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OCBC Reports May 2013
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PostPosted: Thu May 23, 2013 9:14 am    Post subject: Reply with quote

OKP Holdings: Ceasing coverage
For the first quarter of the year, PATMI came down 22.2% YoY to S$2.4m – below our expectations and consensus estimates – mostly due to margin pressures from increased subcontracting and labour costs. Looking ahead, we see softer gross margins in the vicinity of 15%-20% for OKP as it continues to face significant cost-side pressures from more restrictive labour regulations from authorities and increased competition to hire and retain engineers. That said, OKP continues to have a fairly healthy order book at S$393.5m as at 30 Apr 2013, as the group benefits from significant experience in public-sector construction and maintenance projects with a good reputation for on-time delivery. We last rated OKP a HOLD with a fair value estimate of S$0.46, based on a P/E multiple of 11x applied to FY13F EPS. Due to a re-allocation of internal resources, we are ceasing coverage on this counter. (Sarah Ong)

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Singapore Economy: 2013 GDP growth forecast remains at 1-3%
According to the MTI, the Singapore economy grew by 0.2% YoY in 1Q13, better than the street’s expectations of -0.6% growth, but worse than the 1.5% growth seen in 4Q12. On a seasonally adjusted, annualised basis, the economy expanded by 1.8% QoQ, compared to the 3.3% growth in 4Q12. Manufacturing contracted by 12.3% QoQ, reversing the 3.1% growth in 4Q12, largely due to lower output in the biomedical manufacturing and transport engineering clusters. Construction grew by 16.5%, compared to 4Q12’s 3.9% negative growth, due to a strong rebound in private sector building activities. Finally, services expanded by 7.9% after 4Q12’s 2.5% rise, driven mainly by the finance and insurance sector. Despite the stabilisation of external macroeconomic conditions since late last year, risks to global growth outlook remain. Hence barring downside risks, the MTI maintains its 2013 GDP growth forecast at 1.0-3.0%. (Low Pei Han)

TEE International: TEE Land lodges preliminary IPO prospectus
TEE International’s real estate unit TEE Land lodged its preliminary IPO prospectus with the Monetary Authority of Singapore yesterday. The property portfolio injected into TEE Land by its parent comprises 24 projects, worth $394.6m as at 30 Nov 2012. Four pre-IPO investors have collectively subscribed for 4m shares in TEE Land for $4m. TEE’s managing director of real estate will lead TEE Land as CEO. TEE Land must still meet several conditions to complete its listing: It needs to raise at least $20m from its IPO at an issue price of $0.50 or more per share, and it must have a market cap of $150m or more at the time of the IPO. Our rating on TEE is currently UNDER REVIEW, pending a change in analyst. (Research Team)

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


NEWS HEADLINES

- US stocks fell on Wed with the S&P 500 posting its biggest decline in three weeks, after minutes from the latest Fed meeting showed signs officials were open to tapering large-scale asset purchases from as early as at the June meeting.

- Shares in Bank Danamon dropped as much as 5% on Wed, pressed down by uncertainty over whether Singapore's DBS will be able to purchase a majority stake in the Indonesian lender.

- Synear Food Holdings reported 1Q PATMI of RMB 13.44m, a decrease of 43.6% YoY.

- Singapore Shipping Corporation's net profit for the 4Q ended 31 Mar 2013 fell 43.3% YoY to US$1.21m (S$1.52m) on the back of a 1.9% decline in turnover to US$4.86m.

- UIC purchased an aggregate of 200k shares of SingLand on the open market on Wed, at an average price of $9.08. UIC’s deemed interest in SingLand increased from 79.980% to 80.028%.

