Monday, April 30, 2012


Myanmar: STRATEGIC partnership between Vietnam and SG, if cemented, could see the two countries jointly investing in Myanmar in the near future. Speaking at the close of his inaugural state visit to Vietnam, President Tony Tan revealed that both nations are in talks to deepen bilateral cooperation, which may encompass partnerships for investments in Indochina.." Add that with Vietnamese companies increasingly looking to invest and expand beyond their home country, Singapore can contribute with its expertise in overseas investments, and in turn leverage on Vietnam's close ties with its neighbouring countries.

Ho Bee

Ho Bee: is flat at $1.39 despite reporting 1Q12 net profit fell 71% on year to $15.8m, largely on the absence of a year-earlier gain from asset sales and amid sluggish demand for high-end homes. UOBK says the results were below expectations, mainly on the Parvis and Trilight projects' slower-than-expected construction. Notes sales at the high-end residential projects are slower, with just one unit at The Orange Grove selling in 1Q12; its current launches, Trilight, Seascape and The Orange Grove, are 96%, 28% and 75% sold respectively. But the house it keeps its estimates unchanged, expecting a strong 2Q, boosted by the firm's Pemimpin Drive industrial project, which completed this month and is fully sold. Notes office project Metropolis is set for completion in 4Q13. The house raises TP to $1.80 from $1.75 after increasing RNAV on gains from an investment property sale. Keeps a Buy call on the stock's 45% RNAV discount.


Broadway: good headline 1Q12 results, but underlying weak. Net profit at $15.2m, +67.5% yoy, on the back of sales of $157.7m, +14% yoy, +38.5% qoq. But taking out exceptional items, core net profit came in weak at $2.9m, -48.2% yoy. Broadway took advantage of its competitors’ pdtn shortage to capture more mkt share, with its HDD actuator arm worldwide mkt share est to increase from 16% to 20%. In doing so, the group decided ti hire back its Shenzhen plant’s workings which were laid off earlier in the process of plant relocation. As a result, gross margins fell sharply by 28 ppts yoy to 10.1%, a negative surprise. Going forward, Broadway plans to grab more mkt share for both its HDD business as well as its foam plastic business, with $60m built up this yr to increase capacity. DMG expects the group’s HDD business to achieve economies of scale towards 2H12 once the relocation of pdtn processes is complete along with the mass orders from Western Digital. Says eventually, labor intensive work such as hook up and assembly services will be carried out in Chongqing and Thailand, while the mnftg process of the actuator arms which is mainly automated by CNC machines, will remain in Shenzhen and Wuxi. DMG maintains Buy with unchg TP of $0.53, based on 8.8x (5-yr historical avg) FY12E P/E.


NOL: OCBC upgrades to Buy with $1.38 TP. House note that the Shanghai (Export) Containerised Freight Index (SCFI) climbed 4% WoW in the week ended 27 Apr 2012. Shanghai to Europe freight rates gained 11% WoW, while Shanghai to Mediterranean rose 13% WoW, ahead of major shipping liners’ announced general rate increase in Asia- Europe freight rates on 1 May 2012. Add that NOL share price has fallen 17% from its recent high of $1.45/share on 3 Apr 2012 but the correction does not seem warranted. The SCFI is currently 43% higher than this time last year and shipping liners, including NOL, are profitable at current freight rates. Although there are concerns over increasing container shipping capacity, shipping liners seem to have learnt their lesson and are now using slow steaming to manage shipping capacity and refraining from price wars.


Osim: Tehnical Buy Call by UOB kay Hian with potential 7.3% return. House recommends BUY with a $1.18 TP. Note that currently, stock could be moving sideways for now and its daily Stochastics indicator has a bullish crossover. The price action also formed a bullish harami across a couple of trading sessions ago. The alternative exit for this long position will be if the stock trades below $1.18.


GLP: Technical Sell Call by UOB Kay Hian. House maintains SELL with $1.95 TP. Note that stock has formed a lower high and lower low, and could be trending further down. Both the 20-day and 50-day EMA appear to be turning down. The daily Stochastics indicator has turned up but the MACD indicator appears to be trending down further. The alternative exit for this long position will be if the stock rises above $2.20.

Penny stocks

Penny stocks: continued to dominate trading on Friday, but analysts say their time is almost up. Small, cheap stocks, some costing as little as one or two cents apiece, have been driving up market volumes to astonishing heights in recent weeks. NRA noted that in the past, such rallies had been cut short when trading reached such a frenzied level that brokerage houses got spooked. In 2009, for example, at the height of a penny-stock rally, UOBK told its customers that they could no longer use their Internet trading accounts to buy or sell shares in five small chip firms, including Jade Tech, Transcu and Ban Joo. Trading in all penny stocks died down soon after. History could be repeating itself soon. UOBK on Thursday listed 13 penny stocks that its customers are no longer allowed to trade online, including Artivision, Digiland and JEL. OCBC Securities has banned Yoma Strategic and JEL from online trades. Nobody seems to know who is trading these 'ultra pennies'. Remisiers and analysts hint that it could be the work of 'trading syndicates' - groups of full-time stock market traders who work together to amass large amounts of certain stocks in order to push up their values and then profit by selling them off. Veteran stock market observers term it 'pumping and dumping'. "We have seen this countless times before," said a senior dealer. "Penny stock fever takes grip when cheap stocks start to move, the action gets overheated and then it all collapses." Another said: "Everyone knows that there's nothing behind most of the moves, no news, no fundamentals. But as long as everyone knows the score, then the playing field is level."

World Precision

World Precision: Reported net profit of Rmb40.6m for1Q12, which was broadly in-line. Sales showed respectable growth despite seasonal weakness, as sales for conventional stamping machines rebounded 42% qoq as demand recovered after the Chinese govt eased monetary policy. Sales of high-performance/high-tonnage stamping machines contracted 6% qoq due to seasonal dip in delivery during Chinese New Year. Total rev grew 2% qoq despite the usual seasonal weakness. Margin expansion. Gross margin for high-performance/high-tonnage stamping machines expanded 4.5ppt yoy to 34.7%. Gross margin for conventional machines was stable at 26.3%. Overall gross margin thus improved 3.3ppt yoy to 32.2%. Mgt remains vigilant on cost control, noting that admin expense has moderated on a qoq basis. Order book was stable at Rmb220m as at Apr12, an improvement from the Rmb200m two months ago. Order flow from customers has also strengthened after Chinese New Year and is expected to rise further. Ratings as follow: DBSV maintains Buy with $0.68 TP UOB Kay Hian maintains Buy with $0.88 TP


UIC: (No estimates for counter) 1Q net $44.3m -6% yoy, while rev at $233.6m +19% yoy due to higher sales of trading properties and higher revenue from hotel ops, partially offset by lower rental income. Overall, weaker bottom-line was due to the cessation of contribution from UIC Bldg and its Park Natura project, which lowered earnings. Grp highlight growth in office rentals is likely to cont moderating as the supply of new and 2nd-hand office space increases, while retail rents should remain relatively resilient

Singapore Land

Singapore Land: Announced 1Q12 results which was in-line, as 1Q12 core net profit at $55.5m (+14% YoY, +2% QoQ), while rev at $195.5m (+41% YoY, -1% QoQ). Going forward, Mgt concedes that office sector headwinds remain, putting downward pressure on office rents, while Pan Pacific Hotel experienced a surprising 10% QoQ drop in rev, even ahead of its scheduled closure from April to August 2012 for major renovation works. Sales of grp’s freehold residential project, The Trizon, remain sluggish, even though ASPs have been holding firm at around $1,500 psf. 47 out of the 289 units remain unsold. On back of this, Kim Eng maintains Sell with $4.89 TP, pegged to a 50% discount to RNAV.

Sino Grandness

Sino Grandness: Announced results which saw muted top-line performance but strong bottom-line which were ahead of estimates. Rev at Rmb285.5m, +60.7% yoy and flat qoq, while net profit at Rmb56.7m, +81.4% yoy and +162.5% qoq. Gross margins improved at 37.5% vs 34.8% yoy and 33.1% qoq. Performance was mainly fuelled by grp’s beverage segment, with saw rev at Rmb158.9m (56% of grp’s total rev), +198% yoy and +27% qoq, helped by grp’s ability to secure new distributors to market its juices in existing and new provinces in the PRC. While grp also managed to successfully bring down SG&A in the qtr. Sales of grp’s canned vegetables division was however muted due partly to seasonal patterns, whereby the 1H11/12 typically sees weaker export vs 2H11/12 and enters the seasonal stronger period for export business, although we caution that sales for this division appears sluggish in recent qtrs. Going forward, grp remains optimistic about overall growth prospects and has successfully doubled its Garden Fresh bottled juices output capacity to 140,000 ton p.a. rom 70,000 ton p.a by securing a second external supplier based in Zhejiang Province. At current price, grp trades at an annualized just 2.6x FY12E P/E.


SingPost: weak 4QFYMar12 results, below consensus expectations. Revenue at $145.9m, +3.1% yoy, underpinned by growth in Logistics (higher Speedpost contributions, vPOST shipping business) and Retail (increased contributions from financial services, retail pdts and online store), while Mail revenue was steady. But net profit at $30.6m, -17.4% yoy, as expenses across the board rose faster than revenue. In particular, there was higher depreciation following an increase in investments, and lack of reversal of impairment charge for two properties ($2.5m) from the previous yr. Mgt notes the Group is seeing increasing challenges in the postal industry and operating environment, and is embarking on a transformation program. It will focus on building new revenue contributors in the digital services and e-commerce businesses, as well as pusuing growth in regional logistics and e-fulfilment. The $350m raised from the Perpetual Securities back in Mar ’12 will be used to fund the anticipated capex and working cap requirements. The group declared 2.5cts final div, unchg yoy, bringing full yr div to 6.25cts. The stock trades at 6.1% yield, 13.8x P/E, 2.9x P/B.

Raffles Medical

Raffles Medical: steady 1Q12 results, though slightly below consensus. Revenue at $72.9m, +13% yoy, vs consensus $74.4m. All divisions continued to contribute positively, with revenue from Hospital Services and Healthcare Services +15.3% and +7.4% respectively. Net profit at $11.6m, +11% yoy, vs consensus $13.9m. Growth came from higher patient load and patient acuity. Notwithstanding the uncertainties in US and Europe, mgt expects to benefit from the strong demand for high quality healthcare services locally and from the region. Raffles Hospital has received its grant of provisional permission from URA for the additional 102.4k sf expansion, and is planning for construction of the Hospital extension. The Group has also appointed consultants to work on the 42.7k sf property at 30 Bideford Road to retrofit it and expand the Group’s specialist centre operations. The Group expects to commence clinical operations in the Orchard Road shopping precinct in 1H13. The stock trades at 23.9x P/E.

