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OCBC Reports May 2013
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PostPosted: Thu May 02, 2013 9:19 am    Post subject: OCBC Reports May 2013 Reply with quote

Venture Corp: Disappointing start to FY13
Venture Corp (VMS) reported a sluggish set of 1Q13 results which came in below ours and the street’s expectations. Revenue fell 7.6% YoY to S$530.5m, forming 20.6% of our full-year estimate. PATMI fared worse, dipping 21.1% YoY to S$28.0m, or just 16.9% of our original FY13 forecast. Management sounded cautious during the analyst briefing, given the still uncertain macroeconomic environment. We believe that VMS’s 2H strength would be weaker than our previous expectations. We expect some near term selling pressure on the stock given this lacklustre set of results and also because the stock trades ex-dividend today (2 May, from 9 a.m.). We cut our FY13 revenue forecasts by 5.7% (FY14 by 4.8%) and our PATMI estimates by 11.9% (FY14 by 5.4%). Consequently, our fair value estimate is lowered from S$9.08 to S$8.00 (15x FY13F EPS). Downgrade VMS from Buy to HOLD. (Wong Teck Ching Andy)


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DBS: Stronger-than-expected 1Q
DBS Group Holdings Ltd posted stronger-than-expected 1Q13 net earnings of S$950m, up 2% YoY and -21% QoQ, and this is sharply ahead of market expectations of S$824m (based on Bloomberg poll). Net Interest Income fell 1% YoY to S$1327m, but higher Non-Interest Income, which rose 21% YoY to S$990m, helped to give total income a boost to S$2317m (+7.5% YoY). The key contributors were the strong double-digit increase in Fee and Commission Income, +25% YoY to S$507m, as well as higher Trading Income (+26% YoY to S$410m). With this strong set of 1Q performance, there is likely to be upward revision of its full year 2013 earnings forecast, as 1Q now accounted for 27% of consensus full-year earnings. We will provide more details after the analysts’ briefing later in the day. Meantime, do note that we have a BUY rating on DBS but we are likely to revise our fair value estimate. (Carmen Lee)

OKP Holdings: 1Q13 misses expectations
OKP's 1Q13 revenue grew 28.4% YoY to S$32.0m but gross margin fell to 15.1% from 21.0% in 1Q12, chiefly due to increased subcontracting and labour costs. PATMI dropped 22.2% YoY to S$2.4m. 1Q13 EPS of 0.77 S cents was lower than expected, forming 18% of ours and 15% of the street's FY13 estimates. The effective tax rate fell from 16.0% in 1Q12 to 13.2% in 1Q13 due to tax-deductible purchases under the Productivity and Innovation Credit plan, which will apply through 2015. We have adjusted our forecasts for OKP’s FY13 and FY14 performance. Applying the same P/E multiple of 11x to FY13F EPS, we derive a FV of S$0.46, slightly lower than our previous FV of S$0.48. We maintain our HOLD rating on OKP. (Sarah Ong)

CapitaLand Limited: Capital recycling at serviced residences
CAPL announced that it would divest three serviced residences in China and 11 rental housing properties in Japan for a total of S$165.0m to Ascott Residence Trust. The divestment of these properties, which include Somerset Heping in Shenyang, Citadines Biyun in Shanghai and Citadines Xinghai in Suzhou, would take place by 28th Jun 2013 and result in a net gain of S$15.1m for CapitaLand. We like that management continues to recycle capital steadily for stabilized assets in its serviced residences business segment, which would free up capital for deployment and further consolidate its balance sheet. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.29 (20% discount to RNAV). (Eli Lee)

Ascott Residence Trust: Proposed acquisition of assets in China and Japan
Ascott Residence Trust (ART) has entered into conditional agreements to acquire three prime serviced residences in China and a portfolio of 11 rental housing properties in Japan for an aggregate purchase consideration of S$165.0m. ART expects to acquire the target properties at an EBITDA yield of 5.4% on a pro forma basis for FY12. On a pro forma basis, these accretive acquisitions are expected to have increased FY12 distribution per unit by 2.9% from 8.76 S cents to 9.01 S cents. The acquisitions will be funded partly by the S$150m recently raised from an equity placement and the balance will be funded by debt. We are placing our Hold rating and S$1.35 fair value UNDER REVIEWpending incorporation of the acquisitions into our model. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks fell Wednesday as the Fed said it would continue purchasing US$85b in bonds each month, but may reduce or expand the programme depending on the economy.

- Forterra Trust reported 1Q13 net loss of S$16.7m. It had registered a net profit of S$8.0m in 1Q12.

- Religare Health Trust has announced that the Gurgaon Clinical Establishment, which accounts for 26% of its total portfolio value, had its official opening launch on 1 May 2013.

- Del Monte posted 1Q13 net profit of S$4.4m, up 3.7% YoY, as revenue climbed 17% to S$87.4m.

- Ho Bee’s 1Q13 PATMI climbed 230% YoY to S$52.1m on the back of a 68% increase in revenue to S$60.8m.
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PostPosted: Fri May 03, 2013 9:00 am    Post subject: Reply with quote

UOB: Above expectations 1Q
UOB Group posted 1Q13 net earnings of S$722m, ahead of consensus estimate. This was buoyed by higher Non-Interest Income, which rose 12% YoY and 13% QoQ to S$708m. Fee & Commission Income jumped 17% QoQ or 25% YoY to S$453m, supported by strong double-digit growth from loans (+63%), fund management (+19%) and Investment (+18%). As 1Q accounted for about 25% of our full year estimate, we made very slight adjustments to our FY13 earnings. Based on P/B of 1.5x, we raised our fair value estimate from S$21.30 to S$22.97. While we continue to like UOB for its good cost controls and strong quarterly performance, the stock has outperformed and appreciated some 11% YTD. It is now trading close to our fair value estimate. As such, we downgrade our rating to HOLD. (Carmen Lee)


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Genting Singapore: 2013 outlook more cautious
Genting Singapore (GS) reported 1Q13 revenue of S$669.6m, down 15% YoY and also 16% QoQ, hit by much weaker win percentage (2.12% versus 2.85% theoretical) in the premium players’ business; net profit posted a decline of 44% YoY and 13% QoQ to S$115.9m. All in, a pretty muted set of numbers, as top-line only met 20% of our original FY13 forecast while bottom-line met 18% of our full-year number. Going forward, management has turned slightly more cautious, citing the still uncertain global economic outlook, especially with the recent muted economic data coming out of China. We pare our FY13 revenue estimates by 10% and core earnings by 16%. As such, our DCF-based fair value also slips to S$1.41 from S$1.52 previously. Recent run-up in share price seems slightly over-done; hence we downgrade to SELLfrom Hold on valuation grounds. However, we would buyers closer to S$1.30 or lower. Longer-term catalyst could come from a potential IR license overseas in markets like Japan. (Carey Wong)

Lippo Malls Indonesia Retail Trust: 1Q13 results in line
LMIRT posted 1Q13 gross rental income of S$39.4m, up 29.3% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. The higher gross rental income was partially offset by the effect of FX rates used for translating into SGD revenues denominated in IDR. Results for the quarter were in line with our and consensus expectations; DPU of 0.89 S cent formed 25% of ours and 26% of the street's FY13 estimate. We maintain our fair value of S$0.52 and HOLD rating on LMIRT. We estimate a FY13F yield of 6.7%. (Sarah Ong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks rose Thurs, with the S&P 500 reaching a new record, after the ECB lowered its benchmark interest rate and US jobless claims fell to a five-year low.

- GuocoLand has plans for an integrated mixed-use development at the white site above Tanjong Pagar MRT station. Named Tanjong Pagar Centre, the 290m development will be Singapore’s tallest building.

- UOB-Kay Hian Holdings has entered into a sales and purchase agreement to dispose of a 93.47% owned subsidiary in Thailand for a total consideration of ~S$40m.

- Ezra’s subsea division has won a US$75m contract from Statoil.

