was -21.5 in July in final estimation, vs -21.6 expected. Economic confidence was 87.9 in July (88.9 expected) vs 89.9 the month before. Regarding the stocks, Air France-KLM as 2Q loss narrowed. JCDecaux plunged on weak outlook. This morning, the Nikkei225 index opened lower.

CHINA - HK

HSBC (5) posted 1H EPS down 12% YoY to $0.45 and net income down 9% to $8.2B, adding: "Reported profit before tax was $12.7B, 11% higher than in 1H11, (...) Underlying profit before tax down 3% to $10.6B (...) Return on average shareholders' equity 10.5% (2H11: 9.5%, 1H11: 12.3%) (...) The core tier 1 ratio and tier 1 ratio for the Group remained strong at 11.3% (2H11: 10.1%) and 12.7% (2H11: 11.5%) respectively, at 30 June 2012., (...) Dividends declared in respect of 1H12 of $0.18 per ordinary share, in line with 1H11." Meanwhile, the Bank announced provisions of $700M in relation to money laundering issues in the US and $1.3B to cover the misselling of payment protection insurance to customers in the UK . The Bank's CEO said: "We apologise for our past mistakes in relation to anti-money laundering controls, (...) We continue to believe that emerging markets will grow at a reasonable pace. China will play an important role in this phenomenon as the world's second-largest economy and the main trading partner to other faster-growing economies."

Hang Seng Bank (11) reported 1H net income up 14% YoY to HK$9.3B (EPS up 14% to HK$4.87), adding: "Net interest income rose by HK$649M, or 8.5%, when compared with 1H11. (...) The return on average shareholders' funds was 22.9%, compared with 22.8% in 1H2011 and 22.6% in 2H11. (...) At 30 June 2012, the capital adequacy ratio was 13.9%, down 0.4 percentage points compared with 14.3% the end of 2011, (...) core capital ratio was 11.7%, compared with 11.6% at last year-end. (...) The Directors have declared a second interim dividend of HK$1.10 per share, (...) Together with the first interim dividend, the total distribution for 1H12 will amount to HK$2.20 per share, the same as in 1H11."

CNOOC Ltd (883)'s parent group has received approval from the National Development and Reform Commission (NDRC) for its Diefu LNG terminal JV project in Shenzhen announced the NDRC.

Jiangxi Copper (358)'s parent has agreed with two domestic smelters to invest 8B yuan to build facilities in China 's Zhejiang province expanding its annual refined-copper output capacity by 370K tons, according to the China Mining Association.

China Gas (384) said its co-founder Liu Minghui, who has been formally cleared of embezzlement allegations in China , will rejoin the Co as a non-executive director.

Haitong Securities (6837) announced it has obtained approval from the China Securities Regulatory Commission to set up a wholly-owned securities assets management subsidiary called Shanghai Haitong Securities Asset Management Co Ltd.

Shui On Land (272) is said to be selling a $400M bond due 2015 with 9.75% coupon to yield 8.5% reported Dow Jones.

Xinyi Glass (868) unveiled 1H net income down 43.4% YoY to HK$477M on revenue of HK$4.6B, up 18.3%.

Hang Lung Properties (101): FY results expected.

Huaneng Power International (902): 1H results expected.

Singapore Annual Inflation Rate vs. GDP Growth (1980 - 2011)