- Straits Trading has been granted an exemption up till 1 Jun 2013 to restore its public float to above 10%.
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PostPosted: Mon May 27, 2013 9:06 am    Post subject: Reply with quote

Dyna-Mac Holdings: Stay cautious

Summary: Dyna-Mac Holdings reported 1Q13 results that were slightly below our expectations. 1Q13 revenue fell by 19% QoQ to S$60.1m, while net profit fell 24% QoQ to S$6.7m. The group’s order-book continued to fall to S$113m (27 Feb-13: $134m), providing cover for under two quarters. To be fair, delays in the award of contracts is quite common in the industry and Dyna-Mac is currently tendering for a number of large projects. Nonetheless, the low order-book still makes Dyna-Mac vulnerable to potential yard under-utilization should contracts be further delayed. After adjusting our model to incorporate the 1Q13 results, our fair value estimate declined to S$0.44 (previously S$0.50). Maintain HOLD. (Chia Jiunyang)

MORE REPORTS

CDL Hospitality Trusts: AEI for Orchard Hotel Shopping Arcade

Summary: CDLHT has announced asset enhancement plans for Orchard Hotel Shopping Arcade (OHSA). The AEI will comprise an overhaul of the property facade and existing amenities to enhance its user-friendliness. Scheduled to commence in late 2013, the AEI is expected to complete in 12 months, during which the mall will be closed. A soft opening of the revamped mall is expected by end 2014. The AEI is expected to cost approximately S$25.0m, including construction cost which will be fully funded by debt, estimated disruption costs to the adjoined Orchard Hotel, and the loss of rental income during the period of mall closure. Upon completion of the AEI, OHSA will boast an increased NLA of ~10k sq ft. Incremental rental income of OHSA is expected to be more than S$2.0m on an annualised basis, translating into an estimated gross ROI of more than 8.0%. For now, we maintain our HOLD rating and fair value of S$2.05 on CDLHT. (Sarah Ong)

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


NEWS HEADLINES

- US stocks fell for the first week in five as the prospects of the Federal Reserve starting to reduce its bond-buying stimulus rattled a market trading at historic highs.

- Singapore reported a surprise expansion in its economy in the first quarter, helped by a surge in financial services as trading in stocks and foreign exchange soared.

- The government's cooling measures for motor vehicles sales in Singapore has helped moderate inflation, which eased to 1.5% in Apr from 3.5% in Mar.

- Security, cloud solutions, analytics and agile software are the four thrusts behind the Singapore government's plans to call for S$1.2b in new infocomm tenders in fiscal 2013.

- Global Logistic Properties reported 4QFY13 profit of US$224m, +43% YoY, driven by revaluation and foreign exchange gains.

- Stamford Land posted a net profit of S$31.7m for FY13, down 40.6%, as revenue fell 45.1% to S$266.7m.
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PostPosted: Tue May 28, 2013 10:01 am    Post subject: Reply with quote