- Innopac Holdings’ proposed takeover offer for ASX-listed Merlin Diamonds has received acceptances representing 42.52% of Merlin’s issued and paid-up share capital in a little over one month after the offer opened for acceptance.
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PostPosted: Mon May 06, 2013 8:55 am    Post subject: Reply with quote

Sembcorp Marine: Pick up a quality stock on the cheap

Summary: Sembcorp Marine (SMM) reported a 11.4% YoY rise in revenue to S$1.05b and a 5% increase in net profit to S$118.7m in 1Q13, both accounting for about 20% of our full year estimates and in line with our expectations. Operating margin increased from 10.8% in 4Q12 to 13.7% in 1Q13, and the significant uptick could be partly because revenue recognition of the Sete Brasil drillship in the last quarter was not very significant. Management reiterated that enquiries remain healthy across the various business segments. SMM’s share price has underperformed the STI by about 15% YTD although there has been no change in the company’s fundamentals. In our view, investors seeking to hold a quality company for the longer term would find value in SMM. Maintain BUY with S$5.64 fair value estimate. (Low Pei Han)
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Roxy-Pacific Holdings: Sales at new launches to be key

Summary: ROXY reported 1Q13 PATMI of S$11.7m – up 29% YoY mostly due to a stronger contribution from property development. This forms 15% of our FY13 forecast (S$78.0m) and is judged to be mostly within expectations, given that we expect a “lumpy” contribution later in FY13 from Wis@Changi (COC recognition). The 171-unit Jade Residences was launched in Apr and 44% of the units have been sold to date at ~S1.6k psf. All considered, we believe this is a decent launch performance. We also expect WhiteHaven at Pasir Panjang to launch for sales soon, with Sophia Mansions to follow. At this juncture, maintain HOLD as we await more clarity on execution and sales performance at these first set of launches after latest Jan-13 cooling measures. Our fair value estimate is unchanged at S$0.61. (Eli Lee)

Cosco Corp (S’pore): Downgrade to SELL - missed expectations

Summary: COSCO Corp (S’pore)’s 1Q13 revenue and net profit attributable to shareholders came in at S$733m (-25% YoY) and S$9.7m (-65% YoY) respectively. Turnover from shipyard operations, consisting of ship repair and shipbuilding, decreased by 26% YoY to S$719m in 1Q13 (1Q12: S$966m), while turnover for dry bulk shipping and other businesses increased by 8% YoY to S$13.8m (1Q12: S$12.8m). All in all, 1Q13 performance was disappointing with PATMI forming only about 9-10% of ours and consensus’ FY13F estimates. We now cut our FY13F-14F PATMI estimates by 50-60% and pare our fair value estimates to S$0.76 (previously S$0.90) on 1.3x P/B. We expect the street to do the same. Downgrade from Hold to SELL. (Chia Jiunyang)

Singapore Post: Expenses continue to rise

Summary: Singapore Post (SingPost) reported a 25.0% YoY rise in revenue to S$182.5m but saw a 14.6% drop in net profit to S$26.1m in 4Q13, bringing full year net profit to S$136.5m, accounting for about 94% of our full year estimate. Excluding one-off items such as a S$5.7m write-off of intangible assets, underlying net profit was S$141.0m, which was 2.5% shy of our forecast. Volume-related and admin expenses continued to rise in the last quarter, such that total operating expenses rose 17.2% QoQ. EBITDA margin fell from 31.0% in 4QFY12 and 33.4% in 3QFY13 to 25.8% in 4QFY13 as a result. In line with its usual practice, the group has proposed a final dividend of 2.5 S cents/share, bringing the full year payout to 6.25 S cents. Pending an analyst briefing later, we maintain our HOLD rating but put our fair value estimate of S$1.23 under review. (Low Pei Han)

Vard Holdings: Secures NOK400m contract

Summary: Vard Holdings, previously known as STX OSV, secured a contract with Island Offshore for the construction of one advanced offshore support vessel worth approximately NOK400m (US$70m). Delivery is scheduled from Vard Brevik in Norway in 3Q2014. Meanwhile, the group is also expected to report its 1Q results on 14 May 2013. We currently have a BUY rating with S$1.52 fair value estimate. (Chia Jiunyang)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- US stocks on Friday rose to record heights, with the Dow industrials soaring above 15,000 and the S&P 500 index above 1,600, as Wall Street celebrated the Apr jobs report.

- Malaysia's ruling Barisan Nasional had won a majority of 124 seats in the country’s 13th general election, allowing it to extend its 56-year rule.

- Singapore is gaining eminence as a gold storage hub, even as a plunge in the gold price further stokes Asian investors' appetites for more physical gold.

- Capital outflows from Japan since the Bank of Japan announced its dramatic monetary easing measures a month ago appear to have been directed so far mainly toward advanced economies, BOJ governor Haruhiko Kuroda said.

- Indonesian instant-noodle manufacturer Consciencefood Holding Limited's 1Q13 net profit dropped 34.6% YoY to IDR19.7b (S$2.5m).
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PostPosted: Tue May 07, 2013 8:58 am    Post subject: Reply with quote

Ascott Residence Trust: Acquisition of assets in China and Japan
Ascott Residence Trust (ART) has entered into conditional agreements to acquire three prime serviced residences in China and a portfolio of 11 rental housing properties in Japan for S$287.4m at an EBITDA yield of 5.4% on a pro forma basis for FY12. On a pro forma basis, these accretive acquisitions are expected to have increased FY12 distribution per unit by 2.9% from 8.76 S cents to 9.01 S cents. However, with the Japanese Yen currently ~22% weaker in SGD-terms versus the FY12 average, any accretion post-acquisition is likely to be lower. The acquisitions will be funded partly by the S$150m recently raised from an equity placement and the balance will be funded by debt. We maintain our FV of S$1.35 and HOLD rating on ART. (Sarah Ong)

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Swiber Holdings: Still bidding for projects
According to Upstream, Punj Lloyd is poised to win a US$131.45m contract from India’s state-owned ONGC to lay subsea pipelines and execute topside modification work for the B-127 field development in India. We understand that Swiber was the highest bidder for the project with a 13.3% difference from Punj Lloyd’s price quote. Meanwhile, Swiber is still bidding for other work; management has been upbeat regarding its potential pipeline. Despite the positive industry outlook, we would continue to monitor operating margins and cash flows of the group. Meanwhile, the stock price has fallen by about 1.6% YTD vs the STI’s 6.9% rise. Though there is currently a more than 10% upside for the stock, we prefer to maintain our HOLD rating and fair value estimate of S$0.70 on Swiber, pending its 1Q13 results announcement next week. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- MTQ Corporation's 4QFY13 net profit soared 94% YoY to S$7.75m.

- CH Offshore, which charters vessels to support the offshore oil and gas industry, yesterday posted a 57% YoY fall in net profit to US$4.76m for its fiscal 3Q ended March 31.

- Viking Offshore & Marine's 1Q13 net profit from continuing operations fell 77% YoY to $237,000 as "other income" dropped 64% to $698,000 due to absence of a one-time divestment gain from last year.

- Asiamedic has agreed to buy 80% of Complete Healthcare International Pte Ltd for a maximum consideration of $2m in cash.

- Abalone producer Oceanus Group’s 1Q13 loss widened to CNY45.2m (S$9.0m) from CNY39.1m a year ago.

