Thursday, February 28, 2013


WBL: you can view the financial link btwn CB and mother share in this way. The CB have an offer price of $1.95. Conversion ratio of 0.4367 means every $1 in princpal amount of CB can be converted to 0.4367 WBL shares. Therefore, an investor has to convert 2.29 CBs to get 1 WBL share. This will cost him 2.29 x $1.95 = $4.47. WBL shares are now traded at $4.33 So using the CB approach, you are paying a premium of $0.14 per WBL share. This premium is to compensate for the option value embedded in the CB, as well as the 2.5% coupon till maturity in Jun 2014.


Yanlord: FY12 results above expectation, as core net profit at Rmb 1.3b was up 68% yoy, beating Barclays' estimate by 13%, driven by higher net margin. Gross margin came in line at 36%. Net gearing declined to 38%, above expectation due to land payment delay. The company paid Rmb 9 cts dividend, more than consensus estimate. Nevertheless, Barclays believes the strong results present good opportunity to sell into strength; remains concerned about rising tightening policy risks in top-tier cities, and expect it to resume slow growth in 2013. The house reiterates Underweight with TP $1.39. The stock is -0.3% at $1.545.

Pan United

Pan United: 4Q12 results. Revenue at $186.4m, +28% yoy, driven by higher activity levels across all three divisions. Net profit at $8.7m, +31% yoy, largely due to higher contribution from the Basic Building Resources (BBR) division in line with higher construction activities in Singapore and improved performance from the Shipping division. On outlook, mgt expects BBR division sales volume and activity levels to remain firm in FY13, on the back of guidance for the Building Construction Authority (BCA) to award $26-32b of total contracts for 2013, vs 2012’s preliminary est of $28.1b. The Port division continues to diversify its cargo base and increase berth utilization of Changshu Xinghua Port (CXP) as well as expand third party logistics services. In the shipping division, the group will focus on improving vessel utilization. The co declared final div of 2.5cts, bringing full year div to 4 cts (4.3% yield), up from 3.5 cts DPS in FY11. At $0.94 last done, the stock trades at 12x P/E, 1.6x P/B.


Ezion: Company just announced a Letter of Intent with a contract value of approx. US$45.3m over a 2-year period to provide a liftboat to support a S.E.A-based national oil company. The Liftboat is expected to be deployed and working in South East Asian waters by the 3Q13 after its final commissioning and completion. No timing has yet been receive to lift its trading halt.

First Resources

First Resources: DBSV maintains Buy with $2.16 TP. Counter is too cheap to ignore says house. 4Q12 core profit ahead of expectations. Stripping out biological asset gains (net of tax), First Resources (FR) booked 4Q12 core net profit of US $47.3m (-5% yoy; -26% qoq). Including non-operating items, 4Q12 net profit was booked at US$73.1m (-6% yoy; +14% qoq). DPS of S$0.025 was declared (payable 28 May13), which would bring its FY12 payout ratio to 26%. Net gearing (ex. NCI) stood at 12% at end-Dec 12. House understand Indonesian refined products are now offered at US$20/MT discount vs Malaysian spot prices. Imputing this in forecast for FR’s refined products (against 5% previously assumed) together with actual FY12 numbers, house have adjusted the group’s forward earnings slightly. All in, DCF-derived TP is unchanged at $2.16 (WACC 14%, ERP 8.2%, Beta 1.2, TG 3%). At current price believe the market has already imputed softer results this year from lower CPO prices and higher borrowing costs. Catalyst for the stock includes boost from additional refining capacity to come onstream in FY14F and recovery in CPO prices in FY15F.


Artivision: no recent news flow to highlight, other than the MOU signed with Shanghai Menlo Advertising on 17 Feb. Menlo is a subsidiary of AdChina, an integrated internet advertising platform provider in the PRC, and is engaged in the provision of technology consulting and solutions in connection with the various software systems under AdChina's platform. Menlo shall use Artivision's Advision video advertising platform and run its advertising campaign orders through Advision, enabling Menlo to engage in real-time bidding with publishers in the PRC for its advertisement campaigns. Artivision will receive payment from Menlo on the basis of the number of advertisement impressions served. A mutually acceptable detailed agreement is expected to be executed within 60 days from the date of MOU. Technically, the stock may be extending its decline after the support at $0.22 failed to hold. Next support at $0.20 (psychological level), followed by $0.184 (Jul '12 trough)

Keppel Land / K-REIT

Keppel Land / K-REIT: Nomura reiterates Buy call on Keppel Land, with higher TP of $4.75 from $4.11. Notes arbitrage valuation gap of $0.26/sh in KPLD, as KPLD’s current share price implies just $2,300 psf for MBFC III and K-Reit valuation of $1.12/unit, vs K-Reit’s current unit price of $1.345 and implied avg value of >$2,500 psf for its newer international Grade A office buildings.

Metal Component Engineering

Metal Component Engineering (MCE): 2H12 results in line. Net profit at $0.3m, vs net loss of $0.9m yoy, mainly attributable to tax credits received by MCE Singapore in FY12 but mostly off-set by forex losses. The group extended its turnaround from 1H12, post the restructuring and streamlining undertaken in FY11. 2H12 sales was flat at $35.2m, driven by its Precision Components (PC) business as it grew on stronger customer demand. However, the growth was tempered by its HDD business as it faced intense competition from tablets and smartphones last year. Its Mechanical Integration (MI) segment also declined. The group declared a 0.15 cts dividend (first dividend payment in four years) which was slightly lower than estimates but still represents a decent 3.3% yield MCT’s Thailand plant is expected to begin operations in 2HFY13 to support the stamping requirements of one its major shareholders, Cal-Comp Electronics (Thailand). Mgt expects revenue contribution to be marginal ($4-5m) this year and will only contribute meaningfully in FY14. Going forward, Malaysia will continue to be the growth driver for the group. NRA maintains at Overweight, raises TP to $0.058 from $0.051, after rolling over its 0.7x P/NTA valuation from FY12 to FY13. MCE has been amongst the plays of late to emerge in the top volume and 52 wk high lists.

Super Group

Super Group: Maybank KE noted that FY12 results were above expectations as Super posted strong profit growth to match its growing reputation. Stripping out exceptional items, recurring net profit came in at $77.7m, up 43% y/y. Group's growth was driven by both the consumer segment and the ingredients sale segment which saw the benefit of capacity expansion, especially during 4Q12. Maybank KE expect raw material price environment to remain favorable to margins. Given the stock’s increasing investability and scarcity premium, reiterates BUY with TP of $4.80, based on 30x FY13F earnings.

Genting SP (technical)

Genting SP: Trading Central has a positive chart view, notes the stock remains supported by a medium term rising trend line since Nov '12. Both the short term and medium term moving avg are heading upwards, and RSI has recently bounced off support at 50%, standing firmly above the neutral level. As long as $1.48 support (current 50 day MA) holds, the house sees a new up move to $1.64, followed by $1.69 in extension.


Yanlord: post results, Barclays downgrades the stock to Underweight from Equalweight, with TP $1.39


KepCorp: CIMB maintains O/p with $13.30 TP. Note that Keppel announced it had bagged $600m worth of orders from repeat customers in two days. The orders were for jack-up rigs, FPSO-related work and upgrades of semi-submersibles.House expect to see more product diversity in 2013, just as we did in 2012.


SMRT: CS downgrades to U/p, TP $1.30 from $1.60. Note that tighter liquidity stemming from higher capital expenditure and lower earnings over the next few years suggest that dividends are likely to be further reduced. The co has already cut interim dividends 14% and its reticence on dividend guidance increases doubts that payout will retain 80-90% levels of recent years. Labour costs are also expected to trend higher as the group continues to hire for its bus and rail divisions. R&M costs are also expected to remain high after 3 quarters of 30% YoY growth. Rental revenue, which is the largest contributor of growth for the last 5yrs, is unlikely to grow at previous years’ pace.


ComfortDelgro: CS downgrades to Neutral, TP $1.80 from $1.85. Note that dodest growth, largely priced in. Modest earnings growth expected, expect CD’s key domestic operations to remain challenged in light of greater regulatory scrutiny. Rail earnings are expected to see temporary decline due to the start-up of Downtown line. Taxi earnings growth is likely to be capped by the 2% fleet expansion ceiling due to the new Taxi availability rules. Elsewhere, its Australian bus business is likely to see profits decline in 2014 after losing two out of five bus operating regions last November. TP based on a 15x FY13E P/E, (in-line to market as well as its own 10yr average) is warranted in light of the modest growth expectations.


Yoma: issues a series of ancmts overnight. i) proposed acquisition of German Car Industries Co (GCI) Yoma will acquire the business and assets of GCI for total consideration of US$700k. GCI was co-founded in Myanmar in 1996 by Mr Werner Rosendahl and Mr Michael Rudenmark, and was the authorized distributor for Volkswagen until VW withdrew from the Myanmar market due to sanctions. GCI subsequently established itself as the premier service centre for European vehicles in Yangon. Yoma has appointed Mr Rudenmark, who has lived in Myanmar for the past 17 yrs, to take charge of the Group’s auto business. ii) possible acquisition of SPA Group automotive business The deal is still subject to due diligence and negotiations on the purchase price. SPA Group’s automotive business was established in 1994 and is an active player in the Myanmar auto industry with an established nationwide network of dealers and service centres in the major cities. iii) potential acquisition of new site in Yangong Under a First Right of Refusal agreement, Yoma has been offered by SPA Group, the right to acq the land devt rights (LDR) of, and to participate in the devt of approx 12 acres site located beside the Hlaing River (Riverside Residential Devt Project). The site is next to FMI City where Yoma has a current stake in real estate projects. Yoma has 30 days to indicate an affirmative interest in the offer, followed by another 30 days to confirm its acceptance of the offer. iv) appointment of new Managing Director (Real Estate) Yoma has appointed Mr Elmar Busch as MD( Real Estate). He has extensive in large scale real estate projects around the world, having been in marketing and consultancy for international condo projects in HK, Shanghai, Tokyo, London, Toronto Vancouver, NY and Sydney. He will be responsible for the real estate division of the group. Yoma, as the incumbent SGX-listed Myanmar player, remains the most direct proxy for equity invmt into the country.


mDR: 4Q12 results non-event. Revenue at $95.2m, flat yoy, as growth in the After Market Services segment (10% of sales, +53% yoy), offset a decline in the Distribution business (90% of sales, -4% yoy). Overall group margins improved marginally from 9% to 10%, mainly due to the change in sales mix. Net profit at $2.3m, -13% yoy, due to lack of a positive tax credit available in the previous yr. Otherwise, net profit would be 10% higher yoy on adjusted 4Q11 net profit of $2.2m. Mgt says the local economy is expected to register modest growth for the yr, which may impact consumer sentiment. Despite the challenges related to curbs on the inflow of foreign labour, the Group remains cautiously optimistic for FY13; intends to broaden its revenue streams from selective overseas investments in new and complementary businesses, Myanmar being amongst the new markets it is currently eyeing. mDR ended the year with net cash of $17.1m, representing 11% of market cap. The co declared first and final dividend of approx $2.1m, relatively unchg yoy. This translates to a DPS of 0.024 cts (1.3% yield) on the current 8,576m shares out. If all outstanding warrants of 4,111m are converted, SPD will be reduced to approx 0.016 cts (0.9% yield). At last close at 1.8 cts, the stock trades at 24x P/E, 3.2x P/B.