KSH Holdings: A strong year of performance
KSH reported 4QFY13 PATMI of S$14.0m, up 85% YoY
mostly due to an increase in profit contributions from
development projects held by its associates and JVs. On a
full year basis, FY13 PATMI is S$36.3m which increased a
strong 98%. We judge this to be somewhat above our
expectations (our FY13 PATMI forecast is S$30.7m) as the
pace of revenue recognition at JV development projects
came in faster than anticipated. Management proposed a
final dividend of 1.15 S-cents per share. Likely catalysts
ahead includes major pipeline launches at Hong Leong
Garden (NeWest), King Albert Park and Seletar Garden
which would all likely take place this year. In China, KSH’s
45% Beijing condo project could also begin sales this year.
We view a potential firm performance at this project to be
significant for KSH’s earnings profile which could sustain
earnings growth into FY15 by contributing an estimated
S$23m net earnings upon TOP. Maintain BUY with an
unchanged fair value estimate of S$0.73.
More reports:
- Valuetronics Holdings: Starting on a fresh page
- Yoma Strategic Holdings: Catalysts ahead – upgrade to
HOLD
- Sembcorp Marine: Secures US$596m jack-up rig order
from Noble
- Singapore Airlines – Grounds another cargo plane
News Headlines
• Healthway Medical Corp will issue up to 97.5m new
shares to raise as much as S$10m to fund its expansion
plans in China and its obligations in an associate
company that is eyeing a listing.
• Soilbuild Construction Group enjoyed a strong debut
yesterday, with shares closing up 44% at 36cts.
• Technics Oil and Gas Limited has been awarded contracts
worth a total of S$10.6m for the supply of Air Spread
Systems from Singapore.
• Hiap Seng Engineering has reported a net loss of
S$4.5m for 4Q13, a widening from the S$2.2m for the
same period last year.
• Fragrance Group has signed a mandate letter for a
S$1b multicurrency medium term note programme.
• Business receipts for the services industry in Singapore
rose 6.3% YoY in 1Q13, said Singapore’s Department of
Statistics yesterday.
Key Singapore Indices
Close Chg % Chg
STI 3391.3 -1.9 -0.1
Catalist 185.9 2.3 1.2
Finance 877.5 2.1 0.2
Property 816.2 1.1 0.1
Electronics 535.6 -0.3 -0.1
Vol(m) 2762.2 -2251 -44.9
Val(S$m) 1454.0 -1363 -48.4
World Indices
Close Chg % Chg
Dow Jones 15303.1 8.6 0.1
Nasdaq 3459.1 -0.3 0.0
S&P500 1649.6 -0.9 -0.1
FTSE 6654.3 -42.5 -0.6
KLCI 1767.1 -5.9 -0.3
Hang Seng 22686.1 67.4 0.3
Nikkei 14142.7 -469.8 -3.2
SET 1593.1 -14.4 -0.9
KOSPI 1980.0 6.5 0.3
TWSE 8280.1 70.3 0.9
Market Statistics (SG)
STI 52-week range 2,699 3,465
No. of gainers 318
No. of losers 206
No. of unchanged 170
Economic Statistics
S$/US$ 1.3 0.0
Yen/US$ 101.1 0.2
3-mth S$ SIBOR 0.4 0.0
3-mth US$ SIBOR 0.3 0.0
Crude futures (US$) 94.0 -0.2
Research Team
(65) 6531 9800
e-mail: info@ocbc-research.com
OCBC Investment Research
Market Pulse
28 May 2013
2
KSH Holdings: A strong year of
performance
● FY13 PATMI up 98% YoY
● Firm order book
● Key launches this year
A strong year of earnings
KSH reported 4QFY13 PATMI of S$14.0m, up
85% YoY mostly due to an increase in profit
contributions from development projects held
by its associates and JVs. On a full year
basis, FY13 PATMI is S$36.3m which
increased a strong 98%. We judge this to be
somewhat above our expectations (our FY13
PATMI forecast is S$30.7m) as the pace of
revenue recognition at JV development
projects came in faster than anticipated.
Topline for the year increased 42% to
S$206.1m mostly due to strong contributions
from the construction segment, which rose
S$60.9m to S$206.3m. Management
proposed a final dividend of 1.15 S-cents per
share – in line with our expectations – which
brings the total dividend payout for FY13 to
2.5 S-cents per share.
Still looking to strengthen order book
The order book currently stands at S$446.0m
which we view to be healthy and we
understand management is actively in the
midst of seeking more contracts. In 2013 to
date, order book replenishment now
cumulates to S$233m – already exceeding
the S$163m total last year. Construction
contracts won include Q Bay Residences, a
JTC district cooling system building and its
45%-owned condominium development
project in Beijing, Liang Jing Ming Ju Phase 4
(LJMJ).
Maintain BUY at unchanged S$0.73
Likely catalysts for the share price includes
major pipeline launches at Hong Leong
Garden (NeWest), King Albert Park and
Seletar Garden which would all likely take
place this year. In China, KSH’s 45% Beijing
condo project could also begin sales this
year. We view a potential firm performance
at this project to be significant for KSH’s
earnings profile which could sustain earnings
growth into FY15 by contributing an
estimated S$23m net earnings upon TOP.
Maintain BUY with an unchanged fair value
estimate of S$0.73. Our model already
accounts for accretion from LJMJ into the
property segment’s RNAV and use a 5x PE
multiple to value the construction segment,
in line with peers trading at 5-7 times. (Eli
Lee)
. . . . .
Valuetronics Holdings: Starting on a
fresh page
● Estimated FY13 core PATMI down
14.7%
● First and final DPS of HK$0.08
● HOLD with marginally higher
S$0.195 FV
FY13 results in-line with our
expectations
Valuetronics Holdings Limited (VHL) reported
FY13 results which were within our
expectations. Revenue from continuing
operations fell 3.4% to HK$2,210.2m, or just
0.6% shy of our forecast. The decline was
attributed to a 6.1% fall in sales from its
Consumer Electronics segment, but partially
offset by a 4.0% rise in revenue from its
Industrial and Commercial Electronics (ICE)
customers. Net profit from continuing
operations fell 26.1% to HK$118.4m, while
net losses from its now discontinued
Licensing division widened by 32.7% to