- Industrial property developer OKH Holdings begins life as a listed entity today under the name OKH Global, following a S$123.2m reverse takeover of China-based IT solution provider Sinobest Technology.
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PostPosted: Wed May 08, 2013 9:28 am    Post subject: Reply with quote

OSIM International: 1Q13 results within expectations
OSIM International (OSIM) reported a 13.2% YoY jump in its 1Q13 PATMI to S$25.1m despite a mild 0.4% increase in revenue to S$150.6m. This formed 25.9% and 22.7% of our FY13 forecasts, respectively. Results were within our expectations as we foresee further contribution from its recently launched uAngel Sofa-Tranzformer and upcoming new high-end massage chair launch (around Jul period). We expect OSIM to continue its strategic drive of launching new innovative products with different price points to cater to a broader group of target consumers. OSIM also declared an interim dividend of 1 S cent/share in 1Q13, similar to 1Q12. We make some minor adjustments after incorporating this latest set of results in our model. Our fair value estimate is raised marginally from S$2.19 to S$2.21, still pegged to 16.4x FY13F EPS. Maintain BUY. (Wong Teck Ching Andy)

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ST Engineering: All-time high order book of S$13.0b
Singapore Technologies Engineering (STE) reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013. We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLDrating on STE and estimate a FY13F dividend yield of 4.1%. (Sarah Ong)

Wilmar: Decent start to FY13
Wilmar International Limited (WIL) posted revenue of US$10.2b, down 2.6% YoY and 12.2% QoQ, meeting 20.5% of our FY13 forecast; this mainly due to significantly lower selling prices for palm and sugar products. Nevertheless, reported net profit rose 23.3% YoY (but fell 33.9% QoQ) to US$315.4m; excluding non-operating items, core net profit jumped 52.6% to US$313.7m, although down 21.8% QoQ, it still met 23.6% of our full-year forecast. According to management, the improvement came largely from a sharp recovery in its Oilseeds & Grains business; Consumer Products also benefited from volume growth. Going forward, management remains confident that WIL will overcome the difficult environment expected for the rest of 2013. While WIL notes that the bird flu in China will affect meal consumption in the short term, it does not expect to have long-term effect. We will be speaking with management later for more insights; but as results were largely in line, we keep our BUY rating and S$3.90 fair value (still based on 15x FY13F EPS). (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- HI-P International Ltd's 1Q13 net profit jump 4x to S$6.9m versus the S$1.5m it earned a year ago, aided by better product mix and improved productivity.

- FJ Benjamin Holdings posted a net profit of S$417,000 for 3QFY13, down from S$3.48m a year ago, on the back of softer spending in South-east Asia and weaker demand in North Asia.

- Oxley Holdings has set up a S$300m multicurrency medium-term note (MTN) programme to possibly raise capital for general purposes, the property developer announced yesterday.

- Eu Yan Sang International posted a 54% YoY increase in net profit to S$8.4m for 3QFY13.

- Food Junction reported a loss of S$540,000 for 1Q13 versus a net profit of S$64,000 a year ago, mainly due to higher total operating expenses.

- The manager of Cambridge Industrial Trust (CIT) said yesterday that claims in a lawsuit brought upon it and CIT's trustee by two tenants of a CIT-owned industrial property are "unmeritorious", and that it will defend itself "vigorously".
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PostPosted: Thu May 09, 2013 8:59 am    Post subject: Reply with quote

Wilmar: Decent 1Q13 showing – maintain BUY

Summary: Wilmar International Limited (WIL) posted a pretty decent start to the year, with revenue of US$10.2b and core earnings of US$313.7m meeting 20.5% and 23.6% of our full-year forecast, respectively. Going forward, management remains confident that WIL will be able to overcome the difficult environment expected for the rest of 2013. While lower palm oil prices will continue to weigh on its Plantation business, cheaper feedstock would boost its downstream businesses, especially Consumer Products. WIL notes that the bird flu in China will affect meal consumption in the short term but it does not expect to have a long-term effect. As such, WIL remains optimistic about China’s long-term prospects. Maintain BUY with S$3.90 fair value (based on 15x FY13F EPS). Over the longer term, we are also cautiously positive on the company’s expansion in Africa and potentially Myanmar. (Carey Wong)

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ASL Marine: Still positive on its outlook

Summary: ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Gross margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins and the inclusion of the Vosta LMG business. Looking ahead, the group expects the outlook of the offshore and marine industry for this year to be “good”, although competition seems to be increasing. We like ASL for its prudent management, healthy order books, diversified business model and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings. (Low Pei Han)


Far East Hospitality Trust: 1Q13 in line


Summary: Far East Hospitality Trust (FEHT) reported 1Q13 results that were in line with ours and the street’s expectations. Compared to forecast numbers in its prospectus, 1Q13 gross revenue at S$28.1m was 4.2% lower. DPU of 1.38 S cents is 3.0% higher than the 1.34 S cents forecasted, chiefly due to lower finance costs and other trust expenses. 1Q13 hotel RevPAR at S$161 was comparable to 1Q12 (S$162), and reasonably good given the soft 1Q13 for the industry, which saw RevPAR fall 3%.
Adjusting our FY13F revenue assumptions downwards slightly, our RNAV-based fair value falls from S$1.05 to S$1.01 and we maintain a HOLD rating on FEHT. We estimate a FY13 yield of 5.4%. (Sarah Ong)


BreadTalk Group: Still pricey for now

Summary: BreadTalk’s 1Q results came in within our expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively. Although BreadTalk’s move to its new headquarters next month will bring about improvements to its production efficiency and operating expenses, we do not expect cost savings to materialize in the immediate quarters due to the incurrence of transitional expenses. As such, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive in our view. Coupled with an unattractive dividend yield of 1.0%, we maintain our SELL rating with an unchanged fair value of S$0.77. We will look to re-evaluate the counter once speculative interest arising from the MINT acquisition wanes. (Lim Siyi)


Ezion Holdings: 1Q13 results in line

Summary: Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items such as US$17.8m worth of disposal gains, recurring net profit is estimated to be about US$28.4m, accounting for 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. Gross profit margin remained healthy at 44.9% vs 44.4% in 1Q12. Pending an analysts’ briefing later in the morning, we maintain our BUYrating but place our fair value estimate of S$2.35 under review. (Low Pei Han)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- Sembcorp Industries recorded 1Q13 net profit of S$176.9m, little changed from a year earlier.

- WBL Corporation reported a loss of S$11.4m for 2Q13, compared to net profit of S$20m for the corresponding period a year ago.

- ARA Asset Management's 1Q13 net profit fell 16% YoY to S$16.8m, mainly due to lower acquisition, divestment, and performance fees.

- Pacific Andes Resources Development has reported a 3% drop in 2QFY13 net profit to HK$322.2m (S$51m).

- Sing Holdings Ltd's 1Q13 net profit more than doubled to S$15.8m on higher revenue recognition from its freehold development project – The Laurels, at Cairnhill Road.

- Tiong Woon Corporation returned to the black with a net profit of S$3.92m for 3QFY13, compared with a net loss of $373,000 a year earlier.

- Investors have overwhelmingly backed the listing of Croesus Retail Trust, with the total placement tranche and public offer 22.4x subscribed.

- Oxley Holdings' S$150m bond issue has been oversubscribed some 17x by investors.
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PostPosted: Fri May 10, 2013 9:03 am    Post subject: Reply with quote

StarHub Ltd: Downgrade to SELL – pricey now
StarHub Ltd posted 1Q13 revenue of S$580.1m, down 2% YoY and 11% QoQ, but still met 23% of our full-year forecast. Net profit grew 3% YoY and 4% QoQ to S$91.2m, meeting 25% of our FY13 forecast. And as guided, StarHub declared a quarterly dividend of S$0.05/share, payable on 30 May 2013. For 2013, StarHub now expects to see low single-digit revenue growth, versus single-digit growth guidance previously. Management says it is being more cautious in view of the 2% drop in revenue in 1Q13. Otherwise, it has kept everything else unchanged. Stock price has outperformed not only its peers but also the STI. While part of the run-up could be driven by investors searching for yield, current valuation looks pricey; yield has also fallen to 4.2%. A more “risk on” approach could also see investors switching out of defensive stocks. As such, we downgrade our call from Hold to SELL, with an unchanged DCF-based fair value of S$4.00. (Carey Wong)


