Friday, March 30, 2012


Biosensors: longer term technical outlook appears positive, rising steadily in a step pattern over the past 24mths. The upward trending 200 MA has provided good support during this time.
The stock has bounced back up, following a recent low in early Mar which coincided with a bottoming of the RSI and MACD. Both indicators are now rising positively, which suggests upward momentum could continue in the near term.
The risk reward for a long trade appears favorable now, with resistance at $1.70, and support at $1.38 (200 MA).

Pac Andes

Pac Andes,Technicals appears to be chartering in Oversold Territory, with RSI and STochastics both hooking upwards, which could signal the start of a reversal, note however that ADX still apepars fairly neutral at tis pt. Near-term resistance tipped at $0.183, which is the 20 day EMA and support at $0.167. Yr low.


Amtek: Thomson Starmine notes the stock offers the highest dividend yield (7.4%) among 32 stocks in Singapore’s industrials sector tracked by at least three analysts.
StarMine estimates the company’s forward 12-month dividend cover at 3.3. Dividend cover is a measure of a company's ability to pay its expected dividends out of estimated cash flow.
Amtek’s free cash flow at the end of Dec 2011 was twice its net income of $8m. Earnings backed by strong cash flows tend to be more sustainable than non-cash earnings.
Amtek also has an Earnings Quality score of 85. A high score on StarMine's Earnings Quality model signals strong earnings sustainability over the next 12 months based on the company's past operating performance.
3 out of 5 analysts have a Buy rating on the stock while two have a Hold.


Boustead: Awarded contract to design, build and lease an integrated aircraft service centre at Seletar Aerospace Park (SAP) for Bombardier. The centre will have GFA of approx 6.5k sqm with an integrated 3 storey office and completion is expected in 2013. This is the 13th aerospace project for Boustead and its 5th at SAP. The contract will not be added to co's order book as it is on a lease basis. Co's current order book is $345m. No contract value was stated.

Co currently trades at 9.5x P/E

Sin Heng

Sin Heng: Re highlight as a potential Mynmmar story play?
Co. announced few days ago that it has entered into a JV with Starhigh Asia Pacific whereby both Co’s each invested SGD250,000 in the share subscription of a subsidiary SH Equipment.

Under the JV arrangement, both Co’s agreed have agreed that SH Equipment will incorporate a subsidiary in Myanmar for the purposes of undertaking heavy equipment leasing, rental, distribution and sales and such other business as the Co and Starhigh Asia may decide.

SH Equipment Pte. Ltd. will be principally engaged in heavy equipment leasing, rental, distribution and sales directly in Myanmar and indirectly through the Myanmar subsidiary.
We note that Sing Heng’s Fundamentals appear fairly stable with a div yield of 5.5%.


F&N: Announced that one of its 100%-owned subsidiary, FCL (China), is proposing to privatize its 56.17% owned HK-listed entity, Frasers Property (China). The proposed privatization will be undertaken jointly with Riverbook Group, a wholly-owned subsidiary of Ascendas Land.

Main assets of FPC include 157,610 sqm Vision Shenzhen Business Park and Shanshui Four Seasons in Shanghai with 737,000 sqm earmarked for residential/ commercial uses. DBSV believe the rationale is that current traded price does not reflect its value as FPC is trading at 43% discount to its NAV. Furthermore, FPC’s trading value is relatively low at HK$1m/ day.

Overall, house maintain Buy with $7.70 TP. Continue to see value in F&N as it is trading at 24% discount to RNAV, with the potential to progressively unlock value over the longer term. In the meantime, group earnings will benefit from the strong performance of its brewery unit, stable investment property earnings, coupled with $1.7b in unrecognized property development sales in SG.

Coal / Sakari

Coal / Sakari: Indonesia may ask foreign investors that are majority owners of mining cos to sell shares to the govt to comply with a law that lowers their ownership, according to an energy and mineral resources ministry official. If the govt declines, the stake can be offered to state-owned or private co’s, according to the head of the legal division at the directorate general of minerals and coal. Thai's PTT owns a 45.3% stake in SAR, below the proposed 49% ownership limit.

Separately, Credit Suisse revise TP for Sakari and lowers it to $2.10 vs $2.50, maintains 'Neutral'. Firm notes that co continues to experience difficult operating environment at Jembayan mine which has led to a change in mine planning that may hurt its 1Q12 earnings. Add that mkt for sub-bituminous grade coal (JBY quality) continues to experience oversupply situation and house have heard of buyers asking for delay in delivery of high-priced contracts volu, substituting it with cheaper spot vol. Jembayan accounts for 77% of SAR’s vol.


Kreuz: DnB Nor note that the 70m shares placement, which comprises of 20m vendor shares from Kreuz's CEO as well as 50m new shares, increases the free float of Kreuz from 15% to 26%. Argue that this placement is likely to spur increased investor interest in the firm, given that both the macro and micro perspectives of the company remains bright.

Overall, believe this year could prove a brighter year on the back of strong subsea tendering outlook. Specifically, look forward to news regarding major contract work wins such as ONGC's Pipeline Replacement Project 3 which house believe Swiber is well placed for. Kreuz remains well positioned to take on some of the IRM related work from its parent Swiber. Reiterate BUY recommendation but revise down DCF backed TP from $0.45 to $0.44 after factoring in the shares that were issued.

Keppel Corp

Keppel Corp: says it is 'comfortable' with its Sore yard capacity even after a blistering 2011 when rig order wins ballooned to a record US$10b.
CEO Choo Chiau Beng said KEP has always been prudent in not increasing capacity simply to meet short-term increases in demand, pointing to the Spore yards' ability to deliver 21 jack-up and semi-submersible rigs in 2009 and 2010.

Nevertheless the real test will come in 2013, when its Spore yards have 20 rigs slated for delivery, meaning churning out rigs almost every other week.
KEP has thought up ways to overcome yard constraints, such as using a floating barge for drydock. Moreover, KEP can choose to outsource some fabrication work on modules to its regional yards in the Philippines, China and Indonesia.

KEP has also been benefiting from increased interest in the offshore wind energy space. While it has no plans to become a full turnkey provider in this mkt, KEP has not kept too distant from the opportunity. Since 2010, it won two offshore wind contracts - an electrical transformer and maintenance platform and a wind installation vessel. Moreover, in early 2012, it acquired a 49.9 per cent stake in OWEC Tower, a leading industry designer of jacket foundation for the offshore wind industry.
'This will also add to our offerings in the offshore wind installation industry, and we will continue to explore opportunities to expand our suite of solutions for this industry,' said Mr Choo.


SMM: Upstream reported this morning that Seadrill has awarded SMM’s Jurong Shipyard with a US$650m contract to build a harsh environment newbuild rig.
There is no formal announcement from SMM yet.

If the true, this order will bring SMM’s ytd order wins to US$2.1b (S$2.6b). This translates to an annualized order run rate of S$10.4b, almost 3x the S$3.7b worth of orders clinched in FY11.

The Street is bullish on this company, with 21 Buys and 4 Holds, with consensus 12mth TP at $5.89.
The stock closed -0.8% at $5.24 yday, and has been flat over the past wk.

SG Market

SG Market: Spore shares are unlikely to see much window dressing ahead of the quarter end following the mixed close on Wall Street. We expect the local market to continue its listless trading with a possible downward bias as investors move to the sidelines. Stiff resistance for the STI is tipped at 3030 with 50-day MA at 2988 providing underlying support.

SembMarine will take to the news after Upstream reports that the rigbuilder has bagged a US$650m rig order from Seadrill. Cord blood service provider will also be in the limelight after making a strong debut yday.

Thursday, March 29, 2012


F&N: co to lift halt at 10.15am.
Announces that its HK-listed subsidiary Frasers Property (China) has suspended share trading wef 9am 29 Mar, in relation to a proposed privatization jointly by FCL (China) and Riverbrook Group.
FCL China is an indirect wholly owned subsidiary of FNN, which already holds ~56.2% of Fraser Property (China). Riverbrook is a wholly owned subsidiary of Ascendas Land Int’l which holds 17.2% interest in Fraser Property (China).


OSIM: OCBC maintains Hold with $1.35 TP. Note that macro risks the main concern. Believe that further downside risks have emerged for OSIM International since last update on 8 Feb12. This stems from increasing signs of easing growth in OSIM’s key addressable markets, including China, Malaysia and Taiwan.

In house opinion, lower economic growth could manifest into softer demand for OSIM's high-end products, which are largely discretionary in nature. To mitigate this, mgt would continue its innovation drive to introduce novel products with fresh concepts and better functionality, while focusing on improving its productivity per store and man. Maintain HOLD rating and given limited upside potential.


STX OSV: OCBC note that Co. well-positioned to ride an upcycle. Last week, STX OSV announced that it has secured two contracts worth a total of NOK1.2bn (US$200m). As these contracts already form part of house total contract win projections for FY12F (NOK13b), are not making changes to our forward estimates.

Of noteworthy was the contract win for an Offshore Subsea Construction Vessel for DOF, which features an innovative moon pool design developed by STX OSV. Think this is further testament to the group’s ability to stay ahead of the curve for product development and garner customers’ orders. Meanwhile, optimistic on the OSV market given the improving industry fundamentals. Maintain BUY with fair value estimate of $2.25.


QAF: CIMB’s Idea of the day. House note that:

1) Re-rating to its historical 2x P/B translates into a fair value of $1.24.

2) Is there a case for re-rating? Yes.
a) appears to have purged its loss-making China operations,
b) can easily enhance value by ploughing into its vastly successful bakery business capital freed up by jettisoning non-core assets.
C) downside risk limited by below-peer valuations.

3) And if re-rating doesn’t happen. Think of it as you having sold QAF a call option to privatise the Co with the generous dividends you receive as the option premium. No need to tap the equity market and a trend of major shareholder purchases sets the stage for tongues to wag on possible privatisation to unlock value for shareholders.

SIA Engineering

SIA Engineering: UOB Kay Hian maintains Sell with $3.80 TP. Note that outperformance is unlikely to be sustained as market is overly optimistic of dividend payout. Note that mkt has not priced in risk of capacity cuts.

Maintenance rev is typically based on flight cycles and as airlines cut capacity due to weak demand, rev would be impacted. SIA which accounts for two-thirds of rev, has already announced freighter capacity cuts. There is also the strong likelihood that passenger capacity growth could be moderated if demand falters.

This can be gleaned from the fact that SIA has already offered its pilots an optional no-pay leave of up to two years. Changi Airport has also just announced landing rebates of 5% for passenger and 20% for cargo aircraft in an attempt to reduce operational costs. In addition, believe that the market has not priced in the risk of lower operating margins.

Overall, do not expect SIAEC to announce a final special div (FY11: special dividend 10c, total div 30c) and instead expect a final payment of 13c, bringing total div to 19c. This represents a payout of 80%. For FY13, expect div payout to remain flat and payout from JVs and associates to normalise to 67% for FY12 and FY13, from an average of 116% for FY10-11.