Thai Bev

Thai Bev: FY12 post record bottom line, blows past consensus Revenue was THB 161.0b, +22%. Net profit more than doubled to THB 28.5b, +137%, boosted by a one-off gain from APB’s sale under associate earnings. Core net profit rose 33%, driven by the prized spirits business, which saw modest volume growth and rising gross margins from lower raw material costs. This was in spite of the excise tax hike that kicked in in 2H12. Non-alcoholic business performed well posting strong sales growth of 167%, partially boosted by the well-received launch of its new range of cola drink products. The beer division however disappointed as it failed to breakeven in EBITDA. Final div declared was THB 0.28. Full year dividends of THB 0.42 (S 1.75 cts), which translates to a yield of 3.2%, was stronger than expected. This payout represents 59% of Thai Bev’s earnings excl FNN. The stock trades at 11.8x P/E, vs peer Yeo Hiap Seng at 24.1x. CIMB reiterates Outperform, raises TP to $0.74 from $0.70. We reiterate Thai Bev has two key catalysts that could see the shares re-rated. i) Potential asset swap involving F&N's F&B unit in exchange for the 29% stake in FNN that Thai Bev holds, allowing Thai Bev to emerge as an Asean F&B mammoth. Expect synergies and cost savings, given the deeper and extended geographical penetration and broader product portfolio. ii) Thai Bev has a possibility of replacing FNN as an STI component stock, as early as Sep '13. Given that Thai Bev currently has no meaningful institutional shareholder representation, it bodes positively for stock demand if there is a subsequent rush by "benchmark-focused" funds to acquire exposure

Tiger Airways

Tiger Airways: Group announced that they do not intend to sought a replacement for its Australian business, given the existing corporate developments related to the proposed sale of 60% of Tiger Australia. Tiger Airways Australia CEO, who had previously tendered his resignation on 6 Dec 2012 will serve his last day on 14 Mar 2013. The date that the Australian regulator will give its final decision on Tiger Australia's 60% sale to Virgin Australia will be given on 14 Mar 2013. Group trades at 2.8x P/B;

City Dev

City Dev: Good set of FY12 results, which was in-line. 4Q12 rev at $886.4m, +23% yoy and net profit at $249.3m, +53% yoy. Result brings FY12 rev to $3.4b, +2.2% and net profit to $678.3m, -15%. Gross margins at 49.5% vs 54% yoy. Excluding one off gains, FY12 net profit would have been up 5.8%. Strong results was backed by better performance from the property development segment Projects that contributed to both rev and profit for 2012, whose projects included Volari, NV Residences, 368 Thomson, Cube 8, Hundred Trees, Tree House, The Glyndebourne, Buckley Classique and H2O Residences. For grp’s hotel operations, FY12 hotel ops rev remained relatively constant at $1.5b, flat yoy, while FY12 rental properties saw rev increase 8.1% to $303.8m, primarily due to rev generated from a retail mall in Thailand which the Group acquired in 1Q12. Despite the increase in rental properties rev, pre-tax profit for FY 12 decreased due to substantial gains recognised on the sale of The Corporate Building, The Corporate Office and a strata unit in GB Building in 2011. On grp’s others segment, rev remained relatively constant at $99.4m (FY11: $92.5m). The increase was primarily due to higher management fee income, partially offset by lower dividend income received. Going forward, grp note that 2013 remains unpredictable on the global economic front, though there is some positive recovery, albeit slow. Besides residential developments in SG, will also focus on deriving more earnings from its overseas growth engines. Existing platforms include its hotel operations which is a key contributor - in particular M&C’s over 100 global hotels and its hospitality REIT. For its foray into China market, it has FSCL (M&C’s associate) which has established a proven track record in China and upcoming projects via its wholly-owned CDL China Limited; plus other investment properties in the region. The Grp expects its revenue from its overseas investments to grow. At current price, grp trades at 1.4x P/B, with a low gearing of 25%. Grp is recommending a special div of 5.0c per share in addition to the ordinary div of 8.0c per share. The total dividend proposed for 2012 amounts to 13c/share. (1.2% yield).


Midas: Weak set of results, which was in-line with grp’s profit warning issued earlier this mth. FY12 rev at Rmb 869.5m, -19.5%, while net profit at Rmb 27.8m, -85.1%. Gross margins at 28.9% vs 33.5% yoy. Grp’s core Aluminium Alloy Extruded Products Div, which accounted for 95.4% of rev, registered a 20.2% decrease in contributions to Rmb829.6m. Within this division, the Transport Industry remained the largest rev contributor, accounting for 57.1% of its rev, whilst the Power Industry took up 7.4%. The “Others” segment, comprising mainly the supply of aluminium alloy rods and other specialised profiles for industrial machinery, contributed the remaining 35.5%. Going forward, grp note that The PRC rail transportation industry is expected to grow in 2013, underpinned by the Govt’s support to grow China’s transportation network. The Ministry of Railway had in January 2013 announced the Government’s plans to invest approximately RMB650b into the railway sector, of which approximately RMB520b is planned for the development of railway infrastructure. The PRC metro train sector is also expected to see increased activities in 2013, with the National Development and Reform Commission (NDRC) approving an additional two metro projects worth a combined RMB49b in Nov12. The latest project approvals comes on top of an earlier announcement by the NDRC in Sept that it has approved project plans and feasibility studies for 25 metro projects with estimated investments valued at over RMB700b, which represents a strong pipeline of opportunities for industry players.


Mewah: Weak set of results which was in-line. 4Q12 rev at US$767.8m, -24% yoy and -9% qoq, while core net profit at US$4.2m, -61% yoy and +262% qoq. Result brings FY12 rev to US$3.6b, -19% and core net profit to US$40.2m, -50%. For the full yr sales vol decreased by 6.8% to 3.4m MT. Operating margin was relatively flat at US$31.8/mt. Rev fell on back of both lower sales vols and lower ASP. However, grp note that as CPO prices bottomed out during the qtr, the Co has witnessed some revival in which helped it achieve better sales vol and margins for the Consumer Pack segment. However, high inventory levels in Msia and Indonesia has kept the margins under pressure, particularly for Masian refiners due to export duty disadvantage vs Indonesian peers. Under tough operating conditions for Msian refiners, the Group experienced marginal drop in vol and reduced margins for its Bulk segment. Going forward, grp remains cautious on its near-term outlook. However, believes that current global conditions and challenging industry conditions will help industry consolidate and benefit stronger players in the longer term. The co has decided to put the plans to invest in an Indo refinery on hold and cite that it is just a matter of prioritisation and timing before it revisits whether to invest in a refinery in Indo. Meanwhile, Grp continues to tread cautiously in its operations while focusing on increasing refining capacity in Malaysia and participating in other non-oil consumer products. Ratings as follow. CIMB maintains U/[ with $0.46 TP Nomura maintains Neutral with $0.45 TP

Sino Grandness

Sino Grandness: Very strong set of record results at the high end of estimates. 4Q12 rev at Rmb 405.7m, +42.3% yoy and net profit at Rmb 64.8m, +184.9% yoy. Result brings FY12 rev to Rmb 1.64b, +61% and net profit to Rmb 289.1m, +88.3^. Gross margins improved further at 38.7% vs 34.1%. In FY12, the Grp recorded higher sales across the board for all product segments. In particular, sales of beverage segment which comprised Garden Fresh juices and domestic canned products segment which comprised Grandness canned fruits surged the most. Beverage segment sales surged 117.4% to RMB873.2m in FY12, while sales of domestic canned products jumped 326.7% to RMB111.1m in FY12. Domestic demand for Grp’s own-branded products grew significantly in FY12 largely due to growing consumer acceptance and continued expansion of its distribution network within the PRC market. Despite uncertainties in the western markets, sales of overseas canned products which included asparagus, long beans and mushrooms continued to grow steadily in FY12 as the Group’s major customers are operators of discount stores in Europe. In FY12, all key product categories for export markets continued to report positive growth, with sales of overseas canned products segment rising 10.8% to RMB655.9m. Going forward, grp is optimistic abt its outlook. Note that despite economic uncertainties faced by the western countries, the PRC economy will be able to sustain a steady growth under the national policy of stimulating internal demand. The rising disposal income per capita and increasing awareness of health promoting products in the PRC are expected to offer tremendous growth opportunities for the F&N indusry. To reward shareholders for their unwavering support and to encourage greater trading interest in the Co’s shares, the Co has proposed a bonus issue on the basis of 1 bonus share for every 2 held by shareholders.


CWT: Strong set of results which in-line with bullish estimates, after stripping off one-off gains. 4Q12 rev at $1.8b, +58.3% yoy and +25.4% qoq, while net profit at $22m, +5.7% yoy and +24% qoq. FY12 rev at $5.4b, +109% and net profit at $107.9m, +89% Strong bottom-line partly boosted by a $22.6m gain from sale and leaseback of a logistics property. Strong performance was boosted by growth in rev and from its Commodity Supply Chain Management (SCM) Business on back of higher vol; Logistics Business arising from higher capacity, volume and yield; and Engineering Services Business from project income. Rev sourced from China accounted for more than 50% its revenue with full yr contribution from Commodity SCM Business. In FY12, Commodity SCM Business also contributed to the increase in rev from other Asian countries such as India, Korea and Thailand by two folds. Going forward, aims to build diversified supply sources and seek diversification in business lines and geographic trade flows. The acquisition of LN Metals in Sept12 added refined metals to its trading portfolio. To further enhance the SCM operations, the Group has added significant operations in SG as well as for the domestic China market. For the Logistics Business grp will build its global logistics network and capabilities to integrate with the growth of Commodity SCM Business. Initial start-up cost is expected in order to build up the scale of operations. Overall, grp’s fundamentals remain strong, with a net cash position of $78.4m. CWT is recommending a div of 3c/share. At current price, grp trades at 7.7x P/E. Ratings as follow CIMB maintains O/p with $1.75 TP

Interra Resources

Interra Resources: The hype on its Myanmar operations might prove to be overplayed on the release of Group's FY12 results. FY12 revenues increased 22% to US$30.4m, earnings declined 66% to US$3m. Increase in revenues were largely driven by volumes due to higher contribution from Myanmar and West Papua (Indonesia) productions, which increased 21% to 363.7k barrels. The decline in earnings were due to the absence of a one-off revaluation gain of US$7.7m in FY11. Group notes that production is expected to increase in 1Q13, with the completion of a new well in Indonesia, and the contribution of its Myanmar production will still continue to be a significant part of the Group's revenues. Group trades at 47x P/E, P/B of 2.4x

Halcyon Agri

Halcyon Agri: Group's 1st set of results after its recent IPO on 1 Feb 2013. FY12 revenues declined 4% to US$222m, earnings increased 125% to US$9.9m; Adjusted net profits increased 270%, with the absence of one-offs in FY12. The drop in revenues were mainly due to the lower ASPs for rubber over the year, with a decline of 29.8% in rubber prices to US$3273/ tonne. Sales volumes however, helped decrease the offset with an increase of 43.8% sales volume. Group is cautiously optimistic with regards to the overall sector fundamentals due to the ongoing global economic uncertainty affecting commodity prices. Halcyon Agri sells its products mainly to US (40%) and Asia-ex Singapore & China (36%). 1¢/ share dividend proposed; 2.3% indicative dividend yield Group trades at 8.7x P/E, industry upstream player GMG Global trading at 18.2x

Keppel Corp

Keppel Corp: Group bags 3 more contract from repeat customers worth US$300m. Order momentum has been strong in the O&M space, despite the decline of contract values. Contract with Star Drilling (India's Jindal Group) involves the contruction of a KFELS B Class jackup rig, its 3rd jackup rig, as we see India companies enlarging its sphere in the oil and gas industry, pushing to reduce its dependence on oil imports. The other 2 contract were from Ensco PLC and Diamond Offshore, for the upgrading of semisubmersibles.