Indofood Agri

Indofood Agri: Net profit appears to have missed consensus estimates. 1Q Rev at Rp3.2t +9.3% yoy +0.4% qoq with net profit at Rp376.9b -26.7% yoy -17.2% qoq. Gross margins dipped slightly at 34.7% compared to 35.6% prev quarter and FY12 margin of 36.5%. Both divisions, Plantation and Edible Oil & Fats contributed to the rev increase through higher sales. Despite the rev increase, co recorded lower net profit due to lower ASPs of both palm products and rubber. Higher costs of production and a 26% increase in plasma purchases, which typically yields lower margins. Co were of the view that avg CPO prices stayed firm at US$1107 per ton compared to US$1251 per ton in 1Q11 and rubber prices at US$3881 compared to US$5732 in 1Q11. IFAR now trades at 10.1x fwd P/E. Peer Golden Agri is trading at approx at 11.4x fwd P/E.

SG Market

SG Market: S’pore shares are likely to head higher on the back of the firmer close on Wall Street but gains will be limited by the stiff resistance at the 3000 level on the STI and the market close for Labour Day holiday tmr. Among stocks in focus, SingPost's 4Q12 net profit fell 17.4% yoy to $30.6m will like disappoint, while SingLand's 1Q12 net profit rose 10% to $63.8m. Ho Bee's 1Q12 net profit dropped 71% to $15.8m amid sluggish demand for high-end homes. Noble may see support from Gloucester Coal, which it will own 13.2% of when the Yanzhou Coal merger finalizes, citing 3Q12 production more than tripled on-year. IndoAgri reported 1Q results below par on lower ASPs.

Friday, April 27, 2012

Keppel Corp

Keppel Corp: in an interview with Reuters, says it sees a market in fuel conversion by ships, driven by tighter global marine fuel emission standards. Says a shift from low-sulphur diesel, which is more expensive than gas, will spur a retrofit for thousands of vessels worldwide and create a new market for rig-builders including its rival SMM. The potential revenue is tipped to reach billions of dollars in the coming decades. DMG notes the value of such conversions is typically


CEI: To sell its entire invt in Kinergy for $2.3m. Kinergy provides electronic and original equipment manufacturing services.


SingXpress: To issue 123m shares at $0.0162 to an individual with a 6 mth moratorium to raise net proceeds of $1.97m. This is a 10% disc to VWAP of $0.018 on 26 Apr 2012. The no. of shares issued represent approx 2.7% of enlarged issue share cap.


SATS: Deutche maintains Buy on SATS with $2.96 TP. House note that strong passenger trends in SG and Japan support positive stance on SATS. Robust forward-bookings for JAL bode well for TFK and are optimistic about long-term growth potential in this market. While cargo trends continue to be a drag, related operations account for a contained 10% of SATS' revenues and we expect a recovery towards 2H12.


OUE: Stanchart upgrades In-line to Outperform raise TP$3.22 from $2.54. Besides a more moderate decline in office capital values, hotel 2012E RevPar and capital value forecasts are raised by 49% and 34%. Short-term catalysts are seen in the horizon as well. Leasing progress at ORP 2 could beat market expectations. Residential bid could also see healthy development profits. Potential asset divestments cld unlock value. Cites that OUE’s recent interest in land auctions could surprise as mkt has forgotten OUE as a residential developer. Channel checks indicate buyers are seeking quality hotel assets and any divestment could surprise to the upside.

ST Engrg

ST Engrg: Awarded a S$98m contract by LTA to enhance the Expressway Monitoring & Advisory System (EMAS) equipment along eight expressways in Sg. The existing EMAS equipment are reaching the end of their service life. Starting in May 2012, the enhancement will be carried out progressively and completed by 2017.


Singtel: Announced its divestment of entire 3.98% stake in Taiwan’s Far EasTone (closing price NT$63.6). A total of $129.6m share were sold at avg price of NT$62 per share for $339m. Co will record a gain of approx $118m in 1Q2012 Jun-end. Meanwhile, Optus has also lost a legal dispute with Australian sports leagues after an appeal panel overturned a lower court ruling. Customers were initially allowed to download live broadcasts with a slight delay on Optus’s network (free-to-air TV) which made it able to avoid paying for the broadcasts which the leagues get revenue from. Negative impact to Optus may be limited to lower ad revenues and legal fees and seems unlikely to suffer too much in terms of reputation. Singtel now trades at 13.6x P/E with expected FY12 yield of 5.0% compared to Starhub at 17.5x with yield at 6.3%


MCT: FY11 results above expectations. FY11 DPU exceeded mgt’s forecast by 18%, bringing FY12 DPU to 5.27cts, implying 5.9% yield. 4Q11 DPU was 1.55cts, +9% qoq. 4Q revenue & NPI rose 11% and 16% respectively on strong reversions in VivoCity (+25% for FY12), contribution from Alexander Retail Centre (ARC), and rent step up in Merrill Lynch Harbour Front )MLHF). Gearing is at 37.6%, with interest cost at sector low of 1.95^. Vivo’s operational trends remained firm with FY12 shopper traffic rising 15.5% to 51.6m and tenant sales +8.7%, with high retention rate of 92% and occupancy sustained at a high 98.1%. Avg passing rents are now $10.6 psf, +8.3% yoy. VivoCity is expected to see further rental reversions, with 33% of leases by gross revenue, or >200 leases up for renewal in FY13. Occupancy in ARC also rose from 36.2% to 50.3%, although leasing progress remains relatively slow with committed occupancy up slightly from >55% to >57%, with mgt selective about tenant mix. Deutsche maintains Buy, ups TP to $1.04 from $1. Says valuations are attractive at FY13e yields of 6.8%. Goldman maintains Buy with TP $1.02. JPM retains Overweight with TP $0.92.

Starhill Global REIT

Starhill Global REIT: Announced good set of 1Q12 results which was in-line with expectations. NPI at $37.3m, +0.8% yoy and +2.2% qoq while DPU at 1.07c, flat yoy and +5.9% qoq. Good performance attributed to increased occupancy in grp’s office properties, with SG’s contribution at 61% of total rev, and occupancy levels for Wisma Atria and Ngee Ann City offices rising to 96.8% and 97.0% respectively and start of rental collection for some Wisma Atria asset redevelopment affected units in 1Q12. Demand for retail space in SG properties remains strong with positive rental reversions secured. REIT’s Msia portfolio contributed 17.1% of total rev, or $7.9 m in 1Q12, with additional NPI generated from the completion of redevelopment work at Starhill Gallery. Grp’s properties in China which contributes 9.2% of rev respectively saw NPI for 1Q12 -9.2% yoy due to tenants’ remix and renovation and competition from newly opened malls, while Aus which contributes 8.1% of rev, saw NPI +6.7% yoy due to higher rental income from rent reviews and appreciation of AUD vs SGD. Going forward, grp remains confident of prospects, noting that said asset redevelopment at Wisma Atria remains on track for completion in 3Q12. With the completion of the asset redevelopment at Starhill Gallery, grp continues to embark on repositioning the tenant mix of its Malaysian malls that will introduce new brands and exciting concept stores this year. We note that overall fundamentals remain strong, with leverage ratio at 30.4% and no major debt refinancing this year, while occupancy for grp’s total portfolio remains high at 99%. At current price, grp trades at an annualized 6.6% yield and 0.68x P/B Ratings as follow: Merrill Lynch maintains In-line with $0.70 TP


DBS: blow out 1Q12 results. Net income advanced to a record $933m, +16% yoy, +28% qoq, trouncing Bloomberg consensus estimates of $755m. Main drivers were continued loan growth and strong non interest income. ROE rose to 12.8% vs 11% for FY11. Net interest income was at a record $1.34b, +4% qoq. Loan growth slowed to +1.5% qoq, vs +4.9% qoq in 4Q11, but the surprise came from net interest margins (NIM), which outperformed expectations, at 1.77%, down from 1Q11's 1.80%, but up from 4Q11's 1.73%. Non-interest income also came in at a new high of $820m, +31% qoq. Trading income more than doubled to $292m from higher customer flows and more favorable mkt conditions. Net fee income expanded 19% qoq to $406m, as mkt-sensitive stockbroking and wealth mgt biz grew 24% and 39% qoq rptvly. Asset quality remained strong, as non-performing assets were unchg qoq at $2.91b, with the NPL rate stable at 1.3%. UOBK maintains at Buy with TP $16.20. Notes the potential dilution from acq of Bank Danamon could already be reflected in its current share price. Given the recent weakness in DBS share price, this surprise set of results could be just the catalyst for the stock to play catch up.

Thursday, April 26, 2012


F&N: is +2.5% at $7.05, breaches the critical $7 resistance on above avg volume. The stock has been on a strong uptrend since bottoming out in Oct ’11, and is comfortably in the mid of the rising trend channel. Stock is a potential bullish breakout play, if it can close successfully above $7. Near term momentum looking positive after MACD triggered a positive crossover, and RSI and Stochastics also trending up. The counter is in uncharted territory now, hence next resistance may be the next psychological at $7.50.


Biosensors: stock is down 1.4% at $1.37, extending losses for the 6th consecutive day. KE Research highlighted yday that there is growing concern over ASP trends for drug eluting stents (DES), which is Biosensors' key pdt. Industry sources expect Beijing's new DES tender process to lead to a 15% px cut, which could erode Biosensors' margins. China is estimated to account for 30% of Biosensors' total revenue. The house lowered TP to $1.82 from $1.67, though it kept its Buy rating.


Yoma: +4.7%. Note that Yoma is holding a conference tomorrow on 27 Apr'12. Keynote speakers include SG ex-Foreign Minister George Yeo and SpringSingapore Chairman Philip Yeo, we do not rule out a continued play up in the Myanmmar exposed stocks.


YangZiJiang: UOB kay Hian note that latest results were encouraging. Rev was Rmb3686.3b (+12% yoy), of which shipbuilding revenue was 3,344.3m (+10% yoy). Overall gross margin (including investment business) recovered to 33.0% from 1Q11’s 32.3% due primarily to higher percentage of high margin investment business within revenue. Shipbuilding margin Net income was Rm1017.7b (+7% yoy) includes interest incomes of Rmb342m generated from held-to-maturity financial products, cash and Runyuan micro financing (1Q11: Rmb106m). In 1Q12, YZJ clinched orders of 7 bulk carriers for two Chinese shipowners, with value of US$206m. Orderbook declined to 96 vessels with a total value of US$4.5b. House Maintain BUY on YZJ and increase TP to $1.58 from $1.22, based on 10x 2012F P/E. As a shipyard with adequate cash, put YZJ as top pick with Chinese shipyards sector amid an industry downturn.

Suntec Reit

Suntec Reit: OCBC technicals says the counter is likely to see more upside after initiating a strong bullish break above the $1.27 key support turned resistance on heavy volume over the past two sessions. Notes MACD has just initiated a bullish crossover, suggests that momentum is building up. Tips a test of next resistance at $1.40 in the wks ahead. Immediate support is at $1.27 with stop-loss exit at ~$1.23. Fundamentally, the house has a Hold rating with TP $1.20.

