Monday, February 28, 2011

Golden Agri

Golden Agri (GAR): reported FY10 net profit was strong, more than double yoy to US$1423m, mainly boosted by a surprise net gain from fair value changes to biological assets of US$1371m in 4Q. However, even on an adjusted basis, co still beat expectations. We estimate that core net profit came in at ~US$395m, above consensus forecast of US$355m...

Revenue reached US$3505m, +53% yoy, driven by higher CPO price (ASP US$901/mt, +32.5% yoy) and higher sequential sales volume in the 4th quarter. 4Q results also reflected fully consolidated accounts of Florentina Int’l (noodle operations), following completion of the acquisition.
Co proposed a first and final div of S 0.77cts (+56% yoy)...

Mgt remains positive on outlook for the palm oil industry, and will continue to increase pdtn of sustainable palm oil, and further improve operational efficiency and plantation mgt techniques. But highlights the operating environment of the China Agri business remains challenging due to volatile commodity prices.
Stock trades at 16x core P/E, 0.93x P/B.
Prior to results, the majority of houses had Buy/ Trading Buy ratings, with recent targets ranging $0.74-0.91

Indofood Agri

Indofood Agri: CIMB upgrades to Outperform from neutral, post FY10 results briefing. Keeps TP at $3. Sees re-rating catalysts from a potential listing of its subsidiary PT SIMP (previously viewed as negative), stronger than expected output and increased sugar earnings (particularly from 2H11 onwards)…

On the proposed listing of 90%-owned PT SIMP which owns all of IFAR’s operating assets including the stake in Lonsum, mgt indicated that: 1) PT SIMP will remain a subsidiary of the group after the listing; 2) it plans to maintain the listing status of Indo Agri; and 3) the listing will be in the best interests of sh/h but more details can only be revealed when regulatory approvals are received…

CIMB views this, and the recent sale of treasury shares as well as an 8% stake in Lonsum, as part of its plans to unlock value for sh/h, and lower overall gearing, which would be positive in the mid-term…

On 2011 outlook, mgt maintains guidance for 5-10% pdtn growth, aided by improved FFB yields and more new mature areas. Mgt appears more optimistic on its edible oils and fats division due to lower price competition in the market. Industry players, including IFAR, have started to raise prices to pass on higher feedstock costs.


Cityspring: Co has managed to turn a profit in 3Q after losses for prev 2 quarters. Cash earnings at $16.8m posted an increase of 73.4% on a yoy basis. However, earnings were down 18.6% qoq. DPU remains unchanged at 1.05c for this quarter. On a quarterly basis, cashflow is still positive with its cash balance excluding restricted balances increasing to $123.2m compared to $116.2m in 2Q…

In response to S&P putting Basslink’s bond on CreditWatch with negative implications, co has set up A$20m escrow (holding) account for Basslink bonds. S&P has since removed the CreditWatch but bonds continue to be BBB- with negative outlook. Co lacks catalysts in near future although DPU of 1.05c per quarter has been maintained throughout past year...

Further downside risks remain as Basslink has received a dispute notice on 17 Sept 2010, on risk sharing agreements which can impact income and cash earnings. At current price, yield is approx 7.8%. Support at prev low at 0.535 and 0.50, co is in LT downtrend and below 200 day MA.


A-Sonic: +18% at $0.065, on above avg volume. Rebounds from 3yrs of losses, thanks to improving contributions from its businesses and the sale of one of its distributorships in North Asia early last year. Posted US$11.2m FY10 profit (US$8m from one off disposal gain), while revenue leapt 78% to record US$278.4m, which suggests the logistics operator and aerospace component distributor, is seeing a reversal of fortunes after chalking up impairment losses for the previous 3 years...

First and final div of 0.125cts (vs none last yr), translates to 1.9% div yield.
Mgt upbeat on its prospects. Says its logistics business model (95% of sales) has reshaped to incl int’l and domestic multi-modal transportation, customs clearance, warehousing and distribution, and expects continued strategic invmts to ensure sustained long-term growth...

Co will also expand into the aircraft leasing business; has acquired 3 pre-owned 173-seater MD11 narrow body passenger planes, to be leased to airlines / operators in North and South Asia once they are certified by the relevant authorities.
But to be taken off the SGX watchlist, A-Sonic also has to meet the requirement for their market capitalisation to be > $40m, or 6cts/sh, for 120 days prior to the removal of the watchlist status...


OrchardParadeHotel: FY2010 results were strong with rev in at $196.2m +115%yoy, and net profit at $82.5m +524.8%yoy. Fair value gains on invt properties was $7.6m, without which, co would have still posted solid profit of $74.9m. Co attributed rev growth due to recognition $135.8m from the Floridian project although both other division Hospitality and Investment divsion posted gains as well compared to prev yr...

Co is cautiously optimistic that business conditions will remain positive for year 2011, despite higher inflation and property cooling measures, and will bode well for both hospitality and its Floridan project in Bukit Timah. At current NAV of $2.72, co trades at low P/B of 0.55x. Declared div of 6c, comprising of a special div of 2c, total yield of 4% for 2010.


SembCorpInd: FY2010 results in line with consensus. FY10 net profit at $760.8m +11.4%yoy before including an exceptional 3Q gain of $32.0m related to disputed forex transactions. Full yr rev was $8.8b, -8.4%yoy and net profit reported was $792.9m +16.1%yoy. 4Q10 rev at $2.1b -14.4%yoy and net profit of $228.7m -11.7%yoy. FY10 increase came from marine segment +12.7%yoy excluding one-offs, making up 64.8% of net profit…

Utilities business was stable, a 2.0%yoy increase despite poor performance from UK business and Industrial Park segment was up 30.1% yoy on lower base and good take-up of property projects. Co’s current marine order book is approx $4.8b and stretches to 2Q2013....

Other businesses are expected to have a steady performance. Dividend of 17c declared translates to yield of 3.5%. BNP maintains Buy with TP$5.90 and GS maintains Sell with TP$4.70. BNP is of the view that Middle East exposure in Salalah, Oman and Fujairah, UAE as well as North Africa may affect near-term share price but stock is fundamentally sound. Co trades at 11.0x P/E at historical avg of 11.0x

XinRen Aluminium

XinRen Aluminium: Annouced strong set of FY10 Results which were slightly ahead of street bullish consensus. FY10 Rev at Rmb6.2b, +45.8%YoY and above market estimates by 7.2%, while Net Profit at Rmb381m, +24.6%YoY. Without taking into account Rmb29.2m of expenses from its recent IPO, net profit would have been at Rmb410.6m in FY10, +35% YoY…..

Gross Margins however declined slightly to 12.5%vs 13.4%YoY, primarily due to the higher costs of alumina, and the increase in proportion of lower margin trading sales. Strong Rev was due to higher sales volumes and ASP across all business segments, with Aluminium Spot Price Averaging Rmb16,000/ton in FY10, +17.5%YoY, with Grp’s smelting segment remaining the key revdriver contributing 67.7% of FY10 Rev…..

Continued expansion in grp’s fabrication segment however saw the highest growth, with rev +61.9% YoY to Rmb567.9m, as grp added 50,000t of additional fabrication capacity in FY10, while grp’s trading rev segment spiked in FY10 as the Grp exported more aluminum plates due to better pricing and demand from the overseas market….

Going forward, grp remains confident on the prospects of Co, with Aluminium prices expected to maintain/climb higher, and is on track to add an additional to 50,000 MT by 3Q 2011 in its fabrication plant, bringing total capacity for segment to 150,000 MT p.a…..

At current price, valuations appear compelling, with grp trading at a meer 5.5x FY10 P/E vs peers average of 20x, with a good probability of further re-reating going forward, as grp ramps up its capacity (plants currently) at near full capacity, and on the back of surging aluminium prices. Initial concerns on high gearing has also been mitigated, with grp’s net gearing dropping to 75.2% after IPO, from an initial 312.6%, and we maintain our bullish view on Co.


Yamada: Reported strong 4Q10 and FY10 figures, which were in-line with market’s bullish forecast on Co. 4Q10 Rev at Rmb115.4m, +17.8%YoY, and +252.3%QoQ (largely due to seasonality patterns). Result brings FY10 Rev to $313.9m, +32.9%YoY, while Net Profit at Rmb102.6m, +25.6%YoY, while Gross Margins saw a slight improvement at 41.7%, +1ppt YoY, due to increased cultivation of Shiitake mushrooms, which commanded higher margins....

Strong rev was mainly attributable to a 37.3% increase in the sales of self-cultivated mushrooms from Rmb125.5m in FY09 to Rmb172.3m in FY10, as grp expanded their cultivation base to approx 2,614 mu vs 2,213 mu YoY, while grp benefited from higher ASP of shiitake mushrooms, at Rmb6.60/ kg in FY10, up 13.8%YoY....

Rev of processed food products also increased 27.9% YoY mainly due to increased export sales as a result of the improved sentiments of Yamada’s Japanese customers towards PRC food products. Domestic sales of konjac instant noodles (a convenience food product) and other processed food items also improved, in tandem with rising food consumption in the PRC

We note that at current price, valuations remain compelling, with grp trading at 4.6x PE, with a Net Cash Position of almost 4c/share. Ex cash, grp will trade at 3.9x FY10 P/E. Grp has announced a div of Rmb0.043/share (S$0.01/share), translating to a yield of 3.7%....

Going forward, we remain positive on Co. fundamentals and expect further rerating, with Co. remianing on track to double up its Cultivation Output within the next 2 yrs and Increases its Processing capacity in tandem. Street has a unaminous Buy Rating on Stock.


Midas: Reported strong FY10 results which were in-line, with FY10 Rev at 207.4m, +38.3%YoY, while Net Profit at 48.5m, +29.2%YoY. Strong performance mainly attributed to strong growth registered at the Grp’s Aluminium Alloy Division....

Rev from Alloy division rose 39.6% to $199.7m, which contributed approximately 96.3% of total rev in FY10, with the Transport Industry accounting for 80.3% of the division’s rev, while the Power Industry made up 5.4%. Gross Margins however declined to 34.1% vs 38.4%YoY due to higher raw material costs....

Grp saw higher contribution from its associated company Nanjing Puzhen Rail Transport, who increased the delivery of train cars to its customers, and profit contribution jumped from $3.3m in FY09 to $9.3m in FY10. As at FY10, Grp’s cash and equivalents amounted to $244.7m, which included additional funds received following the successful listing in HK....

Going forward, grp tips continued rapid urbanisation and growth across PRC to continue generating demand for new and upgraded railway lines and is not aware of any developments that will impact the business operations arising from the recent personnel changes in the PRC Ministry of Railway, and plans to further increase its presence in international markets....

Midas has proposed a final cash dividend of 0.5c/per share, working out to a total div payout to 1c per share for FY10. At current levels, grp trades at undemanding valuations of 15.8x FY10 P/E, vs historical average of 25x. However we note that ongoing concerns on China’s railway scandal could continue to weigh on stock in the near-term. CIMB and SCB maintains OutPerform with a $1.07 TP and $1.20 TP respectively.

S Chips

S Chips: expect negative sentiment on sector, as 2 S Chip firms China Hongxing and Hongwei Tech have been suspended due to accounting irregularities, relating particularly to the cash and bank balances...

China Hongxing is a sports shoe and apparel mnftr, while Hongwei Tech supplies fibers to the textile industry. Their S Chip peers may be hit particularly hard today, as companies in these industries generally have high cash balances, and will now come under greater scrutiny from investors and auditors alike...