Geo Energy

Geo Energy: FY12 revenues up 14% to US$78.7m, earnings increased 33% to US$19.2m. Revenue improvement came on the back of a 77% increase in coal volumes due to its production increase. Although offset by the decrease in ASPs of coal by 37% to US$46.5/ tonne, due to the lower average calorific value of coal produced. Group expect sales volume to increase, inline with its planned increase in production capacity. Also, the Indonesian Coal Reference Price (HBA) has increased by approximately 8.5% in the last three months, which could serve to improve the Group's ASPs. Group also continues to look for business expansion opportunities which may include acquisitions, joint ventures and/or strategic alliances Geo Energy trades at 23x P/E;


STX OSV: Independent Financial advisor EY have recommended that the independent directors of the offshore vessels builder reject Fincantieri's offer price, as the offer price of $1.22 per share is "not attractive". The directors urged shareholders to reject Fincantieri's offer and for optionholders to also reject Fincantieri's options proposals. Fincantieri's offer will remain open to both shareholders and optionholders of STX OSV until 5.30pm on March 13. Stock is currently up 1.6% at $1.305


UOB: 4Q12 headline beat, but underlying weaker as NIMs disappoint again. Net profit at $696m, -2% qoq, +25% yoy, beat Bloomberg consensus of $614m, driven by wealth mgt fee income, and tax writebacks that more than offset higher-than-expected loan provisions. Like other SG banks, loan growth retraced to ~8% from >20% in FY11, as demand for trade financing fell in 2H12, while Singapore mortgages remained at a healthy +14% yoy. Outside SG, Msia (+13%) grew above the industry avg of 10% while Indonesia was relatively slow at +10%. Similar to peers, NIM fell 7bps qoq due to continued flush liquidity (LDR ratio fell to 85.5% in Dec from 87.5% in Sep) and a one-off shortening of bond portfolio’s duration. Fees and commissions advanced 19% yoy to $388m, led by income from fund mgt and invmt-related services. Other non-interest income jumped 38% to $238m on gains from the sale of securities. Mgt maintained its guidance of high single-digit loan growth for FY13e, driven by good momentum in core markets. However margins are likely to remain under pressure with continued excess liquidity in the system. This should be partly mitigated by the recent improvement in mortgage rates. Asset quality is expected to remain stable but mgt is monitoring for possible signs of stress in its SME/mortgage portfolio The bank announced a div of $0.40, along with special div of $0.10, bringing payout ratio to 39% for the year. Full yr div of $0.70 translates to a yield of 3.6%. Nomura keeps at Buy with TP $22.60. Credit Suisse maintains Neutral with TP $20. HSBC downgrades to Neutral from overweight, with TP $19.65.

SG Market (28 Feb 13)

SG Market: S’pore shares are likely to open higher following gains on Wall Street Wednesday as sentiment is boosted by reassurance from Fed chief to support further accommodative policy. However, worries about US spending cuts that will take effect on Fri may keep any rally in check. The STI is expected to inch towards the 3,300 psychological resistance while immediate support is at 3255. Positive earnings surprises are expected to draw buying interest in UOB, ThaiBev, Sino Grandness and Geo Energy, while Sound Global disappointed. Stocks to watch out for: *UOB: 4Q net profit grew 25% to $696m, beating street estimate of $614m. As expected, net interest income slipped 1.2% on further margin compression but higher fee-based income (+18.7%) from fund/wealth management and capital market activities, coupled with increase in other income (+38%) from trading and investments, as well as lower provisions, bolstered the bottomline. NPL ratio stayed low at 1.5%, while Tier 1 CAR strengthened to 14.7%. Higher DPS of 50¢ proposed, taking FY12 DPS to 70¢ vs 60¢ in previous year. City Dev: 4Q12 net profit rose 53% to $249.3m, mainly due to robust sales and one-off gains from sale of some property and an insurance settlement on a NZ hotel owned by M&C, which closed after the Feb 11 earthquake. 4Q revenue rose 23% to $886.4m backed by its property development segment. Book NAV climbed to $8.03. Group announced a special DPS of 5¢, taking the total to 13¢. *Sino Grandness: FY12 net profit of Rmb289.1m (+89%) came in 7% ahead of consensus estimates on higher sales contributions across the board, particularly from China market (+60%). 4Q12 earnings surged 203% to Rmb64.8m, driven largely by beverage sales, which commanded better margins. Group is setting up a new Hubei plant amid more optimistic outlook for 2013 and is proposing a 1-for-2 bonus issue. *Mewah Int’l: FY12 results in line with expectations with core earnings netting US$20m. On a qoq basis, net profit for 4Q12 saw a sharp improvement to US$4.2m (+262%), supported by higher sales and operating margins in the consumer pack segment, which was offset by continued weakness in the bulk segment. Group remains cautious on the near term outlook and is paying a final DPS of 0.55¢, maintaining full year DPS of 0.85¢. *ThaiBev: FY12 net profit of Bt17.8b topped estimates of Bt16.4b. Including F&N, earnings came in at Bt28.5b, translating to EPS of Bt1.135 or 4.7¢. Revenue grew 22% to Bt161b, driven by sales of spirits (+10%), beer (+4%), non alcohol beverages (+167%) and food (+29%). Overall EBITDA margins widened to 24.4% from 16% despite wider losses from its beer business and declining margins from its food division. Net gearing ballooned to 1.17x from 0.23x. Final DPS of Bt0.28 declared taking total to Bt0.42 (1.75¢) for FY12 vs Bt0.37 (1.54¢) for FY11. *CWT: Posted strong set of results which was in-line with bullish estimates. FY12 revenue doubled to $5.4b while net profit surged 89% to $107.9m boosted by growth in from supply chain management on higher volumes, logistics business arising from higher capacity, volume and yield and engineering services from project income. Strong bottom-line was partly boosted by a $22.6m gain from the sale and leaseback of a logistics property. Group is recommending a 3¢ DPS. *Sound Global: FY12 net profit of Rmb427.5m missed estimates of Rmb464.7m as its performance was impacted by 61% spike in finance charges. This was also evident in its 4Q results, which saw bottomline profit shrink 23% to Rmb82.4m. Of note, the group loaded more debt, reaching Rmb2.83b from Rmb1.68b in FY11 and incurred higher financing costs even as its cash pile swelled to Rmb2.9b. *Interra: So much for its Myanmar hype, the group booked a 4Q12 loss of US$0.05m and FY12 net profit of US$3m. Despite achieving higher share of production of 93,328 barrels vs 81,491 barrels in 4Q11, revenue fell 8% to US$7.2m in 4Q12 due to lower transacted price for its Indon oil. Group is identifying more wells to be drilled in 2013 to improve production and is awaiting approval for its acquisition of Kuala Pambuang PSC in Indonesia. *Geo Energy: 4Q12 net profit more than doubled to US$6.9m, bringing FY12 earnings to US$19.2m (+33%) as the group benefited from higher revenue (+14%) and better profit margins. Gross profit margins expanded to 46% in FY12 (66% in 4Q) from 38.5% In FY11 due to a 88% jump in coal production volume and lower average stripping ratio. But average selling price of coal plunged from US$73.40 to US$46.50/tonne due to the poorer quality coal produced at its mine compared to its previous coal sales under its cooperation contracts. Meantime, the group is acquiring options, representing 93% interests in 4 mining concessions in East Kalimantan totaling 21,377 ha. These target companies have not commenced coal production and are currently loss-making. #mDR: 4Q12 results essientially a non-event with revenue at $95.2m, flat yoy, as growth in the after market services segment (10% of sales, +53%), offset a decline in the distribution business (90% of sales, -4%). Net profit declined 13% to $2.3m due to lack of a positive tax credit available in the previous year. Otherwise, net profit would be 10% higher on adjusted basis. To broaden its revenue streams, group is eyeing overseas investments in new and complementary businesses, including Myanmar. *Keppel Corp: Bags another 3 contracts worth US$300m from repeat customers for the construction of a KFELS B Class jack-up rig for Jindal Group and upgrading of 2 semi-submersibles for Ensco and Diamond Offshore. This brings the total order wins secured to-date to $572m.

Wednesday, February 27, 2013


OUE: DJ Newswires reports that OUE may be planning to inject into a SG REIT IPO set for 3Q13. Sources indicate that Mandarin Orchard and Mandarin Gallery may be in the REIT.


Myanmar: another positive sign of progress in Myanmar's growing international acceptance -- Norway will upgrade its diplomatic office in Yangon to full embassy status. President Thein Sein is on visit to Norway as part of his European tour, in which both countries leaders expect broadened cooperation on the exploitation of energy and other natural resources. Norway is Western Europe's largest oil and gas producer. In addition, both countries discussed improving mobile phone coverage in Myanmar, which current stands at 5-7%. Norway believes "there's room for Telenor" in Myanmar, pointing to possible devt of Myanmar's telco infrastructure. Telenor , the Nordic region's largest phone operator, is amongst the 91 expressions of interest submitted for the mobile phone licenses in Myanmar. Amongst the M-Chips, Yoma develops residential properties, with current focus being on its Star City devt project. It will also embark on devt of an iconic integrated mixed devt for hotel , office and retail use. Interra Resources has E&P activities in Myanmar , under partnership with Myanmar Oil & Gas Company (MOGE). Ntegrator and NeraTel offer telco infrastructure services in Myanamr. mDR is in the midst of setting up a JV with a local Myanmar player, for the distribution and after-sales services of handphones in Myanmar.

Super Grp

Super Grp: Announced strong set of 4Q12 results, which was at the top end of estimates. Rev at $155.5m, +29% yoy and +19.5% qoq, while net profit at $22.3m, -7% yoy and -6% qoq. Result brings FY12 rev to $519.3m, +18% yoy and net profit to $82.6m, +29% yoy. Gross margins improved further to 35% vs 32% yoy. Strong rev was due to double-digit rev growth driven grp’s Branded Consumer and Food Ingredients business segments. Food Ingredients sales led the surge by registering 50% increase to $66.5m due mainly to strong demand from Gup’s traditional markets of East Asia and higher sales into Aseam, particularly from Thailand and Indonesia. Branded Consumer sales grew 16% to $89.0m in 4Q12 from $76.4m in previous corresponding qtr due mainly to strong demand for Group’s instant beverages from Asean and East Asia markets. For FY12, Branded Consumer sales grew 11% to $355.1m. Coupled with Food Ingredient sales’ 34% increase to $164.1m. Going forward, grp expects market conditions to remain competitive in the next twelve mths while raw material costs and currency fluctuations will continue to impact the operating performance. Grp is optimistic that its on-going efforts to stay ahead of the competition will generate positive contributions to its operating performance. The grp has declared a div of 5.1c/share, bring Fy12 div to 7.1c. (1.9% yield). Trading to be lifted at 2.30 p.m


Innotek: disappointing 4Q12 results. Revenue at $51.7m, -29% yoy, largely due to the economic slowdown in China and the recent political tension between Japan and China, which impacted sales of TV components to major Japanese customers. Net loss of $8.5m, deeper than the $1.1m net loss yoy, with the loss due mainly to lower revenue and lower gross profit from Office Automation pdts and existing automotive component programmes, due to competitive pricing and higher labor costs. Embedded in bottom line is the start up loss of $1.3m from the new mobility business and early end-of-life of certain existing pdts. Also the new plant in Wuhan suffered a loss of $0.5m, due to low revenue as major Japanese automotive customers delayed plans to set up plant facilities in Wuhan due to the Sino-Japan political tension. The co declared 1 ct div, down from 5ct dividend in each of FY08-11. . Mgt notes the group continues to be impacted by the ongoing European debt crisis and slower economic growth in China. Business outlook of the group’s main industry sub-sectors – TV components, Office Automation and Automotive components – remains uncertain as Japanese TV-related customers continue to face fierce competition from producers from other countries with lower cost structure. This is in addition to the challenges posed by rising min wage in China and weakening of the USD relative to RMB. On a positive note, the group’s new mobility business is expected to start reporting revenue in FY13. Nevertheless, overall, mgt expects the group’s 1Q13 performance to improve qoq, and FY13 performance to improve yoy with the restructuring and rightsizing of operations. The stock is down 9.5% at $0.335, which translates to 0.48x P/B.


