CLSA’s updates on India’s CPO import tax

Event: Following up on yesterday’s discussion, India has officially implemented a 2.5% tax on Crude Palm Oil imports, while tax on refined products remain the same at 7.5%

Impact: While this is marginally positive given that it is a step down from the earlier proposed 5% tax, this remains a near-term headwind for CPO prices in the form of more active government regulation in a bit to raise protectionist barriers for their own farmers.

What happens next?
While M’sia is the marginal beneficiary given it is at 0% export tax vs. Indonesia at 7.5% currently, we expect Indonesia to cut export duties at the end of the month in a bid to remain competitive vs. M’sian planters. This will go some-way towards relieving inventory build-up pressures, but the bigger specter here is the risk of further protectionist action by India that stifles CPO demand growth.

Corporate Filing (SGX) – 18 Jan 13

SINGAPORE
* Suntec (SUN.sp): Schroders ceases to be substantial shareholder, cutting stake to 4.9879% via sale of 800k shares

* Raffles Med (RFMD.sp): Aberdeen raised stake to 6.0112% via open market purchase of 295k shares

* WBL (WBL.sp): Aberdeen tendered its entire 7.489% stake in WBL into STRTR’s exit offer

* SC Global (SCGD.sp): Wheelock Properties tendered its entire 17.93% stake in SCGD into Simon Cheong’s exit offer

* SC Global (SCGD.sp): Simon Cheong raised stake to 90.447% stake leaving less than 10% stake in public hands. Likely to exercise compulsory acquisition for remaining shares & delist stk

* Hobee (HOBEE.sp): Hobee hldgs raised stake to 70.07% after recent of sharebuybacks done by company

* IHH (IHH.sp): EPF raised stake to 5.44% via open market purchase of 1500k shares

* Hobee (HOBEE.sp): repurchased 1243k shares @ $1.8303

Market Wrap by Decoder – 18 Jan 13

• RIO announced a significant US$14bn writedown of their aluminium/Mozambique coal assets and the resignation of their CEO.
• 1st Condo to be launched in 2013 (Sing) – Q Bay Residences, prices saw a dip of ~7% from the intended selling price due to the additional buyer stamp duty (ABSD).
• US stocks rose with the S&P 500 to end at its high, just 5.2% shy of its all time high in 2007. Investors welcomed +ve job/housing starts data which shows that the Americans are slowly gaining their foothold in the economy. Jobless claims was down 37k to 335k while the # of private houses that started construction jumped 12.1% in Dec (highest lvl since June 2008). Overall, consumer discretionary led gains while the financials finished lower. Tracking overnight gains from the US markets, Japan Nikkei opened sharply higher (with BOJ poising for back to back easing – may pledge open ended asset buying) while the KOSPI sits at ½ a percent higher. We are likely to see the spillover into Asian markets on the last trading day of the week so investors may take this chance to sell into strength.

Local News by broker – 18 Jan 13

* Global Logistics Properties (GLP SP) : will sell 3 more properties, for ¥12.6bn (S$173m) to GLP J-Reit. The latest sale will leave the warehouse operator with 35 wholly owned properties in Japan, as well as 15 partly owned assets. GLP J-REIT has priority over other potential buyers should Global Logistic decide to sell any of the 35 wholly owned properties over the next 10 years.
* Mapletree Logistics (MLT SP) : Q3 DPU of Sc1.72 was in line with our estimate and consensus. The stock rose 36% in 2012, and is trading at 1.29x book with a 6.2% forward yield. We think re-rating from here would require significant inorganic growth – the timing of which is uncertain. In Line, TP S$1.22
* CapitaMall Trust (CT SP) : FY12 DPU 9.46c in line with our est (9.67) and consensus (9.7). CT said its gross revenue +10% in 4Q to S$173.7m, while net property income was up 14.3% to S$112.9m. CT remains one of top pick as increase in suburban homes & higher social spending should favour suburban retail landlords
* SembCorp Marine (SMM SP) unit reports 8 cruise ships secured for refits in 2013; total est. sales of about S$60m