Manhattan Res

Manhattan Res: Updates on invt in Eco Building. Sh/h will increase from 45.4% to 57.5% due to exercise of warrants. Eco Building has also filed a suit in San Diego for US$20m

Jardine C&C

Jardine C&C: Goldman says 1Q12 results above expectations. Revenue at $5.54b was +19% yoy, +6% qoq. Net profit was US$266m, +6% yoy, +9% qoq. Goldman notes Astra’s performance was the key driver for JCC’s beat, as the co’s auto distribution margins and auto mnftg profits surprised on the upside. Recall, Astra acconts for ~95% of JCNC’s net profit. But notes Astra’s 2H12 auto sales guidance was more bearish than before. Adds Spore/ Vietna autos outlook also remain difficult given there appears no turnaround in sight. The house maintains Neutral with unchg TP of $48.50.

Sheng Siong

Sheng Siong Results: Announced 1Q12 results which were slightly below expectations after striping out one-off gains. Rev at $159.8m, +4% yoy and +15% qoq, while net profit at $16.8m, +73.7% yoy and +99.6% qoq. Gross margins fell slightly to 20.8% vs 22.9% yoy. Strong bottom-line was largely boosted by a one off gains, which saw other income rose 1218% to $11.2m. Increase in rev was due to higher comparable same store sales, which improved by 2%, while new outlets at Woodlands Ind Park and Thomson which opened in Nov11 have also contributed to the growth in 1Q12 rev. However Stripping out exceptional gains, 1Q12’s net profit would have been $8.0m lower than 1Q11 net profit of $9.7m, mainly attributed to lower gross margins and the lower contribution from Woodlands Industrial Park and Thomson outlets compared to the Katong outlet. Going forward, grp is optimistic on prospects, noting that Grp has signed leases for two new outlets totalling 19,000sqft. With the opening of these outlets in 2Q to 3Q12, Grp’s total retail area is expected to expand by about 5.5%. Caution however that current uncertainties in the global economy, high oil prices and threat of inflation might impact on its margins if it cannot pass the increase in cost to its customers. Overall fundamentals remain strong, with grp in a net-cash position. DBSV maintains Hold with $0.47 TP. CIMB neutral with $0.49 TP OCBC maintain Hold with $0.49 TP

Ascott Residence Trust

Ascott Residence Trust: 1Q12 results inline. DPU was 2.14 cts, flat yoy, on distributable income of $24.2m (+1% yoy). Revenue +6% yoy to $71.6m, mainly due to the $1.9m contribution from Citadines Shinjuku (acq dec ’11) and stronger performance from the group’s serviced residences in China, the Philippines, and UK, where RevPAU growth was +22% yoy, +15% and +9% respectively. Moving forward, UOBK expects a stronger performance from the UK serviced residences on the back of the upcoming Olympic games in 3Q, and also expects better demand for the serviced residences in the Philippines and Australia due to higher demand from the O&G and mining industries. Gearing stood at 0.42x with a wt avg debt to maturity of 3.1yrs and an interest cover of 3.6x. Having just completed a ¥1.2b acq in Kyoto, Japan, mgt said it continues to explore acquisitive opportunities. UOBK keeps at Buy with TP $1.25. Morgan Stanley keeps at equalweight. Says valuation levels are currently fair, with FY12E yield at 7.8% and 0.8x P/B.


YZJ: Results relatively in-line with expectations. Announced 1Q rev of Rmb3.7b +12.2% yoy -29.6% qoq with net profit at Rmb1.0b +6.6% yoy -1.9% qoq. In 1Q2012 15 vessels were delivered according to delivery scheduled and the Shipbuilding segment recorded Rmb3.4b in rev. Gross profit margin from the segment remained stable at 26.4% compared to 26.2% in 4Q2011 with gross profit at Rmb882.5m. Investment segment also recorded higher rev with held-to-maturity (HTM) invts recording gross profit of Rmb293.0m up from Rmb225.3m in 1Q11 and Rmb183.3m in prev quarter. Co also booked forex gains of Rmb191.5m compared to Rmb112.8m in 1Q11 and loss of Rmb107.4m in 4Q11. Held-to-maturity assets also decreased from Rmb10.5b to Rmb9.9b with 65.8% of such assets with maturity date in less than a yr. Co is also currently in a net cash position. Co’s orderbook as of 31 Mar 2012 stood at 96 vessels with a total value of US$4.5b. Its strategic plan remains to focus on moving up the value chain and develop new vessel types which are more fuel efficient and have higher capacity. YZJ currently trades at 5.9x trailing P/E and 1.8x P/B.

Genting SP

Genting SP: read through from MBS results. MBS reported rolling chip volume of US$12.8b, +19% qoq, +26% qoq. Net revenue was US$848m, +5% qoq, +45% yoy. Adjusted EBITDA was US$473m, +11% qoq, +66% yoy, helped by seasonality and luck factor of 3.58%. Adjusted for luck, Morgan Stanley estimates revenue could be lower by US$93m, and EBITDA lower by US$50m. MBS played down the impact of “Int’l Mktg Agents” (ie. junkets) allowed at GENS, saying it is no different from the 100 salespeople that MBS employs and thus sees limited impact. Morgan Stanley says read-through for GENS is negative. Thinks that VIP rolling chip, while volatile, is unlikely to surprise on the upside. Notes mass mkt is also not growing much, with MBS having reported a 7% decline in mass table revenue and flattish slot revenue in 1Q12. Adds GENS could see an increase in opex with opening of the west zone. Keeps stock at Equal-weight.

SG Market

SG Market: S’pore shares may rise, tracking offshore cues after Fed Chairman Bernanke's well-received post-FOMC comments, but gains may be limited. The market appears a little tentative above the 3000 level and would need a strong follow-through buying to drive away the blues. Meantime, there is a big shift in near term trading towards the small-caps and penny stocks, suggesting that the market is getting speculative. It is more likely that the smart money is waiting for a pullback before getting in. Expect the STI is remain rangebound between 2970 and 3000. Among stocks in focus, Ascott Residence Trust, Yangzijiang CDL Hospitality Trust reported earnings. Global Premium Hotels is making its debut with indicative grey market price around $0.30-0.35. Genting S’pore may be eyed after rival Las Vegas Sands reported earnings.

Wednesday, April 25, 2012

Ocean Sky

Ocean Sky: Some simple valuations to consider. Counter is in the midst of an RTO, with Developer Chiwayland. Note that the simple calculations below has its limitations and assumes that FY12 and FY13 performance hurdles are met, and also does not take into account a potential divestment of current assets within Ocean Sky. Calculations also uses an RNAV basis, which was given by the Co. in its announcement. #Ocean Sky: Simple valuation via new shares: 1) Current share base after placement at 448.495mil shares 2) Ocean Sky acquires (RTO) Chiwayland via RTO at $310mil (925.373 mil shares at $0.335/share) 3) If FY12 Criteria met, 92.5mil new shares issued at issue price ($0.335) = $31mil 4) If FY13 Criteria met, 92.5mil new shares issued at issue price ($0.335) = $31 mil 5) Arranger gets 37.5mil new shares Potential valuation: New share base: 448.495m + 925.373m + 92.5m + 92.5m + 37.5m = 1596.36 Mkt Cap: (448mil * 0.143) + (1110.37 * 0.335) = 436.2 mil Value per Share = $436 mil / 1596.36 mil shares = $0.273 value / share #Ocean Sky: Valuation via RTO’s NAV: Preferred Scenario 1) Current share base after placement at 448.495mil shares 2) Ocean Sky acquires (RTO) Chiwayland via RTO at $310mil (925.373 mil shares at $0.335/share) 3) Chiwayland has estimated indicative realisable NAV of between approximately RMB3.3b ($652.5m) to RMB3.5b ($692.1m) 4) Ocean Sky Current Mkt Cap / Nav at $64.1m/$91.5m respectively. 5) If FY12 Criteria met, 92.5mil new shares issued at issue price ($0.335) = $31mil 6) If FY13 Criteria met, 92.5mil new shares issued at issue price ($0.335) = $31mil 7) Arranger gets 37.5mil new shares Potential valuation: New share base: 448.495m + 925.373m + 92.5m + 92.5m + 37.5m = 1596.36 Combined NAV (Assume low end) = 652.2 mil + 64.13 mil = 716.3 mil Value per Share = $716.2 mil / 1596.3 mil shares = $0.45 value / share


LHT: value plays currently sidelined amidst the focus on penny plays. However such stocks may prove to be more defensive when the tide turns. No better time to pick up value plays than when they are overlooked. LHT is one such company. It is a manufacturer and renter of wooden pallets, and an underappreciated player in the supply chain management sector. As such, it is exposed to Singapore’s growing logistics demands, underpinned by growth in e-commerce. The co has a long operating track record. The improving financials in recent yrs is not yet reflected in the share price. In particular, LHT reverted to positive equity in 2005, and grew it to $38.3m over 6yrs. Yet it is trading at ~60% discount to the lesser known logistics players like Poh Tiong Choon, and at an even bigger ~70% discount to Goodpack, which rents Intermediate Bulk Containers. The steady share purchases by insiders / mgt (on-going for about a yr) shows skin in the game, and reflects mgt’s confidence in outlook. Look out for a catalyst in new 15 yr contract with TP Utilities (subsidiary of Tuas Power). To boost annual revenue by $0.9m – 5.4m (2.3% - 13.9% of FY11 total sales). Expected to commence as early as 3Q12 and no later than end 1H13. Main risk however is liquidity, which may get better once the fragmented shareholders find incentive to sell to new investors closer to ’07 peak of 21cts. But it’s ok as you get paid to wait for stock to re-rate. Stock is trading cum-dividend of 0.5cts, +250% since ’07 when it resumed paying div.


Roxy-Pacific: SIAS reinitiates coverage with an Overweight rating and TP $0.605 (post bonus issue). Says strong recent sales suggest that Roxy’s progress billings are now in excess of $750m, with the co having sold 91% of its units launched in 2012, and selling out 3 our for 4 projects, namely TREESCAPE, Millage and Natura@Hillview Phase 1. Says this confirms that the co will still be able to deliver core earnings growth from now to 2014, and has time to cherry pick new land deals. Adds, with Roxy’s hotel and portfolio of shop units valued at $0.483/sh, vs current share price of $0.43, the mkt does not seem to have incorporated the progress billings that that will be recognized as profit from now to as late as 2016.