Swiber: FY12 results released. Earnings increased 42.4% to US$46m. Strong set of results beating estimates, attributable to Latin America and South East Asia segment, where the Group secured its first ever contract in Mexico which contributed significantly to the Group revenue in FY2012. As for South East Asia, the increase was mainly driven by progressive revenue recognition from Brunei and Indonesia projects. Mgmt believes that major oil and gas companies will continue to expand their offshore exploration activities and hence their production capital expenditure- translating into more opportunities for offshore and subsea contractors that undertake platform, pipeline and subsea installation as well as inspection, repair and maintenance works and other offshore support services. As of February 2013, the group has an order book of approximately US$1.35 billion.

IHH Healthcare

IHH Healthcare: DBSV downgrades to Hold. Note that IHH Healthcare’s net profit (ex-exceptional) of RM686.6m is line with house estimate of RM703m. Revenue was marginally below estimate due to slower contribution and lower revenue intensities from Acibadem. House SOTP remains at $1.38, implying FY13F/14F EV/EBITDA multiple of 21.4x/ 17.8x. Whilst believe the long term prospects for healthcare remains positive and IHH commands a premium due to its scarcity and geographical spread, share price has done well and currently offers just limited upside to house TP. Downgrade to HOLD. Prefer to accumulate at lower levels.

CapitaLand (technical)

CapitaLand: Trading Central notes share price remains supported by a medium term rising trend line since May 2012, and is currently pulling back to test its bullish moving averages' support. However the daily RSI lacks strong downward momentum. As long as 3.76 is not broken, expects a limited consolidation before further upside move to $4.05 (the previous high) and $4.23 in extension.

Genting SP

Genting SP : Credit Suisse sees trend toward "on-shoring wealth" by rich Indonesians , many of whom live in Singapore. Notes the rich are thriving, spending in Spore and increasingly at home where luxury goods were US$1b last yr, double the 2007 level. Adds, its proprietary CS Consumer Suvey shows, Indonesia consumer confidence more generally is high, incomes rising / seen rising further, discretionary spending is back , brand recognition is increasing. Amongst its "Singdonesian" winning stocks, tips Genting SP amongst the Singapore listed plays. Other selected discretionary consumer stocks we note are Osim, Raffles Medical, FJ Benjamin.


NOL/ Container shipping: Nomura issued a sector report, has a BUY on NOL with TP of $1.45, CSCL (HK-listed) and OOIL (HK-listed). Global demand growth forecast for FY13 at 4.2%, vs supply growth at 6.0%; House forecasts an increase of 1.8% for overall freight rates to $1591/ TEU, coming from a 4.7% increase on the Transpacific route. Nomura noted that 4Q12 results disappointed on overall, and is likely to force even tighter capacity discipline. Asia-Europe freight rates should remain volatile with monthly rate increases (before subsequent declines), while transpacific annual contracts will likely be concluded higher y-y. House notes the upcoming catalysts: 15 March rate increases on Asia-Europe of US$750/TEU and 1 April US$400-600/FEU GRI on transpacific. Low margin, slow demand and supply imbalance are forcing capacity management, which underpins Nomura's bullish view on container shipping.

Elec and Eltek

Elec and Eltek: reported a strong set of 4QFY12 results with net profit of US$9.5m (+24.8% y-o-y) on the back of revenue of US$134.9m (+3.2% y-o-y) despite the challenging business environment. Though DMG previously anticipated the inflection point, the co still beat expectation by 10.3% to achieve a respectable net profit of US$35.3m for FY12 on strong high density interconnect (HDI) segment performance. Most notably, the group surprised on the upside with US 11¢/sh final dividend, translating to an attractive FY12 yield of 9.4%. Moving on, the group sounded optimistic towards the outlook and guided positive FY13 results. DMG reiterates, the group's prospects has brightened and that the market has excessively priced-in the negative impact of PC's decline. Maintains Buy. The house intends to adjust its forecasts, and review TP after the analyst briefing. The stock is +2.4% at US$2.18


SMM: DMG insti note that wat is hurting Sembcorp though is the decline in margins that we have now seen since the sector peaked 3 qtrs ago, which was again reconfirmed in the recent result last wk. Gross margins have now declined from the peak of 21.8% in 4Q11, to 15.7% for the full year 2012, to only 12.6% in last quarter of 2012. Even more telling is the guidance, which is for the margins to continue to fall, and they are now expecting only 10-11% for the coming qtrs. This of course filters down to the net profit margin as well. Trading on 17.1x FY2013 PE and with the disappointing dividend payout, house believe the stock is very fully valued, and worse still, given that the consensus street estimates remain too high (14-17% margins are still being forecast despite the mgt downgrade), think the entire sector should now be coming under pressure. Whilst we still believe in the strength of the Jack up rig market, what we are seeing is a normalization of margins (much faster than even we expected) from the previous three years which had been boosted by record rig pricing. Rig pricing is now slowing down and we believe this is attributing to the rising competition for offshore orders (especially from the Chinese, Middle East and Korean Yards which now appear to be pricing for volume rather than profits). So whilst the order book remains healthy, margin prices are now the key. Technically, Sembcorp is stuck in a declining wedge, and looks set to test the bottom of the range at the 4.10 level. A break of this support would clear the way for a retest of the $3.60 level which is more in keeping with historical valuations for the stock. Use the declining wedge top as a stop loss if it is broken.


Noble: Co. report its 4Q12 results tmw. JP Morgan maintains O/w and lifts TP to $1.50. House expect Noble to report (excluding profit on supply chain assets) 4Q12 / FY12 earnings will come in at US$106m / US$453m vs FY12 consensus estimate of US$495m (do note however that consensus ranges from US$378m to US$778m). While potential upside risk would be “stronger than expected” agriculture dollar margins, potential downside risk comes from “higher than expected” SG&A costs.

Wilmar/ First Resources/ Golden Agri

Wilmar/ First Resources/ Golden Agri/ CPO: 50%-owned subsidiary Adani Wilmar, 2nd largest importer of cooking oil in India, stated that there was a 26% increase in CPO in the 3 months through Jan 2013. This increase may trim inventories in Malaysia and Indonesia, and bolster benchmark futures in KL for CPO prices. Expanding demand in India may counter the impact of an increase in import taxes and higher export duties in Indonesia as well. India meets more than 50% of its cooking oil demand through imports of mostly palm from Indonesia and Malaysia. Demand will expand 6% to 17.5m tons in FY13. CPO for May 2013 delivery fell 2.1% to Rm2419/ton yesterday. Inventories in Malaysia jumped to an all-time high of 2.63m tons in Dec 2012, before falling to 2.58m tons in Jan 2013. Wilmar is up slightly by 0.6% to $3.52; First Resources up slightly by 0.5% to $1.95; Golden Agri up 0.8% at $0.635;

WE Holdings

WE Holdings: Group announced that they are engaged in final stage discussions with certain parties in Myanmar with respect to venturing into the resource business in Myanmar. No other details were released;


GLP: signs a new lease agreement of ~15.6k sm at GLP Park Beijing ACL (adjacent to Beijing Airport) with the China subsidiary of Cardinal Health, a leading global distributor of pharmaceuticals and medical supplies. Cardinal is an existing customer of GLP. Including the above, Cardinal leases a total of 29.3k sm with GLP across Beijing, Shanghai and Shenyang. The logistics of pharmaceutical and medical supplies in China is still nascent, and potentially offers higher margin given the stricter quality conditions that need to be maintained. GLP, with its high-end facilities, is well positioned to capture the associated warehousing demand over the longer term. The stock trades at 15.5x P/E, 1.2x P/B.


Maxi-Cash: Non-Executive Chairman Koh Wee Seng, bought 523k shares via open market, increasing deemed interest to 81.1% and direct interest to 1.46% from 1.31%.


Yongnam: 4Q12 results broadly in line. Revenue at $84.6m, -5% yoy, +18% qoq. The expected yoy drop in revenue was due to lower contributions from its structural steelworks (SS) division following the completion of the higher margin iconic projects last yr. This resulted in a margins decline. Net profit at $9.7m, -41% yoy, -6% qoq. Co proposed 1ct dividend, unchg yoy. Current order book stands strong at $400m. Nevertheless CIMB remains upbeat on outlook. Believes previously delayed projects will get ramped up in 1Q13. Notes the group also secured various landmark projects that will boost contributions in FY13. Highlights possible catalyst in Myanmar, where Yongnam is part of a consortium that will be bidding to build and operate a new international airport. Tender closes in late April amid keen competition. The house keeps its Outperform rating, raises TP to $0.36 from $0.33.

Keppel Corp

Keppel Corp: Keppel Corporation's O&M arm has won two contracts worth $200m from repeat customers SBM Offshore and MODEC and Toyo Offshore Production Systems (MTOPS). The order from MTOPS involves the integration of topside modules for a Floating Production Storage and Offloading unit. Integration will take place at the BrasFELS yard from 3Q14 to 3Q15. The order from SBM Offshore involves the fabrication of a 6,800-tonne internal turret for a newbuild FPSO, to be deployed in Australia’s Ichthys Field. Delivery is expected to be 3Q14. Orders are Keppel's 1st contract win of 2013. Street estimates FY13 orders at c.$6.5b. UOB KH maintains BUY with TP of $12.70;

Parkson Retail Asia

Parkson Retail Asia: CIMB maintains O/p with $1.75 TP. House hosted investor meetings with mgt, which affirmed that Jan and Feb SSSG trends have been running better than in 2Q. Msia (74% of 1H gross sales proceeds or GSP) is seeing double-digit growth, helped by Chinese New Year (CNY, pre-election handouts and a low comparison base from last yr. SSSG in Indonesia (14% of GSP) is in the high single-digits, also helped by CNY and solid domestic consumption demand. In Vietnam (12% of GSP), SSSG has turned from -8.4% in 2Q to a positive number QTD. The 7-8 new stores being planned for FY13 and FY14 on the existing 56-store network are on track, including the April 2013 opening of the first store in Myanmar and the FY14 opening of the first store in Cambodia. PRA may also increase its present 47.5% ownership in Odel in Sri Lanka by up to 2% pts a year so that Odel’s results may be consolidated in two years’ time. Overall, house like grp’s entry into new countries, solid management team, strong balance sheet ($0.30 per share) and cash flows (projected $30m in FCF in FY13 and growing with earnings). House reccomends opportunistically accumulating shares in the $1.50-1.60 range


HI-P: Grp is guiding that 2013 will be better then 2012. For this yr, it is saying that 1Q will see a loss while 2H, an improvement leading to a full-year increase in profit and rev vs 2012. Grp note that with the recent BlackBerry 10 launch, from market reports grp is seeing positive signs for RIM and the coming launch in North America will be critical for them. HI-P has also been receiving very good feedback and seeing volume picking up and RIM is discussing with the co. to increase capacity. Add that the mobile phone business is volatile and grp is lucky that when one customer goes down, another goes up. Traditionally, Q1 is a low seasons, and the industry is facing tough pricing pressure, but expect RIM ti be back much stronger in 2Q. For Q3 and Q4, some new customers' projects will start mass production. So those will be much stronger quarters.


