PEC

PEC: Announced 2Q12 results. Rev at $130m, + 18% yoy, while net profit fell by 70% YoY to $3m, mainly on lower gross margins (2Q12: 20%; 2Q11: 26%) and unexpected
losses from its associates and JVs (2Q12: $5.9m losses; 2Q11: $0.3m profit).

Losses from associates /JVs were mainly due to delays in project completion and unsettled costs incurred on variation works. On a qtrly basis, net profit increased 24%, led by a 19% increase in revenue and improvements in gross margins (2Q12: 20%; 1Q12: 18%). 1H12 net profit was $5.6m (1H11: S$19m; -71%) and formed about
40% of our full-year estimates.

Pending a teleconference with management in the afternoon, OCBC places buy rating and $0.92 fair value estimate UNDER REVIEW.