S Chips with sports shoe/apparel exposure:
China Sports Int’l,
Qingmei (sports shoe soles)

S Chips with textile fiber exposure:
China Gaoxian (Sias technical Sell last wk, TP $0.1 ,
China Taisan (Sias technical Sell last wk, TP $0.15),
Qian Feng Fabric,
China Sky Chemical Fiber,
Foreland Fabritech,
Ziwo Holdings,
Li Heng,
Sino Techfibre,
China Fibretech

SG Market

SG Market: Spore shares have mixed leads as steady gains on Wall Street Fri fail to lift regional markets, which opened mostly lower as caution remains over the unrest in the Mid-East & North Africa. The weekend disclosure of accounting irregularities by another 2 Chinese-based firms China Hongxing & Hongwei may agin put a cloud over the S-chip sector. Latest results from Sembcorp Industries, Midas, Xinren & Yamada generally in line & are unlikely to trigger any ratings.
Expect support for STI to remain at 2915 with resistance at 3050.

#Stock ratings:
* Osim: Macquarie reiterates Outperform, $2.06 TP, following non-deal roadshow in Spore last wk. Says recent selloff (down 14% over last mth) provides attractive entry pt. Mgt maintains TDR listing to occur in Apr ’11 at a price of $1.80/sh.

Friday, February 25, 2011


UOB posted 4Q net profit of $706m (vs $688m in 3Q), well above conensus est of $570m but core lending biz was unimpressive as net interest income (-2.1%) was hit by compression in net interest margins (-16bps to 1.91% from 2.07% in 3Q. The outperformance was attributed to strong fee & commission income (+9%) & higher investment income (+30%) arising from sale of securities (incl 10% stake in UIC).

Loans grew 5% qoq while deposit climbed 7.4% resulting in a drop in LDR to 79% (DBS: 79%, OCBC: 85%). Asset quality remained healthy with NPL ratio of 1.8% NAV rose 2.6% to $12.51 giving a p?B valuation of 1.48x, vs historical mean of 1.53x. Tier 1 CAR at 15.3% was sound. Proposed final & special DPS of 50¢ taking full yr DPS to 70¢ vs 60¢ in FY09. Overall, nice headline numbers but difficult to repeat.

Indofood Agri

Indofood Agri: 4Q10 results out this morning, soundly beat expectations. Revenue at Rp 3tr, +31% yoy. Net profit at Rp 0.6tr, double yoy.
For the full year, revenue at Rp 9.5tr +4.9% yoy, net profit at Rp 1.4tr -8% yoy, but would have been higher if not for lower gains from chg in FV of biological assets and FX…

Co benefited from higher sales volumes of edible oil and fat pdts and palm seeds, higher ASP of CPO, palm kernel and rubber, as well as contribution from sugar sales. This helped boost EBITDA margins to 36% in 4Q10, vs 28.7% yoy, and vs 32.1% for the whole of FY10...

Mgt expects palm oil demand to be supported into 2011, with the gradual recovery in global economic climate, demand from the F&B industry and population growth. Notes the expanded capacity from the new CPO refinery in Jakarta completed in Dec ’10 will add much needed capacity to grow the Edible Oils and Fats business. Adds the building of a sugar factory in South Sumatra and new palm oil mills in Kalimantan and S. Sumatra will further strengthen the plantation operations.

Tiger Air

Tiger Air: acquires 32.5% stake in SEAir for US$6m. This appears consistent with its Pan-Asian ambitions, and plans to build an operating base providing int’l and domestic flights in the Philippines. It is also an extension of Tiger’s current partnership with SEAir, in which Tiger has leased 2 A380 aircraft to be operated by SEAir, but marketed under the Tiger flag…

Nevertheless, Tiger’s route expansion plans in the Phils are likely to be preliminary still. Given SEAir’s current lack of scale, non-LCC focus, it is unlikely able to challenge Cebu Air, the leading LCC there, in the near term. Risks include greater competition with Air Asia’s aggressive entry, and bipolarization within the Phils airline industry (Clark Airport emerging as an alternative to Manila Airport).

Noble / Kepcorp

Noble / Kepcorp: Noble and KepCorp has been added to Nomura’s Conviction List Asia. Expect Noble to report good results on 28 Feb, coupled with a strong outlook on agri & energy divisions. Add that Recent weakness, gives a good opportunity to BUY.


Capitaland: Won tender for Bishan residential site with bid of $550m ($869psf GFA), 27% above 2nd highest bid from KepLand, with total of 19 bidders. This is the 1st site released after 4th round of measures and both the number of bidders and price of the bid indicates confidence of developers…

Site is attractive located, within walking distance to Bishan MRT & Junction 8 and co plans to build a 600-unit dev. Estimates put the avg selling price at approx $1.4k psf, a bullish figure, 30% higher than the resale mkt ($720-890psf) and higher than Clover by the Park ($900-1000 psf)...

Co land bank is now at $2.7m and increases low-end exposure which is seeing more demand lately but may be viewed cautiously given bid’s high price. Deutsche maintains Buy with TP$4.87 and CIMB maintains Neutral with TP$3.27.


CAO: Slightly lower 4Q results, Rev at US$1.6b +38.7%yoy with net profit of US$10.0m -5.5%yoy. Despite higher sales in 4Q, less favourable trading mkt conditions, higher procurement and storage costs eroded already thin margins leading to a decrease in gross profit of 19.7%yoy, at $4.0m...

Full yr profit at 54.7m up 21.0%yoy. Full yr operating profit was -14.1% at $18.0m, most of the profit increase coming from associate Aviation Fuel Supply co. Dividend of 2c declared translates to approx 1.5% yield.. Co expects jet fuel demand to increase steadily due to increased passenger traffic with economic growth. Currently not covered by any analyst.


ARA: Slightly better than expected FY2010 results with 4Q rev at $41.7m +55.1%yoy with net profit of $25.7 +82.9% Full yr rev was $84.6m +26.1%yoy and profit at $63.8m +32.0%yoy. Results were boosted by the $15m acq fee from Suntec for 1/3 MBFC and acq of ARA Dragon Fund. Mgmt fees rose 26.1%yoy due to inclusion of Cache Logistic Trust…

Staff expenses grew to $30.8m from $21.9m in 09 from Cache and APM. AUM grew 30% to $16.9b. Refinancing of a revolving line ($18.9m in borrowings) due in May 2011 which should pose no problems. Dividend of 2.5c declared, yield of 1.5% to last close. ARA expects to launch ADF II this year and first close to happen by end of 2Q11. Macq maintains Outperform with TP$1.80.

Global Logistic Properties

Global Logistic Properties: Annouced that it will invest in a US$200m venture with Suzhou New District Bonded Logistic Center Development Co develop a logistics park in Suzhou in China's Jiangsu Province. GLP will own 90% of the venture….

Project will be a distribution hub and integrated logistics park for Co’s seeking to enhance their supply chain efficiency in the Suzhou region and greater Shanghai area. Announcement marks GLP’s 6th dev in Suzhou since 2004 and will further strengthen partnership with the local govt. Grp currently manages over 441,032 sqm of logistics facilities in Suzhou region and has been providing modern logistics facilities to Co’s from a wide range of industries....

As of Dec10, grp’s stabilized portfolio was 96% occupied.


Ho BEE: Reported 4Q10 and FY10 Results, broadly in-line with expectations. 4Q10 Rev at $112.1m, +13%YoY and +13.4%QoQ, while Net Profit at 115.6m, +168.3%YoY and +198%QoQ. Result places FY10 Rev at $538.9m, -53.5%YoY, while Net Profit at $308.3m, -8.5%YoY.....

Strong bottom-line performance, was contributed by the gains of $31.6m and $66.5m on the sale and fair value changes of investment properties, respectively. Turnover for Grp’s ppty devt in 4Q10 rose 13% to $104.1mYoY, as a result of the completion of The Orange Grove project in Dec...

However, turnover was lower YoY due to the exceptionally high recognition of rev in FY09 when five residential projects, namely Vertis, Quinterra, Orange Grove Residences, TheCoast and Paradise Island, were completed.....

For Ppty Investment segment, Group sold TG Building, Frontech Centre and four floors of office space at Samsung Hub, generating a net gain of $30.2m, durning the yr, as part of Grp’s strategy to rationalize its investment property portfolio, following the acquisition of 1.2m sqft of prime commercial development in One-North....

Going forward, grp tips recent anti-speculation measures introduced by govt to have more dampening impact on the vol of transactions and prices of private residential properties. Notwithstanding expected weakening of residential ppty sector, grp remains optimistic for FY11, where earnings are expected to remain positive with progressive recognition of income from sale of development projects in the previous and current yr...

At current price, valations are competlling, with grp trading at 0.66xPB, with Net Gearing at 45.7%. Grp has proposed a one-tier final div of 3c/ share. Inclusive of the 1c interim div paid out earlier in 2010, aggregate div for FY10 amounted to 4c/share. (3% div yield). CIMB Maintains OutPerform with $1.31 TP.

China MinZhong

China MinZhong: Could see some positive momentum. Following its recent Strong Surge following stellar 2q results, BNP Paribas maintains their Buy Rating, but increases TP to $2.19 from $1.76, based on 9.2x Forward PE….

Note that Grp is in the ‘Right industry at the Right time’, with Minzhong increasingly focusing on high-yield, high-margin products in the domestic market and aiming to increase fresh-produce sales to 50% of the total in 3-5 yrs. Expect gross margin to expand 1-2ppt pa, with an average IRR of 33% for new expansion…..

Add that PRC will continue to support the industry to reduce input cost and operating overhead costs through infrastructure development support and/or government grants and subsidies and also continue to support industrialisation to optimise output. Since IPO in Apr10, Minzhong has secured 15,300 Mu of farm land and appears to be on track for its three-year 90,000 Mu expansion plan…..

We note that Street has a unaminonus Buy Call on counter, and further note that counter has a good chance of rereating upwards going forward, on back of rising food prices, the tripling of its cultivation land and expansion of its processing facilities, which would see a huge jump in both its culativation and processed food segments.

All Green Properties

All Green Properties: Reported strong FY10 results which were in-line, with rev at $883.8m, +42%, while Core Net Profit at $165.2m was in-line with avg estimates at $173.1m. Strong overall performance due to an increase in rev from all segments, especially development properties, and a fair value gain of investment properties of $71.8m. Minus off fair value gains, Profit before Tax was higher 56.4%YoY....

In development ppty segment, higher rev was due to higher progressive sales recognised, with Phases 2A and 2B of Pavilion Park and The Cascadia obtaining their TOP in Jan, Jun and Nov10 respectively, while Cairnhill Residences obtained its CSC in Sept10....

For investment properties, all ppty registered an increase in rev, with higher contributions from Great World City Retail and Serviced Apartments, with both enjoying higher rental rates with high occupancies. Traders Hotel also registered a higher rev as compared to 2009. This was due to an increase in both occupancy and room rates....

Higher other operating income was mainly due to the exchange gains made from the US$ hedging contracts, while SG&A incurred were higher, due to higher show flat expenses as. Share of losses of associated companies was higher in 2010 due to higher preliminary and operating expenses incurred by vs overseas investments in China....

Going forward, grp tips transactions for 1Q11 to likely drop, given recent govt cooling measures, but note of genuine demand for housing and current prices should hold up well. At current price, valuations appears compelling, with grp trading at 0.62xP/B, vs simple peer average of 1xPB, while Gearing was reduced significantly to 0.18x, vs 0.36x YoY, leaving headroom for further expansion. Grp has proposed a first and final div of 5c/share….

Morgan Stanley maintains buy with $1.48 TP, UBS retain Neutral with $1.15 TP tipping a strong finish to the yr, lack of catalyst, given the policy overhang. Macquarie maintains OutPerform with $1.44 TP citing deep value, trading at 37% discount to book of $1.62 and a 43% discount to revised RNAV of $1.80. DB maintains Hold with $1.12 TP.