Boustead: Group awarded $30m water contract, bolstering order backlog to $355m. Contract was announced by its wholly-owned subsidiary in Taiwan, to design, engineer and construct a condensate polishing plant (the “Condensate Polishing Plant”) for a 2 x 800MW ultra supercritical coal-fired thermal power plant for Taiwan Power Company. This adds to the Group's 4th design-and-build contract awarded this year, totaling 188m. Mgmt previously stated at its recent 3Q13 results release on 14 Feb that given the current growth trajectory, the Group's FY13 profits would significantly surpass FY12's results. Edge previously highlighted that the Group's cash holdings itself ar $0.35/ share, indicating that the Group trades at 5.3x P/E, which doesn't reflect the Group's earnings growth. Boustead trades at 7.4x P/E, 2.3x PB, has historical dividend yield of 4%.


Swissco: FY12 results released; 69.5% jump in revenues to $110m, 100% jump in earnings to $16.4m. the Group saw an increase in all 3 segments, with Maritime Services segment the most of 164%, mainly due to the delivery of vessels and fees earned. Mgmt stated that the outlook for offshore support vessels for 2013 remains positive driven by current stable oil price which continues to support investment in E&P activities. The Group will look at fleet diversification to enhance the Group’s fleet capabilities and seek strategic alliances in overseas markets to grow the chartering business. A special dividend of 0.3¢ and ordinary dividend of 0.5¢ proposed, bringing FY12 total dividends to 0.8¢; indicative yield of 3.6% for FY12


Petrafoods: 4Q12 results registered a net loss of US$16.7m that came in below expectations following continued weaknesses in its Cocoa Ingredients business. Double-digit net profit growth (+10.4% YoY to US$14.7m) in the Branded Consumer division was offset by a sizeable loss of US$31.4m from the Cocoa Ingredients division during the same period. This brought FY12 net profit to US$25.8m - a decline of 57.3% YoY from US$60.5m. However, excluding the soon-to-be-sold Cocoa Ingredients division, Petra would have registered a 38.8% increase in its FY12 bottom-line to US$54.5m on a 13.8% YoY improvement in revenue to US$477.7m. Pending a briefing with management later in the morning, OCBC place fair value estimate of $3.57 under review but maintain HOLD rating on the counter.


Breadtalk: Good set of results which were above estimates. Grp registered a 19.1% YoY and 5.7% increase in 4Q12 revenue and operating profit to $119.7m and $6.5m respectively on the back of higher same-store sales across all business segments. Although these results exceeded forecast, the group’s operating and net profit margins declined as expected following greater cost pressures. In line with its expansion phase, BreadTalk declared a lower final div to bring the total div declared in FY12 to 1.3c (FY11: 1.5c). Going forward, adjusted FY13/14 forecasts upwards to account for full yr contributions from new stores but remained lukewarm on possible margin improvements as the group’s continued expansion push makes the scenario unlikely. OCBC lower rolling 12-month EPS peg to 15.5x (from 19x) but keep fair value estimate at $0.77. Maintain HOLD

ECS Holdings

ECS Holdings: Results missed expectations. Grp reported a 21.4% YoY dip in its 4Q12 net profit to $7.1m despite a 10.5% increase in revenue to $1,021.1m. Excluding forex and other exceptional items, estimate that core earnings would have decreased 16.4% YoY to $6.6m. This is below expectations due largely to a 1.1ppt slide in gross margin to 3.4%. On a positive note, a first and final dividend of $0.022 per share was declared, similar to FY11. This translates into a yield of 4.2%. Looking ahead, ECS aims to broaden its range of distribution products and services to accommodate the shift in consumer preference from PCs to mobile devices, while it is also looking to develop its own cloud-based solutions. OCBC place Buy rating and $0.56 fair value estimate under review given this set of weaker-than-expected results and ECS’s 14.1% YTD share price appreciation.

Dyna-Mac Holdings

Dyna-Mac Holdings: FY12 results was in-line with Estimate. Net profit at $28.4m (+56.5%). In separate SGX announcements, the group disclosed that its COO will be re-designated as Chief Corporate and Technical Officer “in line with his intention to take on a less demanding role due to his age and health”. OCBC puts its Buy Rating of $0.57 on review, pending mgt meeting.

Far East Orchard

Far East Orchard: good set of FY12 results, above Street estimates. Revenue at $140m (-52% yoy), as previous yr’s revenue was boosted by recognition from sales of The Floridian. This was despite maiden contribution from the newly acquired NMC/NSC units and hospitality mgt business of $5m and $5.3m respectively in 2H12. Net profit was $73m (-39% yoy). The co declared final div of 6 cts, double yoy. On outlook, FEOR’s property devt business is expected to ease, with the TOP of The Floridian. Almost 94% of units in euHabitat have been sold, and the bulk of revenue is expected to be progressively recognised in FY13-14. The Bassein Road JV is in the early stage of development and no recognition of revenue is expected until FY14. SBF Centre could be the next share price catalyst. FEOR has started registration of interest for SBF Centre (20% stake), with sales launch targeted in 1Q13. The 31-storey SBF Centre is a 99-year leasehold mixed-use commercial devt with dual frontage on Robinson Road and Cecil Street. SBF Centre will contain 48 medical suites located on the 3rd and 5th levels, with sizes ranging from 665 to 1,290 sf. There are 192 office units on the 10th-28th levels, with unit sizes of 560 to 1,475 sf. The top three levels contain large floor plates office units of 10,890 sf each. Prices of the strata office units will start from $2,400 psf, while those of the medical suites will start from $3,500 psf. Expect strong sales momentum on the back of keen interest in strata commercial space lately (Alexander Central, Paya Lebar Square, PS100 etc.). Armed with fresh dry powder post-restructuring, FEOR is also in a in a good position to capitalize on growth opportunities ahead. Expect to see more involvement from FEOR and its partners in GLS biddings moving forward. Maybank Kim Eng keeps at Buy with TP $2.50, with valuations backed by the co’s net cash of $1.11.

Wheelock Properties

Wheelock Properties: Results below Street estimates- earnings missed by 3%; FY12 results released; revenues down 47% to $209m, earnings down 78% to $63m. The decline was mainly due to the high base in FY11 from the selling of units in Scotts Square. Retail/ office space: Wheelock Place retail occupancy at 98%, office occupancy at 100%; Scotts Square occupancy of 93%; Mgmt expectations on rental reversions are flat for 2013. Residential space: Scotts Square is 79% sold as at 31 Dec 2012; Ardmore Three saw 1-unit sold from its 84-units, with a public launch date pending; Group plans to launch a 700-unit condo project in AMK ave 2 this year, but is cautious on the recent property cooling measures and subdued luxury market segment, as well as the slowing global economy. Gearing increased to 8.9% from 5.5% in FY11, mainly due to the financing of sites at Fuyang City, China, and the construction costs for Ardmore Three; NAV/ share at $2.61 as at 31 Dec 2012, Group trading at 25% discount to NAV currently; Group proposed dividend of 6¢/ share; indicative yield of 3% CIMB is NEUTRAL and reduces TP to $1.95;


IHH: 4Q12 results broadly in line. Core net profit at RM147m (+53% QoQ, 38% YoY), with EBITDA of RM276 m (+9% QoQ, 81% YoY). All core markets witnessed inpatient volumes growing QoQ and YoY. In Singapore, Novena’s EBITDA losses have narrowed and expect to break even during 2013. At Acibadem, the proposed recapitalisation was completed in 4Q12 replacing the expensive debt—should translate to Group cost savings of US$11 m in FY13. Overall, the Group EBITDA margins were maintained at 21% in FY12 excluding start-up losses. Mgt sounded confident of improving Group margins as Novena starts contributing and more synergies are realised across various regions. Most of the expansion plans in core markets are on track and should be completed by 2015. Beyond 2015, the board will consider the expansion strategy at a later stage. Mgt sees India and China as the biggest opportunities for growth in the medium term. A dividend policy will probably be framed by end 2013 The stock currently trades at 17x FY13e adj EV / EBITDA. CIMB keeps at Outperform with TP $1.53. Sees catalysts from a ramp up of Novena Hospital’s operations and revenue intensity in all its three markets. Likes the co’s defensive earnings and size. Deutsche keeps at Buy with TP RM 3.55 (S$1.42). Likes the co for its large regional foot print and longer term growth potential. Credit Suisse keeps at Outperform with TP RM3.75 (S$1.50). Nomura however keeps at Reduce, with TP RM 2.81 (S$1.12), citing rich valuations.

Indofood Agri

Indofood Agri: Results below Street estimates- earnings missed by 22%; FY12 revenues increased 9.8% to Rp13.8t, earnings declined 31% to Rp1.8t; excluding the effect of the biological assets gains recognized in both years, the adjusted FY12 attributable profit would have been down 22% against FY11. Earnings were affected due to the lower ASPs for CPO, higher production cost and operating expenses, as well as lower biological asset gains. On a full year basis, CPO prices declined 11% for FY12, averaging US$1,006/tonne. Mgmt stated that the slowdown in the global economy, particularly in Europe and China, has weighted down on commodity markets in 2012. Additionally, Europe’s biodiesel off-take was significantly lower than forecast, as well as increasing palm oil inventory. Edible Oils & Fats Division reported total revenue of Rp9.6t in FY12, representing 5% growth over FY11 mainly attributable to higher sales of cooking oil and copra-based products. Supported by higher refining capacities at the Tanjung Priok refinery and increased demand. The outlook for the palm oil industry is expected to remain positive as global demand is likely to be supported by consumption growth from emerging Asian economies like India and China. The long-term outlook for rubber remains upbeat, supported by healthy demand from tyre-makers, automotive industries and rubber goods manufacturers in developing markets. China in particular, is expected to contribute strongly to this demand, given its large population and status as the world’s largest natural rubber consumer, at approximately 35% of world natural rubber demand. Group previously announced a geographical expansion into the sugar and ethanol industry in Brazil with the proposed acquisition of a 50% equity stake in Companhia Mineira de Açúcar e Álcool Participações for a cash consideration of US$71.7m, which is expected to be completed by 2Q13. Group announced a 0.3¢ dividend for FY12; indicative yield of 0.2%

Bumitama Agri

Bumitama Agri: FY12 results broadly in line. For FY12, core net profit rose 26% y/y to IDR 730b, primarily driven by higher revenues (+26% y/y to IDR 3,526b), supported by lower tax rate (-6 ppt). Revenue growth was in line with higher production (CPO and PK sales volume up 35% and 37% y/y, respectively), which more than offset ASP decline (CPO and PK ASPs down 5% and 27% y/y). Operating margins fell (EBIT margin down 3 ppt y/y) as lower ASPs met higher unit pdtn costs (nucleus cash cost of production per mt of CPO up 11% y/y). For 4Q12, core net earnings fell 4% q/q to IDR 172b, despite higher revenue (up 18% q/q to IDR 996b) due to higher costs and interest expenses (arising from larger debt). Revenue was up despite lower selling prices (CPO and PK ASPs down 15% and 22% q/q, respectively) driven by substantial production and sales volume growth (CPO and PK volume up 40% and 30% q/q). Operating margins fell (-5 ppt q/q) driven by the higher cost of production (nucleus FFB cash cost per ha up 30% q/q due to rehabilitation costs and higher application of fertiliser on marginal areas) as well as higher SG&A costs (distribution using trucks instead of by sea due to vessel shortage and adverse sea conditions). Whilst operating margins were under pressure, the drivers (rehabilitation costs and higher selling expenses due to vessel shortage) are not structural and will disappear with time. Analysts were more impressed that Bumi exceeded its already-lofty production guidance, with impressive y/y growth in 4Q12. They reiterate that Bumi remains a growth stock; see substantial value in the stock. On outlook, Bumi has a planting target of 15kha in 2013 (vs. 13kha previously) and expects a CPO production growth of ~20% for the year 2013. The company is also looking to procure its own vessels/barges in 2013 (as part of its Rp 2 tr capex plan) to overcome the shortage that led to the higher selling expenses Nomura tips a positive stock reaction. Reiterates Buy with TP $1.40. HSBC keeps at Overweight, raises TP to $1.29 to $1.33. CIMB maintains Buy with TP $1.12 (from $1.23).