HK$39.8m, resulting in overall PATMI decline
of 39.6% to HK$78.7m. Excluding the oneoff
termination expenditure and impairment
of PPE from its Licensing division and other
exceptional items, we estimate that core
PATMI for FY13 fell 14.7% to HK$103.7m.
This was 1.1% above our estimate.
Dividends cut but still translates into a
yield of ~6.0%
Given the sharp decline in VHL’s reported
PATMI, its DPS for FY13 was consequently
slashed from HK$0.17/share (this includes a
HK$0.01 special dividend) to HK$0.08/share.
This represents a payout ratio of ~36.5%
and was below our HK$0.11 DPS forecast.
However, this still translates into a decent
yield of ~6.0%.
No further losses from Licensing
business; maintain HOLD
Following management’s decision to cease its
Licensing division, VHL does not expect any
further expenses to be incurred for this
business in FY14. Hence we foresee an
improvement in its bottomline in FY14 due to
the hefty losses incurred in FY13. This would
likely result in an improvement in its FY14
DPS (OIR forecast: HK$0.11/share). We
lower our FY14 revenue forecast by 3.6% but
raise our core PATMI estimate by 2.7% as we
expect VHL to place stronger focus on its
OCBC Investment Research
Market Pulse
28 May 2013
3
higher margin ICE business. Our FY15
projections are also introduced. We derive a
slightly higher fair value estimate of S$0.195
(previously S$0.19), still pegged to 4x FY14F
EPS. Although VHL trades at 4.3x and 0.73x
FY14F PER and PBR, respectively, we
maintain our HOLD rating on the stock given
the still challenging outlook and lack of nearterm
catalysts. (Wong Teck Ching Andy)
. . . . .
Yoma Strategic Holdings: Catalysts
ahead – upgrade to HOLD
● FY13 earnings up from one-time
gain
● Focus on Landmark acquisition
● Upgrade to HOLD
4Q PATMI up 452% YoY due to one-time
gain
Yoma reported 4QFY13 PATMI of S$11.5m,
up 452% YoY mostly due to a S$9.1m onetime
gain (negative goodwill recognized from
the consolidation of a subsidiary in Dalian,
China). FY13 PATMI cumulates to S$14.4m
and, excluding one-time gains, is judged to
be generally in line with our forecast. Full
year top-line is S$60.5m, which increased
54% and is again within expectations, but we
note much of the gross profit uplift was offset
by administrative costs rising S$13.9m,
mostly due to employee share compensation
schemes. Management proposed a final
dividend of 0.5 S-cent.
All eyes on the Landmark Project
acquisition
We believe the completion of the Landmark
Project acquisition in downtown Yangon is a
key catalyst for the share price ahead but
note that management has raised the
possibility of another extension for the
deadline. That said, the signing of a Heads of
Agreement with the Hong Kong and Shanghai
Hotels Group and other preparations by
Yoma for site development points to a good
level of confidence that they would acquire
the site eventually, in our view. Management
has also reported that they have received
verbal assurance from relevant authorities
that a new lease would be granted.
Strong deal-making record
Sales at launched projects remain firm, with
491 out of total 528 units sold in buildings 3
and 4 at Star City. In addition, management
showed a strong deal-making record in FY13
and is in the midst of acquiring more land
sites and establishing businesses in tourism,
retail, agriculture and automobiles. One
significant potential kicker for shareholders is
Yoma’s participation (with Digicel and
Quantum Strategic Partners) in tendering for
one of the two telco licenses awarded by the
Myanmar authorities in Jun-13. Upgrade to
HOLD with an increased fair value estimate
of S$0.87 (20% premium to RNAV), versus
S$0.71 previously, as we incorporate firmer
valuations for the Landmark Project and
Yoma’s existing land bank into our model.(Eli
Lee)
. . . . .
Sembcorp Marine: Secures US$596m
jack-up rig order from Noble
Sembcorp Marine (SMM) announced that
subsidiary Jurong Shipyard has secured a
US$596m contract for a newbuild ultra-high
spec jack-up rig for use in the United
Kingdom sector in the North Sea from Noble
Corporation. There is also an option for an
additional unit. Calling it the “most advanced
and versatile of its kind in the industry”, this
rig will be constructed based on the Gusto
MSC CJ70 design, and is in line with an
enhanced version of Statoil’s “Cat J”
specifications. Indeed, we note that the last
Gusto MSC CJ70 order secured by SMM had a
price tag of US$450m in Mar 2011. With this
latest win (scheduled for delivery in 1Q16),
SMM has secured orders about US$2.4b YTD,
accounting for around 60% of our full-year
estimate. Maintain BUY with S$5.64 fair
value estimate. (Low Pei Han)
. . . . .
OCBC Investment Research
Market Pulse
28 May 2013
4
Singapore Airlines – Grounds another
cargo plane
Singapore Airlines (SIA) announced that it
will park another cargo freight plane until
May 2014 in an effort to cut its cargo
capacity further. This will be the second
freighter taken out of service with the first
pulled out in Dec 2012. As a recap, in its
recent FY13 results, SIA Cargo experienced
an operating loss for its second straight year.
While the move is a welcomed one in light of
the weak air cargo market, particularly in
Asia-Pacific, we still expect operating losses
for the division in FY14 and assert that a
turnaround is unlikely even with capacity
cuts as cargo yields remain depressed.
Overall, SIA as a group continues to face
competitive pressures from other premium
carriers, and management has yet to take
any concrete steps to invigorate its business
prospects. Therefore, we maintain our SELL
rating on SIA with an unchanged fair value
estimate of S$10.00. (Lim Siyi)
. .
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PostPosted: Wed May 29, 2013 9:06 am    Post subject: Reply with quote