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Fortune REIT: 1Q13 exceeds expectations
Fortune REIT reported excellent results for 1Q13. Revenue and net property income climbed 16.3% YoY and 17.6% YoY to HK$301.4m and HK$217.9M respectively. Occupancy rose to 98.6%, the highest level in over two years, with good portfolio-wide operational statistics and a fast recovery after AEI. Average passing rents grew by 10.0% YoY to a new high of HK$32.9 sq ft. Due to a strong leasing market, rental reversions were at 19.5%, higher than the mid-teen percentages that management had guided. While 2Q/3Q may see anchor tenants renewing leases with lower percentages, we think that revenue and net property income are likely to grow on a QoQ basis. DPU of 9.0 HK cents formed 27% of our initial FY13 estimate and 26% of the street’s FY13 consensus estimate. Raising revenue assumptions and lowering interest cost assumptions, we lift our fair value to HK$8.64 from HK$7.28 and we maintain a BUY rating on FRT. It is trading at a still-attractive P/B of 0.9x. (Sarah Ong)

Hyflux: Slow start to 2013 as expected
Hyflux Ltd reported its 1Q13 results last night, with revenue slipping 8% YoY and 38% QoQ to S$124.5m, or around 17% of our full-year forecast; net profit rose 5% YoY (though down 62% QoQ) to S$8.0m, or 10.2% of our FY13 estimate. However, we are not perturbed by the seemingly slow start as 1Q is traditionally their weakest quarter. Going forward, Hyflux remains fairly optimistic about its prospects; and will actively pursue opportunities in Asia and MENA. As results are in line, we opt to keep our estimates unchanged. Maintain HOLD with an unchanged S$1.44 fair value. (Carey Wong)

Marco Polo Marine: Drop in shipbuilding activity
Marco Polo Marine (MPM) reported a 31% YoY fall in revenue to S$21.3m but a 121% rise in net profit to S$9.3m in 2QFY13, such that 1HFY13 net profit accounted for 58% of our full year estimate. Excluding an exceptional gain of S$5.7m, core net profit was about S$3.7m, slightly below our expectations. The lower revenue was mainly due to lower contributions from the shipbuilding and repair segment with fewer third-part new-built contracts. Gross margin was 42% in 2QFY13, compared to 27% in 2QFY12 and 39% in 1QFY13. Pending an analysts’ briefing later, we put our Buy rating and fair value estimate of S$0.56 under review. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES


- UOB-Kay Hian posted a 37.8% YoY jump in 1Q net profit to S$31.9m as improved market sentiment and "penny fever" fuelled exceptional stock market activity.

- Parkson Retail Asia's 3Q13 net profit inched up 1.3% YoY to S$9.78m, helped by higher sales.

- Ryobi Kiso Holdings Ltd made a S$271,000 loss in 3Q13, compared with a net profit of S$695,000 a year ago, due to a drop in revenue and higher administrative expenses.

- Cordlife Group Limited, in partnership with Thomson Medical Pte Ltd, announced the launch of the first umbilical cord-tissue banking service yesterday.

- An indirect subsidiary of Falcon Energy Group, Longzhu Oilfield Services, has exercised options to acquire four properties at International Plaza for S$16.6m.
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PostPosted: Mon May 13, 2013 8:50 am    Post subject: Reply with quote

ECS Holdings: Double-digit growth delivered

Summary: ECS Holdings (ECS) reported a positive set of 1Q13 results which exceeded our expectations. Estimated core PATMI jumped 28.6% YoY to S$8.5m on the back of a 20.9% YoY increase in revenue to S$1,090.3m. The group managed to record healthy YoY revenue and EBIT growth for all of its core segments. However, its gross margin slipped 0.4ppt to 3.7% in 1Q13 due largely to a change in product mix. We lift our FY13 and FY14 revenue projections by 8.9% and 10.6%, respectively. But as we also lower our margin assumptions slightly, our FY13 and FY14 core PATMI estimates are raised by a smaller magnitude of 4.2% each. Correspondingly, our fair value estimate increases from S$0.53 to S$0.57, now pegged to 6x FY13F EPS (previously 5.8x). As ECS is trading at an attractive 5.0x and 0.52x FY13F PER and P/NTA, respectively, we upgrade the stock from Hold to BUY. (Wong Teck Ching Andy)

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UOL Group: Proposed delisting of Pan Pacific Hotels

Summary: UOL’s 1Q13 PATMI decreased 15% YoY to S$71.7m mostly due to a weak contribution from its hotel segment. 1Q earnings now make up 19% of our full-year forecast, which we judge to be generally within expectations and is tracking marginally below due to lumpy progress recognition at development projects. In addition, the group has made a cash offer of S$2.55 per share (9% premium over last transacted price) to delist PPHG (Pan Pacific Hotels Group), conditional on the shareholder approval. We see this as a sensible move which would consolidate the group’s hotel assets at a fairly reasonable price. That said, from our discussions with management, it appears unlikely that material operating changes, i.e., a major re-structuring or REIT listing, are in store for PPHG assets. Maintain HOLD with a higher fair value estimate of S$7.16 (20% RNAV disc.), versus S$6.01 previously, as we work into our valuation model higher prices of listed holdings and the Sengkang acquisition. (Eli Lee)

Midas Holdings: Expects net loss in 1Q13

Summary: Midas Holdings (Midas) has issued a negative profit guidance prior to its upcoming 1Q13 results release, saying that it expects to report an unaudited net loss. This is mainly due to lower revenue and gross profit margin given the change in product mix and weaker utilisation rates, as well as higher operating expenses and finance costs and a share of loss from its associated company, Nanjing SR Puzhen Rail Transport (NPRT). This profit guidance comes as no surprise to us as we had forecasted Midas to record a net loss of CNY3.2m in 1Q13. We still expect Midas to stage a recovery in 2H13, but the strength of this recovery will be dependent on the developments in China’s high-speed railway sector. Midas will report its 1Q13 results on 14 May after trading hours, while an analyst conference call has been scheduled the day after. We will provide more updates then. For now, we have a BUY rating and S$0.595 fair value estimate on the stock. (Wong Teck Ching Andy)

Biosensors International Group: Proposed acquisition of assets from Spectrum Dynamics

Summary: Biosensors International Group (BIG) announced this morning that it has entered into an agreement to acquire substantially all the assets of Spectrum Dynamics (SD), which is a privately held company. SD is a medical imaging and clinical applications company involved in the designing, developing, manufacturing and distribution of medical imaging systems and technology in multiple fields. The initial deal consideration is US$51.1m (book value of SD’s assets valued at ~US$7.3m as at 31 Mar 2013), and will be funded by internal resources. Subsequent performance payments of US$4m and US$15m may be paid to SD if certain performance benchmarks are met in 2014 and 2016, respectively. We are positive on this move as it allows BIG to diversify its product offerings and revenue stream. But as the acquisition is not expected to have a material impact on the EPS and NTA of BIG in FY14, we leave our forecasts unchanged for now. Maintain BUY and S$1.60 fair value estimate on BIG. (Wong Teck Ching Andy)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- Two shareholders in See Hup Seng have called for an EGM to remove the managing director from the board and return the founder and ex-chairman of the company to the boardroom.

- The combined profits of companies listed on the SGX trended lower in 1Q13. As of Friday, the 206 companies with 1Q earnings reported a combined profit of about S$6.48b, down 8.4% YoY.

- China's new local-currency loans exceeded estimates last month while money supply expanded at a faster pace, a sign policy makers are maintaining credit support for the economy after 1Q growth unexpectedly slowed.

- Italian Prime Minister Enrico Letta warned that the future of the government was at risk following a furious row over Silvio Berlusconi's attacks on magistrates in a rally at the weekend.