Stock ratings:

Stock ratings:
* SingTel: Citi upgrades to Buy, raises TP to $3.36 from $3.25, on expected margin improvements at Optus and Singapore.
* China Minzhong: BNP raises TP to $2.19 from $1.76, on higher ASP, margin outlook. Reiterates Buy.
* HK Land: Macquarie upgrades to Outperform from neutral, raises TP to US$7.60 from US$7.20. Says recent pullback provides attractive entry point.
ben_oh :

New issues:
* Technics Oil & Gas: TDR debuts today. Stock code 911613. Offer price of NT$11.70 translates to S$1.02/sh (2 TDRs = 1 share).
* UE E&C: to debut on SGX today. IPO Offer Price of $0.48.

Thursday, February 24, 2011

KS Energy

KS Energy: Rev for FY2010 down 21.2% at $509.5m. Co recorded a net loss of $98.4m for the year compared to a net profit of $40.0m in 09. Total net loss for 4Q was $61.5m Co posted an operating loss of $14.4m and had additional impairment losses of $35.0m from plant, equipment and intangibles. Share of results from joint entities added further losses of $18.0m compared to a gain of $19.4m in 2009 which was due to an accounting consolidation of an associate…

Rev from both business segments suffered, Distribution forming 70.7% was down 7.9%, and sales from Capital Equipment and other businesses were down 41.5%. Co will continue restructuring efforts and expect positive results from the reorg to show in 2H2011. In additional news, ITOCHU Corp, a Japanese co has also proposed to invest the 20% equity interest in KS Drilling, the drilling arm of KS energy. ITOCHU is in the business of energy and infrastructure projects.


Rotary: Stable 4Q results bring FY10 rev to $704.2m +27.6%yoy and net profit $63.7m +17.5%yoy. Gross margins slipped slightly to 22% from 24% in prev yr. Both receivables and payables turnover have increased but of little concern at this point unless it continues. Order book at $0.9b with 92% of projects overseas…

Of note, co has started on a $1.1b project in Jubail, Saudi Arabia since 2009, which may be at risk if unrest spreads there. Dividend of 3.8c declared, together with interim of 1c earlier translates to an approx yield of 4.32%. Co’s share price has been trending downward and fell precipitously since the unrest started, prob due to general weakness of mkt as well. Closed at 0.88 at support of 0.875 prev yr lows.


Olam: +3.1% at $2.64. May offer trading opportunities as the rest of the Street backs mgt’s rebuttals to CLSA’s recent report citing concerns about Olam’s Nigeria export incentives, differences in audited and unaudited results, and negative economic value added…

Credit Suisse says this should clear up any misgivings going forward, notes sharp pullback offers an attractive entry point. Reiterates Outperform with $4.20 TP.
IIFL believes a disgruntled rival trader may have spun tales that led to CLSA’s speculations. Reiterates Buy with $4.43 TP.

XinRen Aluminium

XinRen Aluminium: On back of rising Aluminium Prices reaching 2 yr highs, DBSV reitereates Buy Call on the aluminium smelter with a $0.70 TP. Note that XinRen is trading at undemanding valuations of 4.7x FY11 PE vs peers average of 21.2x, which is unjustified. Co. is scheduled to report results on 28th Feb, in the morning, and has guidance that 4Q10 results will be even stronger than 3Q10

SC Global

SC Global: Announced a strong 4Q10 and FY10 results, with Rev for 4Q10 at $228.3m,
-17%YoY but +19.2%QoQ, wile Net Profit at $72.5m, +105%YoY and +117%QoQ. Result brings FY10 Rev to $878.2m, +9%YoY and Net Profit at $163.5m, +187%YoY, registering a CAGR Net Profit of 73% over the last 5 yrs....

Strong Rev included contributions from progressive rev recognition of the Grp’s development projects, including The Marq on Paterson Hill, Hilltops and Martin No. 38 based on progress of construction, as well as its development projects in Shenyang, China and the Group’s subsidiary in Australia, AVJennings....

Construction of Grp’s development project, Seven Palms, Sentosa Cove also progressed to the stage where its maiden rev recognition was included in 4Q. In addition, rev was also recognized from the sale of a Super Penthouse unit at The Boulevard Residence. Gross Margins also increased during the yr, wth FY10 Gross Margins at 35%, vs 24% YoY, due to improved margins in Grp’s operations, particularly in Aus.....

Going forward, grp remains confident on prospects, noting that targeted client profile which grp’s target, are generally more genuine buyers, who are more insulated towards the Govt’s recent property measures, and will focus on the execution and delivery of its projects. Grp currently holds a valuable landbank of over 1.1 mil sqft in the prime areas of Orchard Road and Sentosa Cove, with a strong operational presence through subsidiaries in China and Australia....

Balance sheet remains fairly stable, with gearing ratio (total debt/total assets) improving to 58% vs 65% YoY, while at current price, valuations appear compelling, with grp trading at 0.85x P/B. Grp has proposed a div of 5c/share for FY10, (Comprising a first and final dividend of 2c and a special div of 3c/share), placing Div yield at 3.8%.


Hyflux: FY2010 results best in co's history, beating consensus est with rev at $569.7m +8.6%yoy, profit at $88.5m +18.1%yoy. 4Q was strong, rev of $190.5m and profit of $88.9m making out more than a third of FY2010 figures. Revenue was mainly from the municipal sector contributing 90% of rev for 31 Dec 2010…

Middle East made up approx 60% of total rev and China approx 26%. Contributions from Sg (14% of rev) were also boosted due to a desalination project and a membrane bioreactor plant in Jurong. Co's order book slightly lower than last yr but still healthy at $1.6b with O&M projects of $1.0b and EPC proj of $0.6b.However, net gearing increased to a high of approx 73%...

Co has positive outlook expecting more projects due to scarcity in key mkts of China, MENA and SEA. Co expects some delays in US$100m projects in Tobruk, Libya (plant size 40k m3)and desalination project negotiations in Bengazhi (400k m3)and Tripoli (500k m3) to face potential delays. Two desalination projects in Algeria (total of 700k m3) have progressed as scheduled and near completion...

StanChart downgrades from Outperform to In-line with TP$2.15 due to situation in Middle East and advises to wait for better entry pts. Dividend of 3.5c declared, approx yield of 1.8% with current P/E at 19.4x

Venture Corp

Venture Corp: Reported strong 4Q10 and FY10 results which were in-line with consensus, with 4Q10 Rev at S705.5m, -22.7%YoY, but +4.1%QoQ, while Net Profit at $54.2m, +223.1%YoY (one-time non-operational charge in 4Q09) and +11.5%QoQ. Result brings FY10 Rev to $2.68b, -21.6%YoY, while Net Profit at $188.3m, +31.3%YoY and almost exactly in-line with consensus estimates of $187.8m....

YoY rev decline for FY10 was anticipated, given Grp’s earlier guidance on business mix, as it pares down the low margin HP consumer printer products and shift towards tech services, products and solutions with greater design and engineering content, which registered sequential margin improvements. FY10 Net Margins at 7% vs 4.2%YoY. Grp’s improved profitability profile largely reiterated that its strategic direction is panning out well.....

Going forward, Grp appears confident of its prospects and will expand its capabilities, enhance its operational excellence and growing its technology and enlarge its network of market access....

We note that grp balance sheet remains strong, with a Net Cash Position of $238.5m ($0.86/share), providing headroom for possible ongoing expansion and acquisitions. At current price, grp trades at 13.5x, while on an ex-cash basis, grp trades at 12.2x, vs peers average of 16x and historical average of 14.5x, suggesting stock still has further upside. Grp has declared a final dividend of $0.55/share, translating to a 6% yield…..

BNP Paribas maintains Buy with $10.62 TP.

City Developments

City Developments: Reported 4Q10 and FY10 Results, slightly above expectations, with 4Q10 Rev at $690.9m, -25.1%YoY and -7.3%QoQ, while Net Profit at $249.2m, +31.9%YoY and +27.2%QoQ. Result brings FY10 Rev to $3.1b, -4.4%YoY and Net Profit to $748.97m, +26.2%YoY and ahead of consensus average estimates of $672.8m. Gross Magins also saw improvement, with FY10 margins at 53%, vs 49.9%YoY, despite a slight drop of 3b.p in 4Q10 vs 3Q10….

Strong bottom line, despite weaker top-line was largely attributed to a surge in Other Operating Income, at 387.3m, +9750.1% YoY, comprising mainly management fee, miscellaneous income and profit on sale of investments, investment properties and property, plant and equipment. A gain arising in respect of step up acquisition of Beijing Fortune by the Company’s 54% owned subsidiary, Millennium & Copthorne also recognised in 4Q…

Strong performance was generally driven across all of grp’s segments, with Grp’s residential, selling a total of 1,560 units valued at $2.1b, vs $1.9bYoY. Grp has planned six to seven property launches for 2011. Under the Commerical Segment, profit contribution from rental properties was the lead contributor in 2010 as Grp unlocked value of several of its non-core and secondary assets worth an estimated $967m…..

The office market also turned around unexpectedly, following strong GDP growth and is poised for further growth. Grp’s office portfolio continued to fare well with occupancy rate of 94.0% as at FY10. For the South Beach project, grp has contracted for the construction of the diaphragm wall and actual site work will commence in Mar11. Evaluation of the main construction contract is expected to be finalised by mid 2011…..

Going forward, grp tips growth to be supported by strong growth in the Asian region and remains optimistic that the positive sentiments riding on a dynamic GDP growth of between 4% - 6% this year will bolster sentiment and increase confidence across all business segments. Grp is expected to remain profitable over the next 12 months…..

At current levels, grp trades at 1.5x P/B, while balance sheet remains healthy, with a Net Gearing Ratio of 29%, while CS estimates grp RNAV at $15.60, and tips further rerating to targeted RNAV. Grp has announced a total proposed dividend of 18c/share, (comprising an ordinary div of 8c/share and a special div of 10c/share.)


SembMarine: FY10 results. Another record year of net profit at $860m, +23% yoy, soundly beating expectations. This was despite a 20% yoy decline in turnover to $4.56b, due to lower progressive revenue recognition for offshore projects.
Similar to Keppel, SMM reported strong operating margins, with 4Q10 OPM at 30.3% vs 25.4% qoq and 28.8% yoy…

Backed by a cash hoard of $2.9b, SMM is proposing 6cts final div and 25cts special div. Together with the 5cts interim div, full yr payout amounts to 36cts (+140% yoy), translating to a generous 6.9% yield.
Feb ‘11 orderbook stands at a healthy $4.8b, up from $4.7b at end 3Q10, with visibility till 2013. Furthermore, SMM has granted options for 10 additional rigs worth a combined $2.5b if fully exercised, suggesting strong order momentum may continue…

Mgt guides for 2011operating margins to stay at double-digit % pts, expects demand to further improve as order enquiries are rising. Notes fundamentals remain intact so long as oil prices stay >US$80, but acknowledges Middle East tensions could lead to some uncertainty in the near term.
The majority of Street reiterates Buy ratings, with a number of houses raising target prices.
Deutsche $6.90 to $7.
Credit Suisse $6.10 to $6.30.
Goldman $5 to $5.40 (neutral)

SG Market

SG Market: Spore shares are likely to open lower, taking the bearish cue from Wall Street, which declined amid continuing turmoil in Libya threatening to spread to other parts in Mid-East & oil prices touching 2-yr highs. Despite the modest rebound off the low to sit just above the psychological 3000 level, the STI needs to move above the 200-day MA at 2050 to re-validate the bull case. On the downside, strong support is seen at 1920.