Tat Hong Holdings: Taking a healthy pause
Tat Hong reported revenue and net profit to shareholders of S$837m (+16%) and S$70m (+67%) respectively for FY13. The results were in line with ours and the street’s estimates. Gross profit margin improved to 37.6% for FY13 (FY12: 36.5%) due to greater contribution from the higher-margin Crane Rental and Tower Crane businesses. Although the outlook for its key markets remains positive, management believes it is time to slow down its fleet expansion, after a 79% surge in fleet tonnage in the past 5 years. It will now focus on raising its crane productivity, and reducing operating costs through the use of its new yard in Iskandar. Although this may mean more a modest PATMI growth rate of about 10%, the improving cashflow would also bring its gearing level to a more sustainable level. Maintain BUY with unchanged S$1.75 fair value estimate. (Chia Jiunyang)

MORE REPORTS

United Envirotech: FY13 results almost spot-on
United Envirotech Ltd (UEL) reported its FY13 results last night, with revenue jumping 117% to S$185.0m, or just 2% above our forecast, aided by higher engineering business (+132%) and also the 77% jump in water treatment business. Net profit surged 182% to S$29.5m, and was about 1.6% ahead of our estimate. UEL also declared a final dividend of S$0.005/share. Going forward, management continues to see growing demand for membrane-based eater and waste-water treatment services, especially in China; this mainly driven by stricter discharge limits imposed by the Chinese government and the shortage of water supply in various parts of the mainland. We will be speaking to management shortly to get greater clarity on its plans. Meanwhile, we are placing our Buy rating and S$0.90 fair value under review. (Carey Wong)

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


NEWS HEADLINES

- Bukit Sembawang's FY13 revenue declined 9.2% to $354.7m while net earnings slipped 37.3% to $114.6m.

- Courts Asia's 4Q net profit fell 19% YoY to $12.6m due to lower other income/other gains and higher finance expenses.

- United Fiber System posted a net profit of US$15.6m for 1Q13, on the back of a US$16.9m gain on the deconsolidation of unit Poh Lian Construction.