Nam Cheong

Nam Cheong: secured contracts worth a total of US$36.8m for 2 units of 5150 bhp and 1 unit of 5220 bhp AHTS vessels to new customers from Spore, including a Norwegian-based Spore co.
The vessels are scheduled for delivery in 2Q and 3Q12. Two of the vessels will be deployed to S America and one to the Asia Pac region.
With the contracts, Nam Cheong’s order book stands at ~RM 628m (S$258m) comprising 12 units of vessels, scheduled for delivery till end of 2012.
This compares with Nam Cheong’s FY11 revenue of RM 607m.
The stock trades at 9.3x P/E.
CLSA and Sias have Buy/Overweight ratings with TP $0.23/0.22 respectively.

Lum Chang

Lum Chang: Still buying back its shares daily in small amts and has been continuing on for a full mth

FSL Trust

FSL Trust: Signed 3 yr charter contract to charter its vessel FSL Singapore by 2Q2012. FSL Singapore is a 47.5k dwt product tanker deployed in the spot mkt. The tanker will be chartered to Petrobras at US$14k per day. This is subject to physical inspection of the vessel at its nxt port.


Boustead: Awarded contract to design, build and lease an integrated aircraft service centre at Seletar Aerospace Park (SAP) for Bombardier. The centre will have GFA of approx 6.5k sqm with an integrated 3 storey office and completion is expected in 2013. This is the 13th aerospace project for Boustead and its 5th at SAP. The contract will not be added to co's order book as it is on a lease basis. Co's current order book is $345m. No contract value was stated.

Co currently trades at 9.5x P/E

Cordlife IPO

Cordlife IPO: Trading begins today.
Group's IPO 3.8x subscribed. Cordlife's 58m placement shares attracted some interest from institutional investors, with Coop International, Johnson Tan Chin Kwang, and Eastspring Investments each taking up more than 5% of the invitation shares. As for the 2m public offer shares, over 3,600 valid applications for 172.3m shares were received.

We note that Post IPO, Cordlife will trade at 13.6x FY11 P/E and 1.7x P/B, with its above-average valuations justified by a superior ROE and scarcity premium as a healthcare play. Cordlife has committed to distribute up to 25% of its FY11 and FY12 net earnings as dividends, which translates to a dividend yield of 2.0%


Swiber/Kreuz: Kreuz announce that the Company has entered into a placement agreement with Mr. Kurush Contractor (Vendor Shares – Kruez CEO), and for the placement of 70m shares in the capital of the co, comprising 50m new Shares and 20m vendor Shares. The Placement shares will be placed at an offering price of $0.34/Share, amounting to aggregate proceeds of $23.8m.

The Company intends to use the Net Proceeds in the following manner:
1) $14.9m or approximately 90.0% of the Net Proceeds for capex such as the acquisition of assets including vessels and/or other subsea related assets; and
2) the remaining $1.7m or approximately 10.0% of the Net Proceeds for working capital purposes

Note that the official announcement is slightly different in the earlier announcement by Reuters which we had reported yesterday, which had initially involved Swiber selling out 33m vendor shares in the co.

The New Shares represent approximately 8.98% of the enlarged issued share capital of the company and based on the unaudited consolidated financial statements of the Group for FY11, the Grp’s NAV/share was approximately 21.92 US cents, after adjusting for the issue of New Shares, NAV/share would be approximately 22.32 US cents.

SG Market

SG Market: S’pore shares are poised to face a challenging day given the weak lead from Wall Street, following disappointing data, driving commodity prices lower.

Risk appetite is generally subdued with commodities plays such as Noble and Olam likely to lose ground. Offshore & marine stocks are likely to be in focus after Swiber's 63.2%-owned subsea subsidiary Kreuz announced a 70m share placement to raise around $16.6m; while Malaysia-based OSV builder Nam Cheong bagged US$36.8m tug contracts Watch out for news on F&N after the company requested a trading halt. Cord blood bank service provider Cordlife makes its debut after its IPO was 3.8X subscribed.

Wednesday, March 28, 2012


Swiber/Kruez: Kreuz Holdings is selling new shares and two existing shareholders are selling shares for up to $34.5m in a placement, according to a term sheet seen by Reuters.
Offshore services firm Swiber Holdings will sell 33m of its shares in Kreuz, while Kurush Contractor (CEO of Kruez) will sell 17m of its shares at between $0.34 and $0.345, the term sheet said. (So total vendor shares placedout is at 50m vendor shares, while new placement shares issued would be approximately another 50m too)

DBS Bank and Religare Capital Markets are the joint placement agent. Based on Swiber current shareholdings, sale of its Vendor shares in Kruez would reduce Swiber’s stake to 50.6% from current 63.2% in the new share base capital of Kruez.

HL Finance

HL Finance: BNP says HLF faces headwinds that could persist throughout FY12-13. Sees limited room for NIM to expand given HLF’s costly funding structure (heavy reliance on fixed deposits), which is set to persist given its limited mkt reach (28 branches, zero ATMs) and clientele profile (target ageing group of Sporeans).

Notes net interest income accounts for 95% of HLF’s operating income, hence the ability to grow loans is critical for HLF. While the house expects decent 12-15% loan growth in 2012-13, says HLF is constrained by, i) high LDR of 96%, ii) sizeable short term loans (1/3 of loan book) that need to be replenished quickly, and iii) heavy reliance (20% of total loans) on an increasingly tough car-loan business in view of curbs on car population growth.

Slashes EPS forecast by up to 18%, and expects ROE to slide to record low levels of 5%. Believes a turnaround in fortunes look remote under an increasingly competitive and heavily regulated mkt environment.
The house cuts TP to $2.42 from $3.05, based on 13x FY12E P/E. Reiterates Hold call despite HLF’s seemingly cheap valuation of 0.7x FY12E P/B.

IPO: Civmec

IPO: Civmec has just lodged its prospectus, with Maybank Kim Eng the lead under-writer/placement agent, with MAS.
Civmec is an an Australian-based integrated multi-disciplinary construction and heavy engineering services provider to the oil and gas, mining and other industries, such as the infrastructure, utilities, chemical
and power industries. Grp provides heavy engineering and other services including fabrication, site civil works, pre-cast concrete and maintenance services.


QAF: in top volume today at +2.0% at $0.765, extending yday's 7.1% run.
No newsflow to highlight on the company, neither were any married trades observed.
Co reported a decent set of results at end Feb, with revenue +14% yoy, and net profit +21% yoy.

The trading volume and share price just exploded yday, triggering a bullish breakout signal.
The stock trades at 6.6x P/E, 1x P/B.


KepCorp: Technical Buy Call by UOB Kay Hian with a potential 5.8% return. BUY with a target price of $11.60. There is a following through of the bullish engulfing candlestick pattern with a
gap up, and the stock appears to break out toward the above mentioned resistance level.

Prices have also closed above the mid Bollinger band. The bullish view is also supported by a
bullish crossover at its Stochastics indicator. The alternative exit for this long position will be if the stock falls below $10.60. Institutional research has a fundamental BUY with TP of $12.70.

Keppel Land

Keppel Land: Technical Buy Call by UOB Kay Hian with a potential 10.6% return. BUY with a TP of $3.85. The stock appears to have rebounded from its mid Bollinger band, which is also the 20- day SMA. Currently any retracement is likely to find support at close to $3.30. The Stochastics indicator is appearing to form a bullish crossover and the MACD indicator could cross above its signal line.

The alternative exit for this long position will be if the stock falls below $3.30. Institutional research has a fundamental BUY with TP of $3.60.

CSE Global

CSE Global: Prices are consolidating, getting ready for the next run within a longer term upward rebound. Even though prices remained below its moving averages, the fall from the January high appears corrective, suggesting that there is still one more upleg in the coming weeks if not days.

The momentum indicators are starting to reverse, turning upwards once more from oversold positions. A strong push past the S$0.86 levels would likely signal that the correction from January is over. Aggressive traders could buy now with a stop placed below the support band of $0.75-0.76. Expect prices to retest the January high of $0.98-1.05 once the $0.86 resistance is taken out.


CMA: Tehnical Sell Call by CIMB. Note that the stock has found support near the 30-day SMA in early March and the subsequent rally has taken prices above the February high. However, as prices continue to sport new highs, the indicators show a bearish divergence, signalling a weaker uptrend this time round.

There is still a chance that prices could push towards $1.73-1.75 again but do not think that it would rally too far above the said resistance. Aggressive traders should get in to short on rallies with a stop placed above $1.79. Prices could continue on lower towards $1.455 again, if the $1.61 support gives way.


Europtronic: CIMB Maintains Sell with $0.01 TP. Note that grp announced SGX has granted a waiver of the requirement to seek shareholders’ approval for the proposed sale of its office premises at 80 Marine Parade Road

1) The Company is of the view that the Properties constitute non-core assets of the Group and are not necessary or material to the business of the Group.
2) The Properties are sold above the open market value based on the Valuation Report issued by DTZ.
3) Even though the Sale would not result in any excess or deficit of the Sale Price over the net book value of the Properties of S$6,600,000 as at 31 Dec11 or any gain on the Sale, the Sale would enable the Group to realise cash and deploy its financial resources more efficiently.

Swiber Holdings

Swiber Holdings: OCBC maintains Hold but raises TP to $.75, on back of latest contracts. Note that the undisclosed customer is likely to be PEMEX, and work entails the procurement, transportation and installation of pipeline. As this is a new market for Swiber, it is prudent to factor in contingencies for the group.

However, there are unlikely to be major hiccups as Swiber Conquest has a good track record of pipe-laying and the waters where it will be executing the work is relatively shallow. Meanwhile, expect more contract wins for Swiber but this also means more funds would be needed for working capital. Maintain HOLD due to limited upside potential.


NOL: OCBC maintains Hold with $1.38 TP after Co’s latest perpetual issuance. Note that since accounting standards dictate that these perpetual securities are treated as equity, this issue will improve NOL’s gearing ratio and lower its cost of borrowing. Also, NOL’s cash position will be strengthened further, positioning it well to navigate through the difficult environment the container shipping sector is currently facing.


Singtel: Macquarie reiterate O/p, TP $3.53, India boost ahead. Believe earnings growth over the next 12 months will be driven by improvements in India.
Remains positive on Bharti’s prospects in a market where competition seems to be stepping down from irrational levels.

Undemanding Valuations at 12x FY13E core PER and 5.6x adj EV/EBITDA, vs higher-yielding telcos (6–7% yield), which are trading at 7x EV/EBITDA and above. with a sustainable dividend yield of 5%, believe Singtel offers a good combination of value, growth and yield.


SATS: Deutsche upgrades to buy, TP $2.96 from $2.33, brighter skies ahead. With recessionary risks receding, confident SATS' recent operational resilience will be sustained. Japan is back in focus as traffic recovery gathers pace and given JAL's turnaround.

SATS' improving operational outlook supports sustainability of its 5% div yield and management's growing capital efficiency focus underpins ongoing capital return potential. Raise estimates and now expect 15% FY13e underlying NPAT growth. Valuations are undemanding versus historics and peers.

CapitaCommercial Trust

CapitaCommercial Trust: Nomura reiterate Buy, TP $1.47, seeking unit buyback mandate. CCT is seeking a unit buyback mandate in the upcoming AGM to be held on 27 April, to repurchase up to 2.5% of CCT’s outstanding units. With or without the unit buyback mandate, the stock is still cheap at 25% discount to NAV, and considering its latest move to seek a unit buyback mandate, the manager is clearly in agreement.