Year	Consumer Price Index (2009=100)	Annual Inflation rate	Overall GDP (S$b)	% Growth
1980	59.2	8.5	39.4	10.0
1981	64.0	8.2	43.6	10.7
1982	66.5	3.9	46.7	7.2
1983	67.2	1.2	50.7	8.6
1984	69.0	2.6	55.2	8.8
1985	69.3	0.5	54.8	-0.6
1986	68.4	-1.4	55.5	1.3
1987	68.7	0.5	61.5	10.8
1988	69.7	1.5	68.3	11.1
1989	71.3	2.4	75.3	10.2
1990	73.8	3.4	82.9	10.1
1991	76.3	3.4	88.3	6.5
1992	78.1	2.3	94.5	7.0
1993	79.8	2.3	105.4	11.5
1994	82.3	3.1	116.5	10.6
1995	83.7	1.7	125.0	7.3
1996	84.9	1.4	134.5	7.6
1997	86.6	2.0	146.0	8.5
1998	86.4	-0.3	142.8	-2.2
1999	86.4	0.0	151.6	6.2
2000	87.6	1.3	165.4	9.0
2001	88.4	1.0	163.5	-1.2
2002	88.1	-0.4	170.3	4.2
2003	88.5	0.5	178.1	4.6
2004	90.0	1.7	194.4	9.2
2005	90.4	0.5	208.8	7.4
2006	91.3	1.0	227.1	8.8
2007	93.2	2.1	247.2	8.9
2008	99.4	6.6	251.4	1.7
2009	100.0	0.6	248.9	-1.0
2010	102.8	2.8	285.7	14.8
2011	108.2	5.2	299.6	4.9
Averages		Annual Inflation Rate (%)		GDP Growth Rate (%)
32-year		2.2		7.0
30-year		1.8		6.7
25-year		1.9		7.1
20-year		1.8		6.4
15-year		1.6		5.6
10-year		2.1		6.4
5-year		3.5		5.9

Datat sources: Department of Statistics Singapore

http://www.singstat.gov.sg/stats/themes/economy/hist/cpi.html

http://www.singstat.gov.sg/stats/themes/economy/hist/gdp1.html

For a more historical data, please refer to: Singapore Inflation and Real GDP Growth Rate - A Graphical Presentation

Daily Morning Watch - 30 July 2012

SINGAPORE

CapitaMalls Asia (CMA) announced the acquisition of Olinas Mall in Tokyo for 22.8B yen from Tiger Eye Realty Yugen Kaisha, adding: "The mall is attractively priced at about S$964 (HK$5,848) per sq ft of net lettable area. (...) The current net property income yield of the mall is also in excess of 6%, and has the potential to be further enhanced through tenancy remix and pro-active mall management." Separately the Co announced it is developing its first shopping mall in China's Qingdao, adding: "The proposed mall will be the retail component of Vanke City, a mixed development strategically located in the New Urban Center in the centre of Qingdao. (...) CapitaMalls Asia plans to develop a six-storey shopping mall with a total gross floor area, excluding car park, of about 89,700 square metres. (...) the total development cost of the shopping mall is expected to be about 1,457.0M yuan (S$294.9M/ HK$1,788.9M)."

Jardine Matheson (JM) said 1H net income plunged 64% YoY to $785M and underlying profit was down 1% to $714M on revenue of $30.3B, up 10%. The Co said: "Given these challenging circumstances, the first-half results were satisfactory and we expect to maintain our performance over the full year."

Jardine Strategic (JS) reported 1H net income down 66% YoY to $860M and underlying profit up 1% to $769M.

Jardine Cycle & Carriage (JCNC) unveiled 1H net income up 5% YoY to $511M on revenue of $11.2B, up 19%. The Co said: "The second half of 2012 is expected to be more challenging due to a weaker rupiah and the adverse impact on automotive sales in Indonesia arising from the more restrictive financing regulations introduced in June."

Singapore Exchange (SGX) posted FY net income down 1% YoY to S$292M, underlying profit down 3% to S$304M, EBITDA down 2% to S$404M on revenue of S$648M, down 2%. The Co proposed a final dividend of S$0.15 per share bringing the full-year dividend to S$0.27 per share, the same as in a year earlier, adding: "The Board aims to declare a base dividend of 4 cents per share every quarter."