First Resources

First Resources: Good set of full-year results, at the higher end of estimates. 4Q12 rev at US$134.1m, -15% yoy, while net profit at US$73.1m, -6% yoy. Result brings FY12 rev to US$603.4m, +22% yoy and net profit to US$237m, +20.7% yoy. Ebitda margin at 53.5% vs 59.6% yoy. Slowdown in top line for 4Q was primarily due to lower CPO prices. For FY12, Grp’s improved performance in FY12 was primarily due to higher sales vol from its two business segments. Sales vol from the Refinery and Processing segment surged by 58% while sales vol from the Plantations and Palm Oil Mills segment grew by 23.3%. Grp also saw its CPO yield rise at 5.4tons/ha vs 5.2tons/ha yoy, while FFB yield went up to 23 tons/ha vs 22.2tons/ha yoy. During the yr, FR added 14,152 ha of planted oil palms in Indo, growing its total planted area under mgt to 146,403 ha. The Group’s mature plantations produced 14.2% more fresh fruit bunches (FFB) in FY12, which in turn yielded a 16.3% increase in CPO production to 525,831 tons and a 18.4% increase in palm kernel production to 123,129 tons. Going forward, grp will increase its milling capacity in line with the projected growth in FFB production, with the aim of producing one mil tons of CPO annually within the next 5 yrs. The grp has proposed a final div of 2.75c/share, taking full yr payout to 4c/share. (2.1% yield)


STX OSV: Weak set of 4Q12 results which were below estimates. Rev at Nok 2.5b, -19% yoy and +3% qoq, while net profit at Nok 111m, -83% yoy and -51.3% qoq. Result brings FY12 rev to Nok11.1b, -10% yoy and net profit to Nok 889m, -45% yoy. Ebitda margins healthy at 13.2% vs 19% yoy (exceptionally high base in 2011). Poor qtr results was attributed to grp’s operations in Norway, which experienced temporarily lower utilization at some yards, while its Vietnam yards similarly recorded low activity levels in 4Q12. The shipyards in Romania continue to run at high load, and investments in automation and process and efficiency improvements are being implemented with good results. In Brazil, Operations at the shipyard in Niterói continue to affect Group performance & high attention is being devoted to mitigating the effects of high workload and too high staff turnover. Grp’s new Brazilian yard STX OSV Promar, is entering a new phase, and with most major construction works now in place, moving from shipyard construction to establishing a well-roundedn shipbuilding organization. Recruitment is ongoing, and shipbuilding activities are scheduled to begin in summer of 2013. For the yr, grp secured Nok9.5b worth of orders vs Nok11.1b yoy, and current order book stands at Nok15.1b, vs Nok16.7b yoy. Grp’s orderbook should underpin earnings visibility for the next 2 yrs. Going forward, grp note that mkt for subsea support and construction vessels remained fundamentally robust throughout FY 12, and continues to be so, as evidenced by the three OSCVs contracted so far within the first quarter of 2013. Based on early signs in the market, demand for large and ultra-large AHTS could pick up during 2013. In contrast, the outlook for high-end PSVs continues to be subdued. Ratings as follow: DMG maintains Buy but lowers TP to $1.82 from $1.96 OCBC maintains Buy with $1.52 TP. (Expect to see improved utilization) CIMB maintains Neutral and cuts TP to $1.38 from $1.47.

SembCorp Industries

SembCorp Industries: Results above Street estimates- revenues surprised by 2.4%; FY12 revenues up 13% to $10.2b, net profits declined 7% to $$753.3m; Utilities made up 48% (up from 37% in FY11) and Marine made up 42% (down from 55% in FY11) of Group's profits. FY12 Profit margins for Utilities segment at 10.8%, Marine segment at 13.5%; compared to 8.6% for Utilities and 20% for Marine in FY11. Earnings from Utilities grew 23% y/y to $374.6m, helped by the addition of 3 new plants in FY12 which provided new earnings stream. Earnings from Marine business declined 28% y/y to $326.7m, mainly due to lower margin from new design rigs including the first of seven drillships for Sete Brasil, and resumption of margin recognition on completion and delivery of the Songa Eclipse semi-submersible rig in FY2011. Earnings from Urban Development increased 6% y/y to $41.1m Going forward into FY13, the Utilities segment should see continued increase in performance due to the completion a new renewable energy plant in Jurong Island, as well as the recently-acquired power assets in China. The segment has achieved a CAGR of 20% over the last 10 years, providing the Group with a greater recurring income. Mgmt targets a total of 10,000 MW of power capacity vs its 5,800 MW capacity currently, although no timeline has been stated. Marine orderbook of $13.6b stretches till 2019, which is made up of $11b in orders secured in 2012, and $900m secured in Feb 2013. Group's new yard at Tuas will commence operations in the 2H13, and the construction of the Brazilian yard is on track to full completion by end-2014. Group proposed a dividend of 15¢; indicative yield of 2.9%; Group trades at 12.3x P/E, just below the 5-yr historical +1 s.d. of 12.8x; Peer Keppel Corp trades at 9.2x P/E, under the 5-yr historical average of 10.7x; Note however that a direct comparison can't be made, due to Keppel's property segment. UOB KH maintains BUY with TP of $6.10; DB reiterates BUY with TP of $6.35; Nomura maintains BUY with TP of $6.00; CS maintains OUTPERFORM, reduces TP to $5.90 as a result of reducing operating margin forecasts; CIMB maintains OUTPERFORM with TP of $6.26;

SG Market (27 Feb 13)

SG Market: S’pore shares may recover following gains on Wall Street Tuesday with sentiment was boosted by Fed chairman Ben Bernanke's support for continued easing. The STI could stage a rebound towards 3280 resistance while immediate support is established at 3255. Stocks to watch out for: *Sembcorp Industries: 4Q12 results beat estimates amid record orderbook of $13.6b with deliveries stretching into 2019. But net profit fell 19% to $204.7m despite solid contributions from utilities business as its marine unit faced a margin squeeze from new design rigs. DPS shaved to 15¢ from 17¢ previously. *STX OSV: Hugely disappointing results with 4Q net profit sinking 81% to NOK124m vs consensus NOK278m forecast. The group blamed its poor performance on low yard utilization in Norway, Vietnam and hiccups in Brazil, which dragged Ebitda margins down to 11.3% from 28% previously. No dividend declared. *Dyna-mac: FY12 results topped estimates, achieving record net profit of $28.4m (+57%) and revenue of $215.3m (+82%). This came on the back of higher volume of projects as its S’pore yard operated at full capacity as well as contributions from its newly acquired yard in Nansha, China. DPS of 2¢ proposed. *Ying Li: FY12 net profit of Rmb377.2m (+36%) exceeded estimates of Rmb298.5m. Earnings was boosted by revaluation gains of Rmb378.3m vs Rmb230m in FY11. Revenue growth was flat as lower property sales were offset by higher rental income. NAV stood at Rmb1.47. *Yongnam: Booked net profit of $43.5m (-31%) and revenue of $301.6m (-9%) for FY12, which are in line with expectations. The weaker performance is due to lower contributions from structural steelworks arising from slower progress in certain ongoing projects as well as completion of major projects in 2011 and follows 6 consecutive years of record profits. Orderbook remained strong at $400.6m. *Bumitama Agri: FY12 results came in slightly above expectations. The group chalked up a 3% net profit growth to Rp787.9m despite incurring a Rp123m fall in fair value gains. Revenue jumped 26% to Rp3.5b, boosted by increase in sales volume of CPO and PK, which were partially mitigated by lower average selling prices. *First Resources: FY12 results were on the higher end of estimates with underlying core net profit rising 25.5% to US$211.3m. Revenue grew 22% to US$603.4m, supported by increased sales volumes. Proposed final DPS of 2.75¢, taking FY12 total DPS to record 4¢. *Indofood Agri: FY12 results missed forecasts with net profit falling 30% to Rp1.05b despite revenue growing 10% to Rp13.8t, driven by contributions from its sugar operations and edible oils business. Gross profit declined 10% mainly attributable to lower average selling prices for plantation crops and higher cost of production. *Centurion: FY12 core net profit rose 37% to $9.5m as revenue jumped 117% to $65.2m. Positive results were supported largely by recent expansion and acquisitions in its worker dormitory business. Final DPS of 0.4¢, bringing total FY12 DPS to 0.7¢. Keppel Corp: Secures 2 contracts worth $200m from repeat customers; the first project is to integrate topside modules of a FPSO unit for MTOPS at its Brazilian yard and the second job is to fabricate an internal turret for a newbuild FPSO for SBM Offshore. *Boustead: Clinched a $30m contract to build a construct a condensate polishing plant to produce high grade boiler feedwater for a thermal power plant in Taiwan. *Global Logistic Properties: Signed agreement to lease 15,600 sqm at GLP Park Beijing (adjacent to Beijing Airport) to Cardinal Health, a leading global distributor of pharmaceuticals and medical supplies. This brings the total space leased to Cardinal Health to 29,300 sqm located across Beijing, Shanghai and Shenyang. *HI-P: Offers guidance of a better performance in 2013 compared to 2012. For this yr, it flags a 1Q loss but expects an improved 2H to deliver higher full-year profit and revenue vs 2012 on the back of positive feedback for its new Blackberry 10.

Tuesday, February 26, 2013

Armarda (technical)

Armarda: appears to be a bullish break out play , following the sustained move above the 200day MA. Aggressive traders who have a tolerance for penny stock volatility may find an interesting risk-reward structure in this technical chart. Given the positive bias, do not rule out a rebound toward the 4.2 ct level (52 wk high), followed by 5.8 cts in extension (peak of the 200day MA in Oct '11). Near term support is at 3 cts, although firmer support lies at 2.2 cts, coinciding with the 200day MA.


Equationl Trading to resume at 3.15 pm. Grp annouced a proposed placement to Asdew Acquisitions and Sino Expert Investment Limited for the issue and allotment of 148m new shares. The subscription price will be at $0.0135 per Share. The total consideration for the Subscription is $1.998m. The Co intends to use 100% of the net proceeds for the Group’s general working capital purposes. Recall that Asdew acquisitions is owned by 'renowned local investor Mr Alan Wang, who has in the past invested in Co's like Sarin etc. Equation: Seperately from the above mention placement, the Co. has also entered into a placement agreement with Mr Peter Tan Shou Yi, for 69.4m shares in the Co, at a subscription price of $0.0135 per Share. Mr. Peter Tan Shou Yi is a businessman who owns several co's diversified across Asia and they include consultancy, training, education and concierge services.

Popular (technical)

Popular: co has been conducting daily share buybacks over Dec - mid Feb. 3QFYApr13 results are due est 8 Mar. Popular's share price chart looks pretty, having been on a relatively stable uptrend over the past 12mths, supported by the rising key moving average. The counter is now close to multi-year highs, a positive signal for momentum. Pyschological resistance at $0.30, support at $0.25.