- Boustead Singapore has secured a contract from Brunei's national power producer Berakas for the delivery of a waste heat recovery system, bringing the group's order backlog to S$390m.

- Global Yellow Pages cited restructuring and impairment costs for a net loss attributable to equity-holders of S$124.3m for FY13.

- In a sign that the Singapore electronics sector may be on its way to recovery, Stats ChipPac announced that it would be hiring 300 engineers this year and investing US$500m over three years.
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PostPosted: Thu May 30, 2013 9:11 am    Post subject: Reply with quote

Biosensors International Group: Strong product pipeline
Biosensors International Group’s (BIG) 4QFY13 revenue growth of 0.7% YoY to US$88.8m closely matched our US$88.5m forecast. PATMI excluding exceptional items came in at US$29.8m, a 4.1% increase YoY and exceeded our projection by 6.5%, thanks to an income tax benefit of US$5.9m due largely to a tax refund received. For FY13, revenue and core PATMI jumped 15.1% and 10.5% to US$336.2m and US$111.6m, respectively. Surprisingly, BIG declared its first ever dividend since listing. Declared DPS of US$0.02 translates into a yield of ~2.1%. Looking ahead, we expect BIG to maintain its technological superiority with its new product launches. Management has guided for revenue growth of ~15% for FY14, in line with our expectations. We leave our estimates unchanged, and maintain our fair value estimate of S$1.60. Reiterate BUY as BIG’s recent share price weakness represents a good entry point, in our view. (Wong Teck Ching Andy)

MORE REPORTS

United Envirotech: Long-term prospects still sparkling
United Envirotech Ltd (UEL) reported its FY13 results, with revenue jumping 117% to S$185.0m, or just 2% above our forecast, while net profit surged 182% to S$29.5m, and was about 1.6% ahead of our estimate. UEL also declared a final dividend of S$0.005/share. Going forward, management intends to further expand its recurring water treatment revenue by acquiring or investing in more water treatment plants. We believe UEL has the financial means to achieve its goal after its recent fund raising exercises. We are also positive on the company’s long-term prospects. Maintain BUY with a higher S$1.03 fair value (versus S$0.90 previously), still based on 13x FY14F EPS. (Carey Wong)

Midas Holdings: JV NPRT clinches CNY420m train contract
Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched a train contract worth CNY420m. This is for the supply of 56 train cars for the Shenzhen Metro Line 4 project. Delivery is scheduled to take place from 2013 to 2014, and we believe this may lead to potential contract wins for Midas as it is a key supplier of NPRT. We note that this is the third announced contract order of the year for NPRT, with cumulative contract wins amounting to ~CNY1.47b YTD. While NPRT had been a drag on Midas’ recent 1Q13 results, we believe that its contribution to Midas could improve in 2H13, given its order book schedule on hand. Maintain BUY and S$0.54 fair value estimate, pegged to 1.1x FY13F P/B. (Wong Teck Ching Andy)

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


NEWS HEADLINES

- Silverlake Axis has proposed a placement of up to 150m shares - comprising 100m new shares and 50m vendor shares - at SS$0.75 each.

- GSH Corp plans to fund its China property expansion with net proceeds of S$246.8m raised through its renounceable non-underwritten one-for-one rights issue.

- Freight Links Express Holdings said its S$100m tranche of four-year fixed rate note issue was 13x subscribed, garnering S$1.3b in orders.

- Chasen Holdings has clinched seven new projects worth S$19.3m.

- A consortium of Yongnam Holdings, Changi Airport Planners and Engineers and JGC Corporation, has submitted a proposal to design, construct, operate and maintain Myanmar’s Hanthawaddy International Airport for a 30-year concession.

- Asian Pay Television Trust failed to shine in its trading debut yesterday, with the stock falling 5.2% from its IPO price of S$0.97.