Wilmar: Citi downgrades to Hold from Buy and cuts TP to $5.30 from $6.10. House note that in the short term, Wilmar may see a relief rally on improved margins in both oilseeds and palm merchandising that will help return it back to being a balanced, diversified agriculture firm. Beyond that, for a sustained rerating this year, Wilmar needs to deliver new drivers that will help lift earnings growth to 5-10% p.a vs 3% p.a average since 2008.

The near half reduction in export taxes for processed palm oil exports from Indonesia means reduced competitiveness for 60% of Wilmar’s palm processing capacity which is ex Indo. While Wilmar is aggressively expanding its capacity in Indo by a further 30-40% to bring its global footprint to 50% in Indo, this will only kick-in as contributors by 4Q12.

As such, house see limited upside and downgrade Wilmar to Hold, with TP of $5.30, equivalent to FY12 PER of 16.7x i.e. its five-yr mean.


SIA: its medium-haul, low-cost airline Scoot has chosen Tianjin in China as its 3rd destination. Scoot also took the opportunity to unveil its Chinese name pronounced ku-hang, meaning 'cool'.
Tianjin is a city of 12m in northern China. Scoot CEO Campbell Wilson said that Tianjin - a 30-min high-speed bullet train ride away from the capital - had huge potential, and offers connections to > 100 cities.

This comes after Scoot recently unveiled Sydney and Gold Coast as the destinations of its first two routes, starting in the middle of the year. The airline said it said 'sold tens of thousands of seats' for its Sydney and Gold Coast services over the past week, after an aggressive ticket sales campaign.

The airline, which has recently received its 1st B777-200 and will get 3 more this year, plans to sew up 5 routes by the end of the year.


Guthrie: emphasis of matter by independent auditor, PWC for the FY11 financial statements. Draws attention to Note 37(c) which describes the uncertainty related to the tax assessments of Jurong Point Realty (JPRL), a 50% JV of the Group. In summary, JPRL may be exposed to additional taxes of ~$25.3m (Guthrie’s share $12.65m) for YA05-12, as JPRL is in dispute with the Comptroller of Income Tax with regard to tax deductibility on coupon payments on the subordinated bonds issued by JPRL.

Nevertheless, the financial impact on Guthrie (if JPRL is unsuccessful in its tax appeal) is small, at 5.3% of FY11 net profit and 1.4% of equity.

Otto Marine

Otto Marine: Co has proposed to undertake a renounceable rights issue to raise gross proceeds of approximately $75.6m, which will see the issuance of up to 945,214,500 rights Shares at an Issue Price of $0.08/rights share, on the basis of one 1 Rights Share for every 2 existing Shares.

Based on yesterday’s closing price, weighted average price assuming successful full subscription of rights would be at $0.123.

($0.144 x 2) + ($0.08 x 1) = $0.368
$0.368 / 3 = $0.123


LionGold: Co to issue US$30m of convertible bonds at 9.0% due 2015 with DMG to handle the issue on a best efforts basis. The conversion right attached can be exercised anytime 30 calendar days after the issue date till maturity. The conversion price is the higher of
1) $0.964 (the 10% disc to VWAP on prev mkt day)
2) 120% of the VWAP of 20 trading days after the issue date
and will be limited to $1.158 per conversion share (approx 9.2% higher than last close of $1.06).

The number of new shares convertible is dependant on the conversion price and will range approx from 4.46% to 5.36% of existing share capital.

The issue also raises gearing (net debt/equity) to 128.5%.

Co has a NAV per share of 6.14c before the issue. The issue will increase NAV to 10.55-10.64c.

Note that this follows a private placement of 12m shares at $1.057 to 2 individuals. The convertible bond issue appears to be relatively attractive with conversion price capped at 9.2% premium to last done with a 9% yield compare to its share price.

Keppel Corp

Keppel Corp: announced that it has entered into a Letter of Intent (LOI) with returning customer and 31.7% associated co Floatel Int’l, to build an accommodation semisub worth US$315m for delivery in Jul ’14. This will be Floatel’s 4th accom semi with KEP after the delivery of 2 previous semis in 2010, and comes at a higher price tag than the US$260m order for the Floatel Victory in 2011. The premium for the latest order is likely bcs it is for a new generation harsh environment design.

Ytd, KEP has won 2 orders worth US$465m. This compares with its order book at end Dec ’11 of $9.4b. The strong order flow from the rig builders is testament to the buoyant demand for ultra-deep water (UDW) rigs, as highlighted by yday Citi and Deutsche (see yday’s 9.03am and 9.06am post respectively). This is further reinforced by Morgan Stanley’s view of a “super spike”, in which it sees rental rates for UDW rigs climbing 28% to a record US$714k/day by 3Q12.

KEP trades at 10.9x P/E. The Street has 22 Buys, 3 Holds and 1 Sell rating on the stock, with consensus avg TP of $12.20.

SG Market

SG Market: Spore shares are likely to consolidate its gains following the weak session on Wall Street. Having broken through the 3000 psychological level, the STI may make another crack at the ytd high at 3030 but is unlikely to clear the double top this time round given the uninspiring data from US and China.

In corporate news, KepCorp signed a LOI to build a US$315m new generation harsh environment accommodation semi for Floatel, taking its ytd new order wins to US$465m, while Singapore Exchange announced a business reorganisation and some personnel changes.

Tuesday, March 27, 2012

Bumitama Agri

Bumitama Agri upcoming IPO: Indicative stats below.
Global offering size of 327,324,000 shares (including over-allotment, 18.6% of enlarged share capital) comprising: 124,833,000 shares for cornerstone subscriptions; 187,491,000 Offering Shares for international placement; 15,000,000 Offering Shares for public offer. INDICATIVE PRICE RANGE: $0.675-S$0.745 per share

P/E FY12: 10x – 11x. Valuation is inline with Indonesia's peers trading range. Gross Proceeds (Including Over-allotment): $220.9m-$243.9m

MARKET CAPITALISATION (Based on indicative pricing): Approx $1,186m-$1,309m (assuming over allotment exercised in full) LOCK-UP: 6 months from listing date for all existing shareholders

Roadshow: 26 March, Mon – 2 April, Mon
Books open: 26 March, Mon
Books close: 2 April, Mon (5PM based on UK time) or subject to notification by the JBRs
MAS registration / Allocation: 3 April, Tues
Singapore Public Offer: 4 April, Tues – 10 April, Tues
Expected listing: 12 April, Thurs

Singapore Land

Singapore Land: Mgt still cautious on office and residential segments, following recent meeting. Despite negative rental reversions, occupancies have strengthened at office assets. House sense the intention for site acquisitions, but persistently high bids remain a setback.

Adjust EPS by +12/-2% on development recognition and higher ASPs for Chengdu project. Factoring in narrower cap rates for office assets raises RNAV and target price (still at 45% discount to RNAV). Maintain Neutral, target price $6.12, stronger-than-expected office data points as re-rating catalyst


STX OSV: Nomura initiates coverage with Reduce Call, TP $1.68. Note that situational play on supersized offshore supply vessels, but order book replenishment key.
Expect OSV mkt to remain well-balanced contrary to expectations of over-supply, with potential for upside as new rig orders come through and lead to a pickup in OSV orders. Like co for its market-leading position in the high-spec OSV segment.

Competitive advantage lies in its track record of pulling off difficult projects, its ability to provide in-house designs to clients and its increasingly vertically integrated model, which allows cost and quality control.

But with order book replenishment a concern and valuations looking stretched, would look for more compelling levels before buying. Trades at FY12/13F P/E of 8.7x and 10.2x, on the high end of its forward P/E band of 4x and 9x, with negative EPS growth for both years on its declining order book.

Eu Yan Sang

Eu Yan Sang: The traditional Chinese medicine retailer has clinched a key licence to sell prescription drugs and Chinese herbal medicine in China, allowing the co to sell its flagship pdts in its stores.
The first EYS pharmacy will open in Dongguan later this year, and the co is planning a second. This will add to its current 16 stores in the country. The latest store opened yday - a landmark retail-museum store in Foshan, the birthplace of EYS founder Eu Kong, who is also the great-grandfather of CEO Richard Eu.

EYS currently only sells food products and its proprietary Lingzhi cracked spores capsules in its Chinese stores. Now it will be able to carry its other topsellers, such as its Bak Foong pills for menstrual discomforts and postnatal nourishment.
Richard describes China as a 'challenging market' because of its unique business environment and complicated regulatory processes. Says the pharmacy licence is granted on a store-by-store basis, but believes the first stores in Dongguan could help it to 'get a track record' to help smooth future expansion. But adds, the high barriers to entry could also help EYS as an early foreign entrant in the potentially huge Chinese market.

The stock trades at 15.4x P/E, 2.6x P/B.
Other local healthcare product peers, such as Osim, Cerebos, trade at 13.8x and 17.7x P/E, respectively.

Tiger Air

Tiger Air: 33% associate Mandala Airlines will commence sale of tickets from today 12 noon. Manadala’s initial services will be on the Jakarta-Medan and Jakarta-Kuala Lumpur routes, with prices starting from as low as IDR 519,900 (~S$72.20) and IDR 329,900 (~S$45.80) on the respective routes. Mandala’s inaugural domestic flight is scheduled for 5 Apr.

Nevertheless, the news, while positive for Tiger, has been well-flagged previously.


CMA: may be in focus after being selected as constituent stock for both the Hang Seng Global Composite Index (HSGCI) and Hang Seng Foreign Companies Composite Index (HSFCCI).

The HSGCI and HSFCCI serve as benchmarks for global investors for the performances of all HK-listed companies and HK-listed foreign companies respectively.
The HSGCI comprises all constituents of the Hang Seng Composite Index and the HSFCCI.
The HSFCCI comprises 16 constituents that are either foreign companies listed, or foreign companies which have HK Depositary Receipts listed, on the Main Board of the HKEx with at least HK$3.0b (S$0.5b) in market cap.
The inclusion of CMA as a constituent stock of both indices was effective from 5 Mar ‘12.

Including the two indices above, CMA is a constituent stock of 110 indices in total. The others include STI, MSCI All Country World Index, S&P Global Ex-US BMI (Broad Market Index) and GPR 250 Index.

Ying Li

Ying Li: Announced that it had pre-sold 86% of Ying Li Intl Plaza. The launch of phase 1 for the residential units averaged about Rmb10k per sqm and comprised 1 of 3 residential blks. Co has launched the 2nd residential blk on 25 Mar 2012 and 59% of the launch has been sold at avg price of Rmb11k per sqm. Co has stated that remaining units, SOHO and Grade A office space will be launched in subsequent phases over the yr. Ying Li currently trades at 1.3x P/B.


Swiber: Could see positive sentiments as strong order wins continue, with Co. announcing a US$273m Gulf of Mexico contract. The latest contract, entails offshore construction works for the procurement, transportation and installation of pipeline in the Gulf of Mexico. Work for the project will start immediately this year and into 2013.

Result beings Ytd Orderwins to US$525m, and places current book at an approximate US$1.3b vs FY11 rev of US$654.5m, underpinning earnings visibility till 2014.

CIMB maintains O/p with $0.79 TP.