Sembcorp Ind

Sembcorp Ind: Opened its new $34m biomass steam production plant on Jurong Island capable of producing 20 tons per hr of process steam using waste wood. Co intends to expand capacity ten-fold and supply 1/3 of Jurong Island's Sakra district using alternative fuel. SCI now trades at 12.5x fwd earnings, close to peer Keppel Corp at 12.5x

GMG / Sri Trang

Rubber, GMG / Sri Trang: Possible positive sentiments, after a Bloomberg article today reported that the Thai govt is planning to introduce measures to lift the price of natural rubber to (US$4,838/MT) in 2H12, and to (US$5,806) by next year. This is on top of the measures introduced late last yr, amidst the correction in rubber prices, when the Thai authorities announced plans to purchase 200k MT of rubber to keep the price at US$3,870/MT. This compares to current RSS3 spot price of US$3,800/MT. Nattawut Saikuar, the deputy farm minister, was reported as saying that the govt intends to cut down 500k rai (80k ha) of rubber trees, from about 200k rai in 2011, to further reduce supply. DBSV note that to date the Thai govt has not purchased any rubber since the announcement of its initial plans, and the rally in rubber prices from its low of US$3,080/MT in October 2011 has been mainly a result of a change in sentiment over the global outlook. House however, in agreement that prices should rise over the course of this year due to expected improvements in economic activity and restocking in 2HCY12. Rubber processors benefit the most from a rising price environment via higher margins, hence prefer GMG Global and Sri Trang ahead of downstream names at the moment.

HPH Trust

HPH Trust: UBS adds HPH Trust to Most Preferred post TP upward revision to US$0.88. Prefer HPH Trust for its 100% focus on ports, and an attractive dividend yield of 8%+ in 2012E. Moreover, it is the best beneficiary of US economic recovery as Yantian has the highest US route exposure among all Chinese ports. Despite Yantian’s flattish volume in Q112, expect volume to recover from Q2 onwards, with better-than-expected volume growth during peak season to be stock catalysts.

SIA / Tiger Air

SIA / Tiger Air: Scoot, the new medium-to-long-haul budget carrier of SIA will serve the Singapore-Bangkok route from July, putting it head on with its bigger sister Tiger Air. Tiger is the short-haul budget unit of SIA. Scoot says it is to provide more connectivity for its guests from Australia and China to go to Bangkok via Spore. Yet we note that Tiger also flies to Australia. Scoot is offering a promotion of $88 for a SG-BKK return trip, cheaper than the current fare of ~$200 from Tiger. Scoot will make its inaugural flight on Jun 26, with Sydney the first destination. Scoot’s decision to embark on short haul routes may be understood from Air Asia X’s (Air Asia’s budget long haul airline unit) recent move to withdraw services to India (Mumbai, New Delhi) and Europe (Paris, London) from Kuala Lumpur, in view of soaring taxes and higher jet fuel prices. AirAsia X said it will concentrate capacity in its core mkts of Australasia, China, Taiwan, Japan and Korea. It remains to be seen if there will be further overlapping of routes and cannibalization btwn Scoot and Tiger. Tiger trades at 9.7x P/E. FYMar12 results are due 18 May after market.


SMRT: Announces $900m in planned renewal and preventive maintenance for a safe and reliable system. The $900m is currently an indicative bill and co is in discussions with LTA on how to share the costs. This is expected to be spread over a span of 8 yrs with majority of works during the first 3-4 yrs. $195m has alr been slated for a new signaling system announced in Feb to be undertaken by a firm headquartered in France. Another $3m has also been budgeted to change propulsion systems. Under an old arrangement, the Sg govt is supposed to foot the bill for rail infrastructure and SMRT for the operating assets. Aft 2010, a new arrangement was formed, with the govt taking over ownership of operating assets and leasing them to the operators for a fee, which the Downtown Line currently operates under. As of Dec-end 2011, SMRT had net cash of $32.3m with cashflow from operations of $58.4m. Total debt/equity ratio at that time was also 1.2x. Depending on the cost-sharing arrangements and the actual expenditure over time, SMRT will likely have to raise funds or reduce dividends. SMRT currently has an est dividend yield of 4.7% and will release Mar-end results on 30th Apr after mkt hrs. Deutsche downgrades to Hold from Buy and TP from $2.00 to $1.75

Mapletree Industrial Trust

Mapletree Industrial Trust: 4Q12 results in-line with expectations. 4Q12 distributable income of $35.8m (+26.4% yoy, +1.7% qoq) and a DPU of 2.22c (+15.0% yoy, +2.8% qoq). Result brings FY12 DPU to 8.41c. Results were driven by the acquisition of the JTC portfolio of flatted factories and higher rental reversions. Average portfolio passing rents increased 1% qoq to $1.55 psf pm. There were significantly higher rental reversions ranging from 15% to 30% for flatted factories, stack-up/ ramp-up buildings and warehouse space. Occupancy rate moderated slightly to 94.9% in 4Q12 from 95.1% in 3Q12 due to lower occupancies in business park buildings (91.3% in 4Q12 vs 94.4% previously). The retention rate for existing tenants, at 76% was down from 82% in the previous qtr, but remains robust. This was largely due to a low retention rate of 10% for business park space, while retention for other industrial space remained high at 80% and above. Gearing moderated to 37.8% from 39.1% in the previous qtr due to the higher portfolio valuation. Overall, mgt confident on prospects citing positive outlook for the factory and warehousing sector due to high islandwide occupancies (93-94%). Factory and warehouse rents remained stable in 1Q12, with rentals for ground floor factory and warehouses unchanged qoq at $1.90 psf and $1.75 psf respectively, according to CBRE. Ratings as follow: Deutsche maintains Buy with $1.26 TP Goldman Sachs maintains Buy with $1.26 TP

Suntec REIT

Suntec REIT: 1Q12 results was in-line with expectations. NPI at $49m, +5% yoy and -5.8% qoq, while DPU at 2.5c, +2.7% and -1% qoq. Underlying trends were stable, with the improvement in office occupancy at 99.4% from 99.2%. The contribution from Suntec SG underpinned a 20% rise in revenue, excluding which rev would have fallen 4% on the Chijmes divestment. The Suntec City AEI appears to have started off on the right foot, with 45% of Phase 1 pre-committed. Other tenants include established brands, eg GAP, Guess, La Senza, Sincere Watch. Mgt comments that its projected 10.1% ROI is on track, based on progress to date. Counter trades at 7.3% estimated FY12 yield and 0.65x P/B. Ratings as follow: Deutsche maintains Hold with $1.32 TP. Goldman maintains Sell with $1.02 TP JP Morgan maintains neutral with $1.45 TP Merrill Lynch maintains U/p with $1.10 TP


CMA: 1Q12 results, broadly inline with mgt’s previous prospect statement. Revenue at $70.9m, +41% yoy, mainly due to contribution from the Invmt Business segment, following acq of Queensbay Mall in Apr ’11 and 3 malls in Japan in Feb ’12. Revenue from the Mgt Fee Business also improved due to higher fund, project and property mgt fees due to better performance of shopping malls and new projects undertaken. Net profit at $66.8m, +36% yoy. However, note the $32m revaluation gain arising from the acq of the 3 Japan malls, which helped offset higher finance cost (+$6.9m due to increased debt) and lower contribution from associates and JCEs ($11.3m, due to absence of profit from sale of units of The Orchard Residences and lower share of results from CMT). On outlook, CMA remains confident of China’s economy and will focus on the opening of its 7 malls this year. Separately, CMA says it is developing its first shopping mall in south Beijing. It has signed a conditional agreement to acq the site for the shopping mall at Xinyuan Street in Daxing district. Subject to approval, CMA plans to develop a 7-storey mid-to-high end shopping mall with total GFA of ~122k sm and ~1500 car park spaces. The mall has a 40yr land lease tenure. When completed in 2015, the proposed mall will be one of the first major malls in Daxing and will serve an immediate catchment of ~600k residents. Daxing has been identified as one of five new districts to be given priority for devt. The govt has given an invmt commitment of Rmb 290b in infrastructure to improve transport connectivity, and will build Beijing’s 2nd int’l airport there. The stock trades at 1x P/B.

SG Market

SG Market: S’pore shares are likely to track Wall Street and regional gains but any advances may be limited amid the uncertainty in Europe. This appears to be a 2-tier market with traders sidelined in the blue-chips and focused mainly on penny stocks. The 2 major themes emerging for penny stocks are reverse-takeover as many trade at significant book-value discounts or change in substantial shareholders brining in new life to the company. Meantime, the STI is expected to remain rangebound at 2970-3030 if no significant bad news comes out of Europe. Among stocks likely in focus: CMA, Suntec Reit, Mapletree Industrial and STATS ChipPac all reported results, while SMRT plans to spend $900m upgrading its rails, which may impact its profit and future dividend payout.

Tuesday, April 24, 2012


Xpress: This morn, co has announced the launch of a DBSS, "Pasir Ris One" which is close to Pasir Ris MRT. Co owns a 80% stake with remaining 20% owned by Kay Lim Hldgs. The project announced is not new although the launch is fresh news. Tembusu Partners (headed by Viking's Andy Lim) signed an MOU earlier in Oct 2011 to take a 30% stake in the project from Xpress. No further developments were announced on whether the transaction went through. As of last announced, Xpress still claimed ownership of 80% of the project. Tembusu Partners is a private equity firm which is known to have stakes in Artivision. Link to their portfolio below


Ezion: CIMB note that charts tip Ezion as Sell, as its rally from Sept appears to have completed five waves. It notes the stock closed below its channel support and its 50-day simple moving average Monday. With the confirmation of the breakdown of its head-and-shoulders pattern, the RSI suggests weaker prices ahead. Tips initial support at $0.815, with the likely further correction to have a near-term target at the wave-four low of $0.775-S$0.78. $0.70, its 200-day MA, could also offer support, it says. CIMB tips initial resistance at $0.97, and says as long as the next resistance at $1.03 is intact, the stock should remain in consolidation mode.

Plastoform Holdings

Similar to many of the pennies which are running, no Co. specific news today, although recall that Ang Kong Hua, executive chairman of Plastoform Holdings, has been increasing his stakes in the co. His stake now stands at 26.4 million shares, or 7.79% of the issued share capital. The bulk of it, 25m shares were purchased in Jul last year from a controlling shareholder. Mr Ang was formerly Chairman of Singtel and the Securities Industry Council. For 28 years, he was President of NatSteel. Like JEL, Plastoform is on the watchlist of the SGX and faces the threat of being delisted (without an exit offer), but Plastoform appears to be getting a new lease of life: For 4Q11, the cos revenue was HK$151.1mcompared vs HK$96.6m yoy and net profit was HK$17.7m vs loss of HK$12.5m yoy. Change in fortune was due to the launch of integrated Bluetooth wireless speakers which generated higher sales from September 2011 and orders from a well-known global PC accessory brand and distributor; and strong sales of a new line of speakers modelled after popular gaming characters.


Swiber: stock has been in a downtrend since mid-Feb, in contrast to the rest of the Myanmar theme plays. Religare has a Myanmar note update, says the Myanmar FDI floodgates are about to open, with EU agreeing to suspend most sanctions against the country. Enlarges its Myanmar portfolio basket to include Swiber, which has around 15% of its US$1.4b orderbook in Myanmar. Believes the co is set for further Myanmar order wins, due to its established client relationship with Myanmar’s state oil & gas firm M.O.G.E. and increasing offshore activity in the country. Swiber is +0.8% at $0.605.


