Daily Morning Watch - 17 October 2012

SINGAPORE

Singapore 's non-oil exports fell 3.4% YoY (+2.3% expected) vs -10.7% (revised) in August reported the International Enterprise Singapore . Electronics exports dropped 16.4% YoY vs -11.0% in August.

CapitaLand Ltd (CAPL)'s serviced-apartment unit Ascott may launch a yuan-denominated real-estate investment trust to fund its expansion in China according to the unit's chief interviewed by Dow Jones.

Keppel Land (KPLD) said it has acquired a 28.7-hectare prime residential site in Chengdu city of China 's Sichuan province for 680.4M yuan (appx. S$133.0M) to develop appx. 573 landed homes. Separately the Co announced has submitted a S$435M bid for a prime residential site along New Upper Changi Road in Singapore, saying: "Keppel Land plans to develop about 700 homes ranging from 500 sf to 1,400 sf in one- to four-bedroom configurations."

Olam International Ltd () announced the pricing of S$400M 10-year fixed-rate notes at 6.0% coupon.

US indices jumped on Tuesday boosted by materials and semiconductors & semiconductor equipment sectors. On the US economic data front, Consumer Price Index rose 0.6% MoM (+0.5% expected) and 2.0% YoY (+1.9% expected) in September while industrial production increased 0.4% MoM (+0.2% expected). Finally, NAHB housing market index improved to 41 in October as expected from 40 the previous month. Looking at some US company releases, Mattel (MAT +5.04% to $37.2) reported for its 3Q an EPS of $1.04 ($0.99 expected) compared to $0.86 a year ago with net sales up 4% YoY to $2.1B. Separately, United Health (UNH -1.06% to $56.88) posted for its 3Q an EPS of $1.50 ($1.46 expected0, up 28% YoY with revenue up 8% YoY to $27.3B. After the US market close, IBM (IBM) reported a 3Q ADJ EPS of $3.62 vs $3.61 expected on revenue of $24.75B vs $25.36B ($26.16B a year ago ). In other news, Intel (INTC) reported a 3Q EPS of $0.58 vs $0.49 expected ($0.66 a year ago) on revenue of $13.46B vs $13.20B expected ($14.23B a year ago). Separately, CSX (CSX) posted a 3Q EPS of $0.44 vs $0.43 expected ($0.43 a year ago) on revenue of $2.89B vs $2.93 expected ($2.96B a year ago).

In Europe , euro zone CPI gained 0.7% in September, as expected, vs +0.4% in August. In Germany , ZEW survey on economic sentiment advanced to -11.5 in October vs -18.2 in September and -14.9 anticipated. ZEW survey for current situation decreased to 10 in October vs 12.6 the month before and 11.8 expected. UK CPI gained 0.4% in September, as expected, vs +0.5% in August. Regarding the stocks, Rio Tinto gained as 3Q production figures beat expectations. GKN lost ground as the Co predicts softer demand in Europe . This morning, the Nikkei225 index opened extremely higher, and is now close to its 20-day moving average.

CHINA - HK

China raised its holdings of US Treasurys by $4.3B in August (+$2.3B in July) to $1.154T remaining as the top holder in the world followed by Japan ($1.116T), according to the US Treasury Department.

Sun Hung Kai Properties Ltd (16): Fitch Ratings has affirmed its Long-Term Issuer Default Rating (IDR) on the Co at "A" with "Stable" outlook. The rating firm pointed out: "SHKP's ratings reflect its solid franchise in Hong Kong 's property sector as developer and investor and its prudent financial strategy. (...) The Stable Outlook reflects Fitch's expectation that SHKP will maintain a stable business mix and a strong financial profile over the next 18 to 24 months."

Wharf Holdings (4): Fitch Ratings has affirmed its Long-Term Issuer Default Rating (IDR) on the Co at "A-" with "Stable" outlook. The rating firm said: "The affirmation is supported by Wharf's strong recurring cash flows from its prime retail-focused investment property portfolio in Hong Kong . Its Harbour City and Times Square properties, which represent around three quarters of its $209B investment property portfolio value, commanded a 9% share of Hong Kong's overall retail sales in 2011 (2010: 8.5%). Its rental portfolio continued to experience positive rental reversion for leases renewed this year, reflecting a strong retail lease market in Hong Kong . Fitch expects this trend to continue in 2013, albeit at a slower rate."

Hysan Development (14): Fitch Ratings has affirmed its Long-Term Issuer Default Rating (IDR) on the Co at "BBB+" with "Stable" outlook.

Cathay Pacific (293) announced it and Dragonair carried 2.25M passengers in August, down 0.4% YoY, adding: "The passenger load factor fell by 1.5 percentage points to 78.2%, (...) The cargo and mail load factor was down by 2.0 percentage points to 62.8%. (...) Demand in the premium cabins usually picks up after the summer holiday season but this year the pick-up has been slow, especially on regional routes."

Air China (753) posted September passenger load factor down 1.0 percentage point YoY to 81.8% and cargo load factor up 4.0 points to 61.6%. Separately the Co is said to raise 5B yuan by selling 10-year bonds reported Dow Jones.

Huadian Power International Corp (1071) reported 9-month power generation up 4.3% YoY to 116.5M MWh and on-grid electricity sold up 4.4% to 109M MWh.

Dongfang Electric Corp (1072) issued a clarification saying it has not borrowed from any private sources.

Dongyue Group (189) released a profit warning saying FY net income would drop substantially compared to a year earlier.

Chenzhou Mining Group (002155) posted 3Q net income down 22.4% YoY to 160M yuan on revenue of 1.4B yuan, up 29.4%.

Zhengzhou Coal Mining Machinery Group Co (601717) reported 3Q net income up 19.5% YoY to 393M yuan on turnover of 2.6B yuan, up 10.4%.

Shanxi Lanhua Sci-Tech Venture (600123) is expected to release 3Q net income of 534.5M yuan vs 433M yuan a year ago.

China Merchants Property Development (000024), Yunnan Copper Industry Co (000878), Taiyuan Coal Gasification (000968), Zhejiang China Commodities City Group (600415): 3Q results expected.

GCL-Poly Energy Holdings (3800) was downgraded to "underperform" from "buy" at BofA-ML.