City Dev will be in focus after it posts 41% yoy & 27% qoq jump in 4Q net profit to $249.2m, beating mkt consensus of $217.4m but much of the gain is accounted for by one-off gains from disposal of investment properties as well as revaluation of its stake in a Beijing unit.

SembMarine also reported solid 4Q results boosted by record margins & guided for better prospects in view of renewed order flow driving current orderbook to $4.8b with another 10 options worth $2.5m yet to be secured. Gives surprise special DPS of 25¢ taking FY10 yield to almost 7%. Stocks with perceived exposure to the current unrest in the Middle East could fare poorly again, such as Hyflux & Sound Global.

Wednesday, February 23, 2011


UOL: Positive results, FY2010 rev at $1.3b +28.6%yoy, with profit at $745.8m +75.8%yoy. Fair value gains amounted to $287.8m. Improvements in rev came from property dev segment (60.3% of total rev) up 46.3%yoy which was due to progressive rev recognition and hotel ops segment (up 10.1%). Project launches included Waterbank at Dakota and Terrene at Bukit Timah, Spottiswoode Res was also 76% taken by Dec 2010…

Profit from associated cos were higher also due to recognition of units in Nassim Park Residences and higher share from UIC. An accounting policy change for transactions with non-controlling interest resulted in a gain of $20.3m to net profit. Gearing decreased from 43% to 36% partly due to reduction in borrowings. Final div of 10c and special div of 5c declared. NAV of $6.10 translates to a P/B of 0.7x on yday closing price

Tiger Air

Tiger Air: -3.5% at $1.39, making a new all time low, and extending decline after closing yday below its Feb ‘10 IPO price of $1.50.
Sentiment weak on this counter, amidst recent sale of stakes by significant shareholders, operating disruptions in Australia, and rising jet kerosene prices (worse for budget carriers than full service carriers). Weakness in the overall mkt not helping.

Stock price now resting on Fibo support level (0.618 x $2.25 high). Stock may be a possible short candidate if the support fails to hold.


Olam: Co has issued a report in SGX as well as a note from HSBC disputing CLSA’s analyst report. They state that co is not the only player to enjoy Nigerian incentives and that financial statements are not of any concern. CLSA’s est that incentives account for 30-40% of profits and Olam’s exclusivity to incentives are incorrect, Nigerian incentives only account for slightly less than 1% of rev with almost all incentives passed on to suppliers...

In each product, an est 4 or 5 other exporters would also experience similar incentives. The reports also explain that accounting differences are due to reclassifications and differential accounting treatment at the subsidiary levels which have to be re-presented at the consolidated level. All of these which have no impact on profits.


OKP: Announced a fine set of financial results for FY10, with 4Qrev at $29.6m, -11%YoY, and Net Profit at $4.6m, +28%YoY. Result brings FY10 results to a new high of $139m, +8%YoY and Net Profit at $17m, +7%YoY, slightly ahead of average consensus of $16m…..

Co. is proposing a final dividend of 2c/share and special dividend of 2c/share, bringing total dividends for FY10 to 5c/share (Dividend yield of 8.6%), representing a dividend payout ratio of 77%....

Increase in overall Group rev was derived largely from an 18% growth in the Construction segment, which contributed $116.0m to the top line, and accounted for 83% of Grp’s rev. This growth was partly offset by a 25% fall in revenue from the Maintenance segment, which contributed the remaining 17% of total revenue. Growth in revenue from Construction segment due mainly to higher % of revenue recognised from a few major construction projects which were in full swing in FY10…..

Gross profit margin for FY10 rose to 21%, from 18% previously, primarily due to a few construction projects that commanded better gross profit margins, coupled with better project management and tighter cost controls…..

We note that grp’s prospect remains bright, with a total gross order book at a healthy $309.9m, underpinning earnings up to 2014, while grp has a whooping net cash position of 35.7c/share. At current price, grp trades at an ex cash of 4x FY10 PE, vs peers average of 14xPE.


Wilmar: may see weakness following dismal 4Q10 results. Reported net profit of US$319m below consensus US$392m. Stripping out exceptional gains from revaluation of biological assets and FX, Wilmar would have swung into a net loss of US$57.6m. Market disappointment may be exacerbated by recent Daiwa, Goldman 4Q preview calls for Wilmar’s earnings to surprise on the upside…

Despite 4Q10 revenue rising 31% yoy to US$9.1b, COGS rose at a faster pace (+39%), resulting in gross margins declining to 6%, vs 11% a yr ago. Still, this was an improvement over the 5.5% GPM in 3Q.
Final div of 2.3cts, bringing total FY10 div to 5.5cts (1% yield), down from 8cts last yr.
Wilmar’s balance sheet also starting to look weaker. Inventory +43% qoq to US$6.7b, while total borrowings swelled 37% qoq to US$17.4b, raising nt debt/equity to +85% vs 54% in 3Q…

Despite the weaker performance for the year, mgt remains optimistic for 2011, reiterates China, India and Indon to underpin growth, and commodity prices to remain firm. Plans to continue to invest in existing and new businesses as part of its growth strategy. Acknowledges pressure to remain on margins for crushing and consumer products due to competition, high feedstock prices, and Govt restriction on price increase of consumer products,…

but notes refining and oleochemicals should benefit from expanded capacities while plantations and fertilisers will benefit from higher palm oil prices.
Mgt to hold a briefing at noon. Expect further analyst updates to come only after that.

GMG Global

GMG Global: Annouced 4Q10 & FY10 results which were in-line, with 4Q10 rev at $144.8m, +136.9%YoY and +32.2%QoQ, while core Net Profit at $12.9m, +159.9% YoY but -20.1%QoQ. Result brings FY10 Rev to $418.6m, +132.3%YoY and Core Net Profit at $45m, +860.6%YoY….

Stronger sales rev was due to higher sales vol, +34.4%, with 97,548 tons sold for FY10 vs 72,759 tons in FY09, and higher ASP/ton, +73.3%, on back of rising global commodity prices.
For FY10, grp’s Pontianak subsidiary, PT GMG Sentosa contributed 19,807 tons for the first time to the Group’s total sales tonnages….

Declining Gross Margins however remained a concern, at 24% for 4Q10 vs 30.7%YoY and QoQ 28.4%, while on a full year basis, gross margins were flat YoY at 25%, which could be attributed to higher raw materials purchase costs, which averaged $3,218/ton for FY10 vs $1,870 for FY09…..

Going forward, grp remains upebeat abt prospects, notin that natural rubber price was averaging US$5,691 in the week preceding to announcement, and barring unexpected adverse global development, expect prices for 2011 to remain strong. Note that demand for natural rubber from European and USA markets is stabilising but the demand from China market continues to remain strong….

We note that at current price, valuation appears undemanding, with grp trading at 23x FY10 PE, vs its historical average of 32x. As grp continues ramping up production and on back of continued global demand for rubber, earnings could possibly be rerated upwards, as grp moves forward into the new financial yr. Grp will be recommending a dividend of 0.3c/share.

Sino Grandness

Sino Grandness: Reported a strong FY10 Rev, which were broadly in-line with estimates. Rev at Rmb645.1m, +43.2%YoY, while Net profit at Rmb116.9m, +76.7%YoY, vs consensus estimates of Rmb110m....

Performance primarily driven by higher orders for all product segments. In particular, sales of beverage segment comprising, which surged 246.4% to Rmb179.6m from Rmb51.9m, due to the successful commercialization of new products and sustained expansion of the Grp’s distributor base. Sales of canned fruits and vegetables were also higher across the board due to increased production capacities and higher orders from existing major customers....

Overall gross margins increased slightly to 32.5% in FY10 from 32.2% in FY09, while on a segmental basis, beverage segment and others segment saw margin improvement while asparagus, long beans and mushrooms segments reported lower gross margins, partly due to higher cost of raw materials. Beverage segment gross profit margin surged the most, jumping to 37.6% in FY10 from 25.8% largely due to economies of scale....

Going forward, Grp expects growth to be underpinned by the new in-house brand of fruit and vegetable juices which have received positive response since they were launched . To capitalize on growth opportunities, Grp will continue to focus on advertising and promotional activities to increase awareness and brand sales and marketing efforts to expand distribution networks....

At current price, valuations appear undemanding, with grp trading at an undemanding 5.8x FY10 PE vs peers average of 9.5xPE. Grp has proposed a dividend of Rmb0.044 (S$0.01).

Cosco Corp

Cosco Corp: Announced a record breaking turnover and strong profit growth for FY10. Rev for 4Q10 at $1.11b, +55.5%YoY and +16.6%QoQ, while Net Profit at $93.6m, +431%YoY and +74.7%QoQ. Results brings FY10 rev to a historical high of $3.86b, +33.2%, while Net Profit to equity holders was at $248.8m, +126%YoY, and exceeding market average consensus of $200m. ..

Strong performance was attributed to better shipyard performance, with sales increasing 35.2% in FY10 due to higher contributions from ship building and marine engineering projects, which more than offset the marginal 3.2% lower turnover from dry bulk shipping business which stood at $128.6m, due to lower charter rates.....

Gross Margins increased slightly QoQ, at 14.5% vs 3Q 12.1%, while Overall, FY10 Gross Margins was at 12.3% vs FY09 10.3%, due to greater cost efficiencies in dry bulk shipping and higher profit contributions from ship building and marine engineering business on turnover rise....

Going forward, grp remains confident on prospects and will focus on deliveries and capability, capacity and efficiency enhancements, noting that grp have yielded positive results despite a challenging yr for the industry. Against the backdrop of an uneven global economic recovery and inflationary cost pressure, Grp maintains a cautious outlook for 2011....

We note that Grp’s orderbook remains strong at US$6.1b, underpinning earnings all the way till 2013 which will keep the Grp’s shipyards busy, while new orders received in 2010 totalled more than US$ 2.1b, with grp delivering a total of 32 bulk carriers in 2010 and 1 jack-up rig and 3 multipurpose heavy lift vessels....

At current price, valuations appears fair, with grp trading at 18.2x FY10 PE, vs peers average of 20x and historical average of 22.9x, with a low Net Gearing of 10.4%, while grp has announced a dividend of 4c/share. Detusche maintains Buy Call with $2.30 TP, based on FY13 estimates.


GentingSP: Results generally in-line with consensus. 4Q rev at $788.5m of which RWS contributed $775.2m, EBITDA at $385.6m. 4Q net profit down 150.3m due to loss from discontinued operations, excluding which would have been a positive $91.7m...

Updates revealed through the conference call revealed significant improvement in VIP segment which grew 40%qoq and VIP accounting for 60% of the gaming rev mix, largely driven by credit extended to VIPs. RWS also has an estimated higher mkt share 54%-58% than MBS…

Other segments on a quarter basis, theme park USS reported avg ticket sales of 8,300 per day in 4Q up 11% from 7500 in 3Q and the Battlestar Galactica attraction has re-opened . Hotel occupancy rose to 79% from 71% and avg room rates were higher at $294 over $250...

Further plans include attractions of Journey to Madagascar and Transformers by year-end and a maritime museum, marine life park and 2 new luxury hotels adding 450 rooms from 2H11 to 2012. As of FY2010, co has $3.5b of debt and approx $9.1b in assets. Mixed calls from analysts, Deutsche maintains Buy TP$2.43, GS maintains Conviction Sell at $1.70, prefers parent Genting Bhd. Macq at Underperform, TP$1.83, Citi maintains Buy TP$2.40. JPM maintains Neutral with TPS$2.15.

SG Market

SG Market: Spore shares are likely to continue its decline, tracking steep falls in US stocks as geopolitical tensions in the Mid-East & North Africa jacked up oil prices, adding to inflationary concerns & hurting investor risk appetite. Local stocks could also face a wave of margin calls, which were triggered by yday’s drop. The STI has broken below the 3040 support as well as 200-day MA with 3000 now seen as the psychological support with firmer base at 2920.