- A dual-track system, including survey-based lending rates along with transaction-linked indices, is likely to replace scandal-hit LIBOR as soon as next year, the Financial Times reported.
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PostPosted: Tue May 14, 2013 8:57 am    Post subject: Reply with quote

Golden Agri-Resources: Upgrade to BUY on valuation ground
Golden Agri-Resources (GAR) posted 1Q13 revenue of US$1430.1m, weighed down by lower CPO prices; but still managed to meet 22% of our full-year forecast. We estimate that core earnings came in at around US$113m, down 30% YoY but up 176% QoQ, and also met 23% of our FY13 forecast. Management noted that the better showing came from lower operating expenses, improved performance at its China operations and the sell-down of inventory, which came as a big relief. While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Coupled with the recent fall in share price, GAR now looks relatively attractive with a 19% upside to our unchanged S$0.63 fair value (based on 12.5x FY13F EPS). Hence from a valuation standpoint, we upgrade our call from Hold to BUY. (Carey Wong)

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City Developments Limited: Still executing well
1Q13 PATMI came in at S$137.7m, down 12% YoY mostly due to the absence of a disposal gain from the Tagore Avenue warehouse sale in 1Q12, partially offset by gains from strata units sales in non-core industrial assets. First quarter PATMI now makes up 26% of our full year forecast, which we judge to be in line with expectations. In 1Q13, the group launched two projects, the 912-unit D’Nest and 868-unit Bartley Ridge, of which 87% and 62% of total units have been sold – a reasonably firm set of performances. The group’s hotel subsidiary, M&C, reported a soft set of first quarter numbers, with 1Q13 PATMI down 29% YoY due to a room refurbishment program that removed over 100k room nights and more difficult sector conditions. Maintain HOLD on CDL with an unchanged fair value estimate of S$12.04 (15% RNAV disc.). (Eli Lee)

Goodpack Limited: Catalyst delayed
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD. (Lim Siyi)

Nam Cheong: 1Q net profit up 8% to RM35.8m
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged. (Chia Jiun-Yang)

Viz Branz Limited: Best operating margins since FY10
Viz Branz’s 3Q13 results was in-line with expectations with a decline in revenue offset by continued margin improvements due to the favourable raw material cost environment. While we lowered our FY13 projections to account for the seasonally weaker 4Q13, we expect margin improvements to persist and VB should remain on track to record a better FY13 performance in terms of PATMI growth. In addition, its growth prospects in its key China market remain decent. We leave our fair value estimate unchanged at S$0.74 and keep our BUY rating on the counter. In terms of the likelihood of a GO, we remain steadfast in our assertion that it will materialize, albeit at a later date and with a potentially different acquirer. (Lim Siyi)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- Wing Tai's net profit more than doubled to S$94.6m for 3Q13, from S$42.3m a year earlier.

- Super Group posted 1Q13 net profit of S$22.1m, up 25% YoY, helped by improved sales of food ingredients, cost management and a fx gain.

- China Minzhong's 3QFY13 net profit rose 5.9% YoY to RMB255m (S$51m) on improved sales in its processed and cultivation business segments.

- SBS Transit’s 1Q13 net profit tumbled 41.6% to S$2.8m, weighed by losses in its bus division.

- Yanlord Land Group's 1Q net profit halved from a year ago to CNY67.3m (S$13.4m), mainly due to FX translation losses.
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PostPosted: Wed May 15, 2013 9:11 am    Post subject: Reply with quote

Neptune Orient Lines – Looking at the positives

Summary: Neptune Orient Lines's (NOL) 1Q13 results disappointed with a larger-than-expected core operating loss. Nonetheless, the figures marked a vast improvement over the same period a year ago. Revenue stayed relatively flat at US$2.37b (-0.3% YoY) and core operating losses narrowed to -US$85.2m from -US$233m a year ago following the success of the cost cutting initiatives implemented last year. Entering 2Q13, NOL could experience further downward pressure on freight rates although we remain hopeful that a combination of positive macro-data, collective industry action and lower bunker fuel costs will push NOL towards a more positive showing by 3Q13. We maintain our view for a modest recovery in FY13 for the liner and keep our BUYrating with an unchanged fair value estimate of S$1.38. (Lim Siyi)

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SingTel: FY13 results just about in line
Summary: SingTel posted its 4QFY13 results this morning, with revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. Reported net profit for 4Q came in at S$868.2m, down 33% YoY but up 5% QoQ; core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, and was about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). For FY14, SingTel expects to consolidated revenue to remain stable, while EBITDA should continue to see low single-digit growth. It also expects to spend some S$2.5b in capex, with free cashflow coming in at around S$2b. Last but not least, it has revised up its dividend payout ratio from 55-70% to 60-75%. We will have more after the analyst teleconference later. Meanwhile, we place our Buy rating and S$3.68 fair value under review. (Carey Wong)

Olam Int’l: Decent 3QFY13 results

Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but down 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. We will have more after the analyst briefing later. Until then, our Hold rating and S$1.50 fair value is under review. (Carey Wong)

Noble Group Ltd: Weak FY13 start but recovery expected

Summary: Noble Group (Noble) reported a 1.1% YoY QoQ decline in revenue to US$22.6b, meeting 22.5% of our full-year forecast, but reported net profit tumbled 62.5% to US$41.3m, or about only 10.2% of our original FY13 forecast, weighed by losses at its Agriculture segment. Its Metals, Minerals and Ores (MMO) also did not fare too well. The only bright spark came from its Energy segment, with operating income up 6% at US$368.0m, although tonnage (Excluding gas and power volume) was flat. Noble intends to continue with its asset light strategy and also intends to focus on improving its efficiency and lowering cost amid a still-challenging environment. Still, we are cutting our FY13F earnings by 10% (FY14F by 13%), which in turn eases our fair value from S$1.19 to S$1.09. Maintain HOLD. (Carey Wong)

ComfortDelGro - Decent start to the year

Summary: ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff and repairs and maintenance expenses were offset by a reduction in fuel and electricity expenditure. As a result, PATMI rose 7.9% to S$57.7m. In the coming quarters, we expect a fare increase to be implemented by the government in FY13, and the group should to continue benefiting from lower fuel costs due to the favourable fuel outlook and proactive hedges in place, which should offset sustained weakness in the SG bus business. While we continue to prefer ComfortDelgro over SMRT, we maintain our HOLD rating with an unchanged fair value estimate of S$1.95 in light of its recent ~8% appreciation. (Lim Siyi)

Midas Holdings: 1Q13 net loss wider than expected

Summary: In line with its profit guidance issued on 10 May, Midas Holdings reported a net loss attributable to shareholders of CNY4.9m in 1Q13, versus PATMI of CNY15.3m in 1Q12. Revenue fell 12.1% YoY to CNY202.4m. While we had expected Midas to report a loss-making quarter, the magnitude was larger than our forecast for a net loss of CNY3.2m. However, revenue was within our CNY199.8m estimate. The below-expectations bottomline performance was due partially to weaker-than-estimated gross margin and largely attributed to a wider share of loss of CNY4.0m from its associated company, Nanjing SR Puzhen Rail Transport (OIR forecast: share of loss of CNY0.8m). On an operational basis, Midas was actually profitable, although profit from operations dipped 50.4% YoY to CNY18.9m. We will provide more updates after the analyst conference call. For now we have a BUY rating on Midas. However, our forecasts, 1.2x P/B target peg and S$0.595 fair value estimate are likely to be lowered given the ongoing uncertainty over the timeline of resumption of new high-speed train car orders. (Wong Teck Ching Andy)

SATS Ltd – FY13 results in-line

Summary: SATS’s FY13 results were in line with our expectations, coming in within 2% of our projections. Revenue grew 7.9% YoY to S$1,819m on the back of increases from the gateway and food businesses while operating profit increased correspondingly by 13.8% YoY to S$192.3m. Despite cost pressures related to higher staff expenses and raw material costs, SATS was able to register an improvement of 0.6ppt in operating margin to 10.6% from a year ago. FY13 PATMI was S$184.8m (+2.1% YoY). Management declared a final and special cash dividend of 6 S cents and 4 S cents, respectively, to bring the total dividends declared in FY13 to 15 S cents (FY12 total: 26 S cents), representing a payout ratio of 90.3% of PATMI. As SATS’s share price has continued to appreciate in the previous weeks, we feel that many of the positives have already been priced in. Nonetheless, pending the analyst briefing later this morning, we place our HOLD rating and fair value under review. (Lim Siyi)