Pac Andes / China Fish (update)

Pac Andes / China Fish: both companies to lift halt at 2pm. China Fish intends to make a voluntary cash offer for all shares of Oslo listeed Copeinca ASA, Peru's second largest fishing co. This is consistent with China Fish's business strategy of increasing access to fishery resources in strategic mkts such as Peru. It will provide China Fish with an additional 10.7% of catch quota in North and Central Peru adn an additional 3% of catch quota in South Peru. Upon successful completion of acq, China Fish will become the largest fishmeal co in Peru with a total of 16.9% catch quota in North and Central Peru and 14.7% in South Peru, and one of the top producers in the world. Total consideration for the entire stake in Copeinca at the NOK 53.85 Offer price trasnlates to NOK 3.15b (US$556m). To finance the deal, China Fish proposed 1-for-1 rights share issue will be at an issue price of $0.34/sh. This represents a 51% discount to the counter's last close at $0.69. Ex-rights is on 21 Mar 2013. DBS, Stan Chart are the joint lead mgrs and underwriters.

Pac Andes / China Fish

Pac Andes / China Fish: China Fish, part-owned by U.S. private equity firm Carlyle Group , plans to raise about US$250 m in a rights issue. The Singapore-listed industrial-fishing company plans to use the proceeds to acquire Norwegian fish-processor Copeinca ASA . If the acquisition falls through, China Fish will still go ahead with the rights issue and use the proceeds for other purposes. China Fish declined to comment. Carlyle bought ~11% of China Fish in 2010. As part of that deal, Carlyle also bought warrants, which if exercised, would raise the U.S. company's stake in China Fishery to 13.6%. Copeinca has a market value of about NOK 2.6b (US$455 m). China Fishery, which fishes mainly in the Pacific, and its parent, Pacific Andes, remain on trading halt.


MGCCT: the upcoming REIT IPO is said to be priced at $0.93, at the top end of the indicative $0.88 – 0.93 /sh range. The REIT will include the Festival Walk shopping mall in Hong Kong and Gateway Plaza office complex in Beijing. The sale will be the biggest REIT IPO in Singapore. Gross proceeds from the offering could be as much as $1.68b if an over-allotment option is exercised. Mapletree Investments will own 32 – 35% of the REIT after the sale. ~953 m of the 1.7 b shares will be sold to cornerstone investors, including AIA, Morgan Stanley, Henderson Global Investors, Myriad Asset Mgt and Norges Bank Investment Management, which runs Norway’s sovereign wealth fund. Citi, Goldman Sachs., DBS and HSBC are managing the offer.


Albedo: corporate action involves 4 rights shares with 4 free detachable warrants for every 1 Albedo share. The rights shares have an issue price of 0.5 cts . The warrants have an exercise price of 0.5 cts. Ex-entitlement date is 1 Mar 2013.

Koon Holdings

Koon Holdings: FY12 Revenues increased 141% to 212m, net profit declined 60.2% to $3m. Decline in profits attributed to the Group's FY11 one-off gain on disposal of leasehold property and non-recurrent dividend income totaling $12.1m, which was absent in FY12; Group recognized a number of major construction projects over FY12, contributing to the 96% revenue increase in the Construction division. Also, revenue from the Property division that was acquired in July 2011 more than tripled from $7.6m to $25.1m. Recent Govt White Paper signalling an increase on infrastructure, should see housing construction demand for HDB flats, where more than 70% of a typical HDB flat is constructed using precast components, which would boost Group's Precast Division sales. As of 25 Feb 2013, the Construction and Precast division has an outstanding order book of $179m and $82.7m respectively. Group trades at 14x P/E, 0.8x P/B. Group's JV Penta-Ocena/ Hyundai/ Koon Joint Venture, has announced the JV won a project worth $40m. Project will be for the construction of container berths and stacking yards at Pasir Panjang Terminal- Phase III. Contract duration will occur for a 19-mth period, and will contribute to FY13's financials. Koon Holdings has a 20% stake in the JV.


CarrierNet: Group proposed subscription with Tres Maria Capital Ltd to which the subscriber has agreed to pay for 1,025m new ordinary shares in the share capital of the Company at $0.011/ share. Tre Maria Capital has total interest of 33.32% of existing shares; Tre Maria is owned by Mr. Sugiono Wiyono Sugialam, president director/ CEO of PT Trikomsel Oke Tbk. Indonesia's first and leading Indonesian public listed company dealing in retail and distribution of telecommunication and multimedia products. Upon completion of the proposed subscription and assuming all 1,025m subscription shares are allotted and issued, the subscriber’s shareholding in the Company will increase to approximately 53.72%, triggering a mandatory general offer. Proposed Subscription is to allow the Company to raise gross proceeds of $11.3m will be used towards reducing loans owing by the Company to financial institutions and also as working capital purposes for the expansion of the Company’s business of the distribution of mobile communication devices. CarrierNet trades at 10.6x P/E, 8.7x P/B.

TT International

TT International - The grp this morning annouced that is has completed the Investment Agreement of its Big Box Project. TT International has invested approximately $95.0m in Big Box. With the completion, TT International now owns 75% of the total issued share capital of BB (comprising ordinary and preference shares), with the remaining 25% held by Prima BB and Utraco Investment which have collectively injected an aggregate $92.0m into the Project located at Jurong East Street 11. Grp note that The Completion of the agreement marks an important milestone in the advancement of the Big Box and look forward to the early completion of the project financing agreement.


GLP: Business Times notes, GIC plans to sell a 12.5% stake in GLP to raise up to $1.6b. JPM, the global sole bookrunner for the deal, is offering to sell the 595.7m shares at $2.60 - $2.66 apiece, or a discount of 3.3% to 5.5% from GLP’s last close at $2.75. Pricing is expected this morning. If the shares are sold, GIC would still remain the largest single sh/h of GLP, with a deemed interest of ~35%. GIC declined to comment, but market sources said the fund was most probably just rebalancing its portfolio. Separately, GLP announced it signed ~19k sm of new leases with two different third party logistics providers in Xi’an, Northwestern China, resulting in its GLP Park Xi’an Hi-Tech devt (74k sm GFA) being fully leased upon completion. GLP currently has two further devts under construction in Xi’an. These are due to be completed in Oct ’13 and will have a total GFA of 153.5k sm. The stock is last traded at 16.6x P/E, 1.3x P/B.

KS Energy

KS Energy: Still no news on convertible bonds. KS Energy reported a 41.7% increase in rev to $698.1m and a net profit of $1.3m in FY12, vs OCBC forecast of a full year net loss of $1.0m. This compares to a net loss of $78.8m in FY11. There is still no news on the group’s convertible bonds, which may be redeemed by investors in Mar this year. Mgt only mentioned that it is still working on various options to meet this funding requirement. The group’s cash level stood at $60.7m, with a net gearing of 0.75x as at 31 Dec12. Looking ahead, mgt is cautiously optimistic about prospects in FY13. There will also be increased focus on Indonesia for the drilling segment. OCBC maintain HOLD with $0.78 fair value estimate.


BreadTalk: Group is due to release its 4Q12 results this week, and OCBC anticipating another challenging set of results in terms of cost mgt. While there will be YoY improvements in terms of its top-line, a continued uptick in raw material costs and operating expenses should see operating profit and net profit decline by 6% and 9% YoY respectively. Despite the lack of a fundamental catalyst, the stock has continued its appreciation with an 11.8% gain on a YTD basis. From house review of the similar counters across the region, deem this increase to be down to a re-rating of the sector as investors clamour to gain exposure to EM-Asia consumer demand. Although raise rolling 12-month EPS multiple to 19x (11.1x previously) to reflect higher regional valuation, which increases fair value estimate to S$0.77 (from S$0.49) and upgrades rating to HOLD, continue to urge caution as house expect margin pressure to continue in the coming quarters.

China Animal Healthcare

China Animal Healthcare: FY12 revenues up 12.3% to Rmb863m, net profits declined 52.5% to Rmb105.9m; solely due to the early-redemption of convertible bonds. Adjusted net profit attributable to owners for FY2012 would be Rmb215.2m, representing an increase of 3.8%. The increase in revenue was mainly boosted by the surge in sales of biological drugs of 25.8% y/y to Rmb323.7m , and the continued stable performance in the powdered drugs segment. Company seeks further growth in its core business, in particular the biological drugs business segment. Company stated its operations have held up commendably despite the tepid and lacklustre economy in FY12, contributed by continued strong performance in the powdered drugs segment and animal vaccine sales. On its early redemption of the convertible bonds, Group's working capital needs as well as other on-going corporate plans will not be affected, although mgmt have not recommended a dividend in respect of FY12. Mgmt stated that the reshaping of the Chinese economy bodes well for the Group as the animal husbandry industry is primarily driven by domestic consumption. Group expect China’s appetite for agricultural products to surge as its vast manufacturing sector revives. Company trades at 10.7x P/E, 1.8x P/B.


Ntegrator: FY12 revenues declined 11% to $32.8m, earnings flat at $250k; The Group revenue was affected by the slow progress in completion in Thailand and the delays in securing additional contracts in Myanmar due to the national parliament elections. Gross profit margins for the Group improved, as the mix in revenues grew towards the Project Management and Maintenance Service business, achieving economies of scale for services. The Group has seen a continuing interest in Myanmar and Vietnam resulting in an improvement in the order book and sales pipeline, and expects positive development in the sales pipeline for the next 2-5 years. Ntegrator’s order book as at Feb 25, 2013 stands at a record $72.2m. NAV/ share at $0.0312 as at 31 Dec 2012; Company trading at 173x P/E, 3.8x P/B


Armstrong: FY12 revenues flat at $216m, earnings up 61% to $11.5m; mainly due to lower impairment losses and absence of mark-to-market loss on the Group’s forward FX contracts. The Automotive segment was the largest revenue contributor, posted growth of 12.4% y/y to $84.7m, contributing 39.2% of Group's revenues. Data Storage business contracted by 10.0% as a result of lower turnover as the segment recovered from the effects of the Thailand flood in 1H2012 and lower demand by key customers in 3Q2012. In terms of geographical segments, China remains the top revenue contributor accounting for 30.4% of the Group’s revenue, followed by Thailand and Singapore which accounted for 26.3% and 25.2% of the Group’s revenue respectively. According to iSuppli, an IT market intelligence firm, the global HDD market is expected to decline by 12% in 2013, putting downward pressure on HDD prices and operating margins; whilst the China Automotive segment is expected to grow, albeit at a slower pace. Disputes between China and Japan extending into 2013, the Group is cautious of the possible impact on its business as China-Japan trade is highly integrated into Asia’s supply chain. Dividend of 0.6¢/ share declared; 2.3% indicative yield NAV/ share at $0.203 as at 31 Dec 2012; Company trading at 12.6x P/E, 1.5x P/B; OSK DMG is NEUTRAL on the counter, with TP of $0.27;

ARA Asset Mgmt

ARA Asset Mgmt: FY12 results in line with consensus; earnings rose 7% y/y to $72.7m, due to growth in recurring REIT and fund management fee income. While acquisition and performance fees declined 61% y/y, finance income rose 108%. This was due to gains on disposal of REIT units received in lieu of cash as fees and higher distribution income because Asia Dragon Fund I (ADF I) distributed profits from asset divestments. ARA has a 2% stake in ADF I. Over 2012, ARA achieved $2.3b growth in assets under management, to $22.1b as of 31 December 2012. Management expects to be able to match its run rate of $2b p.a. AUM growth. ARA sees opportunities for its REITs to take advantage of cheap capital to acquire assets. StanChart note growth opportunities are less visible than in past years, which saw obvious fund raising or asset acquisition opportunities. ARA declared a 1-for-10 bonus issue and a final dividend of 2.7¢ (payable to bonus shares as well). Including 1H12, a total 5¢ dividend was declared in FY12. Total distributions of $40.5m for the year increased 5.5% y/y, translating to a 56% payout. StanChart maintains IN-LINE with TP of $1.84.