SG Market

SG Market: Spore shares are likely to rise, tracking gains across the region and Wall Street after comments from Fed Bernanke breathed new life into hopes for further easing after remarking that US employment growth could be supported by continued accommodative policies.

The STI is expected to set 3000 back in its sights following recent sideways trade amid the lack of upward impetus. Gains are likely to be broad-based with asset plays such as Noble and Olam and other commodity stocks getting a liquidity boost. Tiger Airways may be in focus after its 33%-owned Mandala confirms its first flight will be on Apr 5. NOL may also draw interest after it mandated banks for a proposed perpetual bond issue.

Monday, March 26, 2012

Pac Andes

Pac Andes: The issue is 1 right for every 2 existing shares at $0.14 per right share. The closure date for the issuance of rights was on record date 20 Mar. The rights have started trading since 23 Mar and will trade till 2 Apr 5pm. At current rights price of $0.021 and conversion cost of $0.14, the total cost of a rights share is currently $0.161 ($0.14 + $0.021)

The mother share is trading cum dividend at $0.172. However after the mother share trades ex-div (div of 1.08c), the ex-div value is $0.1612, compared to which the rights are currently trading at a slight discount.

The rights shares are not entitled to the dividend of 1.08c.

The last date of accepting the rights and payment is on the 11 Apr at 5pm (9.30pm for electronic applications) and the rights shares will be issued on the 19 Apr.


OUE: CLSA interviews with Mr Michael Sengol, CEO of Meritus Hotels and Resorts, the hotel arm of OUE. Though he joined just two yrs ago, the veteran hotelier, with >30yrs of experience, has successfully transformed Mandarin Orchard, OUE’s single largest hotel. The 1051-rm hotel is the 2nd largest hotel in Spore, and has won ~200 awards last yr.

Mr Sengol believes that the upside in the tourism industry is great, given that Spore has more to offer now. Says the opening up of flights from secondary cities in China, Indonesia and India will boost tourist arrivals. Thinks that the hotels here are underpriced and will each S$500 room rate in the next 4-5 yrs (this compares with a 5-star hotel in Bombay charging US$500/night, and the much higher rates in Korea, Tokyo and HK).

CLSA notes the tourism sector has continued to enjoy strong growth with tourist arrivals hitting a record 13.2m last yr, +14% yoy. Highlights that hotel occupancy rate has consistently ranged highly btwn 83 – 90%. Believes demand is set to grow further as the govt will be making another $905m invmt to spur growth in tourism (Spore Tourism Board target 4yr CAGR of 6.5% to hit 17m visitor arrivals by 2015). .

The hotel segment represents 24% of OUE’s GAV. Despite being optimistic on OUE’s hotel business, CLSA is concerned on the weakness from other major parts of its business, such as office (48% GAV) and high-end residential (17%). Adds, OUE’s earnings profitle is changing with increasing office contribution once the new office buildings (OUE Bayfront and One Raffles Place T2) start operations. Expects hotel revenue to reduce to 54% this yr and 44% in 2013, from 65% last yr.
The house keeps its Sell rating with TP $2.04.

Cordlife IPO

Cordlife IPO: IPO Public offer closes tomorrow, 27th Mar at 12 p.m and begins trading this Thursday.
Formed in 2001, Cordlife Group is among the 1st cord blood banks in Asia, and the largest in Singapore (62% market share) and 2nd largest in HK (28% market shares). Fundamentals appear to be driven by an expected strong penetration rate and group’s technological and clinical leadership, cementing its first mover advantage in Asia.

Post IPO, Cordlife will trade at 13.6x FY11 P/E and 1.7x P/B, with its above-average valuations justified by a superior ROE and scarcity premium as a healthcare play. Cordlife has committed to distribute up to 25% of its FY11 and FY12 net earnings as dividends, which translates to a dividend yield of 2.0%.


Sakari: CIMB has Technical Sell Call. Note that since TP target of $2.22. Prices closed below its 200-day SMA on Friday, which could induce a tad more selling pressure on the stock.

The technical landscape continued to deteriorate with its MACD moving into negative territory. However, its RSI is flat. Aggressive traders should get in to short now as with a buy stop placed above $2.50. Prices could continue on lower towards S$2.22 first, followed by $2.00-2.05 next.

Myanmar (Yoma/Interra/Sin Heng)

Myanmar (Yoma/Interra/Sin Heng): A raft of new investment laws are expected to make Myanmar draw more foreign interest if sanctions are lifted in the coming year. But the overhaul leaves some problems unresolved and might stoke new ones.

A plan to give tax holidays and other incentives to foreigners is expected to be approved as early as this week, ahead of a closely watched April 1 parliamentary by-election. That vote could put democracy icon Aung San Suu Kyi into elected office for the first time. Other major changes in the works include plans to simplify the unwieldy FX system, give more independence to the central bank and open the economy to foreign phone cos and banks.

CSE Global

CSE Global: CIMB upgrades to O/p (TP $0.90) from Netural on the back of its recent underperformance. On a relative basis, current trading price offers a decent entry point. Against its own trading cycle, it is trading at 7x P/E vs. 5-year mean of 11x, peak of 24x and trough of 4x.

Compared to Singapore small-mid-cap industrials, it is trading at 6x CY13 P/E vs. 8x. The stock also offers an attractive div yield of 7%. There could be scope for a special dividend (1c) should the sale of its 29.2%-owned associate, Ebworx Berhad (EBWX MK) materialise. Checks with
mgt suggest that business is as usual. Overall, expect CSE to post steady 1Q12 results of $14m, up 11% yoy. Stronger-than-expected results and order intake could lead to a re-rating.

CDL HTrust

CDL HTrust: Positive guidance from Singapore Tourism Board.
Daiwa note that STB expects 13.5m-14.5m visitor arrivals for 2012 vs 13.2m for 2011, when visitor arrivals increased 13%YoY and believe the significance of STB’s projection is that visitor-arrival growth is unlikely to be negative for 2012, which house believe was the prevailing view in 2H11.

Reaffirm forecast for visitor arrival growth of 5% YoY for 2012, 8% YoY for 2013, and 8% YoY for 2014, and hotel-sector RevPAR growth of 4% YoY for 2012, 11% YoY for 2013, and 7% YoY for 2014. Maintain Buy for CDL HT, TP $2.10, which trades at attractive 2012-14E DPU yields of 7.2-8.4% vs S-REIT sector average of 6.8-7.5% and a superior 2011-14E DPU CAGR of 9.4% vs 4.5% for the S-REIT sector.

Genting SP

Genting SP: Analysts highlights award of 2 junket licences to RWS cld potentially drive its Spore VIP rolling volumes and help lower credit risk. CLSA highlights that more may be licensed in future, and Spore's 2 casinos operators could see ‘qtrly volatility of rolling chip reduced as the junkets manage vol and flow’.

Note that entry of junkets ‘extends casino operators reach to VIP customers and opens a new mkt segment that will compete with Macau in terms of credit availability’. Added that depending on the no and quality of junkets, the junket VIP mkt could be in the billions comfortably, and therefore significantly increase the overall SG gaming mkt.


Oxley: Acquires 66 East Coast Rd through collective purchase at the price of $76.1m The property is a freehold 7-storey commercial property comprising office units. The site is approx 2.1k sqm and co intends to redevelop property after obtaining approval from authorities. The acquisition is approx 15.3% of co's mkt cap and co will fund the acquisition through internal resources and bank borrowings.

Note that co has $142.1m in net assets and has liability-to-asset ratio of 84.8%. The bulk of it is in other financial liabilities which consist of bank loans secured by sh/h guarantees. Oxley is trading a P/B of 3.9x, significantly higher than its smaller developer peers which are below book.

Mapletree Log Trust

Mapletree Log Trust: To acq 2 cold storage warehouses in South Korea. The first is Jungbu Cold Warehouse for KRW33.5m (approx $37.6m) which comprises 3 blks of cold storage warehouses with 3 auxiliary buildings with GFA of 20.8 sqm. It is expected to generate an initial NPI of 9.5%

The 2nd is Dooil Cold Warehouse for KRW30.0b ($33.7m). It also has 3 single-storey cold storage warehouses with 3 auxiliary buildings with GFA of approx 18k sqm. Dooil is expected to generate a yield of 9.9%. MLT's existing South Korea portfolio achieves only an implied property yield of 8.2%.

This is located within logistics cluster of Gyeonggi-do where 70% of distribution centres and warehouses in South Korea are located.

MLT now has indicative yield of approx 7.4%


SATs: Co. has appointed Mr Tan Chuan Lye as its CEO with effect from 1 Apr12. Mr Tan has been holding this post on an interim basis since Jul 11, while the Board was looking for a replacement. Having done an effective job, SATS has decided to make the appointment permanent.

Mr Tan has been with the Group since 1976 and has held managerial positions in SIA Ground Services and SATS Airport Services, and was responsible for both SIA and SATS’ Changi Terminal 2 operations. Besides keeping a steady helm, Mr Tan oversaw the disposal of Daniels and managed to turnaround the operations of recent acquisition Tokyo Flight Kitchen. Ratings as follows:

-Kim Eng maintains Buy call on SATS to $2.70TP. Basic div yield is attractive at 4.7%, and do not exclude possibility of a special div derived from proceeds from sale of Daniels.
- Deutsche maintains Hold, TP $2.33, believe the appointment of Mr Tan is positive, as it removes the overhang around SATS' CEO succession.
- Nomura maintains Buy, TP $2.90, think the appointment will dispel some investor concerns over SATS’s future, and will enable mgt to concentrate on the business at hand.


Cosco: A2SEA, a 51/49 JV by Danish energy giant Dong with Siemens Wind Power, has penned a US$155m deal to build a single wind turbine installation vessel at Cosco Nantong shipyard (50/50 held by Cosco, and its 51% subsidiary Cosco Shipyard Group). This is the 2nd jackup vessel which Cosco will be building for A2SEA.
Cosco’s order price compares with Keppel’s US$220m contract from Seafox to build a new wind turbine installation vessel back in Jul 2010.
The latest newbuild will hit the water in 2014. Although it has been ordered on speculation, A2SEA said it is already hunting charter coverage which will definitely see it work in the northern Europe offshore market.
In addition, A2SEA has penciled another 1-yr option for an identical vessel at Cosco Nantong.

This order comes after Thursday’s announcement that Cosco Shipyard Group will build 4 Platform Supply Vessels worth >US$105m for an American shipowner.

The stock trades at 18.7x P/E, 2x P/B.
The overwhelming bearishness from the Street have at times led to buying opportunities. There are 19 Sell calls, vs 1 Buy and 2 Holds. Consensus 12mth TP is $0.80.

SG Market

SG Market: Spore shares may open higher and take cues from Fri's minor gains on Wall Sreet and and more positive openings in regional bourses. However, given the spate of weaker data recently from China, Europe and the U.S., investors are likely to remain very cautious, while the STI is likely to remain volatile and range trade between 2955 and 3030. Corporate news is thin with Cosco signing a new US$155m contract to build a wind turbine installation vessel and Baker Tech’s sale of 49% in its trailer component business York Transport for $22m.

