Singapore's Japan-exposed plays face yen impact: DBS Vickers

While Japan's reflation/recovery theme is positive for Singapore-listed companies exposed to Japan, it will be offset by the weaker yen's effect on earnings translated back to local currencies, DBS Vickers says.

The falling yen is positive for companies buying goods and services from Japan, such as Pan United (P52.SG), which buys cement, and Tat Hong (T03.SG) and Sin Heng (KF4.SG), which buy cranes, it says. But it adds, the weaker yen will be negative for companies competing with Japanese players, such as the China shipyards Yangzijiang (BS6.SG) and Cosco Corp. (F83.SG) as Japan's goods and services become more cost attractive. It also expects the falling yen to hurt companies which aren't likely to see demand for their products fluctuate much based on the Japan's economy, such as Biosensors (B20.SG).

Among trusts with both Japan asset and revenue exposure, such as Mapletree Logistics Trust (M44U.SG) and Saizen REIT (DZ8U.SG), the declining yen's short-term negative will be offset by medium-term asset-value reflation, it says. It notes GLP (MC0.SG) faces a negative earnings translation impact, while the negative earnings-translation impact on SATS' (S58.SG) Japanese catering unit could be partly offset by increased volumes if tourist arrivals increase.