AIO Finance Analysis

Home Sales News
New home sales slump to 9-month low in Feb. The number of new homes sold by developers dropped to just 170 units in February - the lowest since the Urban Redevelopment Authority (URA) began releasing monthly sales data in June 2007. And CB Richard Ellis executive director Li Hiaw Ho estimates that new home sales could be just 700-800 units for the first quarter of 2008 - even lower than the 894 units sold in the fourth quarter during the Asian financial crisis in 1997. In an analysis of the data released yesterday, Jones Lang LaSalle (JLL) said, however, that prices were comparatively stable. The firm's head of research (South-east Asia) Chua Yang Liang said that using the 'lowest median prices' category of the URA data, median prices declined 0.7% for units sold in the Core Central Region (CCR) and 5% in the Outside Central Region (OCR) on a month-on-month basis. For units sold in the Rest of Central Region (RCR), the lowest median price increased 14.2% from $765 psf in January to $874 psf in February.


Swiber
Swiber Holdings announced on Sunday night that it was awarded a LOI from CUEL Thailand for offshore installation work (platforms, jackets, topsides and pipelines) in the Gulf of Thai. The contract is tenable for five years and estimated to be worth US$50 p.a. The contract is scheduled to start in 1Q09.

Swiber has shown impressive YTD win of US$742m boosting order book to about US$1bn. This is the first long-term contract that Swiber wins after Brunei Shell project of about US$200m which will end in 2009. We believe more of such long-term contracts will provide a good mix for Swiber's order book and confidence in earnings visibility. Our FY08 revenue forecasts for FY08 is 90% backed by orders while FY09 is
already 45% secured.

Source: DBS Vickers

Investors should continue to stay defensive heading into 2Q. Our view that the STI has a downward bias to 2530-2650 remains intact. While minor oversold bounces do occur, it’s still a sell-into-strength market.

The clearest indication came last week when the FED’s USD200bil injection into credit markets triggered a 180pts gain from Tuesday’s low of 2794 to Wednesday’s high of 2976 that was all given back by Thursday.


Defensive plays such as telecom (SingTel, StarHub and M1) and consumer staples (SPH, SMRT, SingPost) should hold up well in coming weeks. Outside of these defensive stocks, other index heavyweights are likely to pull the STI lower towards 2530-2650.

The Singapore economy saw earnings rise but productivity dips for first time in six years. Labour productivity slipped 0.9% in 2007 while real earnings rose 4%. Jobless rate is down to a decade low of 1.6%.

Source: DBS Vickers
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