SIA Engineering: FY13 within expectations

Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased by 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased by 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Pending a briefing with management, we are maintaining our HOLD rating but place our fair value estimate of S$4.38 under review. (Sarah Ong)

Swiber Holdings: Good 1Q13 results

Summary: Swiber Holdings (Swiber) reported a 59.3% YoY rise in revenue to US$309.7m and a significant rise in net profit from US$8.6m in 1Q12 to US$20.1m in 1Q13. Both revenue and pre-tax profit formed 27% of our full-year estimates, in line with our expectations, but the lower-than-expected tax rate meant that net profit accounted for 38% of our full-year forecast. Gross profit margin was lower at 16.1% in 1Q13 vs 19.8% in 1Q12. Swiber’s order book stands at about US$1.1b as at May. Net gearing increased slightly from 0.95x in 4Q12 to 1.0x in 1Q13. Pending an analysts’ briefing later in the afternoon, we put our hold rating and fair value estimate of S$0.70 under review. (Low Pei Han)

CSE Global: 1Q13 net profit within expectations

Summary: CSE Global’s 1Q13 net profit was flat at S$12.7m, forming about 24% of our full-year estimates and 23% of the street’s. Revenue declined 11% to S$120m due to lower contribution from the Americas and the EMEA region. However, net margin improved to 10.5% (1Q12: 9.4%) as it undertook higher margin work in the Americas and the loss-making projects are nearing completion. CSE’s order-book declined to S$361.1m as at end-1Q13 (end-4Q12: 384.5m). Pending an analyst briefing later, we keep our BUYrating (FV: S$0.99) unchanged. (Chia Jiunyang)

CWT Ltd: Commodity SCM expansion underway

Summary: CWT’s 1Q13 revenue increased by 39% YoY to S$1.5b, largely due to growth from its newly established Commodity SCM business. However, net profit was flat at S$27m as the start-up costs offset any incremental earnings for the new business segment. Nonetheless, the results were within our expectations. CWT’s balance sheet also appeared to be stable with net gearing of 0.48x as at end-Mar 2013. We currently have a BUYrating on CWT with a FV estimate of S$2.08, and will provide further updates after our call with management. (Chia Jiunyang)

Dyna-Mac Holdings: Stay cautious

Summary: Dyna-Mac Holdings reported revenue of S$60m (+155% YoY) and net profit of S$6.7m (+101% YoY) for 1Q13. However, gross profit margin declined to 24.4% from 28.8% in the year-ago period due to fewer variation orders during the quarter. Its order-book fell to S$113m (as at 14 May 2013) from S$134m (as at 27 Feb 2013), providing cover for only two quarters. This makes it vulnerable to any delays in the award of new contracts. We keep our HOLD rating for now and will review our S$0.50 fair value after our discussions with management. (Chia Jiunyang)

UE E&C: Construction pace expected to pick up

Summary: UE E&C reported a 43% YoY increase in revenue to S$87.6m and a 14% YoY increase in net profit of S$4.8m in 1Q13. The improvements were mainly due to larger contribution from existing projects. However, 1Q gross profit margin fell to 10.8% from 15.4% in the year-ago quarter as some of the projects were still in preparatory stages. We expect the construction pace to pick up in 2H13. Pending our discussions with management, we keep our BUY rating and S$0.82 fair value unchanged. (Chia Jiunyang)

VARD Holdings: Earnings recovery in FY14

Summary: VARD Holdings’ 1Q revenue and net profit declined by 2% and 30% YoY to NOK2.7b and NOK188m respectively, largely due to (i) the completion of several high-margin jobs last year, and (ii) operational challenges in the Niteroi yard in Brazil. Although 1Q results were slightly lower than ours and consensus estimates, we now see positive developments that we believe would herald an earnings recovery in FY14F. Firstly, management is now more positive on Brazil and expects operations to stabilize by year-end. Secondly, order-book is at a very healthy level and management is optimistic on securing new contracts. Thirdly, management is now able to commit to longer-term investment with Fincantieri coming onboard as a controlling shareholder. Maintain BUY with unchanged S$1.52 fair value estimate. (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- Hotel Grand Central’s 1QFY13 net profit declined 17% YoY due to a slowdown in its Australian businesses.

- Jaya Holdings’ 3QFY13 net profit rose 7% YoY from US$3.8m to US$4.0m, helped by higher day rates commanded for offshore support services.

- Mewah posted a decline in PATMI by 53.6% YoY despite sales volume increasing 9.2% YoY and 18.1% QoQ.

- Sim Lian recorded a 45% YoY improvement in net profit for 3QFY13 on the back of a 37% increase in revenue.
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PostPosted: Thu May 16, 2013 9:24 am    Post subject: Reply with quote

SingTel: Upside fairly limited; downgrade to HOLD
Summary: SingTel saw its 4QFY13 revenue slipping 6% YoY and 3% QoQ to S$4.48b, weighed down by the weaker A$. Full-year revenue fell 3% to S$18.18b, and was 3% shy of our forecast. 4Q core earnings slipped 2% YoY and rose 15% QoQ to S$1.0b. Core FY13 earnings eased 1.8% to S$3.61b, or about 4% below our forecast. SingTel has declared a final dividend of S$0.10/share, bringing the full-year payout to S$0.168 (74% of underlying net profit). Going forward, SingTel expects group consolidated revenue to remain stable, and EBITDA to see low single-digit growth. It has guided for S$2.5b capex spending and a FCF of S$2b; it also raised its dividend payout ratio to 60-75% (from 55-70% previously). While we raise our SOTP fair value from S$3.68 to S$3.83 (after updating the value of its listed associates), further upside from here looks limited after the recent sharp run-up. Hence we downgrade our call from Buy to HOLD. (Carey Wong)

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Petra Foods – 1Q13 results below expectations

Summary: Petra Foods’ 1Q13 results fell short of expectations as growth slowed relative to the previous quarters. Revenue grew 7.7% YoY to US$127.4m while margin improvement boosted gross and operating profit. Excluding losses from its to-be-divested Cocoa Ingredients business, which resulted in an overall net loss for Petra, core PATMI came in at US$14.1m (+20.0% YoY but -4.3% QoQ). Based on the results, we reduce our FY13 projections to reflect more achievable revenue growth targets and to account for a net loss in 2Q13 from sustained losses in the Cocoa Ingredients business. In terms of valuations, Petra is currently trading at more than 36x FY13F / 32x FY14F PE. In our view, this premium is too expensive at this juncture, and we expect some profit-taking on the likelihood of overall losses for 1H13. Maintain HOLD with an unchanged fair value of S$3.88. (Lim Siyi)

Olam Int’l: HOLD – recalibration still needs time

Summary: Olam International Limited (Olam) saw 3QFY13 revenue climb 12% YoY (but decline 4% QoQ) to S$4.72b, such that its 9MFY13 revenue of S$14.31b (+20%) met 72% of our FY13 forecast. Reported net profit gained 10% YoY (but fell 30% QoQ) to S$108.5m, while core earnings (excluding bio-asset revaluation gains etc) rose 13% YoY (down 22% QoQ) to S$92.8m. Core 9MFY13 earnings of S$240.3m met about 79% of full-year forecast. Meanwhile, net gearing remains high at 2.2x as at end-Mar, unchanged from end-Dec; this after it further increased borrowings to S$9.3b from S$8.8b. But Olam intends to reduce its gearing boundary condition from <2.5x to <2.0x. Still, we could continue to see some overhang from its high net gearing. We also opt to keep our FY13 estimates unchanged. But our fair value improves from S$1.50 to S$1.73 as we push our valuations out from blended FY13/14F EPS to FY14F EPS. Maintain HOLD. (Carey Wong)