Sakari: AmFraser initiates at Sell with TP $1.65, based on 12x FY12e P/E. Expects share px to dip in the near term. Says FY12 is the yr when Sakari bears the brunt of high cash costs from 2 new pit devts at Jembayan. Forecasts FY12e EPS to be US$0.11, nearly 40% below consensus. Expects profit margins to be squeezed from softening coal px, lower total pdtn volumes and a higher cash cost per ton from Jembayan. Nevertheless the house believes FY13e earnings outlook will be better and continues to like the underlying business at Sakari.


Cordlife: UOB Kay Hian initiate coverage on Cordlife with a BUY recommendation and TP of $0.66, implying a 20.0% upside from the current price. House like Cordlife for its market leadership in SG and HK, with potential for growth through a) the right-of-first-refusal (ROFR) to acquire assets in high-growth developing markets and b) a 10% stake in a Guangdong cord blood bank, which enjoys a monopoly in an underpenetrated market. Technically, on a 30-minute chart, we believe that the resistance is at $0.63 while support is at $0.52.

Super Grp

Super Grp: UOB Kay Hian maintains Buy with $2.24 TP. House note grp is expected to release its 1Q12 results on 10 May. Expect the coming results to benefit from falling commodity prices and a pick-up in contributions from its Thailand operations. Cite grp as an attractive proxy on Asia consumption and maintain upbeat view on Super as the stock is a good proxy to Asian consumption. The group is a leading food and beverage brand owner with a strong position in Asean. Super is one of the top three in terms of mkt share for the 3-in-1 coffee segment in countries such as SG, Malaysia, Thailand and Myanmar. As for Indonesia and believe contributions to group should trend up due to its JV with Petra.


Ezion: DnB Nor reiterate positive view on Ezion with $1.10 TP, supported by quantitative and qualitative factors. Note that co has demonstrated over time that it can add shareholder value through value- and earnings-accretive contracts, without overstretching its balance sheet. With 10 liftboat and service rig contracts secured in the past 15 mths, focus will be on the performance of these contracts, from which house expect a strong earnings uplift from Q4 2012 (2013e EPS growth 75% YOY). Although Ezion is one of the best performing offshore stocks in Asia (+44% YTD), argue that investors have yet to fully price in earnings growth prospects and visibility, with an undemanding 2013e P/E of 6.1x and EV/EBITDA of 4.5x.


STX OSV: DnB Nor expect bidding to close soon and maintains Buy with $2.00 TP. Note that with rev assured by a large order book, margins are an important share price driver. Expect EBITDA margins to normalise to 15% in 2012 (19% in 2011). Still believe that a tighter OSV and subsea market will raise vessel owners’ confidence in placing new orders, in anticipation of a stronger market. House reiterate belief that STX OSV is well positioned for such orders, as supported by recent order flow. As STX OSV is filling up its 2013 yard slots, believe it is not desperate for orders and can be selective in orders that offer the most economic benefits. Add that for the past couple of mths it has been widely known in the mkt that STX OSV’s Korean parent, STX Corp, is looking to divest its 51% stake, which would necessitate a general offer. House expect some firm bids from interested buyers and the closure soon.


SATS: Operating data released, DMG maintains BUY: TP $2.54). SATS operating data for 4QFY12 (Jan-Mar12) A traditionally slower quarter compared with 3Q remains encouraging, despite the global economic uncertainty. Grp handled 10.0% more passengers YoY, and 9.6% YoY more flights. However, due to lower consumer demand, especially for electronics and manufactured goods in EU and America, cargo processed declined 2.4% YoY. On a QoQ-basis, all operations recorded a sequential decline, except for the number of passengers handled, likely due to the trend of more passengers opting for budget flights. Strong balance sheet (net cash position of 16.8c/share as at end 3QFY12) and stable cashflows puts it in a good position to ride out any operating challenges while maintaining stable dividends. At current price, SATS is trading at 16.7x P/E (compared with its average of 15x P/E).

United Envirotech

United Envirotech: Grp has just secured two more projects in China. The first is a large RMB216m ($43m) EPC project to build a 100k m3/day drinking water plant in Yantai City, Shadong Province. UEL also won the tender for a TOT project in Shangzhi, Harbin city, , which UEL is investing RMB70m ($14m) for a 30-yr concession to operate the 40k m3/day treatment plant. Based on the usual 40% equity funding ratio, OCBC estimate that the remaining $100m proceeds from its CB issue can finance up to another $250m worth of projects. With its latest TOT win, house bump up FY13 revenue and earnings estimate by 2% and 3% respectively, with $0.52 TP.


Cosco: OCBC Initiates with Hold and $0.98 TP. Note that in recent years, Cosco has made significant efforts to build up its offshore marine engineering capabilities such that the offshore segment accounts for >50% of new orders in FY2011. However, as it is relatively inexperienced in building drilling rigs and production facilities, the offshore segment could take a substantial period of time before it sees any significant productivity improvements. Besides, the group also faces strong headwinds in the shipping and shipbuilding industries. House apply an industry-average P/B multiple of 1.6x to COSCO and obtain a fair value estimate of $0.98.

Marco Polo

Marco Polo: To form a 50/50 JV with priv co Marine Tankers Hldgs which relate to the owning and mgmt of bunkering vessels and to provide bunkering logistics services around Singapore waters. The co will own and operate 2 double-hulled vessels due for delivery around July 2012. Marco Polo is trading at approx 7.4x P/E.

Sembcorp Industries

Sembcorp Industries: Vietnam SG Industrial Park (VSIP) and Vietnam will partner to build a 5th industrial park worth US$337.8m in Quang Ngai province. Development will be a 1,120 ha integrated township and industrial park project, comprising a 520 ha site slated for commercial and residential purposes and a 600 ha industrial park. VSIP jv is a 49:51 tie-up between Vietnam state-owned Becamex IDC Corp and a SG consortium respectively. SCI owns a 79.29% stake in the SG consortium. As the lead SG partner, SCI effectively holds a 40% stake in all 5 VSIP projects.


A-REIT: Has issued JPY10b at 2.55% p.a of notes due on 23 Apr 2024. The notes have been swapped into SGD at at fixed rate of 4.08% upon issuance for the entire tenure with procedds of $153.7m used towards existing borrowings. Notes have a Baa1 rating by Moody’s. This raises A-REIT’s debt maturity profile from 3.5 yrs to 4.2 yrs with a cost of debt of 3.04%. Leverage remains unchanged at 36.6%. A-REIT has a yield of 6.5% for prev 12 mths.


XinRen: (Possible positive sentiment) Shareholders has approved proposed acquisition of a 21% stake in CLI (Rmb 1,890m)which indirectly owns Xinjiang Plant, and a 100% equity interest in aluminum smelter, Xinjiang Production and Construction Corps Agricultural Division Eight Tianshan Aluminum Plant, with a smelting production capacity of 447,000 tons, more than double XiNRen’s one of 275,000 tons. Grp intends to use its existing working capital, bank borrowings and/or proceeds from fund raising exercises to fund the Proposed Acquisition. Upon completion of the Proposed Acquisition, XinRen also has the right to exercise a second call option to acquire another 30% equity interest in CLI within the next five yrs. Overall, we note that acquisition could be positive for grp, in a sector where upstream expansion is heavily regulated and restricted, as the PRC govt aims to limit supply and phase out unproductive smelters. Furthermore, already one of the lowest cost aluminum producers in the PRC, Xinjiang Plant will enable XinRen to enjoy further cost savings from the plant’s on-site power plant, powered by the cheap and abundant coal resources in Xinjiang. Separately, data shows that more aluminum is being tied up in warehouses by so-called financing deals, raising cash premiums on the metal and signaling higher prices for co’s ranging from auto-parts producers to beer-can makers. Supplies have become less available because orders for delivery are coming in faster than metal can be shipped out. Premiums have also gained amid increased use of aluminum for financing deals, leaving the metal in inventory unavailable for manufacturers.

Fraser Commercial Trust (FCOT) / Fragrance / Aspial

Fraser Commercial Trust (FCOT) / Fragrance / Aspial: FCOT will sell its KeyPoint property to Bayfront Ventures, a 50/50 JV btwn Fragrance and Aspial, for $360m. The sale was achieved at 26% above the last valuation $285m in Sep ’11. This translates to an NPI yield of 3.11%, vs industry std assumption of 4.5- 4.75%. FCOT will book an est. gain of $72.8m. The proceeds will be use to reduce debt liabilities of FCOT. The costs of acq and devt will be funded internally by Fragrance and Aspial, and through bank borrowings. KeyPoint is a 34 yr old, non-Grade A commercial building located at 371 Beach Road. It has a leasehold tenure of 62 yrs remaining. NLA is 310k sf and 227 carpark lots. Occupancy as at end Mar was 91.5%. On 12 Aug ’11, the URA granted an outline planning permission for the redevt of KeyPoint into a commercial and residential devt. Land area is 7,269 sm. The site zoned as commercial can potential yield a commercial gfa of ~426.4k sf. Prior to the sale, FCOT trades at 7.2% FY12e yield, 0.47x P/B. The stock has 6 Buy ratings with TP btwn $0.94 - $1.14. Fragrance trades at 22.4x P/E. The counter has been making new highs, with the pending spinoff of its Global Premium Hotels just round the corner. Aspial trades at 8.9x P/E, with share price mirroring that of Fragrance.

Fraser Centrepoint Trust (FCT):

Fraser Centrepoint Trust (FCT): 2QFYSep12 results in line. Income available for distribution of $21.3m, +8% qoq, +31% yoy. DPU of 2.5cts, +14% qoq, +21% yoy. This is the highest quarterly distribution for FCT, and makes the first time that income to be distributed has surpassed $20m. Results boosted by the group’s new acq of Bedok Point, as well as partial contribution from Causeway Point, where asset enhancement (AEI) works are ongoing. FCT continued to achieve healthy rental reversions of 11% in 1H12. The group has remaining 10.4% of leases due for expiry in 2H12. Portfolio occupancy declined to 93.5% from 97.5%, as AEI works continue in Causeway Point and the temporary closure of Northpoint’s food court. AEI in Causeway Point is on track for full completion in Dec ’12, with 91% of space pre-committed. Gearing remains unchg at a conservative 30.9%. FCT has debt headroom of $273m before reaching a gearing of 40%. Avg cost of borrowing is down 2bp to 3.04%. CIMB maintains Outperform, raises TP to $1.75 from $1.65. UOBK keeps at Buy, raises TP to $1.80 from $1.75. BOA-ML reiterates Buy with TP $1.70. Likes the seucre div yield of 6.2%. Tips potential upside to forecasts when FCT acquires Changi City Point from its sponsor (est FY13).

