SINGAPORE DAYBOOK :Tuning out the noise to hit the bullseye. Not distracted by disturbance in the market, top analysts navigated through volatility.

[SINGAPORE] One guy sneezes, and someone else catches a cold. Decoupling is no longer a buzzword, as events around the world over the past few years have shown.
At the start of the year, it was the US fiscal cliff; before that, it was the long- drawn eurozone debt crisis - both of which continue to cast a long shadow on world markets. And then came a slowdown in the economic juggernaut, China.
Amid such constantly shifting sands, the 10 best analysts in Singapore remained focused on the fundamentals of the companies they covered and did not allow themselves to be distracted by the "noise" generated by these bouts of economic volatility.
This helped them beat their peers in making stock calls and hitting the bull's eye in their earnings estimates, and ultimately let them take home the top accolades in the 2013 StarMine Analyst Awards.
CLSA's Saurabh Chugh, who covers the industrials sector, was No 1 stock picker for Singapore. His most lucrative call was keeping a "buy" on Ezion Holdings from Aug 6 last year through June 30 this year as its share price shot up by 114 per cent, outperforming the industry benchmark by 104 per cent.
"(Equities research) is not for somebody who's looking for more of a work- life balance," Mr Chugh said. "You should be prepared to put in long hours. It's a 14-hour day, and that's a norm for the industry."
Among the challenges that analysts face is that economic cycles are getting shorter - which makes spotting and pricing in longer- term trends trickier, said DBS Vickers' vice-president Tan Ai Teng. She is the top earnings estimator for the technology sector.
Slightly over a year ago, the second round of the US Federal Reserve's quantitative easing (QE) came to an end and Greece was being bailed out. Instead of moving on, the market revisited the same themes again this year.
Ms Tan said: "Keeping a 12-month outlook is probably a good period fundamentally, but along the way, you do have to change your calls along with the market dynamics."
OSK/DMG's analyst Jason Saw, who covers stocks in the offshore marine sector, emerged Singapore's top earnings estimator as well as tops in the Asia awards' machinery & materials category.
Mr Saw, who won for his accurate estimates for Sembcorp Marine, Yangzijiang Shipbuilding Holdings, Vard Holdings and Hutchison Port Holdings Trust, said: "Estimates are the basis for where valuations would be. You try to get it as right as possible. But in this industry, I think stock picks matter more than estimates.
"It's an industry where you try to make money for your clients, and it's all about the performance."
Adds transportation analyst Derrick Heng, who was No 2 stock picker and top earnings estimator for the resources and infrastructure sector: "It's important to think independently for yourself. In the process, you have to stay sober and not be led by the market."
Mr Heng left Phillip Securities and joined Maybank Kim Eng Research in May.
The annual awards, given by Thomson Reuters company StarMine, rank equity analysts on the returns of their "buy" and "sell" calls, and the accuracy of their earnings estimates. Only analyst calls on Singapore-based companies are included in the awards calculations.
The 2013 awards track their performance for the period from July 1 last year to June 30 this year. BT is the media partner for the Singapore awards.
For the stock-picking awards, analysts are ranked according to their industry excess return computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark.
For comparison purposes, StarMine has built a non-leveraged portfolio for each analyst based on his or her recommendations. For each "buy" recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark.
"Sell" calls are the reverse: long the benchmark and short the stock. The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage or changes a rating.
For the earnings estimates award, StarMine measures the relative accuracy of each analyst's earnings forecasts against his or her peers and comes up with a single-stock estimate score.
The score takes into account many factors: the analyst's absolute forecast error; the analyst's error compared to other analysts; the variance of the analysts' errors; the timing of the estimates; and the absolute value of the actual earnings for the stock.
The top broker awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in Singapore. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for most of the year.
This year, OSK/DMG Partners is the top brokerage firm, bagging a total of five individual analyst awards.
In a three-way tie for second place are BofA Merrill Lynch Global Research, CLSA and DBS Vickers as they got four awards each.
(Source: The Business Times)

MARKET SCOOP

Singapore's SATS says exploring cargo joint venture in Oman
World's largest container ship sails into town
JTC offers sites in Tai Seng St, Tuas South
LionGoldsays in very early discussions to buy gold assets
Tritech plans stock split, bonus warrants
(Source: The Business Times)

OCBC Securities says...