Friday, March 23, 2012


STX OSV: Technical Sell Call by CIMB. House note that stock has rallied strongly from the October low in what looks like a 5-wave move. Furthermore, prices are fast approaching a strong trend line resistance at S$1.85. Would not be surprised if prices start to push a tad higher before reversing.

Technical indicators show waning momentum which supports our call for a reversal in the near term. Dropping below $1.76 would likely signal that the trend is ready to change. Anything below $1.59 would help eliminate any more upside potential in the near term. Medium term, expect prices to consolidate towards the $1.30-1.40 levels.


DBS: CIMB has Technical Sell Call. House see a bearish wedge pattern forming here and prices broke below the wedge support yesterday on rising volume. The odds would now favour weaker prices In the near term.

Waning momentum indicators supports our technical view that the stock is now poised for a correction. The bearish divergence on its MACD and RSI show exhaustion in buying strength. The stock is now a technical sell following the breakdown of the wedge support. As long as prices stay below $14.60, prices are more than likely to fall further towards its $14.01 and
$13.17 levels, where the latter is its 200-day SMA.


BioSensors: OCBC maintains Buy but cuts TP slightly to $1.92 from $1.95. House believe that concerns over imminent stent price cuts by the China government have manifested into Biosensors share price recently. Such fears have been overdone, in house opinion, as strong vol increase is expected to buffer the impact of ASP declines.

China remains a high-growth market for drug-eluting stents (DES), and house positive on BIG’s move to enhance its presence there. Besides organic growth, also expect M&A activities to drive its earnings traction moving forward. While new DES launches by competitors will likely have some negative impact on BIG, see its first mover advantage and strong positive clinical data as its key competitive advantage.


UE E&C: OCBC upgrade to BUY with $0.81 fair value. Note that UE E&C’s share price has rallied strongly since the beginning of the year. YTD, its share price is up a stellar 74% against the STI’s 13%. House met with management recently and are bullish on its medium to long-term prospects.

The group’s strategy of developing its designand- build capabilities and expanding into property development has enabled it to raise/maintain its margins and provide effective cost controls. Going forward, think the mkt will recognize this transformation and re-rate accordingly. Meanwhile, house refined valuation methodology to SOTP (previously PBR) to account for its returns from development projects.

Cache Log Trust

Cache Log Trust: Has successfully completed a private placement of 60m shares to raise $59.1m, of which 61% will be used to acquire Pan Asia Logistics Centre and 36% to partially repay existing debt.

Macquarie maintains O/p, TP $1.18, improved gearing, more headroom for acquisitions, catalyst wld be yield-accretive acquisitions in the next 6-12 months and improvement in the global macroeconomic environment. Top pick within the industrial space remains Mapletree Industrial Trust (O/p, TP: $1.45), in view of its solid DPU growth of 18.8% in FY12E.

Tiger Airways

Tiger Airways: Tiger Airways on Thurs became the first regional low-cost carrier to offer direct flights from Singapore to Colombo, Sri Lanka. The airline will fly three times a week to Colombo, its first destination in Sri Lanka when the service commences on May 31, 2012.

KepCorp / Keppel Land

KepCorp / Keppel Land: Have announced that they have commissioned architect Daniel Libeskind for the plot 3 development at Keppel Bay. To recap, Daniel Liebskind was also responsible for the design of Reflections at Keppel Bay.

Plot 3 is located along the King’s Dock, and the new development is envisioned by Keppel Corp and Keppel Land to be a premium waterfront property comprising 367 homes. Keppel has not yet set an official launch date for the plot. While the current property market is soft, Kim Eng envisage that the development will be sold for at least $2,200 psf, which could generate around $280m in development profits for Keppel Corp's 70% stake, all in.


LionGold: Mali soldiers have staged a coup, announcing that they have seized control of the country and closed Mali’s borders. LionGold is known to have exploratory projects there through 70% of Mornington Offshore.

Global authorities have condemned the coup with the UN Security Council calling for the restoration of the democratically elected govt. The World Bank and African Dev Bank announced that aid would be suspended until the crisis is resolved.


COSCO: 4 shipbuilding contracts signed by COSCO (Guangdong) (a subsidiary of the Company’s 51% owned subsidiary, COSCO Shipyard Group) with an American ship owner for the construction of PSVs have been made effective on 15 Mar 2012 at value over US$105m in total.
Delivery of the above 4 vessels is expected to commence in early 2014.The ship owner has options to declare up to another 6 contracts for the construction of the same PSVs, which have a value of over US$160m in total.

As of Dec 2011, co’s orderbook was approx US$6.1b with FY11 rev of $4.2b which does not include orders for 7 bulk carriers and 2 offshore construction vessels secured during this quarter


Hyflux: Consortium comprising Hyflux Hitachi, Itochu group wins US$600m desalination project in India to develop a seawater desalination plant in Gujarat, India.
The consortium will develop the project on a 'Design, Build, Own and Operate' (DBOO) basis and to supply the desalinated water to DSL. The shareholding structure will be finalized at a later stage. DahejSpring will be allotted land by DSL in the Dahej SEZ to develop and operate the project for 30 yrs.

Hitachi will be the lead EPC Contractor and will collaborate with Hyflux on the EPC works and the O&M works. It will be Asia's largest seawater reverse osmosis desalination plant to date. The Project is not expected to have a material impact on Hyflux’s financials for FY12.

For comparison purposes, the capacity of the latest project in India, would have an operating capacity of 75mGD (Gallons per day) vs Hyflux Tuas’s plant of 70mGD and Sembcorp Industries Fujairah plant of 100mGD. Note however that latest project by Hyflux in India is a consortium, and Hitachi is the lead contractor.

Ratings as follow:
Citi maintains Buy, TP $1.86 from $2.15, house continue to like the long-term and attractive nature of Hyflux’s environmental-linked business, and this win in India will likely cause investors to relook at Hyflux. Its low net gearing level at 0.2x (0.8x in 2010), with cash on hand now S$662m, can help it with Chinese project wins where local competition likely is especially credit-constrained.

Nomura Reduce, TP $1.00, believe the additional project is a positive development for Hyflux.
However, still prefer Beijing Enterprises Water and China Everbright in the water space. Hyflux trades at 15x 2012F P/E vs. BEW’s 14x and CEI’s 14x.

Genting HK

Genting HK: good set of FY11 results, inline to above expectations.
Revenue came in at US$515.5m (+28.9% YoY) with a record net profit of US$182.2m (+120.5% YoY).

The higher revenue was mainly due to a 42.6% YoY increase in gaming revenue on Star Cruises operations, as well as a 7.3% increase in capacity days.
Operating margin was higher at 13%, vs to 9% in FY10, boosted by the increase in gaming revenue in FY11.
Nevertheless, operating cost on a per Capacity Days basis rose higher by 13.9%, due to higher fuel cost, payroll, and port charges. Average fuel cost rose by 28.1% in FY11.

Norwegian Cruise Line (NCL)'s EBITDA came in at US$506.0m, +24.9% YoY. NCL would look forward to the delivery of 2 new ships in 1H13 and 1H14 respectively.

Travellers, which operates the Resorts World Manila, reported revenue of US$659.3m (+85.3% YoY), EBITDA of US$214.4m (+110.2% YoY) and net profit of US$111.9m (+57.2% YoY). EBITDA margin came in at 35.0% vs 28.7% yoy. RWM is now working on Phase 2 of expansion to construct a 112k sm convention centre (expected completion in 2013), and additional luxury hotels over the next 2 years.

KE Research maintains Buy rating, to adjust previous US$0.45 TP post analyst briefing.
UOBK yday downgraded from Buy to Hold, but raised TP from US$0.33to US$0.36.

Genting SP

Genting SP: the Casino Regulatory Authority (CRA) awarded the first batch of Junket licenses to two Msian operators, for both to operate in GENS’ RWS.
This is the catalyst that the whole Street has been waiting for, in order to raise their market forecasts. Unanimous Street view that near term positive sentiment will drive share price.

KELive notes the following positives:
i) While junket approval was always on the cards, the timing of this announcement came largely as a surprise, with GENS’ share price virtually unchanged over this week. Hence today’s share price reaction could be more intense.
ii) worth noting that GENS’ rival MBS did not receive any junket approvals this time. This should give GENS’ the window of opportunity to take VIP gaming market share.
iii) this paves the way for further junket approvals going forward, which should be incrementally positive for volume growth. The CRA is currently evaluating a few other applications and is in the midst of conducting probity checks for these applications.

The Street is likely to raise their earnings forecasts.
Spore’s annual revenue of the VIP market (no junkets) is ~US$3b; this compares with Macau’s US$24b (90% junket driven).
Morgan Stanley estimates revenue could increase by 7% and EBITDA by 11%, based on the following assumptions, i) VIP tables currently generate US$24,500/day, but rise to Macau avg of US$30,000/day with junkets, ii) 50% of tables assigned to junkets, iii) pay 0.2% extra to junkets.

To temper over optimism, some analysts note the following:
i) out of 14 applicants, 12 were rejected, which shows the CRA’s stringent criteria in granting approvals,
ii) the two Msia licensees are subject to strict rules themselves, eg. license valid for 1 yr, not allowed to target locals,
iii) the extensive financial reporting and credit assessment of foreign VIP rollers by the junkets may mean Chinese VIPs (biggest market) may still prefer Macau.

Goldman says this is a new dawn for Spore Gaming. Keeps at Buy with TP $2.16.
DBSV reiterates Buy with TP $2.05. Says re-rating in store.
UOBK maintains Buy with TP $1.89.
Morgan Stanley keeps at Equal Weight.
Deutsche has a Hold with TP $1.49.
Macquarie keeps at Neutral with TP $1.55.
UBS says stocks may react positively, but potential upside more hype than reality.

SG Market

SG Market: Spore shares could see a rough open tracking weakness on Wall Street, weighed by weak manufacturing data out of China and Europe. Added to this, the market looks quite overbought with low volumes indicating sidelining of investors. STI is tipped to trade rangebound between 2960 and 3000 in the near term with a downward bias.

Genting Spore will draw attention after being issued its first-ever junket licenses, likely boosting the casino operator's VIP business. Hyflux may also be in focus after announcing a partnership with Japanese firms to develop a US$600m desalination plant project in India.

Thursday, March 22, 2012


mDR: the penny stock is +18% at 1.3cts in top volume at 533m shares traded, extending yday’s +10% gain on 888m shares traded.
The bullish sentiment coincides with yday’s glowing write up on mDR under The Business Times Hock Lock Siew column, which pipped mDR as a “gem among the penny stocks”.

Highlights that last mth, mDR unveiled its 9 consecutive quarter of profits and declared its maiden div payout of $2.1m, or ~0.033cts/sh.
Last yr, mDR repaid all $55m owed to bank and retired ~$12m of loan-stock overhang. It currently sits on ~$16m in cash, and has no debt. This compares with its current mkt cap of $84m.

Says following a massive restructuring, the co’s fortunes have been revived under the chairmanship of former Cycle & Carriage MD, Philip Eng. Mr Eng is best known for having engineered the purchase of a 31% stake in Indonesia’s Astra Int’l for US$296m, and subsequently raised its stake to 50.5%. Today, the Astra stake is worth ~$20.8b and contributes 95% of JC&C’s mkt value.