Singapore Airlines (SIA): ex-div S$0.1

US indices jumped on Friday boosted by diversified financials and retailing sectors. On the US economic data front, gross domestic product rose at a 1.5% annual rate (+1.4% expected) in 2Q after an upwardly revised 2% gain in the prior quarter while personal consumption rose 1.5% QoQ (+1.3% expected). Finally, the Thomson Reuters/University of Michigan final index of sentiment declined to 72.3 in July (72.0 expected) from 73.2 the previous month. Regarding US stocks, Amazon.com (AMZN +7.87% to $237.32) posted 2Q EPS of $0.01 vs $0.41 a year earlier and operating income down 46.8% to $107M on sales of $12.8B, up 29.5%. Separately, Facebook (FB -11.7% to $23.71) posted 2Q LPS of $0.08 vs EPS of $0.11 a year earlier (adjusted EPS of $0.12, flat YoY) on revenue of $1.2B, up 32.3%. In other news, Starbucks (SBUX -9.42% to $47.47) announced 3Q EPS up 19.4% YoY to $0.43 ($0.45 expected) on revenue of $3.3B, up 12.7%.

In Europe, In Germany , the CPI accelerated by 0.4 percent month-on-month from a drop of 0.1 percent last month (+1.7% year-on-year). In France , consumer sentiment decelerated to 87 in July from 89 in June. In Spain , unemployment rate increased to 24.63% in the second quarter from 24.44% in the first quarter. The number of unemployed persons rose by 53,500 over the quarter to 5.69 million. In Italy , the business confidence among manufacturers dropped more than expected to 87.1 in July from 88.7 a month ago. Regarding stocks, EADS jumped as first-half profit jumped 89 percent and it lifted its full-year earnings forecast. Barclays rebounded sharply after it said underlying pretax profit jumped 13 percent to £4.23 billion, spurred by a 38 percent improvement in profits from wealth and investment management. This morning, the Nikkei225 index opened higher with a bullish gap.

CHINA - HK

Hong Kong 's mortgage loans drawn down rose 3.6% MoM to HK$20.2B during June vs +11.6% in May according to the Hong Kong Monetary Authority. Mortgage loans approved in June fell 20.4% MoM to HK$21.2B including HK$4.2B (+0.7% MoM) in primary market transactions and HK$14.1B (-28.5%) in secondary market transactions. The mortgage delinquency ratio remained unchanged at 0.01%.

HSBC (5) may make a $200M provision for costs in relation to money laundering issues in the US , reported the Sunday Telegraph. The Bank is expected to release 1H results.

Guangzhou R&F Properties (2777) issued a profit warning saying 1H net income may decrease significantly compared to a year earlier.

China COSCO (1919) posted a profit warning saying 1H net loss may widen over 50% YoY (1H2011 net loss: 2.8B yuan).

Fosun International (656) issued a profit warning saying it expects a substantial YoY decrease in 1H net income.

Glorious Property Holdings (845) said it does not expect an insider-dealing probe by the US SEC against a firm owned by the Co's chairman to affect the Co's business.

Shanghai Electric Group (2727) announced plans to issue 4B yuan of bonds in China .

Golden Eagle Retail Group (3308) made clarification in response to a press article: "The Group's sales and net profit growth in 1H2012 had been slower than management's expectation. (...) the net profit of the Group for the six months ended 30 June 2012 remains about the same as compared with that of last year. It is anticipated that same store sales growth in 1Q and 2Q of 2012 was at high single digit."

Fangda Carbon New Material (600516) posted 1H net income down 33.2% YoY to 258M yuan on turnover of 2.0B yuan, down 3.5%.

Beijing Haohua Energy Resource (601101) reported 1H net income down 7.0% YoY to 674M yuan on turnover of 3.7B yuan, up 16.6%.

Hang Seng Bank (11): 1H results expected.

Everbright Securities (601788), Fuyao Glass Industry Group (600660): 2Q results expected.

China Railway Group (601390): ex-div CNY0.048 China Railway Construction (601186): ex-div CNY0.1

Privatization of Meiban Group Ltd

Meiban Group Ltd. held a court meeting on 26 July 2012 for shareholders to vote for their privatization scheme. The Group received an overwhelming support, of about 96% in value of the shares, for the scheme.

During the meeting, interesting questions such as "How was the offer price at $0.40 per share determined?" and "What is the IFA's recommendation, given that the offer price does not reflect the intrinsic value of the company." Perhaps, one of the most immediate concerns of shareholders was "Where to put my money after Meiban is privatized?"