OUE: Core earnings broadly in-line. Grp reported 4Q net profit of $21.7m, -69% YoY and FY12 net profit of $90.1m, -76% YoY. Excluding net fair value loss of $11.7m (mainly due to One Raffles Place of –$41m), FY12 core net profit of $102m (+11% YoY) would have been broadly in line with consensus. Grp’s hotel portfolio was revalued up by 5% with Mandarin Gallery +4%. Rev growth was broad-based; driven by hospitality (+11% YoY) on full yr contribution from CPCA (Crowne Plaza Changi), making up 57% of FY12 revenue. Investment property rev rose 35% underpinned by higher occupancy rate at OUE Bayfront and a one-off penalty on DBS Blg. Occupancy at OUE Bayfront has increased from 88% to 93.2% and mgt comments that it is seeing strong interest from MNCs for DBS Blg (renamed 6 Shenton Way), although backfilling progress was not disclosed. Sales at Twin Peaks have improved with 7 units sold in 4Q (13% of total 462 units sold to date). Going forward, grp will review its marketing strategy for Twin Peaks in view of the latest cooling measures and will focus on active lease mgmt. While hotel occupancy remains strong, global uncertainty and slowdown in visitor arrivals could weigh on demand. Mgmt will also proceed with plans to redevelop the retail podium of 6 Shenton and ORP, as well as more rooms on the adjoining site of CPCA. At current price, grp trades at 0.8x P/B and 0.7x P/RNAV, the grp has declared a final div of 3c & a special div of 5ct, bringing FY12 div to a better than-expected 11c (vs. 13c in FY11) implying slightly under 4% yield. Net gearing rose marginally from 61% to 62%. Ratings as follow: Deutsche maintains Buy with $3.32 TP UOB Kay Hian maintains Buy with $3.30 TP

Nam Cheong

Nam Cheong: Very strong set of results, meeting bullish estimates. 4Q12 rev at Rm 379.2m, +172% yoy and +167% qoq, while net profit at Rm 49.3m, + 87% yoy and +56% qoq. Result brings FY12 rev to Rm 876.6m, +45% yoy and net profit to Rm 136.6m, +47% yoy. Gross margins at 20% vs 23% yoy. Strong qtr was attributed to strong vessel sales in the qtr, where grp sold 9 vessesl, out of a record-breaking 21 vessels in 2012. Grp sold more Platform Supply Vessels (PSVs), which generally contributes more to rev stream due to its larger size. Rev contributions from the vessel chartering segment dropped 10%, as certain vessels were demobilised upon fulfillment of their charter contracts and later re-deployed for ensuing contracts. Grp note that its success in securing a steady number of contracts speaks vol of its unique build-to-stock model, ability to anticipate demand ahead of time, and strong track record as Msia’s largest OSV builder. These fundamentals enabled us to ride on the offshore marine boom in Malaysia. Looking forward, grp believe that investments will continue to bode well and continue to see demand for AHTS vessels, PSVs and other offshore vessels, especially in the shallow water region. Msia is expected to incur the highest offshore capex in Asia over the next 5 yrs as Petronas, has expanded its 2011 – 2015 capex plan to Rm 300b, thereby driving much of the offshore oil and gas uptrend that makes up a major component of the country’s Economic Transformation Programme. Grp’s orderbook of RM 1.3b, underpins earnings visibility till 2015-16.


SINGAPORE BUDGET 2013: Overall impact Nomura maintains a cautious view on the Singapore mkt, believes ongoing economic restructuring should continue to undermine the outlook for corporate EPS growth, in view of higher worker levies and constraints on labour growth. Continues to like stocks with stable dividends that also derive more of their earnings from overseas, eg. SATS, Comfort, SingTel, Keppel Land, DBS, Jardine Matheson, and Ascendas Hospitality Trust. O&M, Construction, Consumer Services (negative) The govt continued to reduce foreign worker quotas. Foreign work levies for low-skill Construction workers will be raise, while Service Economy Dependency and S Pass ratios have been tightened an additional 5%. Companies have until Jul 2015 to comply. Notably, the Marine sector (which previously escaped cuts) will see a reduction in its dependency ratio from 1:5 to 1:3.5. To help manage the transition, the govt introduced a 3-yr transition support package (co-fund 40% of wage increases for Singaporean employees earning up to $4k over the next 3 years, enhanced Productivity Incentive Bonuses, and corporate tax rebates of 30% up to $30k per year for 2013-15). Such moves could dampen margins for the O&M, construction, consumer services sectors, which may see rising wage pressures. With its new yard opening in Tuas, Deutsche, Credit Suisse believe that SMM faces greater margin risk vs Keppel Corp which is likely to be buffered by growing contributions from its overseas yards. For construction firms who ventured early into property devt such as Lian Beng and KSH may be less affected than pure construction companies such as Logistics Holdings. Nevertheless, expect sector margins to be crimped. Maybank KE highlights FJ Benjamin, already feeling the pinch from difficulties in hiring local workers to work in its stores, will be facing further cost pressures. Banks (negative) The higher taxes on cars and higher end properties may impact loans for these discretionary items. HL Finance has sizeable % of the car loans market. UOB, DBS, OCBC all have approx 20-30% of their loan book in the property segment. Property & REITs (mixed) UOBK notes the increased spending driven by higher disposable income levels will benefit the retail REITs, especially those exposed to the suburban segments, ie. FCT, CMT. Credit Suisse likes MCT for this angle. We think that Industrial Reits may be more adversely affected, giving higher costs faced by (industrial) SMEs. Smaller Reits like Sabana, Cache, AIMS AMP Capital Industrial Trust, Cambridge tend to have higher SME tenant contribution, vs the larger industrial Reits like A-Reit, MLT and MINT. The property tax increase was a surprise, with the increase having greater impact on higher grade properties. This could negatively affect high end players like Wing Tai, Ho Bee, Wheelock. Consumer discretionary (positive) UOBK believes companies such as Super, Courts, QAF, Challenger and Sheng Siong are key beneficiaries from higher disposable income arising from an expectation of wage increase, lower personal income tax, lower foreign maid levy, GST offsets and a reduction in property tax. Credit Suisse also notes the greater focus on social spending will support the consumption theme. For each of the last 3 yrs, stocks such as Super, Osim, Raffles Medical have outperformed the market in the 3 mths post Budget. Transport (positive) UOBK notes Comfort could benefit from lower COEs due to a 50% cap on LTVs of motor vehicles and one-off 30% rebate in road tax for commercial vehicles. Nomura thinks Comfort is a key beneficiary, given its leadership in the tax segment, which is expected to see increased demand from reduced affordability of car ownership. The co should also benefit meaningfully from the tax rebates, given it is the largest taxi and bus operator in Spore.

SG Market (26 Feb 13)

SG Market: S’pore shares are likely to open weaker as a potential political gridlock in Italy renewed concerns about Europe’s debt situation, causing steep losses on Wall Street. Sentiment may also be weighed by the S’pore Budget especially on labour intensive industries such as construction offshore & marine, F&B and banks with those in land transport and perhaps Iskandar plays benefiting as some SMEs may relocate there following the tightening of foreign labour imports. Immediate support for the STI now tipped at 3255 with topside resistance is at 3310. Stocks to watch out for: OUE: Core earnings for FY12 broadly in line. Operating profit rose 31% largely driven by higher revenue from hospitality and property businesses but bottomline earnings plunged 76% to $90.1m due to smaller revaluation gains from investment properties ($32.5m vs $265.5m in FY11) and fair value losses of $40.6m from One Raffles Place. Final + special DPS pared to 8¢ from 11¢. NAV stood at $3.49. *Nam Cheong: Delivered strong set of 4Q12 results, which met expectations. Net profit soared 87% to RM49.3m as revenue surged 172% to RM379.2m on strong vessel sales, partially offset by weaker chartering revenue. Group boasts a strong orderbook of RM1.3b with deliveries stretching till 2015. DPS of 0.5¢ proposed. *ARA Asset Management: Results came largely in line. 4Q12 net profit rose 33% to $17.7m but FY12 earnings of $72.7m missed estimates. Total assets under management jumped 12% to $22.1b. Company is proposing a 1-for-10 bonus issue and final DPS of 2.7¢. *Armstrong: Turned in 4Q12 net profit of $1.4m (vs $0.9m in 4Q11) and FY12 earnings of $11.5m (+61%) on flattish revenue growth amid a weakened global HDD market and rising Sino-Japan tensions affecting Asia’s supply chain. DPS of 0.6¢ declared. Gallant Venture: 4Q12 net profit of $17.1m was 47% higher than $11.1m achieved previous year due to higher realization of land sales, lower doubtful debts and a $4.1m FX gain. Outlook for its industrial park and utilities business remains challenging following the withdrawal of several tenants and low electricity consumption. Koon Holdings: Recorded $3m (-60%) net profit on the back of 141% jump in revenue to a record $212.4m. The earnings drop was attributable to one-off gain on a property disposal and non-recurrent dividend income totaling $12.1m. To-date, the construction and precast divisions have outstanding orderbooks of $179m and $83m. Final DPS of 0.5¢ proposed. Separately, its 20% JV has been awarded a $40m contract to construct container berths and stacking yards at PSA’s Pasir Panjang Terminal. *Lee Kim Tah: 4Q12 results boosted by $10.2m revaluation gains from Jurong Point, lifting net profit to $14.9m and FY12 earnings to $31.5m. DPS of 1.5¢ maintained. *Global Logistic Properties: GIC reducing its stake to 37% from 49% through proposed sale of 595.7m shares at $2.60 apiece or 5% discount to last closing price. *Golden Palm Resources: Flagging a net loss for 4Q12 and FY12 due to changes in value of biological assets. *Cordlife: Entered into 3-year strategic alliance with CordLabs Asia to provide cord tissue banking services, widening market to S’pore, HK, Malysia, Indonesia, Philippines, Thailand and India. *UPP: Extended the long stop date for its JV agreement with Myan Shwe Pyi to engage in excavation, drilling and blasting activities in Myanmar till 30 Jun 2013.

Monday, February 25, 2013

S’pore Budget 2013

S’pore Budget 2013: The govt announced fresh curbs to slow the growth of its foreign workforce, in a bid to push businesses to restructure and boost wages. The aim is to achieve economic growth that is driven by sustained productivity improvement rather than manpower growth. As part of the effort, the govt will raise levies on foreign workers across all sectors in Jul 2014 and 2015, and selectively lower limits on the ratio of foreign workers that companies can hire as part of their total headcount. The measures will target business sectors with weak productivity growth and high expansion of foreign workforce. The construction, marine and services sectors will be affected more than others.

Raffles Medical Group

Raffles Medical Group: CIMB maintains O/p with $3.50 TP. House note that FY12 core EPS is in line at 97% of house forecast, confirming renewed operating efficiency. More importantly, the potential for an overseas venture with China Merchant Bank adds excitement, underscoring the group’s longer-term plans for Hong Kong and Shenzhen. If RFMD pursues this opportunity and Chinese approval is granted, the hospital could be ready in three yrs’ time.