The article notes that Mr Eng is not content on overseeing a smallish telco eqpt player delivering thin margins, and hypothesizes that if he clinches an earnings accretive business, it could double the co’s topline from $360m now, and with economies of scale, deliver a four-fold boost to bottomline.

mDR (previously known as Accord Customer Care Solutions or ACCS) is involved in franchised distribution and retail services with M1 and SingTel as customers, and also provides after-market services for mobile phones.

SGX / HPH Trust

SGX / HPH Trust: SGX will introduce dual currency trading which enables listed securities to be traded in 2 different currencies. As such, a co can now choose for its listed security to be traded in any two different currency denominations.

The securities will be fungible, i.e. an investor can buy and/or sell the security in any currency regardless of the currency in which it was first bought and/or sold.

Dual-currency listed shares will be consolidated in investors’ Central Depository (CDP) accounts so that the total number of shares can be viewed at a glance - for example, 1,000 US$-denominated shares and 2,000 S$-denominated shares will be reflected as 3,000 shares in the CDP account.

HPH Trust is the first listed security to launch dual currency units, in US$ and S$. It will start trading on 2 Apr.

Conceptually, this development could potentially lead to exciting share trading volume growth for SGX, if successfully executed.
This works best for highly liquid counters, with sizeable share ownership from both foreign funds and retail.
Ideally the sum of trading volume from both currency share listings would be greater than the original single currency share listing, boosted by the additional volume from arbitrageurs.

Besides potentially being applied to the blue chips and ADRs, this feature will also be a useful complement to the upcoming Asean trading link, which aims to provide investors in the region with access to each others’ markets, as Singapore investors can benefit from the convenience (in terms of pricing and settlement) of trading in overseas markets.


Osim: the stock has enjoyed a decent ~18% rise from the recent through over a span of 3 wks. It is now approaching an area of resistance at the $1.30-1.35 levels, which it failed to breakout off in the previous 2 attempts. Stochastics and RSI are approaching overbought levels, and the odds favor a mild pullback toward the $1.25 levels (bottom of the runaway gap) in the near term.
If this plays out, this may provide an opportunity for entry. A golden cross is just forming (50 MA cut 200 MA) which is generally a bullish signal. Moreover, the higher low in early Mar ‘12, vs late Dec ‘11 suggests the longer term outlook has turned more positive as well.

United Engineers / OCBC / Great Eastern

United Engineers / OCBC / Great Eastern: the 3 companies have a JV in the “orchardgateway”, which will house a new 500-room hotel with 6 floors of retail space (180k sf leasable space) as well as office space (3.5k sf gfa) slated to open 2H13. It will also feature a 18k sf public library to open in 2014.
The devt will straddle the sites formerly occupied by Hotel Phoenix, the Specialists Centre and Orchard Emerald. The two towers will be linked by a glass tubular overhead bridge and an underpass across Orchard Road.

The project has been awarded the Green Mark Platinum award for sustainable devts. Its green features will help to conserve 10.1m Wh per year of energy, which is equivalent to Singapore's electricity consumption for 2.2 hrs, and annual water savings equivalent to about 231 Olympic-size swimming pools.

On a side note, CLSA recently visited 5 malls (4 new being 112 Katong Mall, Changi City Point, Scotts Square and The Rochester mall + 1 undergoing AEI being Causeway Point). The house ranked United Engineers’ The Rochester mall last in terms of crowd. Notes in Oct ’11, news reported that the mall was >90% occupied, but in Feb ’12, anchor tenant Farmhouse Supermarkets terminated its 25k sf lease as the premises were not ready in time.


F&N: Mgt have reiterated that they are not looking to sell their APB business, even if a bid comes in at premium multiples (APB is currently at 23x trailing P/E), over out phone conversation. House do not see a sale on the cards in the near-term, and see growth normalizing this year. Maintain Neutral, TP $6.75.

On a separate note, grp has established a $1b multicurrency medium-term note program to fund general corporate purposes, loan refinancing and investments, the food and beverage company. Grp may issue under the program bonds in any currency with various amounts and tenors. The notes may bear fixed, floating, variable, index-linked or hybrid rates. DBS Bank is the arranger and dealer for the program.

SIA Engineering

SIA Engineering: CIMB maintains O/p with $4.56 TP. Note that SIA Engineering has all the ingredients of a quality stock: stable earnings growth, high ROEs, net cash, attractive div yields and undemanding valuations against peers.

House peg a higher P/E of 15x in blended valuation following a more positive outlook for its MRO business. This has resulted in a higher target price of $4.56. Maintain Outperform rating, with catalysts anticipated from strong earnings growth.

Cache Log Trust

Cache Log Trust: Private placement of 60m new units at an issue price of between $0.985. Price is 5.2% disc to VWAP of prev mkt day and will constitute 9.4% of enlarged share capital. DBS and StanChart will be handling the placement. Net proceeds from the private placement will amt to approx $57.1m, with $36.5m used to fund 21 Changi North Way and $21.1m for repaying existing debt.

The Changi North acquisition was a sale and leaseback done with Pan Asia Logistics and has a NPI yield of approx 7.7%.

Co has an indicative yield of approx 7.7% based on yday’s closing price.

Cordlife IPO

Cordlife IPO: Grp will raise about $26.3m in net proceeds from its IPO to aid its SG and HK expansion and overseas acquisitions. Cordlife will issue 60m new shares - 2m public shares and 58m placement shares - at 49.5c apiece.

Shareholders can also look forward to a div payout in the current financial year ending June 30, 2012. Cordlife will pay out at least 25% of FY2011's $8.5m net profit, which amounts to $2.13m. Cordlife's public offer opens today and closes at noon on March 27. Cordlife starts trading on the mainboard on March 29. We will be following up with a factsheet shortly.


Noble: Several Asian trading firms, including Mitsui & Co, Marubeni Corp and Noble, are in the running for US grain and energy trader Gavilon, which could be valued at about $5b, according to sources familiar with the matter.

Sources have previously said that Swiss trader Glencore and US based Bunge had expressed interest in the co before that deadline. But Glencore's interest in Gavilon has cooled after it agreed to buy Viterra, Canada's largest grain handler, in a $6.2b deal on Tue, according to one of the sources.

Several industry sources said Gavilon's two larger US rivals, Archer Daniels Midland and Cargill, are also unlikely buyers because they would encounter antitrust problems if they were to bid for all of the co. Gavilon is the third-largest grains marketing network in the US behind ADM and Cargill. The co has a leading fertilizer distribution system, a network of grain storage bins and oil storage facilities in Oklahoma. A deal for Gavilon would give the Asian trading co’s a sizable presence in key US agriculture mkts.

Noble's grains and oilseeds operation could benefit from a potential acquisition because its operations currently focus on South America, Europe and Asia. Marubeni is pursuing global grain sales operations. We note that a potential acquisition of Gavilon by Noble could see a delay in a potential listing via its agriculutural spin-off, due to integration and stabilizing of new assets.


SIA: Could see some positive interests after Qantas Airways shelved plans to set up an Asean hub after failing to get approvals in SG, while its supposed-partner in KL, Msia Airlines, is in dire financial straits.

News is pleasing to SIA whose bottom line is facing intense pressure amid soaring fuel price and competition, and has not been pleased with the prospect of Qantas setting up a base in its backyard. Qantas CEO add that any move would be pushed back by 'a year or two, or three' and seems to suggest that SG authorities would not give Qantas an air operator's license.

SG Market

SG Market: Spore stocks are likely to open slightly weaker following the soft Wall Street finish but will probably be supported on dips given the ample liquidity and lack of viable investment alternatives. The STI is expected to find support at the 2993 level with overhead resistance at 3030.

Investors will eye China March PMI data due at 0230 GMT. Hutchison Port Holdings Trust and Hongkong Land will be in focus after the SGX announced the introduction of dual currency trade. Cache Logistics Trust may also be eyed after raising $59.1m in a private placement.

Wednesday, March 21, 2012

Hour Glass

Hour Glass: (Technical Alerts) While on low vol, counter is currently at an all time-high over the last 5 yrs. Recall that fundamentally, Co. posted strong qtrly earnings results. Near-term resistance could be at $1.40 and support at $1.33 (Resistance turned support)


DMX: (Technical Alert) Counter in good vol and appears to have broken out of recent week high. See repost below DMX: Grp will showcase four feature-enhancing TV products at Asia Pacific’s largest broadcast technology expo at the China Content Broadcasting Network (CCBN) 2012 to be held in Beijing from 21-23 March, 2012.

DMX believes its products will be welcomed by Cable TV (CATV) and Interactive TV (IPTV) operators, as they represent new streams of revenue for the operators. The CCBN is the largest broadcasting technology and equipment expo in Apac. This year, DMX will continue to demonstrate its strength in TV-related technologies by introducing four brand new solutions that will provide viewers with enhanced features on their television sets.


Wilmar: UOB Kay Hian upgrades to Buy with $6.00 TP, after house upgraded the regional plantation sector to OVERWEIGHT.
Note that after the disappointing 4Q11 results, Wilmar had a sharp share price correction, and house believe the bulk of the bad news has now been factored in. Recommend investors should look beyond this and focus on Wilmar’s good assets.

Tip Wilmar to be one of the beneficiaries of rising plantation landbank prices in Malaysia and Indonesia as it is the second-largest plantation landbank owner with 610,000ha of land worth about US$4.2b ($0.81/share) based on current market prices in Malaysia and Indonesia.

As the largest listed oil palm plantation company, Wilmar will also benefit from the expected rise in crude palm oil (CPO) prices on softening production growth and firm soybean oil prices.


GLP: Nomura maintains Buy, TP $2.49 from $2.48.
Recall that GLP announced its third development project in Jap on 19 March and together with the earlier 2 under the Japan Development Fund, will allow GLP to ride the econstruction-related demand amidst tight supply of modern logistic facilities.

Competition for high-quality logistic properties should provide support to GLP’s portfolio valuation and could even suggest upside risk to property values, which could enhance the potential for GLP to monetise part of its Japan portfolio in coming mths.

Domestic consumption still underpins the demand for the logistic space in China; GLP's first-mover advantage in China positions it well to capture this demand. The establishment of its fund mgt business in Japan provides a capital-recycling platform to address future capex needs in China.


Olam: Goldman upgrades to Buy from neutral, with a revised TP of $2.80 (from $2.85), implying 14x FY12E P/E vs the historical 9-40x range and 21x avg.
Notes Olam’s ROE dilution since 2009 was due to deleveraging and upfront invmts, but believes the co’s ROE may have bottomed in FY11, as mgt has not indicated further equity requirements under its current 5-yr (FY11-16) business plan. Going forward, Goldman expects maturing projects’ earnings contribution from prior yr invmts to drive steady ROE accretion, beginning with 2HFY12 earnings to mark the turnaround in returns.


CWT: Co. has emerged as a stand-out performer based on analyst revisions among 115 stocks in Singapore, data from Thomson Reuters StarMine shows.

The logistics firm has the maximum Analyst Revision score of 100 and a positive predicted surprise of 2.2% for FY12. At current levels of $1.285, the stock trades at half its intrinsic value of $ 2.46, as determined by StarMine.