SG Market

SG Market: S’pore shares are likely to slip below key supports, tracking Wall Street's and European bourses' losses on concerns over Europe’s economy and debt problems. With French elections looming and a Dutch govt walkout, cracks are starting to appear in the political system as resistance grows to much-needed austerity measures. The STI has broken below both 20 and 50-day moving averages as well at 2970 immediate support. If 2950 breaks, the next support zone would be at 2915 level. Among stocks in focus: *Frasers Centrepoint Trust 2Q results in line; net property income +30.4% to $26.2m due to major AEI completion at Causeway Point and the addition of Bedok Point to portfolio; DPU +20.8% to 2.5¢ *Rickmers Maritime reported 11.7% drop in 1Q net profit to US$8.2m on stable charter revenue and repaid US$13.3m of debt, paring down its bank debt to US$608.6m as of end-Mar. DPU remains unchanged at US0.6¢. *CNMC Goldmine struck new gold deposits in its Msian concessions by 35% and raised its ore reserves by 35% to 503,000oz. The miner aims to increase production from current 10-15kg/month to annual output of 1,000kg of gold. *Frasers Commercial Trust sold its KeyPoint property to Fragrance and Aspial for $360m. *XinRen Aluminium secures shareholders approval to acquire a 21% stake in a Xinjiang smelting plant *Sembcorp Industries announces a tie-up to build 5th Vietnam industrial park

Monday, April 23, 2012


Ezion: Technicals look bearish for Ezion. Indicators are pointing down with MACD continue to decline in negative territory. Decline has been sharp and fast though volumes are not exceptional. Any retracement shld be read positively, completing positive divergences in Stochastics and RSI. See support at $0.875


NOL: Nomura says, logistics is "the bright star" at NOL . Expects the logistics business to remain profitable in 2012, while estimating NOL will report a US$20 m operating loss due to the container-shipping segment; values the logistics business at US$0.35/sh, equivalent to 36% of NOL's estimated fair value. Expects the container-shipping sector is likely to return to profitability in 3Q12, on capacity discipline and cooperation on freight-rate increases, rather than industry fundamentals. Raises TP to $1.20 from $1.00 on a smaller container-shipping loss and increased value for the logistics business. But Nomura says, the key question remains - will container lines remain disciplined once profitable? Believes that discipline could weaken again especially as we see signs of increasing pricing competition and declining global idle capacity. Estimates quarterly container freight rates will peak in 3Q12 and decline in 2013. The house keeps a Reduce call. The stock is down 0.8% at $1.265.


Myanmar: Aung San Suu Kyi's party protested against a swearing-in vow due to the wording of the vow over the wkend. This gave rise to worries that the political situation could take a negative turn. Aung San Suu Kyi did try to play down rumours of division and stated that the party would not boycott parliament. This is unlikely to affect the lifting of sanctions though with the EU expected to unfreeze assets and end travel bans today. Other bans on investments and sales relating to precious stones and metals have yet to be lifted.


CWT: Technical Buy Call by UOB Kay Hian with a 13.9% potential return and $1.39 TP. House note that stock has retraced from a recent high and could be well supported by its 50-day EMA and its 200-day EMA. The Stochastics indicator may form a bullish crossover in the oversold region and could trend up. The alternative exit for this long position will be if the stock falls and closes below $1.20. House nstitutional research has a fundamental BUY with TP of $1.80.


Yangzijiang: Shipbrokers expect 2012 to be another boom yr for scrap mkt, as a depressed freight mkt and high fuel costs could force owners to send older fuel-guzzlers to scrap yards. Also fuelling the boom at ship recycling yards is the demand for recycled steel. 38.8m DWT were scrapped worldwide in 2011, and 98% of total scrapped tonnage are handled in China, India, Turkey, Bangladesh, Pakistan.

China Fishery

China Fishery: DBSV UPGRADE to Buy from Hold and increase TP to $1.35 from $0.95. House now projecting a sustained earnings growth in FY12F, after a disappointing FY11, which saw results missing expectations. Believe market expectations are now at more realistic levels with downward earnings revision over, presenting outperformance opportunities. Expect earnings growth in 1Q12 to continue and project 2Q12 net profit to grow c.5-10% yoy to US$48-50m due to a stronger contribution from its fishmeal operations, as well as interest savings from an earlier refinancing of its senior notes. Add that counter is now trading at 6.5x/ 6.1x on FY12F/ 13F earnings, near -1 SD below its average of 9.8x. At current levels, this puts it at a hefty 44% discount to Carlyle Group’s entry price of $1.85 (in Jun 2010).

Raffles Education

Raffles Education: update to 1 Mar ’12 announcement on sale of 4 land parcels with total area of 635mu in Langfang Devt Zone, for Rmb 1.047b (Rmb 703m payable in novation of debt, Rmb 344m payable in cash). The co discloses that an additional sale of 10mu was sold to the same Purchaser for Rmb 11m, back in 22 Dec ’11. The co says the transaction is expected to significantly strength the Group’s financial position as this will result in full payment of the debts owing to OUCDC. Additional cash of Rmb 344m can be re-invested into its education business. The co adds after the transaction, the Group will still own a significant amount of land and buildings in the Langfang Devt Zone. Nevertheless, the deficit from proceeds of the 635 mu land sale over the book value is ~$41.1m. Based on FYJun11 numbers, the financial effects of the 635 mu land sale is as follows, i) NTA decrease from 41.75cts to 36.94cts ii) EPS decrease from 4.89cts to 1.01cts.


Wheelock: Executive director, Tan Bee Kim says mkt watchers can expect more activity from Wheelock ahead. The Group is actively looking at investments both locally and overseas. In particular, it is interested in Singapore's residential, commercial, and retail markets, and is not ruling out the possibility of a mixed-devt. Ms Tan sees strength in the Spore market, with upgraders still buying, but notes the luxury market has not been that active. Believes there still is a lot of cash available, and it's just a matter of time before this mkt segment will start moving, “maybe this year (or) next year." Wheelock’s latest project, Ardmore Three, located along Ardmore Park is launch-ready. The group's freehold 36-storey luxury devt comprising 84 three-bedroom units, is expected to be completed by 2014. The group has also been noticeably active in its overseas foray. In Feb last year, Wheelock surprised analysts when it announced it was buying five sites in Fuyang City, China, for Rmb 1.44b (S$285m), with the intention to build about 1,900 residential sites. In Mar, the death of then CEO David Lawrence had raised questions regarding succession planning, which were addressed in Friday’s AGM. Two executive directors, Tan Zing Yan and Tan Bee Kim, previously worked with David, who in turn worked with Chairman Peter Woo. Both EDs now work directly with Peter. Wheelock stock Friday gained 4cts to close at $1.83.

LC Dev

LC Dev: To acquire 2 parcels of freehold land of 37 rai (59.2k sqm) with building and fixtures, 6 parcels of freehold land in Phuket of total 75 rai (120k sqm) with a hotel, rights to a land parcel in Bon Island and two condo units in The Andaman Cove Condominium. The acquisition will be done with 9 related companies but no mention of the stake involved or details on the companies were revealed. The total cost of acq is approx THB1.4b ($58.8m). Co intends to re-position and upgrade the hotel into a luxury resort and complement its holdings which already includes another resort hotel, Holiday Inn Resort Phuket. Co currently trade at P/B of 0.6x and has net cash of approx 40% of its last done share price based on last reported results.

Dyna Mac

Dyna Mac: Results below estimates. 1Q rev at $23.5m -39.1% yoy +99.3% qoq with net income at $3.3m -51.4% yoy +263.9% qoq. Lower rev was attributed to projects being in early stages of fabrication with has lower % of completion and hence lower rev recognition. Co recorded EPS of 0.36c. On a more positive note, co announces 2 new fabrication contracts of US$31.6m. The contracts are for 4 units of Manifold Racks and 3 units of topside modules and were signed with SBM Offshore and Bumi Armada. Work is expected to commence in 2Q2012 and to complete by 2Q2013. Co currently trades at trailing P.E of 13.9x.

First REIT

First REIT: Results in-line with expectations. DPU of 1.93c declared which is same as that of 4Q11. 1Q rev at $14.0m +6.3% yoy +0.6% qoq with net profit at $9.5m +28.4% yoy -44.5% qoq though last quarter included fair value gains of $14.4m. Note that the DPU includes a portion of the total gain of $8.7m on divesting the Adam Rd property and the balance will be distributed in future periods as well. The REIT trades at 8.3% annualized yield based on current DPU. OCBC downgrades from Buy to Hold but raises TP from $0.89 to $0.935 though results were within expectations due to valuations.


GMG: Announced poor set of results which was below estimates. Rev at $282.6m, -0.1% yoy and -9.1% qoq, while net profit at $11.7m, -24.5% yoy and -29.9% qoq. Gross Margins fell further at 12.9% vs 14.8% yoy and 15.8% qoq, from further contributions from processing facilities by Teck bee Hiang. Poor results was attributed to a -27.5% yoy and -14.8% qoq drop in ASP of rubber price to $4,510/ton, despite Grp delivering a +37.9% yoy and +6.8% qoq increase in sales vol, largely from its Thailand and Ivory Coast operations, with tonnage from Teck Bee Hang for 1Q12 increasing 67.3% yoy, forming about 58.0% of total Group tonnage. Going ahead, mgt remains cautious citing that performance is dependent on several economic factors such as the macro‐economy, mkt prices of rubber and currency fluctuations. Whilst demand for natural rubber from European and USA markets is stablise, believe that demand from China markets will remain strong. We note that overall, grp’s fundamentals remain strong, wth grp in a net cash position of $333.9m, partly helped by its recent cash call. At current price, valuation appears steep, with grp trading at an annualized 24.2x FY12E P/E.

SG Market

SG Market: S’pore shares are likely to set a cautious start following Wall Street’s unconvincing advance last Fri and regional mixed cues. Worries about the US economy and slowing China do not provide strong support for risk assets, which is causing a crisis of confidence among traders. The STI is expected to range trade within its familiar 2970-3030 boundary in the absence of large scale earnings upgrades. Even KepCorp’s bumper 1Q results were unable to lift its stock price as many of the positives have already been factored in by the market. Among stocks in focus: *GMG Global 1Q results came in below par with net profit -24.5% to $11.7m on flat revenue and lower average selling prices of rubber *First Reit 1Q results generally in line with distributable income +22.7% to $12.1m, DPU at 1.93¢ *Guocoland 3Q profit made a profit turnaround to $162k vs $920k loss in 3Q11 *AIMS AMP 4Q distributable income edged uo 6.1% to $12m, DPU at 2.7¢ *Wheelock Properties exploring local and overseas projects *Tiger Airways’ 33% associate Mandala Airlines starts Medan-Spore service *Palm oil plays may be eyed after US soybean futures hit a 7-month high

Friday, April 20, 2012

China Min Zhong

China Min Zhong: Lim & Tan Securities had a chat with co. regarding recent share price plunge. Note that phone conversation with China Minzhong suggest that operations continue to remain in line with what they had guided the market in their results briefing in late Feb’12. Veg prices continues to remain strong in current qtr, and co’s peak harvest season which was delayed by one mth last quarter is on track this qtr. While the heavier than normal sell-done in the stock despite consistent purchases by Templeton is a concern, house remains comforted on the fundamentals of the business and note that further weakness is likely to provide investors with a buying opportunity.