Midas Holdings: Adverse near-term conditions

Summary: Midas Holdings’ 1Q13 net loss attributable to shareholders of CNY4.9m (1Q12: PATMI of CNY15.3m) was larger than our forecast for a net loss of CNY3.2m. This was attributed largely to a wider-than-estimated share of loss of CNY4.0m from its associated company, NPRT. Looking ahead, we believe that strength of Midas’ recovery will depend heavily on the resumption of new high-speed railway (HSR) tenders. As the timeline of this is still uncertain, we believe that a more significant recovery in Midas’ financial performance would likely come in FY14, versus our previous FY13 expectations. Paring our FY13 revenue and PATMI estimates by 9.7% and 59.1%, respectively, and lowering our valuation peg from 1.2x to 1.1x FY13F P/B, we derive a fair value estimate of S$0.54 (previously S$0.595). But we maintain our BUY rating as we expect the eventual HSR tenders resumption and subsequent contract wins by Midas to provide a re-rating catalyst for the stock. (Wong Teck Ching Andy)

SIA Engineering: FY13 within expectations

Summary: SIA Engineering Company's (SIAEC) FY13 results were in line with ours and the street's expectations. Revenue decreased 2.0% to S$1.15b, chiefly due to lower fleet management and project revenue. Operating profit fell 1.2% to S$128m. Share of profits from associated and JV companies increased 1.5% to S$159m, representing a contribution of 52.0% of the group's pre-tax profits. PATMI was up 0.4% to S$270m. Basic EPS of 24.51 S cents formed 98% of ours and the street's FY13 estimates. The board is recommending a final ordinary dividend of 15.0 S cents, which will bring total FY13 dividends to 22.0 S cents per share. Increasing our P/E peg from 17.1x to 20.0x and using an EPS forecast of 25.0 S cents for FY14F, we increase our fair value from S$4.38 to S$5.00 and maintain our HOLD rating on SIAEC.
(Sarah Ong)

CSE Global: Focus on margin stability

Summary: CSE Global reported 1Q13 results that were in-line with ours and the street’s estimates. 1Q revenue fell 10.9% YoY to S$120m on lower contribution from the Americas and EMEA (Europe, Middle East & Africa), while PATMI was flat at S$12.7m. After encountering issues in the Middle East in 2011 (cost overrun at two large telco projects) and the Americas in 2012 (lower-than-expected margins for onshore work), CSE Global now appears to be more keen on the higher margin brownfield projects, while carefully re-evaluating the lower-margin greenfield jobs. We now expect a slight contraction or modest growth in the top-line across FY13-14F and gross margins to stabilize around 30%. We have tweaked our model slightly and our FV declines to S$0.96 (previously S$0.99) on 10x FY13F PER. Maintain BUY. (Chia Jiunyang)

Ezion Holdings: Bond issue to fund new contract

Summary: Ezion Holdings (Ezion) announced that it has received a letter of intent with a contract value of about US$80.3m over a four-year period to provide a service rig for an Asian-based national oil company. The unit is expected to be deployed and working in SE Asian waters by end-2013 after refurbishment and conversion. Unlike previous projects, this project will be funded through a bond issue; the total project cost is US$60m (US$40m asset cost, US$20m refurbishment, conversion). Indeed, we understand that Ezion has launched S$110m of six-year bonds at 4.70%. We maintain our BUYrating on the stock but put our fair value estimate of S$2.50 under review. (Low Pei Han)

KS Energy: Recovery will take time

Summary: KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12. However, the group’s operating profit went into the red again, after four previous quarters in the black. Though revenue and net profit accounted for about 24% and 26% of our full year estimates, respectively, we note that results were bumped up by gains arising from the sale of a jointly owned asset. Gross profit margin was lower at 23.3%, compared to 28.2% in 1Q12. Revenue from the distribution business grew 40.6% YoY to S$120.4m, mainly due to strong project related sales in SSH Corp and Aqua Terra. The drilling business, on the other hand, saw a 9.6% growth in revenue. Pending further details from management, we put our HOLD rating and fair value estimate of S$0.70 under review. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- US stocks rose on Wed, with hopes for ongoing central-bank stimulus bolstering sentiment amid economic reports illustrating a contraction in manufacturing.

- Singapore retail sales fell 7.4% YoY in Mar 2013, according to Singapore Department of Statistics. Excluding motor vehicles, retail sales went up 1.2%.

- Developers’ private home sales, excluding executive condos, halved to 1,375 units in Apr from the record 2,793 units sold in Mar.

- SP AusNet reported a net profit of A$279.1m for FY13, up 9.5%.

- United Engineers saw its 1QFY13 profit fall 24% YoY to $7.4m, hurt by a surge in administrative expenses.

- Banyan Tree Holdings is planning to launch a third brand this year that will focus on lower-priced holiday home projects, in addition to its Banyan Tree and Angsana names.
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PostPosted: Fri May 17, 2013 9:04 am    Post subject: Reply with quote

Singapore Airlines – Share gains premature
Singapore Airlines (SIA) reported a weak set of 4Q13 results as passenger yields remained depressed following weak demand for its services. Revenue fell 1.0% YoY to S$3.7b and operating loss widened to S$44.2m. On a full-year basis, revenue inched 1.6% higher but operating profit declined 19.8% to S$229.2m. Only with the gains from disposal of aircraft and parts did it manage to post an increase in PATMI for both the quarter (S$68.3m vs. –S$38.2m) and FY13 (S$378.9m vs. S$335.9m). Management declared a final dividend of 17 S cents, which brought the total dividends declared for FY13 to 23 cents (FY12: 20 cents). With the lacklustre results, continuing challenges ahead, and possible disappointment over the lack of a special dividend that some on the street had anticipated, we expect selling pressure on the counter, especially after it gained ~8% since mid-Apr. Based on a peg of 0.8x P/Book, we downgrade SIA to SELLwith a fair value estimate of S$10.00 (S$10.85 previously). (Lim Siyi)

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KS Energy: Recovery will take time
KS Energy (KSE) reported a 27.6% YoY rise in revenue to S$153.4m and a net profit of S$1.1m in 1Q13, vs a net loss of S$315k in 1Q12. Though the group’s operating profit went into the red again after four previous quarters in the black, we understand that operating profit would have been about S$8.3m had it not been for a one-off foreign exchange loss from the Titan 2 disposal. We estimate core net profit of about S$0.4m in 1Q13. Overall, the group expects business and operating conditions this year to “remain similar” to 2012. We review the valuations of KSE’s closest comparables on the SGX, and note that the average P/Book valuation is about 0.7x. We ascribe a ~20% premium to arrive at a 0.85x P/Book for KSE due to its integrated operations which are larger in scale in comparison to some of its peers. As such, our fair value estimate falls to S$0.50, based on 0.85x FY13/14F NTA. Maintain HOLD. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks declined Thursday, halting the S&P 500’s four-session winning streak, after a Federal Reserve official said the central bank could begin tamping back on monetary easing as soon as this summer.

- Japan's economy grew faster than expected in 1Q13, expanding at its quickest pace in a year on the back of solid private consumption and a rise in exports.

- Singapore lost the pole position in Nasdaq-listed Morningstar Inc's Global Fund Investor Experience 2013 report, getting an overall grade of B this time.

- Asian Pay Television Trust is set to raise around $1.39b through its IPO, making it Singapore's second largest listing this year.

- Intraco has tied up with Tat Hong and a Myanmar businessman in a JV that will provide rental of cranes and the distribution of cranes and excavators in Myanmar.

- Transcu Group has claimed a breakthrough in trials in Fukushima, Japan in which it used a process that cleans up nuclear contamination and converts nuclear waste to energy.