- Mapletree Investments has been awarded a 226,000 sqft prime site in Hong Kong to develop a logistics facility for HK$1.69b (S$275.9m).
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PostPosted: Fri May 31, 2013 9:14 am    Post subject: Reply with quote

Land Transportation sector: Possibility of new entrant?
The LTA recently re-iterated the possibility of introducing competition in the bus services industry. However, as with before, we do not anticipate any changes to the operating landscape in the medium term unless the government decides how it wants to strike a balance between a free-market and government assisted model. For the near-term, the street is awaiting the recommendations from the fare review committee and has already factored in some level of increase. That said, any further delays from this committee could lead to continued losses for both PTOs and even asset impairments for SMRT. We downgrade the sector to NEUTRALin light of this possibility but do not anticipate further deterioration in the share prices for both ComfortDelgro and SMRT at this juncture. Maintain our HOLD ratings on both SMRT [HOLD; FV:S$1.45] and ComfortDelgro [HOLD; FV:S$1.95] although we favour the latter for its more attractive overseas ventures. (Lim Siyi)


MORE REPORTS

Swiber Holdings: Expanding into deepwater
According to Upstream, Swiber Holdings is preparing to invest in its first large deep-water offshore construction vessel for its fleet. In particular, the company is understood to have expressed its intention to purchase a vessel similar to Ezra’s Lewek Constellation. The capex of US$400-500m is huge, but considering that the unit is expected to take up to three years to build and the group has not announced any additional substantial capex plans, this may be a manageable purchase. Meanwhile, we would continue to monitor the group’s cashflow from operations. Pending an official statement from the company, we do not see this as a surprise, as Swiber has expressed its intentions to expand its operations into deeper waters. Maintain BUY with S$0.86 fair value estimate. (Low Pei Han)

Sembcorp Marine: Secures US$220.5m jack-up rig
Sembcorp Marine (SMM) announced that subsidiary PPL Shipyard has secured a contract to build a jack-up drilling rig from BOT Lease Co., Ltd, a leasing company of The Bank of Tokyo-Mitsubishi UFJ which is under the umbrella of Mitsubishi UFJ Financial Group. The contract price is US$220.5m (excluding cost of BOTL’s project management team and pre-operations cost), and is scheduled for delivery at end-Jan 2015. The unit is based on the proprietary Pacific Class 400 design; we note that Oro Negro had ordered a rig of similar design from SMM with a price tag of US$208.5m in Mar and Perisai Petroleum at US$208m in Feb this year. With this latest win, SMM has secured orders worth about S$2.7b YTD, accounting for 67% of our full year estimate. Maintain BUY on SMM with S$5.64 fair value estimate. (Low Pei Han)

Ezra Holdings and Ezion Holdings: Ezra divests remaining shares in Ezion
Ezra Holdings announced that it will divest its holding of 40m shares in Ezion Holdings via a placement that is fully underwritten by DBS Bank. This represents about 4.17% of Ezion’s issued share capital, and was transacted at a price of S$2.25/share (4.9% discount to VWAP over 30 May 2013) for a total consideration of S$90m. Ezra will realize an estimated net gain of ~US$65.7m, and it intends to use the proceeds for working capital needs, lowering debt and fund growth of operations. We are not surprised by this move as Ezra had also previously sold off 60m shares in Ezion in Mar 2012. Maintain BUY on Ezion with S$2.62 fair value estimate and HOLD on Ezra with S$1.10 fair value estimate. (Low Pei Han)

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


NEWS HEADLINES

- US stocks rose on Thursday, rebounding from the previous session's losses, as tepid economic data eased concerns the US Federal Reserve would begin to gradually scale back its policy of stimulating growth.

- WE Holdings Ltd will place 80m new shares at S$0.10224 each to raise S$7.5m in net proceeds to repay a bank loan and for general working capital purposes.

- Ascendas Hospitality Trust has launched an equity-fund exercise to raise at least S$200m to partially fund the S$300m acquisition of Park Hotel Clarke Quay.

- Del Monte Pacific Ltd announced that its application for listing by way of introduction of all the company's shares on the First Board of the Philippine Stock Exchange (PSE) was approved.

- Yongnam Holdings has secured a 5-year S$130m syndicated loan from CIMB Bank, DBS Bank, OCBC and Chinatrust Commercial Bank.

- The HDB on Thursday launched 8,000 flats for sale under the joint Build-to-Order (BTO) and Sale of Balance Flats (SBF) exercise.
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