DMX: Grp will showcase four feature-enhancing TV products at Asia Pacific’s largest broadcast technology expo at the China Content Broadcasting Network (CCBN) 2012 to be held in Beijing from 21-23 March, 2012.

DMX believes its products will be welcomed by Cable TV (CATV) and Interactive TV (IPTV) operators, as they represent new streams of revenue for the operators. The CCBN is the largest broadcasting technology and equipment expo in Apac. This year, DMX will continue to demonstrate its strength in TV-related technologies by introducing four brand new solutions that will provide viewers with enhanced features on their television sets.


Chaswood: To resume trading. Co has completed its compliance placement of 10.5m shares at $0.30. Another 10.5m vendor shares were placed out as well.

Formerly known as Asia Silk Hldgs and is listing through an RTO. Co is focusing on casual dining on the ASEAN region with current operations in Msia and Sg. Co intends to also enter into Thailand and Indonesian mkts in the near future. Its brands include Malones, Italiannies, Teh Tarik Place in Msia and has obtained franchisee rights for brands such as Sg’s Paradise Dynasty in Thailand, Bulgogi Brothers,Watami and TGIF.

Co is currently suspended due to its reorganization after its RTO but is in the midst of conducting a placement exercise of 21.0m shares (10.5m vendor, 10.5m new shares) at $0.30 per share. Vendors (Asiason’s Posh Corridor and indiv Andrew Reddy) will retain a 84.7% stake. Net proceeds of $3.1m is expected to be raised to fund capex for new restaurants and refurbishment of existing restaurants.

Based on pro-forma end-Jun 11 figures, price is approx 36.6x P/E and 3.7x P/B based on post-placement no of shares. Peer Breadtalk trades at approx 14.0x P/E and 2.1x P/B.


LionGold: To place 12.0m shares to 2 individuals at $1.035. The subscription price is a disc of approx 2.1% of VWAP on 20 Mar of $1.057. The shares are approx 1.61% of enlarged share capital. Net proceeds of $12.4m will be used for working capital.

SIAS resumed coverage with an Invest call yday with TP$1.18 taking into account co’s acquisition of Signature Metals and its Kashmir and Akropong project. Updated valuation does not take into account any contributions from Mali, Philippines or Mongolia.

Otto Marine

Otto Marine: Secures 5 yr bareboat chartering contract for value of US$36.5m with option to extend current contract for 2 more yrs for total of $52.4m if option is used. The vessel is a 3000 DWT multi-purpose field support vessel. This follows Otto’s announcement on winning a US$14.9m contract in the Gulf of Mexico on 19 Mar. Co has been loss making for the prev 3 quarters attributed to a dearth of shipbuilding and ship repair contracts.

SG Market

SG Market: Spore shares are in for a tough start after declines in Wall Street and regional markets on a possible economic slowdown in China. With technical momentum starting to ease from overbought levels, the STI appears to be struggling to hold above the 3000 level, drawing some profit-taking, which is expected to continue today. Support is tipped at 2955 with 3030 acting as resistance.

Cyclicals especially the commodity firms as well as China-related plays are expected to take a slight hit today amid concerns over China’s growth following comments from BHP Billiton that suggest Chinese demand for iron ore is "flattening out." Airline stocks such as Singapore Airlines and Tiger Airways may also be in focus, after the Iata revised down its industry profit guidance for 2012 to US$3b from the earlier US$3.5b forecast in Dec, citing higher fuel costs.

Tuesday, March 20, 2012


Midas: China's National Audit office said yday that it had uncovered more evidence of fraud, waste, mismanagement and irregular accounting and procurement, totalling billions of yuan, at the flagship high-speed Beijing-Shanghai railway.

The report said it had also found evidence of wrongdoing by local governments. It said Jiangning economic development zone in Nanjing applied for land compensation worth 140 million yuan from the railway using false documents, receiving 40 million yuan of payments by end of June 2011. It found that Beichen district government in Tianjin had 340 million yuan in its own accounts instead of being paid promptly in compensation for land procured for the railway.

By the end of May 2011, the railway had 8.251 billion yuan worth of debts owning to 656 suppliers and 1,471 contractors, the National Audit Office said. The former railway minister was removed from his post in early 2011 for "serious discplinary violations".


Centurion: says it may declare an interim dividend for FY12 when its 1Q12 results are announced. Centurion was unable to declare dividends for FY11, as a one-off goodwill impairment amounting to $12.97m and a one-off reverse acquisition expense of $100k dragged its bottom line into the red. The group incurred a net loss of $6.16m for FY11.
Mgt said the co would have chalked up a net profit of $6.91m vs FY10's $5.68m, if the impairment charges and reverse takeover expenses were excluded.

Centurion, created from the reverse takeover (RTO) of optical storage disc maker SM Summit, develops and manages workers dormitory assets. It still has an optical disc business, left over from SM Summit. The group's dormitory business made $5.38m in FY11, while the optical disc businesses contributed $1.53m.

Mgt is optimistic about the group's dormitory business, despite the potential impact of higher foreign worker levies; believe the business will continue to grow as demand remains robust.
Centurion is also making inroads into the business overseas; it has signed 6 MOUs to build dormitories in key industrial and manufacturing hubs in Johor. 2 have been completed, adding some 9000 beds, while the other 4 are still undergoing various stages of negotiations and due diligence.
The group is also exploring third-party property management of the dormitories and ancillary services such as laundry and catering services to support and diversify its dormitory business portfolio.
Mgt said the group plans to tap the foreign workers accommodation market as far afield as the Middle East, where there is an increasing demand for special purpose-built dormitories.

The stock is +2.3% at $0.22 on above avg volume today.

Keppel Land

Keppel Land: Technical Sell Call by UOB Kay Hian with an 8% potential return. House recommends SELL with TP of $3.20. The stock is likely to retrace further after a lower close of the shooting star candlestick lookalike pattern formed in the last trading session.
The Stochastics indicator suggests the stock is overbought and has crossed below its signal line near the overbought region. Alternatively, investors may exit their shorts if prices move above $3.65.


Sakari: Technical Sell Call by UOB Kay Hian with a 9% potential return. House recommends Sell with TP of $2.22. The stock appears to be resisted by the mid band of the Bollinger and a break below $2.42 is likely to see more selling pressure ahead.
The Stochastics indicator has crossed below its signal line, suggesting there could be price weakness. Alternatively, investors may exit their shorts if prices move above $2.54.


Hi-P: is +5.1% at $1.03.
No recent corporate developments to highlight.
The stock, as one of Apple's component suppliers, may be benefiting from spillover interest after Apple said the just launched New iPad is the fastest selling in the iPad series, with 3m sales recorded since Friday.
Apple stock made a new high last night just closing above the US$600 mark.

Roxy Pacific

Roxy Pacific: OCBC upgrades to Buy and raises TP to $0.62 from $0.45 previously. House note that inFeb 12, ROXY had a strong month of sales. Treescape is now 78% sold at a median price of S$1.4K psf. Also, sales at Nottinghill Suites picked up with an additional 16% sold in Feb 12 (now 60% sold).

Currently, judge that ROXY warrants a lower RNAV discount at 30%, vs 40% previously, due to its more favorable risk profile. First, see limited risk from long-term residential uncertainties on existing landbank as most remaining sites would likely be launched in 1H12. Second, re from FY12-15 are underpinned by S$599m of progress billings (4.5x FY11 development revenues) from already sold units. Finally, a significant portion of value (46% of RNAV) is anchored on Grand Mercure Roxy Hotel, which house value at a fairly conservative 460k per room.

Wheelock Proeprties

Wheelock Proeprties: Co. held an analyst briefing session. Notes as follow:
No updates on Privatization or new management - Mget remained tight lipped on any privatisation plans. The two executive directors and four independent directors will continue to oversee the ongoing operations until a new successor is identified.

Other notable notes are dividend to remain stable at 6c, SG to remain as key focus market for acquisitions, Fuyang site to be launched in 2013 and steady performance across its investment portfolio.


SPH: Deutsche maintains Hold, TP $3.80. Note of strong growth in Feb's total adex. Feb's total adex +21% (or S$30m) YoY to $174m. Despite Feb's strong adex growth, SPH's advertising revenues are tracking in line with full year advertising revenue forecast.

Specifically, based on current run-rates, estimate SPH booked $180m advertising revenues in 2Q12e. Together with the $204m 1Q12 advertising rev already reported, this would take SPH's YTD advertising revenues to $384m.

Cambridge Industrial Trust

Cambridge Industrial Trust: Daiwa d/g to Hold from Sell, TP $0.56. House see DPU and earnings risk in 2013. Lower 2012 DPU forecast by 6.4%, after deferring the income contribution from the ‘potential property 1’ acquisition to 4Q12 from 1Q12.

2012-14 DPU forecasts are 5.6-10.1% lower than consensus, do not expect Cambridge to be able to promptly deploy the compulsory land acquisition proceeds from the SLA in 2013: forecast a YoY DPU decline for 2013.


Biosensors: Nomura maintain Buy, TP $1.84. Note that recent pullback is healthy consolidation, stay bullish. Market concern about pricing pressure in China and Japan has been priced in.

Changes to its mgt structure will provide greater clarity in responsibilities even as Biosensors looks to embark on M&A to diversify its product range. SFDA approval of Biomatrix in China would enable the group to tap the premium market in China, while CE Mark approval for BioFreedom would enable the group to embark on new clinical trials to support the safety and efficacy of its next-generation stent.

With the restructuring of JWMS and revenue contribution from Japan in FY12F, Biosensors is well positioned for the next stage of its growth. believe it may expand into adjacent products via acquisitions.


Olam: Following latest rubber investments in Gabon, UOB Kay Hian maintains Buy with $2.93 TP. House note that investment is not surprising as the grp has clearly articulated its strategy to drive growth by selectively expanding into value chain adjacencies, which could boost margins.

In addition, this rubber JV has several attractive characteristics including: a) scalability, b) is part of a growing industry, c) low agronomy risk as rubber trees are sturdy and less affected by infestations and disease outbreaks, d) having a late mover advantage as newcomers can use superior clones for new plantings, and e) rubber is actively traded and allows for hedging.

In addition, this JV will also enjoy a 15-year tax holiday. Other than Greenfield investments, the group’s overall rubber strategy could also include Brownfield investments, supply chain/rubber trading as well as its SIFCA JV in West Africa. The SIFCA JV has operations across Ivory Coast, Nigeria and Ghana and provides Olam with valuable insights and local knowledge, which would help curtail execution risk for the Gabon Greenfield investment.


Yangzijiang: Citi downgrades to 'Sell' vs 'Buy' but raises TP raised to $1.25 from $1.20. SOTP valuation relatively unchanged at $1.25, but see no re-rating catalyst in sight. Firm highlights 1) the huge margin disparity between pre-crisis backlog and new orders is unlikely to narrow; and 2) risks of a sharp collapse in ‘14 earnings should not be overlooked.

We note that downgrade comes on back of a few upgrades on counter to Buy by various houses the last few days, notably by Merrill and Credit Suisse.


Mencast: lift halt today at 8.30am.
To place out 22.5m new shares (~11.8% of existing shares out) at issue price of $0.53, a 5.4% discount to the counter’s last close at $0.56.