- Eu Yan Sang will be forming a JV to set up a TCM decoction pieces (processed herbs) plant in China.
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PostPosted: Mon May 20, 2013 9:06 am    Post subject: Reply with quote

Tiger Airways: Roaring success in FY14?
Tiger Airways (TGR) reported a decent set of 4Q13 results to close out the year with a second consecutive quarter of core operating profit. This helped overturn 1H13 losses and TGR recorded a FY13 overall core operating profit of S$7.3m (FY12: -S$83.4m) and its net loss narrowed to S$45.4m from S$104.3m a year ago. In the coming quarters, we expect TGR SG to continue exhibiting strong growth prospects and carry the group forward. Passenger demand has remained healthy for the group and the planned capacity increases for FY14 will allow it to capitalise on this demand. Despite the risk of a drag from its associates, we remain hopeful for a positive core net profit performance for FY14. Maintain BUYrating on TGR with an unchanged fair value estimate of S$0.79. (Lim Siyi)

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CWT Ltd: Growing the trading wing
CWT Ltd’s 1Q13 revenue jumped 39% YoY to S$1.5b, while net profit was flat at S$27m. 1Q results were in-line with ours and the street’s expectations. The surge in 1Q revenue was mainly driven by its newly established trading business (Commodity SCM) which resulted in higher volume, and the inception of a new product line. At the same time, the group incurred higher administrative expenses relating to the costs of establishing new operations. The group’s logistics operations were largely business-as-usual. Looking ahead, we expect operating leverage to kick in for the Commodity SCM business and the group to expand its logistics capacity with the developments of three large warehouses in Singapore. Maintain BUY with unchanged FV of S$2.08. (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

-Mapletree Investments is looking to ramp up its overseas business and potentially list a REIT made up of office assets in Japan in two years.

- Sembcorp Industries has entered into a joint venture with Oman's Takamul Investment Company to develop a centralised utilities complex, which costs around S$1b, to service the Duqm SEZ.

-Indian firms flock to Singapore debt market, with Tata Motors being the latest to do so, raising S$350m through 5-year bonds.

- Mercator Lines (Singapore) has posted a US$77.7m net loss for FY13 ended 31 Mar, versus a net profit of US$7.8m the previous year.

- OCBC has announced that the Shanghai Financial Services Office has on 25 April 2013 approved the establishment of a Renminbi fund.

-Yahoo!'s board has approved a deal to purchase the popular blogging platform Tumblr for US$1.1b (S$1.35b) in cash.
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PostPosted: Tue May 21, 2013 9:04 am    Post subject: Reply with quote

KEY IDEA

Telecom Sector: Downgrade to NEUTRAL
All three telcos reported 1QCY13 results that came in within our expectations, with all of them meeting between 25% and 27% of our full-year forecasts. Going forward, other than M1 expecting moderate earnings growth, the other two are guiding for a pretty muted showing this year, with SingTel expecting stable group revenue while StarHub has eased its guidance to low single-digit revenue growth from single-digit previously. Besides the run-up in the telcos’ share prices YTD, which makes the yields less attractive, a more “risk on” approach could see investors switch out of defensive stocks. As such, we downgrade our rating from Overweight to NEUTRAL on the sector. (Carey Wong)

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Global Palm: HOLD; No catalysts yet
Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, while reported net profit tumbled 36% YoY to IDR8.3b, meeting 29% and 25% of our full-year revenue and net profit estimates, respectively. While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) – the lowest new planting since 1Q11. Meanwhile, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia’s minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS). (Carey Wong)

Keppel Corporation: Sells 6.7% of Keppel REIT at S$1.555/unit
Summary: Keppel Corporation (KEP) announced that its wholly owned subsidiary, Keppel Real Estate Investment Pte Ltd, has entered into a sale and purchase agreement with Goldman Sachs (the placement agent) for the sale of 180m units of Keppel REIT (6.7% of total issued units of KREIT) for S$1.555/unit. The aggregate cash consideration of S$279.9m took into account KREIT’s last transacted price of S$1.605/unit as at 20 May 2013 and the 30-day VWAP of S$1.5129. This is at a premium to the book value and NTA/share of S$1.31 and S$1.28, respectively, as at 31 Mar 2013. Upon completion of the sale (expected 27 May), KEP’s interest in KREIT remains substantial (from 58.2% to 51.5%). Recall that KEP earlier rewarded shareholders with dividend in specie of KREIT units; announced on 24 Jan 2013 when KREIT’s share price was S$1.37. Maintain BUYon KEP with S$12.68 fair value estimate. (Low Pei Han)

ComfortDelGro – Addition to Australian operations
ComfortDelGro announced yesterday that it will acquire a privately-held bus company, Driver Group Pty Ltd, for A$22m. This acquisition will add five long-term, metropolitan bus routes in the Eastern suburbs of Melbourne to ComfortDelgro’s Australian operations in Victoria, and increase its fleet to 420 buses from 378. Assuming regulatory approval, this deal will be completed in Jul 2013. While the deal is relatively smaller compared to its previous acquisitions in Australia and will not have a material impact on its earnings in FY13, it demonstrates management’s intent to actively grow its overseas operations and we view this positively. However, valuations for ComfortDelgro remain expensive in our view and we maintain HOLD on the counter with an unchanged fair value of S$1.95. (Lim Siyi)
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PostPosted: Wed May 22, 2013 9:05 am    Post subject: Reply with quote

Singapore REITs: The burgeoning market
In our latest assessment of the S-REITs sector, we continue to see familiar trends. REIT managers have generally maintained firm growth in their trusts’ rental income, on the back of contributions from past investments and improved operational performance. For 2013, we are maintaining our view that S-REITs are likely to continue to deliver firm performance. Nevertheless, the S-REIT index has been enjoying a good run-up, raking up 36.7% gain in 2012 and another 12.7% increase YTD. Given that the S-REITs are now trading at a 24% premium to book value on average, we feel that it is prudent to be selective on S-REITs. We continue to prefer S-REITs with good growth potential, strong financial position and compelling valuations. In this respect, we continue to pick CapitaCommercial Trust [BUY, S$1.80 FV], Fortune REIT [BUY, HK$8.64 FV] and Starhill Global REIT [BUY, S$1.05 FV] as our preferred BUYs. Reiterate our OVERWEIGHTview on the broader S-REITs sector. (S-REITs Team)


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Bumi Armada Berhad: A good start to FY13F
Bumi Armada Berhad’s 1Q revenue jumped 46% YoY to MYR489m and net profit to shareholders increased by 22% YoY to MYR110m. The results were roughly in-line with ours and the consensus’ estimates. Segment results were mixed. Although the FPSO, OSV and T&I segments had YoY increases in revenue, only FPSO and OSV showed segment profit improvements. The OFS segment reported no activity for 1Q13. The group also benefited from disposal gain of a subsidiary of MYR9.4m, write-back of doubtful debt of MYR2.0m and a net foreign exchange gain of MYR3.0m. We tweaked our models slightly to reflect 1Q13 results and roll forward our estimates to FY13/14. Accordingly, our fair value increases slightly to MYR3.56 (previously MYR3.74) on 21x PER. Maintain HOLD. (Chia Jiunyang)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks closed higher on Tuesday after a strong earnings report from Home Depot and also due to market anticipation of Wednesday’s testimony by Ben Bernanke in Congress.

- Boustead Singapore’s FY13 PATMI rose 46% YoY on the back of a 26% increase in revenue YoY. It announced a final dividend of 3 cents and a special dividend of 2 cents.

- RELIGARE Health Trust (RHT) registered DPU of 3.55 S cents for the period spanning 19 Oct 2012 to 31 Mar 2013, missing its projected DPU of 3.61 S cents.

- The Asian prime brokerage unit of Credit Suisse has replaced Morgan Stanley as the second largest firm servicing the region's US$148 billion hedge funds industry, a survey shows.

- Fashion group Giorgio Armani's sales revenue rose over €2.0b (US$2.6b) in 2012, a 16% rise YoY. It saw a 11% jump in sales in crisis-hit Europe.

- British luxury group Burberry posted a 14% rise in full-year pretax profit but forecasts declining profit in 1H13 due to reduction in wholesale markets in favor of retail markets.
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