Mr. Mano Sabnani, Chairman of Rafflesia Holdings Pte Ltd, answered this question and offered a recommendation during the meeting. He recommended shareholders of Meiban to take a look at Venture Corporation Ltd.

The reasons given by Mr. Mano were the following:

• Meiban and Venture are in the same industry. 
• Venture has a PE of 14 (which is similar to Meiban's exit price).
• High dividend yield of 6.9%
• NAV of $6.83
• Cash per share at $1.74
• ROE of 8.4% (compared to 6.2% of Meiban)

There were more information given but the above was what I managed to take note of during the meeting.

-----

From SGX:

Venture Manufacturing (S) Ltd was incorporated in 1984 to provide contract manufacturing services to companies in the electronics and computer-related industries. In 1989, the Company formed the Venture Group with the merger and acquisition of Multitech Systems Pte Ltd and Technocom Systems Sdn Bhd. The Venture group comprises about 30 companies with global clusters of excellence in South-East Asia, North-East Asia, the Americas and Europe. 

Venture offers high value-added and highly efficient manufacturing services to MNCs using state-of-the-art manufacturing process technology and test development capability. In addition, Venture provides an excellent range of pre-manufacturing services including design, prototyping and engineering services, as well as post-manufacturing services including after-sales repairs, customisation and fulfillment logistics. 

Venture Manufacturing (Singapore) Ltd changed its name to Venture Corporation Limited wef 17 May 2002.

Daily Morning Watch - 27 July 2012

SINGAPORE

CapitaMalls Asia (CMA) posted 2Q net income up 40.7% YoY to S$232M and EBIT up 33.4% to S$284M on revenue of S$75M, up 18.8%. The Co declared an interim dividend of S$0.01625 per share, up 8.3% YoY. The Co said: "The outlook for our key markets of Singapore , China and Malaysia remains positive, with retail sales expected to continue to grow. In Singapore , we expect retail sales this year to be boosted by GDP growth of between 1.0% and 3.0%, and higher tourist arrivals of between 13.5M and 14.5M. In China , retail sales are expected to grow between 16.0% and 17.0%, driven by economic expansion of 8.0% forecast for the whole year. In Malaysia , retail sales are expected to increase 6.0% this year on the back of projected economic growth of 4.0% to 5.0%. (...) Based on the current outlook and growth momentum, the Board expects this year's total dividend payout to be at least equal to last year's S$0.03."

Hongkong Land Holdings (HKL) said 1H net income plunged 84% YoY to $626M and underlying profit declined 13% to $318M on revenue of $478M, down 36.6%. The Co declared an interim dividend of $0.06 per share, unchanged from 1H2011. The Co pointed out: "Operating profit from the Group's commercial property portfolio increased in the first six months of 2012, but this was more than offset by the decrease in residential profits. (...) While conditions remain uncertain, the Group's commercial portfolio in Hong Kong is well positioned due to the lack of new commercial space entering the market. The contribution from residential developments in the second half is expected to benefit from the completion of two projects in Singapore and additional profits in Hong Kong ."

Fraser & Neave Ltd (FNN) announced it has agreed with Heineken to extend the latter's offer for stakes in Asia Pacific Breweries Ltd (APB) by one week from 27 July 2012, adding: "The Co wishes to clarify that, save for the Heineken Offer, the Co has not received any other proposal for its direct and indirect interests in APBL."

Mapletree Logistics Trust (MLT) said CEO Richard Lai Tak Loi has resigned and been replaced by Ng Kiat, the former Chief Investment Officer (Southeast Asia) of Mapletree Investments Pte Ltd.

Dairy Farm International (DFI) unveiled 1H net income up 8% YoY to $245M sales of $4.8B, up 8%. The Co declared an interim dividend of $0.065 per share (1H2011: $0.06).

Mandarin Oriental International (MAND) posted 1H net income down 29% YoY to $31M on revenue of $619M, up 8%. The Co declared an interim dividend of $0.02 per share, unchanged from a year earlier.

Jardine Cycle & Carriage (JCNC), Jardine Matheson (JM), Jardine Strategic (JS): 1H results expected.

Singapore Exchange (SGX): FY results expected.