Genting Spore (Ebitda in-line), Wilmar (poor 4Q earnings), Cosco (earnings above expectations), Sino Grandess (meet estimates), GMG Global, UOL will be in focus after reporting 4Q results.

Tuesday, February 22, 2011

IPO: Dyna-Mac

Dyna-Mac: IPO of 436.0m shares at $0.35, of which, 186.0m new shares and 250.0m vendor shares. 431.0m shares will be to institutions and priv investors, 5.0m shares will be offered to the public. Of note, Keppel Shipyard has on 17 Feb 2010, stated on a letter that it will or through a nominee subscribe for 250.0m shares…

The IPO opens today and closes on the 28 Feb 2010. The IPO comes with an over-allotment option of 30m shares. Total outstanding shares are 900.3m excluding the option, approx 315.1m in mkt cap…

After IPO, majority shareholders Lim Tze Jong will own 51.6% and KSL 27.8% of outstanding shares, a total of 543.8m. Net proceeds of $62.0m will be to used mainly for expansion of yard facilities, acquisition of additional equipment and expanding overseas…

Year-end of co is in May. 6M2011 results (HY2011) on 30 Nov 2010 posted a decline of 48.9%yoy with $83.7m rev and net profit of $10.1m -32.1%yoy. Total order book is at $138.0m, substantially lower compared to rev in FY2010. Post-IPO EPS of 1.12c, annualized translates to 15.6x P/E and on FY2010 earnings, EPS at approx 12.4x. Post-IPO NTA of 11.33c per share will result in a P/B of 3.09x…

Valuations are not particularly attractive. Furthermore, co has had net negative working capital in both HY2011 and FY2010 due to increased investments in expansion of yard facilities and capacities…

Co is mainly in the EPC business to the offshore oil and gas and marine sector. The business involves EPC of topside modules, detailed engineering and fabrication for semi-subs and sub-sea products such as buoys. Other fabrication parts include steel and mechanical structures, process piping and tanks...

Co’s module segment was approx 98.0% of rev in HY2011 but other ad hoc projects segment may boost rev which made up 48.8% of rev in 08. Grp has 2 major customers SBM and Modec which contributed 91.9% of rev in FY2010 and 86.7% (Modec 59.7% and SBM 27.0%) in HY2011. Both customers are big offshore names, Modec is the Japanese co Mitsui Ocean Dev & Engrg listed in Tokyo and SBM is a Dutch-based offshore co listed in Amsterdam…

Pros are mainly due to interest of cornerstone investor Keppel Shipyard, however valuations at 15.6x P/E amd 3.09x P/B appear to be higher than other EPC players and half yr results are relatively weak. Closest peer would be Technics O&G also in the module business at 8.06x P/E, other O&M support plays CH offshore at 7.61x P/E and MTQ at 7.57x.

AusGroup/Ezion Holdings

AusGroup/Ezion Holdings: More bad weather for AusGroup & Ezion, both of which are exposed to Western Australia, which is bracing for further flooding in the state's Pilbara iron ore region as tropical cyclone Carlos tracked along the coast, having already forced ports & oil fields to halt operations.

Loading of ships for export was disrupted after authorities at Port Hedland--used by the country's major iron ore producers - suspended operations & face continued heavy rains that have closed rail
lines & roads.

Rio Tinto cautioned that shipping volumes are likely to be affected this quarter as cyclones Carlos & Dianne hamper its operations. BHP Billiton is monitoring the situation while Fortescue, the country's 3rd largest iron ore producer is waiting to hear when the port would reopen. All 3 iron ore producers are long term customers of AusGroup.
Another client, oil & gas E&P firm Woodside Petroleum has shut prodn at its Cossack Pioneer oil facility in offshore Western Australia due to the approach of cyclone Carlos. Its Enfield oil facility was also closed cos of tropical cyclone Dianne. The closures may also impact Ezion, which is providing liftboat services to the Gorgon gasfield & is setting up 2 marine supply bases there.


Wilmar: Daiwa expects palm-oil stocks under its coverage to mostly record higher YoY 4Q net profit, thanks to an increase in CPO prices. However, expects net-profit margins to generally be compressed due to a progressive export tax on plantations in Indonesia. House maintains its Positive sector rating…..

Believe Wilmar International's 4Q10 net profit will surprise the market on the upside due to a rebound in the net profit for its China-based soybean-crushing operations. Expect its soybean price hedging to have been accurate during the qtr…

Rates the stock at Buy with $6.73 TP. Tips Indofood Agri's 4Q10 net profit to provide a negative surprise, due to its rainfall-impaired fruit yields and weak EBITDA margin for its cooking-oil division, rating stock at Neutral with a $2.50 TP.


GMG: -5.2% at $0.275 with a heavy 28m shares traded, as investors shy away from counters perceived to have exposure to geo-political risk, amid political violence in N Africa and the Middle East. GMG faces some risk, with the Ivory Coast's disputed presidential election still unresolved amid violent clashes between supporters of both sides…

A foreign brokerage analyst says, GMG hasn’t fallen that much relative to the mkt, but is still exposed. Notes GMG has operations in Cameroon and Ivory Coast, though the latter is purely processing, and contributes about 10-15% of profits, which is manageable. Adds mgt said previously that operations were still on track. But notes newspaper reports of foreign banks being shut down may affect their cash flow operations.


SGX: Breaking its long silence on the proposed SGX-ASX deal, Tokyo Stock Exchange's President Saito commented that SGX's bid for ASX is unusually high & unfavourable as it will dilute its 4.99% stake in SGX. Throwing a brick at the SGX offer, it added the transaction was designed to convince ASX holders. Views Deutsche Boerse bid price for NYSE as more logical. This lack of support by a significant stakeholder raises the bar even higher for SGX to push through its takeover of ASX.


Mid-Day: STI down 1.4% at 3028.64 midday, in a broad-based sell off with almost 12 decliners per gainer in the broad market and 1.04bshares traded worth $816m. Regional markets are sharply lower, with Hong Kong's closely watched HSI down 1.9%, after a selloff in Europe Mon amid turmoil in Libya and civil unrest across the Arab world…..

The negative sentiment has taken the STI below widely-touted support at 3050, and analysts now expect the psychological 3000 to provide some respite, with 2950 below there. Counters with perceived exposure to political risk are suffering; Hyflux, which is bidding for projects in Libya, slumps 6.7%. Boustead, which has evacuated its staff from the troubled country, is down 5.4% at $0.965, and GMG Global with Ivory Coast operations, is off 3.5% at $0.280.

IPO: Samsonite

IPO: Samsonite is considering SG, along with HK, as a possible venue to list its shares in an IPO, quoting Ramesh Tainwala, president for Asia Pacific and the Middle East at the luggage maker. The Wall Street Journal reported on Feb 21 that Samsonite has appointed bankers for its proposed $1b listing in Hong Kong.


Olam: CLSA has a conviction Sell with $1.60 TP, citing mispriced risks. Note that export incentives from Nigeria make up a significant chunk of Olam’s profits (30-40%), with also ongoing concerns about internal controls given significant differences between unaudited and audited nos. every yr without any impact on the reported net profit…..

Add that export incentives dependent earnings, negative EVA, and concerns about internal controls would warrant a significantly higher risk premium and lower multiples.


Boustead: Co has initiated evacuation of its 31 non-Libyan staff and control of the JV at the Al Marj township project has been handed over to co's JV partner to expedite the completion. Suspension of all operations in Libya will be in effect until peace is restored. Co is unable to ascertain extent the township project will be affected.


UMS: KDR update.
Plans to issue up to 110m new shares to support the issue of 11m KDRs (10:1 share/ KDR ratio), which results in 32% share dilution.
KB Invmt & Securities is the Korean Book Runner.
80% of net proceeds to be used for invmt in PPE and acquisitions, with remainder used for working capital.
Circular to be sent to sh/h for approval to amend company articles to comply with KRX listing rules.
Co will submit the application for KRX listing in due course.


Hi-P: Announced 4Q10 and FY10 result, which was slightly ahead of consensus. FY10 Rev of $957.7m, +27.7%YoY, while Net Profit at $66.9m, +25.8%YoY and +7% ahead of average consensus. Increase comes on the back of a record 4Q10, which saw Grp generate a $35.9m in net profit, +762.1% YoY ….

Grp’s FY10 rev benefitted from a ramp up of new projects in 2H10 and grew 27.7%YoY to $957.7m. With economies of scale, improved productivity, product mix and overall effective cost control. Effective tax rate however increased from 17.1% to 24.2mainly due to higher income tax rates for our PRC subsidiaries…..

Going forward, grp expects significantly higher rev and profit in 1Q11 as compared to 1Q10 but lower rev and profit as compared to 4Q10 due to seasonality factors. Management has guidance for FY11 to register higher revenue and profit vs FY10….

Balance sheet remains strong, with grp having a net cash position of $211m. At current levels, grp trades at a 14.2x FY10 PE, on an ex cash basis, grp trades at 11.3x PE vs peers average and historical average of 14x.


Capitaland: Better than expected FY2010 results, Rev at $3.4b, +14.4%yoy and net profit $1.3b +20.9%yoy. 4Q rev at $1.1m +36.5%yoy, Net profit $522.0m -41.1%yoy. In 4Q revaluation gains were $94.9m due to properties in Sg, China and Australia, and divestment gains of $151.5m from co’s 58.1% stake in Raffles City Changning and $64.8m of 28 serviced residences from Ascott REIT…

Excluding the above one-off gains, net profit would be $210.8m. Full year rev increased due to higher recognition for 4 core mkts of Sg, China, Australia and Vietnam, and main projects were The Interlace, Latitude and The Wharf Residence in Singapore and The Vista and Mulberry Lane in Vietnam...

Outlook remains positive for both Sg and China despite policy curbs, co expects continued rev from all the 3 Sg projects and new launches include d’Leedon and condo project in Bedok Town Centre and various others in China. Expansion in Vietnam will continue with the affordable housing initiative. NAV per share of $3.33 translates to approx 1.05x P/B vs hist avg of 1.46x.

Straits Asia Resources

Straits Asia Resources: FY10 net profit of US$88m ahead of consensus’ US$80m expectation. 4Q net profit at US$36m, -4% yoy, but +56% qoq, driven by higher volumes, lower costs and higher ASP…

SAR produced and sold 2.8m and 2.9m of coal r’ptively in 4Q (+28% yoy, +4% qoq), ahead of forecasts, driven by stronger than expected pdtn at Sebuku. Mgt maintains guidance for the final borrow-use permits for its re-zoned Sebuku mine to be issued by mid-2011, which would enable ramp up of pdtn in 2H11.
Co. is looking to increase pdtn to 11-11.5 mt in 2011 (90%/10% from Jembayan/ Sebuku), vs 10.6m mt in 2010…

4Q ASP rose 5% qoq to US$75.5/t, beating analyst forecasts, driven by the higher proportion of Sebuku coal sales. FY10 ASP was US$72.8/t. Co has so far priced 40% of 2011 pdtn (of which 25-30% on 2010 benchmark pricing), and the remaining 60% is unpriced/ indexlinked (30% index linked, 20% unpriced, 10% spot).
Higher sales contributed to lower pdtn cash cost in 4Q of US$43.8/t, FY10 of US$46.9/t. But that could rise going forward due to higher oil prices…

Stock trades at 13.2x consensus FY11E P/E vs sector’s 9.3x.
Macquarie, UBS maintain Outperform. both with $3.40 TP.
DMG downgrades to Neutral with $2.49 TP, says valuations fair.
Goldman maintains Neutral with $2.30 TP.


