Excerpts from DBS Vickers' report this morning


thumbs-upOur recent positive view on the Singapore market at STI 3380 and slightly below has been vindicated.

STI’s rise in the past two weeks has lifted valuation back above the 13.4x (-0.25SD) 12-mth forward PE currently at 3405 that we now see as the near-term support. It is heading towards the 13.76x (ave) 12-mth forward PE currently at 3500 that is viewed as the near-term resistance.

The rally in SingTel shares over the past 2-3 weeks has lifted the stock to levels not seen since July 1996, a 19-year high.

The price action is positive from a mid-long term perspective and points to $4.80 in coming months. The near-term pullback support is at $4.26.

While our positive fundamental view on Sheng Siong remains so, its narrowing upside to TP prompts us to advocate a switch to its peer Dairy Farm.

We see more potential for Dairy Farm from here because its EPS growth rate and PE ratios are rather similar to Sheng Siong even as it boasts a market capitalisation that is more than 14x larger and its businesses cast a much wider geographical reach across the region.

Near-term support is at $9.20. Scope for a rise towards $10 followed by $10.35 (38.2% retracement) in the week(s) ahead.

Finally, we observed indications that the sell-down in Noble Group shares related to Iceberg Research’s allegations has likely run its course.

Technically, the near-term support is at $0.91 with upside to $0.965 and $1.02, the latter coincides with a major 23.6% upward retracement of the stock’s correction from a high of $1.48 back in Jan 2014.

If the upward retracement extends further, look for further subsequent upside to the 38.2% upward retracement level of $1.08.


Noble Group – The Bottom of the Iceberg

Singapore's port authority has denied allegations of misconduct made by Iceberg Research against a subsidiary of commodities trader Noble Group, according to Reuters. The newswire reported that Singapore's Maritime and Port Authority (MPA) said it had in 2013 received information relating to the conduct of Noble Resources International Pte Ltd, but did not find any malpractices by the company.

The law of diminishing returns have clearly set in on Iceberg Research’s third research report against Noble Group.

Recall that the first Iceberg report was released on 15 Feb and the reaction was a 13% drop in Noble Group’s shares in the subsequent two days. The second report was on 25 Feb and the reaction was a lesser 11% drop in the subsequent two days. The reaction to the third and final report was a 4.5% gain on 23 March.

This indicates that the sell-down in relation to Iceberg’s claims has likely run its course. Technically, we see near-term support at $0.91 with upside to $0.965 and $1.02, the latter coincides with a major 23.6% upward retracement of the stock’s correction from a high of $1.48 back in Jan 2014.

If the upward retracement extends further, look for further subsequent upside to the 38.2% upward retracement level of $1.08. Our fundamental TP for Noble Group is $1.12.

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