HPH TRUST | BUY | TP: S$0.84

Since we initiated on Hutchison Port Holdings Trust (HPHT) on 4 Sep, HPHT's unit price has climbed 9.0% to US$0.790 from US$0.725
We believe the increase is chiefly due to: 1) the Fed's decision to delay tapering its bond purchases, which has given a general boost to the equity markets, and 2) positive economic data points from both Europe and the US
The service industries in the US expanded in August in the fastest pace in close to eight years (Institute for Supply Management's non-manufacturing index, 6 Sep)
Markit's flash Eurozone PMI for Sep was a 27-month high (released 23 Sep)
We are currently maintaining our forecasts of 0% and 2% YoY growth in 2013 throughput for HPHT's ports in Kwai Tsing, HK (including the increase in TEU from the acquisition of Asia Container Terminals in Mar) and Yantian, Shenzhen respectively
Aug container throughput at Kwai Tsing was 1.478m TEU, down 1.7% MoM and up 1.5% YoY, while Aug container throughput at Yantian was 2.093m TEU, up 0.9% MoM and up 1.1% YoY
We believe that if the US and European economies continue to strengthen, there is potential for better volumes in 2014
According to Dow Jones, HPHT has secured a US$3.6b refinancing loan which comprises three tranches - a US$1b one-year loan, a US$1.6b three-year loan and a US$1b five-year loan
The one-year tranche is at an interest rate of 0.6% above Libor, while the three-year and five-year tranches are 1.1% and 1.4% above Libor respectively
On a blended basis, we estimate that the interest rate cost for this loan is ~1.5%,
dramatically lower than the 2.5% rate which management had previously guided
Updating our model to reflect the lower future interest expense, we raise our DDM-based FV to US$0.84 from US$0.76 and maintain a BUY rating on HPHT
We estimate that HPHT is currently trading at an attractive FY14F dividend yield of 7.9%

DBS Securities says ...

SEMBCORP INDUSTRIES | BUY | TP: S$5.60

The IPO offering of 33.4m shares (~35% of share capital) was comfortably oversubscribed with strong demand from investors. Shares are expected to commence trading on 10 Oct 2013
The gain is higher than our S$109m estimate and comprises S$37m divestment gain from the sale of its 20% equity interest and a revaluation gain of S$80m for SCI's remaining 40% equity interest in SCI Salalah
We believe the variance could be due to higher projection on cost of asset value on our end and possibly forex differences
This divestment would boost SCI's FY13 PATMI to S$864.8m
Stripping out these exceptional items, FY13 core profits would be S$772.8m versus S$753.3m in FY12
The impact on SCI's balance sheet is moderate as the divestment of its 20% stake would be offset by revaluation of the remaining 40% stake
While positive, this development has no impact on our fair value for SCI because these divestment gains would be recorded as part of FY13 earnings while our Utilities valuation is pegged to FY14F
However, it would add to total returns of investors if SCI were to pay out some of these gains as special dividends
This year, we expect SCI to pay DPS of 16 Scts, translating to 3% yield at current price
In conclusion, we maintain Buy on SCI for ~10% total return with potential for dividend upsides

DMG OSK Securities says...

UMS HOLDINGS | BUY | TP: S$0.71

We believe Applied Materials (AMAT)'s acquisition of Tokyo Electron Ltd (TEL) will make it a dominant industry player, which will in turn benefit its suppliers
While we do not expect UMS to immediately gain from this, we see it as the sole Singapore proxy to ride on this landscape-changing event
Maintain BUY, with our DCF-based TP unchanged at SGD0.71 (WACC: 10.9%, terminal growth: 0%)
Largest customer makes major move
UMS' largest customer AMAT, which contributes close to 90% of the group's revenue, has made a major move by acquiring its rival, TEL
Gartners ranks AMAT and TEL No.1 and No.3 respectively in the semiconductor manufacturing equipment industry in terms of worldwide market share last year
The combined entity could potentially boast a market share of 25.5%, twice as much as that held by AMAT's second largest competitor, ASML
The deal is expected to wrap up in the middle or second half of 2014, subject to regulatory approvals
The deal will enlarge AMAT's customer base, drive product innovation and give rise to cost saving opportunities, thus helping it to achieve its ambitious profit growth target
This is likely to benefit UMS in view of the duo's co-relation in terms of financial performance
We expect this to boost demand for UMS' components as: i) overall demand for AMAT products will naturally increase, and ii) UMS has cost advantage over Japanese component suppliers
One concern is whether UMS' assembly of AMAT's Endura system would be disrupted in view of the potential overlapping in AMAT and TEL's product lines
We view this as unlikely since TEL's CEO Tetsuro Higashi has said that there is limited overlapping in both companies' products
Secondly, while both companies have their respective wafer deposition products - eg TEL's Triase+ vs AMAT's Endura system - a key competency of AMAT is its wafer handling platform, which is also UMS' sole product line
As such, it is likely that UMS' wafer handling platform will be refined and kept in AMAT's future product innovations