US indices jumped on Thursday boosted by consumer durables & apparel and telecommunication services sectors. On the US economic data front, initial jobless claims decreased by 35,000 to 353,000 (380K expected) in the week ended July 21st. Durable goods orders rose 1.6% MoM in June (+0.3% expected) after an upwardly revised 1.6% gain the previous month. Finally, pending home sales fell 1.4% MoM (+0.3% expected). Regarding US stocks, Zynga (ZNGA -37.48% to $3.18) announced 2Q revenue up 19% YoY to $332M. Non GAAP EPS was $0.01 vs $0.06 a year ago. Separately, Akamai Technologies (AKAM +24.04% to $35.04) reported 2Q adjusted EPS up 22.9% YoY to $0.43 ($0.37 expected) on revenue of $331M, up 19.6%. Western Digital (WDC +20.94% to $39.27) reported for its 4Q ended June 29, revenue of $4.8B vs $2.4B a year ago. After the US market close, Amazon.com (AMZN) posted a 2Q EPS of $0.01 vs $0.03 expected ($0.41 a year ago) on sales of $12.83B vs $12.90B expected, up 29% YoY. In other news, Facebook (FB) posted a 2Q adjusted EPS of $0.12 on revenue of $1.18B vs $1.16B expected.

In Europe, stocks made a strong rebound after Mario Draghi, ECB President, said that : "the ECB is ready to do whatever it takes to preserve the euro". In other economic news, Euro zone M3 was up 3% in June YoY (+2.7% expected) vs +2.9% in May. In Germany , GfK consumer confidence survey was up for August at 5.9 vs 5.8 in July. It was expected to be flat. German import prices dropped 1.5% in June (-0.9% expected) vs -0.7% in May. Among stocks, Unilever jumped as 2Q sales beat estimates. France Telecom gained ground on strong 2Q results. This morning, the Nikkei225 index opened higher, and is now posting a technical rebound.

CHINA - HK

China will use fiscal measures, such as preferential tax treatments promised to smaller firms and new strategic industries, to support growth and promote economic restructuring, according to Finance Minister Xie Xuren cited by Xinhua.

The Hong Kong Exchange Fund posted 1H net investment income of HK$38.1B vs HK$46.4B a year earlier, announced Hong Kong Monetary Authority.

AIA Group (1299) posted 1H net income up 10% YoY to $1.4B and operating after tax up 12% to $1.1B, adding: "VONB (Value of new business) grew by 28% to $512M net of tax compared with 1H2011. This excellent performance was driven by increases in both volume and margin. VONB margin increased by 6.6 percentage points to 42.6% and ANP (Annualised new premium) grew by 9% to $1,187M (...) All of our major markets shared this continued profitable growth momentum, with the exception of our Korean business, which as discussed previously, we continued to reposition. (...) EV (Embedded value) grew to $28,840M at 31 May 2012, an increase of 6% over the first half from $27,239M at 30 November 2011. EV operating profit grew by 9% to $1,655M compared with 1H2011. (...) The Board of Directors has declared an interim dividend of HK$0.1233 per share. If trading conditions continue in line with present expectations, the 2012 interim dividend will represent appx. one-third of the 2012 full-year dividend."

China Zhongwang Holdings (1333) announced it may post a substantial increase in 1H net income considering surging sales.

Huolinhe Opencut Coal Industry Corp (002128) posted 1H net income down 10.0% YoY to 733M on revenue of 3.3B yuan, down 2.9%.

Hangzhou Binjiang Real Estate Group (002244) reported 1H net income down 43.2% YoY to 85M yuan on turnover of 648M yuan, down 24.2%.

TBEA (600089) unveiled 1H net income down 20.7% YoY to 547M yuan on revenue of 9.8B yuan, up 19.9%.

UFIDA Software (600588) said 1H net income grew 10.4% YoY to 135M yuan on turnover of 1.7B yuan, up 17.3%.

Fangda Carbon New Material (600516), Beijing Haohua Energy Resource (601101): 2Q results expected.

Datang International Power Generation (601991): ex-div CNY0.11

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