YangZiJiang: Announce another yr of record rev and earnings for FY10, which exceeded average estimate consensus. 4Q10 Rev at Rmb4.9b, +19%YoY and +32.6%QoQ, while Net Profit at Rmb838.1m, +30%YoY and +14%QoQ. Result brings FY10 Rev to Rmb12.9b, +22%YoY and Net Profit at Rmb2.96b, +29%YoY….

Strong rev attributed to Grps deliverery of 48 vessels in FY10 vs 40 vessels in FY09), while grp’s Changbo yard (that was acquired last yr) delivered 2 vessels in 4Q10. Gross margins improved further from 21% in FY09 vs 22.5% in FY10 on increased efficiency in new yard and as yard continues to deliver bigger and higher margin vessels in FY10…..

Operating expenses for Grp remained stable at about 2% of the rev for FY10, while higher other income increased 143% in FY10 to Rmb876.2m, which was consistent with increase in investments in financial assets held-to-maturity during the yr….

We note that Grp has entered into 50 new shipbuilding contracts worth USD1.38b, bringing Grp’s order book at 131 vessels with value of USD5.31b as at 31Dec10 and contract winning momentum has continued into 2011, with Grp securing shipbuilding contracts worth USD147.4m for two 4,800 TEU container vessels and two 10,000 DWT bulk carriers, scheduled for delivery in 2012 and 2013 respectively…..

Grp’s remains confident of prospects and has guidance that its niche of building container vessels is starting to show positive signs and is working closely with interested customers to secure more container vessel orders, while grp’s Changbo yard is on track to reach its annual production capacity of 400,000 DWT by 2013….

At current levels, balance sheet remains strong, with grp having a Net Cash position, suggesting further appetite for expansion and acquisitions, while valuation appears compelling, with grp trading at 12.2x PE, vs peers average of 15x, with a Net Cash Position of 89c/share.

SG Market

SG Market: Spore shares expected to react negatively to over 1% declines across European bourses & weaker opening in Tokyo (-1.3%) & Seoul (-1.5%) as growing unrest in Persian Gulf spreads to North Africa & send oil prices soaring & investors fleeing. DJ Futures are trading almost 100 pts off.

Among Spore listed firms with exposure to Libya - Hyflux has yet to build a $100m desalination plant in Tobruk (one of the cities hit by violence) with MoAs for another 2 bigger water contracts & Boustead is suspending operations on its 35% JV Al Marj township project.

Nervous sentiment plus follow-through selling likely to overshadow deluge of results from Yangzijiang, Capitaland, Straits Asia, Hi-P, Hotel Props, Wheelock, CSE Global, Hiap Hoe, Husan Hsin with some exceeding estimates due to divestment gains. Watch the key 2040 support on the STI.

Monday, February 21, 2011


Ramba: says it will begin drilling 2 new pdtn wells, JRR-6 and JRR-7 in 2H11. The wells are expected to add at least 4 mmscfd in gas pdtn, vs total production at the Jatirarangon block of ~3.4 mmscfd of gas and 90 bopd. The tender process for the drilling is scheduled to begin over the next few weeks…

Indonesian state-owned gas distributor, PT Perusahaan Gas Negara (“PGN”) will also pay a one-time lump-sum payout of US$2.18m to support Ramba’s development work towards raising gas pdtn at the block.
Recall last wk, PGN agreed to pay US$4.332/mmbtu, or 70% more for gas from the Jatirarangon block wef 1 Apr ’11. The price will increase by a further 3 percent on an annual basis thereafter until 2014.


STX PO: CIMB Maintains Underperform, lowers TP to $11.90 from $13.20. Core net profit of US$36.0m was worse than expected due to disappointing profits from Bulk segment at US$124m and larger than expected losses of $40m from Tanker segment. House has a negative view on both bulk and tanker shipping sector and sees 25 yr contracts with Vale (starts in 3Q11) and Fibria Celulose (starts in 4Q12) as hope for co and will help to deliver more stable revenues…

Highlights in results conference include a high coverage ratio of chartered capsize fleet to protect against short-term volatility in rates for vessel class and bunker cost hikes to be covered by pass-through clauses which decrease the volatility of earnings due to oil prices. Valuations based on 10% discount to SOTP. Co trades at current P/B of approx 0.9x

Strategy/Budget Report

Strategy/Budget Report: Following budget Report, UOB Kay Hian has Strategy Report on key sectors. Note that in house view, the biggest winners of Budget 2011 are Co’s that benefit from a rise in discretionary spending and rising demand for higher education….

Tip Co’s such as Raffles Edu & Informatics to benefit from subsidies given to adult Singaporeans to pursue their first degree or diploma on a part-time basis. Discretionary spending could rise and benefit companies such as Tiger Airways, FJ Benjamin, Epicentre, Eu Yang Sang and Osim…..

The levy on foreign workers is tipped not have a meaningful negative impact on shipyards as foreign worker levy makes up a small portion of total staff cost. As such, house expect no negative impact on earnings from this increase in foreign worker levy on both Keppel Corp (KepCorp/BUY/TP $13.00) and Sembcorp Marine (Hold/TP $4.90)…..

Zero-rating scheme for specialised warehouses could benefit SATS, although impact will be limited, while the 2011 Budget will have a minimal impact on property stocks. House remain Neutral on the property sector and prefer exposure to the office, industrial and hospitality space. OUE (BUY/ TP $4.25), Sabana REIT (BUY/ TP $1.20) and CDL Hospitality Trusts (BUY/TP $2.50)….

In conclusion, see limited impact of the Budget on the market. Forecast a constructive outlook for 2011, with a year-end FSSTI target of 3,550. In terms of stocks, favour a combination of large-cap laggards, high and sustainable dividend-yield stocks, inflation beneficiaries and stocks with specific catalysts. House top picks for FY11 are Ascendas REIT, CDL HT, Ezion, OCBC, OUE, SABANA REIT, SIA and Starhub.


CourageMarine: Poor 4Q results, rev at US$8.9m was -21.7%yoy +5.2%qoq and net profit was US$12k - 99.6%yoy -98.5%qoq. Rev was impacted by lower freight rates shown through the BDI and the fall in net profit was due partly to an increase of 45% in admin expenses largely attributed to dual-listing costs and staff bonuses. Despite poorer 4Q showing, FY2010 rev was up 66.5% at US$46.5m and profit was at US$9.0m up from 75k last year in 09...

Other income in 4Q fell 94% due to an insurance claim in FY09. Co took delivery of 2 vessels and disposed of its oldest vessel, current tonnage of fleet stands at 580k dwt. Co expects financial performance for 2011 to be adversely affected and notes that the dry bulk mkt has not recovered. Full yr 2010 EPS at US0.85c and trades at approx 17.6x P/E, 1.4 P/B.

Otto Marine

Otto Marine: Following grp’s mismay results, DMG downgrade to Sell with $0.25 TP from $0.335, a sharp loss in 4Q. 4Q10 plunged into a loss of $9.3m on lower rev of $93.3m, -12.9%YoY and reversal of profit from cancellation of vessel related to global settlement with GC Rieber, and forex losses….

In view of prolonged drought in new shipbuilding order wins, and possible threat of cancellations of Mosvold Supply’s (MS) 3x 21k bhp AHTS in the future, house downgrades to sell based on 10x FY11F PE

Similarly, BNP maintain Reduce on Otto Marine with $0.34, noting of continuous disappointment, increasing working capital needs on 'build to charter' model and resources being spread widely, with risk profile worsening.


ChinaOilfieldTech: Posts profit warning, expects a loss for FY2010 due to lower sales.


ChinaOilfieldTech: Posts profit warning, expects a loss for FY2010 due to lower sales.


Oceanus: Has posted profit warning expecting loss for the quarter and substantial decline in net profit for the year 2010, due to a fall in fair value gains of abalones, restaurant losses and higher financing costs.


OCBC: Other houses ratings, following grp’s 4Q10/FY10 Results.

Citi maintains Buy Call with $10.60 TP from $11.40, remain upbeat on top-line growth outlook into 2011, although pared forecastsby 3-6% largely on lower insurance income post the weaker 4Q performance.

Daiwa maintain Outperform with $10.80 TP, believe the 4Q10 performance revealed encouraging trends (such as strong loan-growth momentum and a stable NIM), and any results-related selldown would offer an opportunity, for investors to accumulate the shares.

UBS maintain Buy, (Key Call) with $11.30 TP, remain sanguine on stock as it is attractively priced and its wealth management franchise should help it achieve a stronger and more profitable profile.

DB maintain Buy with $10.40 TP, Tip that underlying trends better than the headline result, earnings trends likely to improve in 2011.

JPM maintains Overweight, note that 4Q10 misses the mark, further outperformance to be results led, prefer DBS in the sector.

BNP reiterate Buy, with $11.05 TP, tip that Earnings disappointed on weaker insurance income, Key positives: Strong loan traction and low credit charges.

DMG Upgrade to Buy, $10.60 from $9.60, noting that wealth management and loans outperformed. Share price underperformance vs its peers YTD, had made it more attractive.


Capitaland: Annouced that its unit has signed an agreement to acquire an additional 39.3% stake in LFIE Holding Ltd, a holding company for real-estate investments in China, for HK$762m (US$98 million). CapitaLand China CCDF (Cayman) Holdings., which currently owns a 6.95% stake in LFIE, will buy the additional stake…

Grp note that the acquisition is part of its ongoing business development and tofurther strengthen its presence t in China. The Consideration will be satisfied wholly in cash and is payable by CCDF Cayman on completion which is expected to take place in 1Q11. The above transactions are not expected to have any material impact on the NTA or EPS of the CapitaLand Group FY11.


UIC: Given 76.5% owned SingLand results, 2010 results were also boosted by revaluations. full yr 2010 rev dipped by 4% to $972.0m but net profit rose to $703.0m compared to a loss of $142.8m prev in 09. Operating profit rose 1.5% to $402.3m over 2009...

Revaluation gains on property was a positive $691.0m compared to a loss of $658.5m in prev yr. The slight fall in rev was explained by the completion of residential projects of Tianjin Jun Long Square, One Amber, Grand Duchess and Northwood. Of note, UIC Building was valued at $659m in Dec 2010 up 62.7% from $405m in Dec 09. A div of 3.0c has been declared same as 09. UIC, with NAV of $2.71, is trading at P/B of 1.0x.


SingLand: Full yr results at $527.1m +32.6%yoy. Net profit at $661.7m up from loss of $266.0m in 2009. Gains from revaluation made up $538.5m of net profit over a loss in $347.2m in 09 attributable to Singapore Land Tower, Clifford Centre and The Gateway at Beach Rd...

Excluding revaluations, core operating profit was up 14.0% at $298.1m. Sales at The Trizon project (up 258% at $166.1m) due to revenue recognition and rev from Pan Pacific (up 21% at $109.8m) due to higher room and occupancy rates boosted topline figures partially offset from lower rental income. Renewal rental rates were lower than the expiry rates several yrs ago and fell $9.4m approx 4%...

Co has declared a div of 20c per share same as that of 09. Majority of business remains in property invt, contributing 47.7% of rev and all of fair value gains. Current NAV at $10.00 and at closing price of $7.29 translates to P/B of 0.73x

Raffles Medical Grp

Raffles Medical Grp: Annouced strong FY10 Results which were in-line, with Rev at a record $239.1m, +9.4% YoY, while Net Profit at $45.3m, +19.5%YoY. All divisions of the Group continued to contribute positively to the growth in rev, with Rev of Hospital Services and Healthcare Services divisions increasing 12.1% and 6.1% respectively…..