AIMS REIT: DPU was approx 2.7c, with annualized yield of 9.1% at current price of $1.19. 4Q rev at $20.3m -2.5% yoy with net income at $29.0m -2.3% yoy which also includes fair value gains of $21.2m compared to prev yr 4Q’s $19.4m. Distributable income was up 6.1% yoy at $12.0m. Occupancy is high and at 99.2% is above industry avg of 93.6%. As at Mar-end, WALE is approx 2.62 yrs with bulk 38.9% maturing in FY2013. Total DPU was 10.5c this yr approx 5.3% increase of that in FY2011 Co is cautiously optimistic with potential moderate increases in rental rates.


NOL: Daiwa initiates NOL atat Buy with $1.58 TP. Note that NOL is well-positioned to take advantage of the recovery in transpacific freight rates, and believe it will return to profit earlier than the market expects. Expects a 2012 return to profit, and record sharp 2013-14 net profit growth. It forecasts NOL's 2012 transpacific revenue to rise 8% on-year, after 2011's 7% decline; it expects the logistics business' positive contribution to continue, benefiting from a U.S. trade recovery; it notes the logistics business accounts for about 15% of revenue, with two-thirds currently in the US. Doesn't expect NOL to achieve its aggressive US$500m 2012 cost-cut plan, forecasting only US$300m of cuts, mainly on lower operating lease expenses. It believes higher bunker prices will make cost cuts more difficult. It estimates the stock at an undemanding 1.0X 2012 PBR. The stock is flat at $1.275.

Eu Yan Seng

Eu Yan Seng: DMG Maintains Buy with $0.90 TP. House recently spoke to CEO Richard Eu and came away with the following takeaways: 1) Acquisition of 96 HealthyLife stores and distribution business in Australia for A$5m is expected to boost Group’s topline by A$50-60m, 2) Targets 20 outlets in China by end-FY12 and +20 in FY13/14 respectively, 3) Recently secured pharmacy license in China will see first pharmacy be opened in Dongguan, enabling the Group to offer the Chinese market its entire product range as current stringent Chinese regulations restrict it from retailing certain medicinal products. Going forward, expect core margins to contract from 9% in FY11 to 7-8% in FY12-14F due to lower margin Australian business. FY12F earnings are lowered to take into account the S$8.8m write-off on Healthzone and we introduce our FY13-14F numbers. Expect FY13-14F earnings CAGR of 23%, driven in part by lower base in FY12.

Sabana REIT

Sabana REIT: DPU at 2.26c exceeding forecast of 2.17c with annualized yield of 9.3% 1Q Gross rev at $19.7m +8.8% qoq with net income at $11.9m +14.5% qoq. Distributable income was approx $14.5m +4.7% qoq. Gross rev was higher than forecast by 14.1% due to contribution from new properties which were acquired in 4Q2011 which flowed to net property income. Gearing is approx 33.9% and has debt headroom of approx $88.0m. Co has stated that both DTZ and Colliers expects industrial rents to decline due to supply and competition.


CCT: DPU of 1.9c declared, with annualized yield at 6.1%. Results in line with expectations. Rev at $87.4m -3.9% yoy -2.7% qoq with net income at $49.0m +6.0% yoy -1.8% qoq. Distributable income at $53.9m +3.4% yoy -0.9% qoq. Co also recorded yield protection income of $3.6m from One George Street and $0.2m from Twenty Anson. Twenty Anson is expected to fully contribute from 2Q2012 and is expected to be DPU accretive. Gearing is approx at 30% after the Mar refinancing of a $570.0m term loan with unsecured facilities. Co has guided for a subdued outlook for the demand in office space.

Fraser Commercial Trust

Fraser Commercial Trust: 2Q12 in line with expectations. Gross revenue and NPI each grew by about 4% y-o-y. Performance was largely driven by higher contribution from Central Park as well as China Square Central. Taking into account lower interest expenses, distributable income grew by 8% to S$15.9m. Net of CPPU dividends, DPU rose 8% yoy to 1.74c. Ratings as follow: DBSV maintains Buy with $1.14 TP.

Mapletree Logistics Trust

Mapletree Logistics Trust: Announced FY11/12 results which was in-line with expectations. 5Q FY11/12 NPI at $61.4m, +12.3% yoy and flat qoq, while DPU at 1.7c, +9.7% yoy and flat qoq. Result brings 15 mths NPI to $293.6m, +52.1% yoy while DPU at 8.2c, +35.3% yoy. Rev and income growth were mainly driven by contribution from the four properties acquired in the past 15 mths and a 5.6% organic growth from the existing portfolio. The DPU included the third and final payout of the net gain from divestment of two properties, amounting to 0.03c. Going forward, grp remains upbeat on prospects and will continue to focus on optimising yield through active asset and lease mgt, and pursue strategic investment opportunities. However caution that the strong organic growth and positive rental reversion experienced in FY11/12 are likely to moderate going forward although occupancy rate is expected to remain stable. Overall, we note that fundamentals remain strong, with leverage ratio at 35.2%, while portfolio occupancy remained high at 98.7% and a Wale of 6 yrs. At current price, grp trades at with yield at 7.4% and at 1.07x P/B vs Industrial REITs average of 8% and 1.5x P/B. Ratings as follow: Deutsche maintains Buy with $.05 TP UOB Kay Hian maintains Buy with $1.05 TP

Keppel Corp

Keppel Corp: blowout 1Q12 results. Net profit came in at $751m, ~50% of consensus 2012 net profit estimate. The strong beat was due to the lumpy Deferred Payment Scheme (DPS) revenue recognition of $1.3b at its 70% owned Reflections at Keppel Bay project. This resulted in the property division’s $393m net profit (+702% yoy) vs the O&M business’ $235m (+9% yoy). Takeaways from the conference call were largely positive: i) the last 100 property units under the DPS will be delivered in 2Q12; ii) O&M EBIT margins fell to 15% from 21% in 4Q11, as revenues now reflect mostly post-crisis orders. While KEP stated that margins may fall to 10- 12% in coming quarters, it maintains full-year guidance of 12-15%; iii) despite the mixed macro picture, rig order enquiries remain active and rig financing for customers (not for speculators) has in fact selectively improved from 4Q11; and iv) KEP stated that it may not need to expand Brazil yard capacity (though plans have yet to be finalized), as its 6 Sete Brasil semisub orders have a local content requirement of only 55% (i.e. 45% of the work can be completed overseas) and that KEP can also do yard improvements to enhance capacity. v) KEP guides that its joint devt with ConocoPhillips on the first ice-class jackup rig is past the conceptual design phase, and is ready to move on to detailed engrg works. This paves the way for KEP to receive the first orders. The US Geological Survey estimates the Arctic to possibly hold ~25% of undiscovered O&G reserves globally. BOA-ML maintains Buy with TP $12.53. JPM keeps at Overweight with TP $13.30, says the stock remains one of its top picks within its Spore coverage. Morgan Stanley maintains at Equalweight. Goldman Sachs maintains Neutral but raises TP to $10.80 from $10.00 to reflect the on-avg higher 2012-14 EPS estimates.

Thursday, April 19, 2012


NOL: is +0.8% at $1.285, outperforming a flat STI, but in line with some regional peers' gains, after the container shipper priced a $400m issue of five-year bonds with a 4.25% annual coupon, in line with pricing guidance from a person familiar with the deal Wednesday.
The offering comes 3 wks after NOL postponed a perpetual-bond issue due to market conditions.
While some analysts have concerns over short-term debt repayments, Jefferies doesn't believe it's an issue. Says, the co is not running out of cash, but is a step for the company to "play it safe". Notes the coupon is "quite good", comparing with the Europeans paying almost 8%, which reflects well on the credit situation for the company. The house was was expecting an interest rate above 5%. Rates at Buy, with TP $1.63, on expectations of a container-shipping-industry turnaround this year, forecasting a 1Q loss and 2Q turnaround.
The $1.36 200-day exponential-moving-average likely offers near-term resistance.

CDL H-Trust

CDL H-Trust: UOB Kay Hian has a Technical BUY Call with potential 12.5% return with a TP of $2.11. The stock has broken the prior resistance at S$1.86 and is likely to trend higher. Its
moving averages have also formed a golden cross in recent trading sessions (its 50-day with its 200-day EMA).

The daily Stochastics indicator has hooked up earlier, suggesting prices are likely to rise further. The alternative exit for this long position will be if the stock falls and close below $1.79. House institutional research has a fundamental HOLD with TP of $1.85.

City Dev

City Dev: Technical Sell Call by UOB Kay Hian with a 5.2% potential return and $9.90 TP. Note that the stock is also trading below its 50-day EMA and has closed a tad below the 200-day EMA. The MACD indicator has turned down and is hovering below its centreline, and could support the above view.
The alternative exit for this long position will be if the stock rises above $10.65. House institutional research has a fundamental SELL with TP of $9.20.


Biosensors: Credit Suisse cuts FY13-14e EPS by 13% and 19% rptvly. Says Abbott received XIENCE PRIME Drug Eluting Stent approval in Japan last wk. Together with the potential impact from recent DES price cut of 14.5% wef 1 Apr 2012, notes Biosensors may receive a smaller royalty revenue and net profit contribution from Terumo in FY13.
The house revises TP to $1.80 from $2.00, based on 15.5x FY14e EPS, but maintains Outperform. Recommends investors to accumulate during current weakness. Believes the invmt thesis to drive value by diversification of its pdt portfolio remains intact, with new M&A, and earlier than expected launch of Bio Freedom as catalysts.


Sino-Grandness: UOB Kay Hian re-iterate BUY recommendation on Sino Grandness with a TP of $0.60. This translates into 4.0x 2012F P/E, pegged to Singapore-listed peers’ average. SGF is trading at an undemanding valuation of 3.8x 2011 PE and 2.8x 2012F PE vs an earnings CAGR of 26.1% between 2011-14F (PEG of 0.14).
Technically, note that the stock's support and resistance could be at $0.39 and $0.43. The stock is likely to trend higher should the stock holds above the mid Bollinger band.


Swiber: Religare initiates with Buy Call and $0.86 TP. Note that Swiber’s orderbook has hit an all-time high of over USD1.4b, and is in the running for a set of large contract wins in India, and Brunei, amongst others.

Enlarged fleet represents capacity to expand orderbook and rev. Since 2006, Swiber has grown its fleet from just 9 vessels to 53 today. Its enlarged fleet is only 65-70% utilized, hence represents potential for the company to expand its orderbook and rev above current levels. Co is also expanding its fleet further due to contract opportunities visible on the horizon.