Among the investors, SME-Co is a private equity fund ultimately owned by Temasek.

Of the net proceeds of ~$11.9m, one-third will be used for future acquisitions, one-third for future expansions and the remainder for general working capital.


GLP: Co is forming a 50:50 JV with Mitsui Fudosan to develop a large-scale multi-tenant logistics facility in Greater Tokyo), Japan. The project will have a GFA of 121k sqm built on a land site of 53k sqm. Construction of the 5-storey dev equipped with seismic isolators is scheduled to commence on Sep 2012 and completed by Sep 2013.

GLP has stated that other logistic facilities nearby operate at 100% occupancy and co has been seeing strong demand from customers that total over 4.7x the net rentable area of the project. Co currently trades at 1.0x P/B.


STX OSV: Could see renewed sentiment after Co. secures its first 2 contracts for 2012. Grp announced 2 contacts, the first contract for a Nok500m. (US$87.1m) contract for the construction of one advanced subsea support vessel for the Island Offshore Group. Delivery is scheduled in 1Q14. The hull of the vessel will be delivered from STX OSV Braila in Romania.

The second contract was for the design and construction of one Offshore Subsea Construction Vessel for DOF. The value of the contract amounts to approximately NOK 650m. Delivery is scheduled in 2Q 2013.

With latest order, grp order book currently stands at approx. Nok 15-16b and brings Ytd new orders to Nok 1.15b. As a gauge, for FY11, grp secured total new orders of Nok11.1b. Ratings as follow:

DMG maintains Buy with $2.00 TP
CIMB maintains O/p with $2.02 TP
OCBC maintains Buy with $2.25 TP

SG Market

SG Market: Spore shares may stumble at the open despite Wall Street's positive lead after breaking the key 3000 support. Despite more bullish US sentiment, the local market appears to be showing signs of nervousness and finally capitulated yday despite a strong start as profit-taking and caution about China's projected slowdown over loan and housing data took hold. Market players are also sidelined by concerns over rising oil prices.

Having covered the gap at 2993, the next support for the STI lies at around 2955, while the 3000 level now acts as resistance. STX OSV is likely to continue its uptrend after landing 2 contracts valued at $252m. GLP may also be in the limelight after forming a 50/50 JV with Mitsui Fudosan to develop a multi-tenant logistics facility in Japan.

Monday, March 19, 2012


Yangzijiang: may be in focus following a couple of broker TP upgrades.

BOA-ML reiterates Buy, ups TP to $2.12 from $2.08. Notes the Street has surprisingly not raised earnings forecast for FY12, post the co’s recent Rmb 4b FY11 net profit, which was spot on with its in-house estimate, but beat consensus by 7.8%. Expects strong upcoming 1H12 results to force the Street to play catch up with FY12E profit upgrades, latest by Aug 2012. Sees the following catalysts and new sources of earnings,
i) potential shipbreaking boom, as 27% of dry bulk carriers globally will be 20yrs or older in the next 5 yrs, amid low freight rates,
ii) likely maiden rigbuilding contract wins in 2H12, with YZK’s chances boosted by the Chinese govt’s support and Qatar Invmt Corp’s relationship with offshore players in the Middle East, and
iii) rising idle ratio, better freight rates and lower newbuild prices, which could attract the usually ill-disciplined owners to place mega-containership orders from mid-2012.

Separately, Credit Suisse reiterates Outperform, raises TP by 23% to $1.60. Says the stock is one of the cheapest in the shipbuilding business.

Interra Resources

Interra Resources: Technical Buy Call by CIMB. House see a breakout of its bullish flag pattern. Using the minimum measurement of the flag pattern, prices still have the potential to continue on higher towards the $0.435 mark.

With indicators starting to turn up again, the breakout could lift prices higher to test the old high of $0.375 soon. As long as prices stay above $0.295, the odds continue to favour the bulls. Recommends keep a stop below $0.29.


Yoma: Technical Buy call by CIMB. House note that stock broke out of its bullish wedge pattern last week and prices climbed above its 30-day SMA. Expect this breakout run to continue towards the old high of S$0.575.

Technical indicators continue to show bullishness with its MACD just confirming its bullish crossover and RSI pushing above the 60-pts mark. The stock is a buy and any weakness should be viewed as a chance to accumulate. Keep a stop below S$0.40, the recent swing low. Minor resistance is seen at $0.50.

Golden Agri

Golden Agri: (The Edge) The Golden Decade? Recall FY11 has been a particularly good year for the Co. as Co. announced a +70% yoy in rev and +48% increase in core net profit, and a record div payout of 30%.

Supply of CPO seems likely to remain tight too in the recent CPO conference where Dorab Mistry thinks CPO prices may climb to a 4 yr high by June and for prices to hit Rm4,000. GoldenAgri appears to concur with this assessment and house base case is for CPO to maintain prices at the current levels.

Regarding Indo export taxes, grp cite that its too early to tell exactly the impact for now, however grp is already palnning to nearly double its refining capacity in the next 2 yrs. Besides adding refining capacity, Grp will build its downstream business by imrpvoing sales and distribution channels, and enter net mkts.

For upstream, grp aims to add another 30,000 ha in new plantings for FY12 (FY11 at 13,190ha) and expand its mills to harvest its FFB. Overall, analyst target prices of $0.89 still represents a significant upside of 20.3%.


LionGold: (The Edge) Quest for more gold-mining firms brings it to Australia, Africa, despite struggling to gain control of Australia’s listed Signature Metals. LionGold is reviewing 8 opportunities at the moment, but will take on only 1 or 2 deals at any one time, with an eye to becoming a substantial shareholder in these Co’s.

As Grp scales up on gold mining, hopeful that sceptics will see the merits of its new business, tipping that LionGold is going to become the consolidator of gold assets and present them to investors. Ultimately analysts note that biggest concern is on execution and investors should be mindful of the capital intensive busines.

PSL Holdings

PSL Holdings: (The Edge) Focus is on small mines, with 5 full-time staff in Indo and is working with various agents, geologists, engineers and consultants to source for mining opportunities, although concedes that returns will not be immediate and shareholders need to be patient.

On recent Coal ruling in Indo regarding foreign ownership, cite that new rules may bot have a significant impact on PSL, as small mines tends to have shorter life span. Meanwhile, grp has no plans to forsake or slow down its construction business.

Raffles Education

Raffles Education: update on Raffles Vietnam.
Despite the group’s appeal to resume operations, options have so far been unworkable.
Raffles Vietnam has since fully paid the stipulated violation fine and both centres in Hanoi and Ho Chin Minh have been suspended wef 6 Jan ’12.
Meanwhile, the group has been processing the permanent transfer of >400 Vietnam students to other Raffles Edu colleges in Spore, Sydney and Phnom Penh, and will bear the student air fares and contribute partially to the students’ living expenses in these cities. Students who have chosen to discontinue their studies with Raffles will be given refunds for the unutilized portion of any tuition fees paid.
The group is reorganizing its Vietnam operations and will be applying for new licenses to resume operations.
Raffles notes the reorganization is likely to have a material impact on the EPS of the group for FYJun12.
The stock trades at 10x trailing P/E, and 20.4x consensus fwd P/E.

Otto marine

Otto marine: secured a time charter contract for its 4200 bhp ABS class Work Maintenance Vessel, from a Mexican offshore platform construction company. The initial value is US$14.9m for a 450-day period, with an option to extend the contract for another 12 mths, bringing the potential value of the contract to US$20m. The vessel will be deployed from Mar ’12. The contract is expected to have positive contribution to the group’s FY12 earnings.
The co was lost making in FY11. The stock trades at 0.7x P/B at last close of $0.133.


Osim: Kim Eng initiates coverage with Buy Call and $2.02 TP.
House believes likelihood of impending M&As has been a price overhang and given negative experience with OSIM’s purchase of Brookstone. However, house beg to differ, adding that OSIM has a much stronger balance sheet and profit base to absorb new businesses, lowering execution risk substantially and is the cheapest high-end brand-owner in the region.

Add that OSIM is in pole position to become the king of lifestyle brands in Asia, a crown still up for grabs. It is already the undisputed brand leader for massage chairs. As the master franchisee of GNC, it has pushed this health and nutrition brand into a dominant market position in SG and Msia, and is replicating this model in China through its own RichLife brand. New acquisition TWG Tea is poised to revolutionize the way Asians perceive tea drinking.


Olam: Co has planned another invt in Gabon, a 80% owned JV with the Gabon govt (20% stake). The project will be to develop 28k ha of rubber plantations in Phase 1 with an additional 22k ha in Phase 2. The total invt amt is est at US$183m. The project will be financed on 1.5: 1 debt to equity ratio. Olam’s share of equity will be approx US$59.0m.

Planting is expected to commence in FY2013 and to be completed by FY2019. At full maturity, the project will generate annual volumes of approx 62k tons of dry rubber. Note that any upside is likely to be during FY2019 except for revaluation gains.

Olam’s other projects in Gabon include a US$1.3b urea fertilizer project and US$236m palm oil project. Olam trades at approx 14.0x fwd P/E and peer commodity trader Noble trades at 11.2x fwd P/E.

Separately Capital Group decreases its stake in Olam from 6.8% to 5.6% (approx 28.2m shares).

SG Market

SG Market: Spore shares are not expected to break out of its trading range flanked by 3030 resistance, as represented by its recent Feb high and 2992 gap support amid lukewarm signals from Wall Street and regional bourses. While eurozone woes are taking a backseat and US economic recovery gains traction, there are still concerns over the creeping threat of oil prices and worries that the bulls may be jumping the gun a bit too soon.

Olam may be in play after setting up a JV with Gabon’s govt to develop rubber plantations in the African nation, while Raffles Edu pays fine to Viet govt and halts its training programs in Vietnam. Meantime, Broadway has resumed prodn in 1 of 2 factories affected by the Thai floods. China Environmental may take a hit from the disclosure that it made a HK$10m discrepancy in its 1H12 results anncmt.

Friday, March 16, 2012


Wheelock: OSK-DMG last wk had mooted the idea that the privatization scenario by parent Wheelock & Co, could be revisited, following the demise of its CEO David Lawrence.
OSK has a Trading Buy rating with TP $1.87, 30% discount to its RNAV estimate of $2.67.
Under a privatisation scenario, OSK assumes a takeout price of $2.18, based on a 10% discount to NAV. Notes that in 2010, the parent had privatised the immediate holdco of Wheelock, Wheelock HK at a 144% premium to its last traded price and at a 3% discount to book value, in a move to streamline the group's shareholding structure.


Olam: DMG tips Olam as its best pick in the supply-chain-management business, as it focuses largely on the resilient food segment, with 89% net contribution. Cotton-price volatility has been a major negative for the supply-chain segment, with developments on India's cotton-export ban, reported to be partially-removed, likely a major cotton-price mover ahead.

House thinks a replay of 2011's cotton drama, which included defaults by both farmers and customers, is unlikely. Note that Olam's shares have underperformed peers recently, whilst this may not be entirely due to the cotton issues, expectations of less volatile cotton prices will help increase investors' interest in Olam. Overall rates Olam at Buy, $2.98 TP and is less bullish on Noble and Glencore due to their greater exposure to the more cyclical industrial commodities business.