Higher patient load, wider range of medical specialties, continued improved operating
efficiencies and the recruitment of more specialist consultants contributed to the grp’s performance. Excluding the impact of jobs credit grants received by Grp and revaluation gains of investment property in FY09 and FY10, Net Profit would have grown by 22.9%....

Going forward, grp will continue its focus on quality and value-driven curative healthcare services, and tip Foreign patient load to increase, due to its well-diversified foreign patient base and growth in specialist staff and competencies. Also tip finalizing the design scheme for the 102,408 sqtft expansion of RafflesHospital and liaising with the authorities on the relevant submissions, with construction expected to commence in second half of this yr….

Grp’s balance sheet remains strong, with a healthy net cash position of $84.6m, due to continued strong operating cashflows generated by the Grp after distributing div of $15.7m in 2010. We note that at current price valuations appear compelling, with grp trading at 24.7x FY10 PE, vs Thomson’s Medical takeover PE offer of 32.2x

Palm oil

Palm oil: plantations may see higher costs as Indonesia may increase the base price for CPO to US$1,230/ mt in Mar from US$1,194 this month. However, the govt may keep the export tax rate unchanged at 25%.
Export tax = base price x export tax rate.

Indofood Agri

Indofood Agri: said its main operating subsidiary, 90% owned PT Salim Ivomas Pratama (SIMP) is exploring a listing on the Indonesian Stock Exchange, subject to mkt conditions as well as regulatory and sh/h approvals. IFAR intends to retain SIMP as a subsidiary…

Investors may opt for a cautious stance, due to lack of further details. Apart from SIMP, IFAR has no other operating assets, hence the proposed listing could signal IFAR’s intent to diversify away from its core Indonesian agri-business model, perhaps into other geographies or related industries.


Budget: mainly centered on households (this being an election year) and SMEs (to improve productivity and growth). Overall limited impact on large cap listed companies, though land transport stocks, conglomerates and construction companies likely to see higher labor costs (+2.2% by 2013), driven by higher CPF contribution and foreign worker levies...

i) Income taxes reduced
Adjustments to the personal income tax structure, effective YA2012, is focused on support for low-middle income families. Those earning $40k will see a 39% reduction in income taxes; however those in the top income bracket will only see a 0.8% reduction. Furthermore, all taxpayers this year will receive a 20% rebate, up to $2k. Families will also receive greater support as childcare grants and various other accounts (such as Medisave) will be increased.

Businesses will also see a reduction to income taxes, but benefit mainly SME’s, as rebates will be capped at S$10k.

ii) CPF
Increase in employer contribution rate by 0.5% to 16%, which goes into the Special Account. This is expected to raise labor costs by 0.5%.
CPF contribution ceiling raised to $5000/mth from $4500/mth, leading to up to $1700 reduction in annual take home pay.

iii) foreign worker levy
Raised to $60-200/ worker, expected to raise labor costs by 1.7%.

iv) Growth dividends:
Distribution of btwn $100-800 for Singaporeans. Expect some of this to flow into consumer goods and services.

v) radio and TV licenses
To be scrapped.

SG Market

SG Market: Spore shares could open lower as mkt sentiment is likely to be dampened by heightened tensions in the Mid-East & China's reserve ratio hike late Fri & lean towards flight to safety. Spore’s inflation focused 2011 Budget also viewed generous to individuals but not too helpful to corporates. On average, the higher foreign worker levies & CPF hike may increase overall labour cost by 2% by 2013 & impact the labour intensive land transport, construction, marine & service industries.

Speculation that China may cut its soyoil import tax to 1% from the current 9%, while keeping the palm oil tax unchanged at 9%, which may weigh on CPO stocks. Key levels for The STI remain 3040 support & 3120 resistance.

Friday, February 18, 2011


Ezion: CIMG has Technical Sell Call. Note that the stock has broken below its bearish flag pattern three weeks back. It then rebounded to test the channel resistance again but failed to break upwards. This failure is bearish for the stock in the near and medium term….

The technical landscape remains negative for the stock with its MACD still in negative territory while its RSI is still in a downtrend. Recommend aggressive traders could short now with a stop placed above $0.70, the flag support turned resistance….

Tip that Prices are likely to fall to test $0.62 and $0.55 next. For the longer term, as long as the downtrend channel resistance at $0.725 is not breached, the trend remains down.


SembMarine: Citi maintains Buy with $6.20 TP, staying above consensus. Note that SembMar has underperformed Kepcorp YTD on the back of slower orderbook momentum, as well as concerns over its premium valuations….

However, believe that consensus is too cautious on its fundamental outlook currently trades close to mid-cycle level valuations and could rerate higher once orderbook momentum returns. A strong re-rating to valuations will occur when SMM penetrates the drillship market and narrows the product gap with the larger Korean yards.

Daiwa note that 4Q10 results on 23 Feb and look forward to seeing what
the 'normal' operating margin is. Forecast SembMar to announce a Net Profit of $136.6m and $1.1b of revenue. Maintain OutPerform with $5.60 TP, while key share price catalyst will be the announcement of contract awards…..

Expect some additional awards for high-specification jack-ups in 2011, but not at the pace they have been between Sept10 and now. Do not expect any sizable volume of semi-submersible orders until late 2011.

MapleTree Industrial Trust

MapleTree Industrial Trust: CIMB Initiate with Outperform and TP of $1.24. Note that with an 11.2% market share of SG’s flatted factory space, MIT’s $2.1b portfolio is a good proxy for Singapore’s SME space. Anticipate a 3-year DPU CAGR of 5.3% for the next 2 yrs as existing rental caps on its non-business park space are lifted by Jun….

Tip that with a under-rented portfolio, pure Singapore exposure, and large tenant base point, rental downside is limited whilst upside is conversely strong. Expect catalysts from announcements of accretive acquisitions or development projects…

Add that a healthy SG economy and manufacturing growth backed by the global electronics and semiconductor recovery are likely to boost take-up for flatted factories as firms expand to increase demand. Net new demand for flatted factories could surpass net new supply at least till 2013. The resultant rise in occupancy should lend support to rents and capital values.


TechnicsO&G: Update on TDR listing. Issue price at NT$11.70 (approx $0.51) for each TDR. Every 2 TDRs will represent 1 share, which is equivalent to approx $1.02 per share, a premium of ~1% to closing yday at $1.01. Of the 80m TDRs issued, the underwriter will retain 8m and issue 64.8m to institutions and priv individuals. Remaining 7.2m TDRs will be offered through a public subscription. Est proceeds of NT$304.2m (S$13.2m) will be raised to partly repay borrowings and reduce gearing.


Roxy-Pac: Solid set of results, full yr rev at 216.9m +32.6%yoy, net profit at 42.8m +53.3%. 4Q rev was $47.5m +7.8%yoy, net profit was $12.0m +103.2%yoy Strong profit figures were partly due to a fair value gain of $5.6m in this quarter as well as better operating results and sales. In 4Q, rev from all segments increased and core Property Dev made up 74% of rev with a 5% yoy increase to $35.3m as co recognised rev from 7 dev projects in 2010…

Hotel segment rose 16% for the quarter with a 21% increase in RevPar mainly due to raised hotel rates. Average occupancy rate was up to 93.6% from 93.0% prev 4Q. NAV of 26.7c translates to a current P/B of 1.7x.


GLP: Signed new and expansion lease agreements totalling 136k sqm in its China portfolio. Agreements were signed with online retailer Joyo-Amazon, supermarket group CR Vanguard, casual apparel distributor Metersbonwe, all of which are some of the largest in their industries as well as other customers...

Co owns, manages and leases out 296 completed properties in 122 logistics parks spread across 25 major cities in China and Japan and recent results (1st set since listing) were generally within expectations. Counter currently trades at P/B of 1.0x and JPM rates it a Buy TP$2.90 based on SOTP valuations.

Ramba Energy

Ramba Energy: Could see some positive interest, after announced that its subsidiary has been notified by PT Pertamina Exploration & Production that it has concluded a variation of the gas sale and purchase agreement with PT Perusahaan Gas Negara (Persero) dated 26 Jul04, which will result in a significant adjustment to the gas sale price from US$2.55/MMBTU to US$4.332/MMBTU; representing an increase of 69.9% in the gas sale price….

Subsidiary owns a 70% participating interest in, and is the operator of, a technical assistance contract covering the Jatirarangon Block, an oil and gas-producing field located in Cikarang, West Java, Indonesia. The new gas sale price will take effect from 1 April 2011 and it will be subject to an escalation rate of 3% p.a….

Shareholders are advised to exercise caution when trading Co’s shares. The exploration and production of oil and gas is a very risky undertaking. Technically see near term resistance at $0.50 followed by $0.525, with near term support at $0.45.

Otto Marine

Otto Marine: Could see negative sentiment on stocks, after Co. reported 4Q10 results which missed bottom-line estimates, with Rev at $93.3m, -13%YoY and +16%QoQ, while Net Loss was at $9.2m vs a Net Profit of $9.7mYoY and $8.7m QoQ. Result brings FY10 Rev to $579.8m, +36.4%YoY, while Net Profit at $40.6m, -22.3%YoY….

Poor bottom-line performance was negatively impacted by one-off items, with an aggregate value of $46m, namely Net foreign exchange loss of $22.4m, and a $23.6m loss due to the reversal of profits recognized for the terminated sale contracts for vessels sold to a customer and an associate. Had Grp not been impacted by one-off items, Core Net Profit for FY10 would have been 113.3% higher at $86.6m, ahead of FY10 consens estimates of $63.1m…

Grp note that it has begun to benefit from its strategy of growing its contribution from chartering, leasing and specialized offshore services. For FY10, aggregate gross profit from these segments was $33.7m, representing an almost three-fold increase from that of FY09, (40% of FY10 Gross Profit), vs 15% in FY09, while ‘shipbuilding segment’ registered a 19%YoY increase in rev due to higher rev recognition…..

Operating expenses for Grp more than doubled to $63.8m in FY10, mainly due to increase in FX loss and increased staff costs due to fleet expansion and new businesses. Going forward, grp plans to continue building a strong chartering platform as they diversify frm ship building and has secured new orders worth US$83m for three vessels in FY10….

We note that at current price, valuations appear high, with grp trading at 14.5x FY10 PE vs more attractive peers of STX OSV of 5.3x and ASL Marine of 8.3x, with grp’s shipbuilding segment continuing to be plagued by an over supply of OSV’s in the global market. DMG Maintains Neutral Call with $0.35 TP.


STX PO: 4Q10 results disappoint, with pre-exceptional loss of US$5m vs consensus estimates of US$46m profit. Headline profit was US$7m (-79% yoy), boosted by other income and exceptional gains.
The weaker-than-expected results were largely due to the chartered-in fleet, which experienced -ve GP margin of 0.2%. Given that the BDI has declined 30% ytd to just 1,271, there is a high risk that 1Q11 contributions from the chartered-in fleet may be sequentially weaker...

Goldman maintains Sell rating, cuts TP further to KRW 8600 (S$9.85) from KRW 9600 (S$11). DnB reiterates Sell, TP $10.90.


Biosensors: Placement of 216.3m new shares (20% of existing share base) at $0.9283/sh to raise $200.8m, to invmt boutiques Atlantis Investment and Ever Union Capital. Each will take up an 8.2% stake. Both funds have track record investing in medical technology/ healthcare related sectors in the PRC.

Proceeds may be used for invmt in clinical trials, capex, potential new acquisitions, working capital, and possible repayment of borrowings…

Post placement, historical P/E rises to 32.4x from 26.9x, based on last close at $1.04. Expect stock price to react negatively due to dilution concerns (EPS to drop ~2%/7% for FY11/12E) and the hefty 11% discount of issue price vs last traded. There could also be further disappointment as mkt talk regarding possible M&A did not materialize.
Near term, we see technical support at $0.88-0.90 levels, which coincides with the Jan ’10 high and Hony Capital’s acquisition price...

