KSH

KSH: OCBC upgrade to BUY with $0.50 TP. Note that due to a rapid sales pickup at a key project, Cityscape@Farrer Park, e now forecast for FY13 (ending Mar 13) earnings to surge 68%. Similarly, expect FY14 earnings to increase 73% and see sustained earnings growth as a key price catalyst ahead, particularly as continued market liquidity seeks out deep value laggards like KSH (0.6x trailing PB, 3x FY13E PE). Also note KSH has been actively buying back shares near current levels –which mgt views as severely undervalued –and has a mandate to purchase up to a quarter of its free float, with ample cash (S$53m) to do so. Finally, see a major re-rating as likely imminent given KSH’s transition, over the last two yrs, from a cash-hoarding contractor to an property player actively managing shareholders’ capital – deploying capital into accretive site acquisitions and returning excess cash via dividends and share buy-backs. Upgrade KSH to BUY as key small-cap conviction idea.