Fundamentally Nomura maintains at Buy, but lowers TP to $1.40 from $1.50.

SG Market

SG Market: Spore shares are expected to stay listless despite the higher close on Wall Street as all eyes will be on the 2011 Budget out in the aftn with the govt expected to dish out fiscal support in the form of cash handouts & rebates on taxes and utility bills to defray the rising cost of living plus the usual incentives to upgrade the skills of the lower-income group in order to enhance competitiveness & employability.

Biosensors is likely to take a hit on dilution concerns following its massive 20% placement at a maximum 10% discount price. Otto Marine may also fall after posting a 4Q loss impacted by forex losses & reversal of gains on vessel sales. OCBC will report 4Q results during lunch break with consensus profit at ~$560m. STI expected to stay within 2040 & 2120 range before clearer trend emerges.

Thursday, February 17, 2011

Indofood Agri

Indofood Agri: Credit Suisse upgrades to Neutral from Underperform, and raises its TP to $3.00 vs $2.12, after increasing its FY11 crude palm oil price assumption to MYR2,950 pt vs MYR2,300/ton. Lifts FY11 earnings estimates by 57% to reflect its higher CPO price assumptions….

Note that IFAR is currently one of the largest upstream plantations in Indonesia, with exposure in North Sumatra, Riau, South Sumatra and Kalimantan. Its plantation portfolio comprises a handful of contiguous estates, allowing the company to enjoy significant economies of scale.

... still palm oil stocks down marginally today, after CPO May futures dropped 3.6% yday to close at RM 3745/ ton. Palm oil's decline to its lowest level since Dec 17 follows losses in soybean and soyoil prices on CBOT, as traders cut risky positions following higher crop estimates for Brazil and rains in Argentina diminished the threat of prolonged tightness in supplies.

Hutchison Port

Hutchison Port: global roadshows for the US$6b IPO likely to begin Feb 28 and end Mar 11. Mar 18 tipped as a listing date. The joint bookrunners are DBS, Deutsche and Goldman Sachs.
Meanwhile, the co is seeking a US$3b loan, and has invited ~10 banks to participate. Proceeds to be used for working capital and to repay debt and shareholder loans.


CWT: CIMB maintains Outperform with TP $1.72. Co’s expansion of commodity logistic business with acq in S.Africa and organic growth in Europe, Turkey and Indonesia is viewed positively. House expects major contributions from 2H11 onwards and freight fwding and warehouse ops to serve as cushion to risks from logistics biz…

In spite of recent outperformance (+22.8% to FSSTI’s +18.3% YTD) valuations remain attractive at 13.5x CY12 P/E slightly below forward avg of 14x.Excluding net cash, CWT trades at 10.9x CY12 P/E. Further catalysts to come from coal-trading wins.


Singtel: 3Q results were largely within or slightly beat estimates but houses maintain a lack of positive/negative catalysts to push it out of range-bound trading in the near-term. Counter is probably taking its cue from the general mkt as well. Technical indicate weakness, broke support of $3.03 and is trading below 100 day and 200 day MA as well. Starting to trend downwards with MACD in negative territory. Nxt support at prev low of $2.95


SGX/ASX: In a show of support, ANZ Bank chairman John Morschel has strongly supported the $8b offer by SGX for ASX Ltd, arguing the two countries' financial markets "must come closer together if Australia wants to be part of Asia….

The strong endorsement from Mr Morschel, a SingTel director from 2001-10 and chairman of the nation's most active bank in the region, came as SGX played down the prospect of any further tinkering to smooth the bid's political passage.


Broadway: CIMB maintains OutPerform Rating with $1.84 TP, based on 8xCY12 PE. Raise FY11-12 estimates by 1% after incorporating higher sales but lower margin and effective tax assumptions. Also introduce FY13 forecasts….

Note that Business remains healthy, with The HDD component business benefiting from
greater allocations from key customers as a result of quality issues at one of its major competitors…

Non-HDD components are benefiting from greater outsourcing from the West to Asia. The packaging business is also expected improve with increased capacity and the closure of the loss-making Xinjiang operation (S$1.8m losses in FY10). To combat rising labour costs in China, labour-intensive coilbonding processes will be shifted inland in 2011. This is expected to result in higher operating expenses in 2011. Completion of relocation is expected by end-2011.

Wednesday, February 16, 2011


UniFiber: Co has settled with China National Machinery Equipment (CMEC) on co’s debt for $19.5m which was owed to CMEC announced on 7 Feb. Update on the subscription of shares from ASF, Sec Industry Council has granted the whitewash waiver so ASF’s will not have to make a general offer and will likely proceed with the subscription of 3.6b shares at $0.05 approx 51% of co’s enlarged share cap and offer a $35m loan to co first announced on the 13 Jan...

In the 3rd piece of news, co has also received a demand of $10m from Falcon due to an owed payment. This is likely to come from the loan ASF has granted. ASF is a private fund owned by a sole investor Mr Oei Pheng Lian who has business interests in mainly the financial industry.

Straits Asia

Straits Asia: CIMB Has Technical Sell Call. Note that stock broke below its uptrend channel support as well as its 50-day SMA last week. Yesterday’s long black candle was likely a confirmation, suggesting a gloomy outlook for the stock in the near term…

A test of the 200-day SMA at S$2.27 is likely if the $2.40 support gives way. Upside resistance is seen around the $2.60 levels, where both the channel support turned resistance and its 50-day SMA meets. Recommend aggressive traders could short with a break below the $2.40 low, targeting the 200-day SMA and below. Stop could be placed above $2.57 or $2.60.


Telco: 4QCY10 round up. Credit Suisse says mobile continues to be the sector’s main growth driver. Notes SingTel performed the best, with 53% of the quarter’s 78k postpaid net additions.
SingTel now enjoys 46% of postpaid market share, with StarHub at 28% and M1 at 27%.
The gaps are more distinct in mobile revenue share terms, with SingTel leading with 51% versus StarHub’s 33% and M1’s 16%...

But revises industry earnings downwards by 1-3%, as the NBN remains a 2012 story, in light of the delays in the roll-out of OpenNet’s all-fibre network and startup issues faced by the players...

SingTel (maintain Outperform with $3.73 TP), with possible further capital management as a key catalyst.
MI (Neutral with $2.66 TP), due to limited near-term catalysts.
StarHub (Underperform with $2.35 TP), on view that the effectiveness of its hubbing strategy has been diminished by the more intense competitive landscape.


Cosco: 51% owned subsi Cosco Shipyard has secured 3 orders and 1 option to build USD113m worth of special purpose carriers. The 3 orders are scheduled for delivery btwn Feb 2013 and Feb 2014. Option will expire by end of June 2011. More on Chinese shipbuilders in Deutsche report.

Chinese Shipbuilding: Deutsche issue report noting healthy enquiries for containership and expects firm demand driven by positive macro outlook and relatively manageable global order book, 25% of total fleet below average of 32% in 1995-2010. Top picks include Buy, YZJ TP$1.90, Cosco TP$2.15 and HK counter China Rongsheng TP HK$7.45...

YZJ has indicated enquiries for dry bulk remain healthy despite falling Baltic rates, mainly from Chinese customers who wish to reduce reliance on charterers. Consolidation is expected in shipyard space due to recent order cancellations at smaller yards and re-ordering at larger yards. House also expects a stronger economy to lift sentiments of vessel owners and flow down to pricing power on end of shipyards…

On additional news, BDI rose to a 3-wk high on demand to transport S.American cargoes, advancing 30 pts (+2.5%) gaining for a 7th day.


UnitedEng: Launch of IPO of UE E&C following today's registration at MAS of prospectus dated 15 Feb 2011. Offering will consist of 70m new shares at $0.48 per share, 60m of which will be offered to institutions and private individuals, the remaining 10m will be offered to the public. A greenshoe option of 10.5m shares, approx 15.0% of the offering, can be exercised if necessary…

The offering will be handled by OCBC, the underwriter and stabiliser of this IPO. Size of offering is approx $38.6m including the option and mkt cap of UE E&C will be approx $134.6m. Co will retain a majority stake of 68.2% post-listing, and 65.6% if option is exercised. The IPO opens on 16 Feb 9am and closes on 22 Feb 12 noon.

Tiger Airways

Tiger Airways: Citi maintain Buy with New TP of $2.15. Note that house continue to like grp as it sees its well-executed business model (in terms of cost control and profit generation) leveraging on the multi-year structural demand growth in LCC traffic. Tiger is also an under-recognized proxy to the strong tourist arrivals into Singapore, mainly driven by the Integrated Resorts….

However, lower FY11-12E EPS by 9-11% and TP on higher fuel costs, note that Tiger may be able to pass s costs by raising ticket prices or increasing ancillary rev. While headwinds exist, believe there is little threat that Tiger may not find opportunities to deploy growing fleet. See grp as best positioned LCC to weather rising fuel costs, as passengers are less price sensitive....

While grp has no plans to implement a fuel surcharge, believe it has started to build higher base fares into its dynamic pricing structure to partially offset costs.


Midas: Nomura downgrade Midas Holdings to ‘Neutral’ from ‘Buy’, and reduces TP HK$5.90/S$0.97 from HK$7.20/S$1.18, noting that Co’s future growth is at risk amid the uncertainties in China’s high-speed railway development…

House view that recent Railway news is purely negative for the whole railway sector, as minister has been extremely bullish on China high-speed railway construction during his tenure. While already started projects are not likely to be terminated and train procurement orders are unlikely to be withdrawn, long-term railway development now faces more policy risks, which could cause a shrinkage in PE multiples for the whole sector.

Viking OffShore

Viking OffShore: Announced FY10 results, which were in-line, with Rev at $79.9m, +112%YoY, while Net profit at $12.7m, +1,169%YoY. Sterling performance was due largely to full-year contributions frm grp’s wholly owned Viking Airtech, a Heating, Ventilation, Air-Conditioning & Refrigeration systems specialist, which was acquired in Jan10, while Gross profit margin rose to 32% vs 19% YoY....

In addition, Grp consolidated 4.5 mths and 1 mth of earnings, respectively, from two newly acquired businesses, Promoter Hydraulics Distributor and Marshal Systems, where both were acquired in FY10, and grp notes that it now offers a fairly comprehensive suite of O&M products and services to customers....

Going forward, grp’s nxt stage of growth will be centred on the integration of its various business units to achieve economies of scale and enhance opportunities to cross-market to customers and expand into new markets. Grp remains confident on its unique value proposition as a one-stop solutions provider and is confident in standing out against competition to capture additional market share in FY11....

Current orderbook stands at approximately $39m vs $27m YoY, with management tipping sustainability on back of higher crude oil prices, growing demand in the O&M sector in general and the results of aggressive expansion in recent months to new markets such as Vietnam. At current price, valuations appear compelling, with grp trading at 9x FY10 PE vs its historical average of 18x

China MinZhong

China MinZhong: DBSV maintains Buy, but raises TP to $1.80 from $1.60. Note that grp’s 2Q results In line with consensus, driven by the processing segment which grew by 53% on the back of 31% increase in sales volumes and 17% higher ASP. Delivering value to shareholders. Management has basically executed well and that has reinforced house confidence in management’s competence to deliver growth over the next three to five years….

Growth plans include doubling of cultivation farmland in two years’ time, expanding vegetable processing capacities and selling higher priced vegetables. Believe that grp will be minimally impacted by food inflation. Prospects are positive and has prompted house to upgrade FY11F/FY12F by 13%/10%, pegging it at 9x CY11F PE compared to peers’ average of 14.2x.