TP equates to 1.0x adjusted 2012E PBV, adjusted for a future conversion of grp’s convertible bond. Swiber is currently trading at 6.3x 2012E P/E and 0.7x 2012E unadjusted P/B, which is cheaper than peers.


UPP: Co. will be appointing Malaysian tycoon Tong Kooi Ong as CEO and executive chairman with effect from May 1. UPP's share price had closed yesterday, trading at a 52-week high of 33.5c. Mr Tong, 52, is UPP's second largest shareholder with a stake of over 26% and is said to be a close friend of local billionaire Peter Lim, who is UPP's largest shareholder with a stake of over 31% according to Bloomberg data.

Mr Tong bought into UPP in March and the mkt had been expecting him to take up a key role in the firm. He holds several other appointments in other companies. E.g, he is a board member of M+S Pte Ltd, a joint venture between Khazanah Nasional and Temasek Holdings.

Perennial China Retail Trust

Perennial China Retail Trust: (Flash Note) Could see positive interests, after Perennial’s CEO And Wilmar CEO To Set Up Property Joint Venture Called Perennial Real Estate Holdings, with a target Capital of $500m. While lacking details, news could create further positive sentiments for PCRT on further tie ups with Wilmar.

Separately, on Wed, Kuok raised his stake in Perennial China Retail Trust to 16.9% from 5%, while (Wilmar’s COO) Sitorus upped his stake in the trust to 5.7% from 3.2%. Kuok and Sitorus each paid 44.625c / unit to raise their stakes in the trust, according to filings to the Singapore Exchange.


Cosco: Could see some positive sentiments after Upstream reported that Newcomer Energy Drilling inks Cosco rig orders. Energy Ventures has, along with Asian partners, established the new rig co Energy Drilling and placed a $260m speculative order with the Chinese yard for delivery of the two self-erecting tender barges by 2Q14 and 3Q14, respectively. The deal with Cosco includes options for two more tender rigs, to be declared before the end of this year.

Cambridge REIT

Cambridge REIT: DPU of 1.2c declared, annualized yield of 8.8%. 1Q Rev at $20.9m +8.2% yoy with net income at $11.9m +29.9% yoy. Distributable amount at $13.9m +17.1% yoy. Co also updates that it is still pending formal notification from authorities on 3 of its properties affected by the compulsory land acquisition and will make an announcement on the value of compensation awarded when it is known.

Cache Logistics Trust

Cache Logistics Trust: Announced good set of 1Q12 results which was in-line. NPI at 16.1m, +11.6% yoy and flat qoq, while DPU at 2.09c, +6.9% yoy and flat qoq, translating to a yield of 8.4%.

Strong performance was attributed to higher rev and higher net property income mainly from the additional rental income from upward rental adjustments and acquisitions of investment properties in 2011.

Going forward, grp remains upbeat on prospects, noting that outlook for the warehousing sector is slightly more positive due to the continued demand from third-party logistics players involved in regional trade.

We note that overall, grp’s fundamentals remain strong, with gearing at a comfortable 27.7% vs Industrial REITs with a WALE of 4.4 yrs, and portfolio occupancy at 100%. At current price, grp trades at 1.08x P/B vs peers average of 1.5x, and with a yield of 8.4% vs peers average of 8%.

Keppel Land

Keppel Land: 1Q12 results above consensus, though analysts less sanguine on outlook.
Core net profit came in at $142m, +26% qoq, +141% yoy, driven by development profit recognition under the deferred payment scheme (DPS) at Reflections and the completions of units at The Springdale in China. The fund mgt and invmt property operations continue to strengthen, rising 28% and 36% rptvly on higher contributions from K-Reit, improved occupancy, AUM and acq fees.

However 1Q sales trends remain slow, with Spore sales at 90 units (1% mkt sh) vs 60 units (2%) in 4Q11, led by the mass project Luxurie. KPLD has also set aside 150 units at the 1229-unit Reflections (75% sold) for corporate residences to get income stream, while preparing for the potential launch of Keppel Bay Plot 3 (367 units).
Meanwhile overseas home sales remains subdued with China selling ~190 units in 1Q12 vs 220 in 4Q11. Mgt has tempered its overseas launch plans, cutting its planned launches in China to ~4k units vs 6.65k units in 4Q.

MBFC Tower 3 (1.3m sf) has attained TOP, and is currently 67% committed, including recent tenant additions of Rio Tinto, Fitness First, and the Regus group. Potential divestment is tipped as a positive catalyst for the stock, as with the previous divestments of MBFC Towers 1-2 in 2010 and OFC in 2011.

Seeing divergent Street views.
BOA-ML maintains Underperform with TP $2.30, believes residential sales will remain weak as govt measures continue to affect sentiment.
Goldman maintains Sell, but lifts TP to $2.60 from $2.46, after raising FY12-14e EPS by 4-12% on DPS bookings and updated sales schedules.
Morgan Stanley maintains Equalweight, believes valuations is fair at a 23% discount to base case RNAV.
Deutsche maintains Buy, raises TP to $3.77 from $3.73, inline with upward revision of RNAV to $4.71 from $4.66, due to marking to market of K-Reit.

SG Market

SG Market: S’pore shares may stall amid a three-way tug-of-war between news that China will boost liquidity, via a cut in banks' reserve-requirement ratios, caution ahead of Spain's 10-year-bond auction today and a negative cue from Wall Street. Caution is likely to be the key buzzword at the moment with European debt woes remaining in the background.

Expect the STI to trade within the choppy 2970-3030 band. Among stocks likely in focus, Keppel Land reported better-than-expected 70% rise in 1Q12 net profit, while Cache Logistics 1Q12 results were on par. Meantime, Hotel Properties is looking to issue perpetual securities and NOL priced a $400m 5-year bond.

Wednesday, April 18, 2012


Biosensors: Nomura believes that the sharp selldown on Tue is unwarranted and likely due to a news report about biodegradable stents meeting safety standards after a 10-year-long clinical study. Notes the limited study showed biodegradable stents’ viability for treating coronary artery disease.

However, house reckons that the market reaction is misplaced as the availability of competition from biodegradable stents or other stent platforms is not new. Adds that biodegradable stents are still very new to the market and it will take time for clinical data to reassure doctors on safety, efficacy and deliverability. Meanwhile, biodegradable polymer stents appear to be showing increasing evidence of superior results compared to durable polymer stents as evidenced by Biosensors LEADERS trial. Keeps its Buy rating with $1.84 target. The stock is up 1.7% to $1.46 after falling 9.5% yday.

Kingsmen Creatives

Kingsmen Creatives: stock is +2.3%, marking a new 52wk high, albeit on thin volume.
The co does store fit-out (including design and concept creation) for major retail brand, incl the likes of Apple, Burberry, Chanel, Cartier, LVMH, Osim, Gucci, etc.

Maybank KE Research notes KMEN’s penetration into China back in 2006 has been fruitful, with the co now involved in “last mile solutions” for key retail brands setting up shops in key cities in PRC. Believes the new mall opening across China are a catalyst for KMEN, particularly as margins in China are healthy due to the rising component of Design work.

Adds, a new revenue generator is in alternative mktg services to the key brands, eg. helping put together launch parties. At avg cost of $1m each, the margins are much better than fit out costs.

The house notes KMEN has moved up the value chain over the yrs, and is no longer just another contractor, but a fully integrated solution to the brand owners. Believes KMEN’s experience in theme parks projects like Universal Studios in Sentosa has put them in a good position to take on more in the region.

Says funds have been accumulating, with mgt having spoken / to speak to more insti investors (eg. Fidelity) soon, arranged by other brokers.
At fwd P/E of 7x and sustainable div yield of 6%, says the stock is perfect for long-only small-mid cap funds.

Dukang Distillers

Dukang Distillers: would not be overly excited about the relief bounce that played out over the past wk, as the counter remains trapped in a longer term downtrend, with all 3 key moving averages headed south and diverging from each other.
Expect the bounce to be capped by resistance at $0.36.
The high transacted volume around the $0.40-0.44 price back in Feb, marks the start of the recent big decline, and may be a signal that negative momentum could carry on for an extended period.


YangziJiang: Technical Buy Call by UOB Kay Hian with potenail 12.2% return and $1.38 TP. Note that stock is likely to rebound as prices have formed a bottom tweezer and a bullish hammer in the last trading session. The close above its 200-day EMA is also positive.

The daily Stochastics indicator is attempting a bullish crossover. Do keep an eye on
the MACD indicator to see if it will also do the same. The alternative exit for this long position will be if the stock falls below $1.185. House institutional research has a fundamental BUY with TP of $1.58

Golden Agri

Golden Agri: Technical Buy Call by UOB kay Hian with a potential 10.6% return $0.83 TP. House note that stock is likely to rebound as it is still above its uptrend line and its lower
Bollinger band could be acting as a support for now. Do keep an eye on a possible bullish crossover at its daily Stochastics indicator. The alternative exit for this long position will be if
the stock falls and close below $0.72. House institutional research has a fundamental BUY with $0.95 TP.

Advance SCT

Advance SCT: auditor Moore Stephens gives qualified opinion on the audited consolidated FY11 financial statements. Highlights the following:
i) accuracy of a gain on disposal ($711k) was determined based on the unaudited financial statements of certain former subsidiaries,
ii) out of proof of debt claims of $4.2m filed by certain banks, Advance SCT only recognized an amount of $0.5m as “Other Receivables” on the balance sheet, with the remaining amount not recognized in the financial statements. This compares with the co’s mkt cap of $31.3m, at the stock’s last close at 2.9cts.


Sakari: Merrill Lynch cuts TP to $2.40 from $2.70, although maintains Buy Call. House expect SAR to release 1Q12 results by end-April and cut earnings estimates by 17% for 2012 and 2013 on lower volume expectations in Jembayan from 10mt to 9mt, and 7-8% higher FOB costs on a higher expected stripping ratio and deeper mining pit in Jembayan and Sebuku.

Tip prices for the year should remain relatively stable as understand grp has managed to lock in 35% of 2012 volume at a fixed price while the remaining 65% is either unpriced or index-linked.

Overall, expect some share price weakness after 1Q results but note that we could see an enhanced buying opportunity for SAR after 1Q12 results. After all, the share price corrected around 20% after 4Q results and has now traded one SD below its historical mean P/E.

Yoma, Interra, Sin Heng, Super, Ezion, Swiber, Viz Brand

Myanmar / (Yoma, Interra, Sin Heng, Super, Ezion, Swiber, Viz Brand): EU foreign policy chief Catherine Ashton announced that the bloc would like to lift sanctions aganist Myanmar. Note that in Jan, EU lifted visa bans on the Govt of Myanmar. At the end of this mth, EU will likely do more.

Add that the EU would enter into an active collaboration with Myanmar, to assist the reform process and to contribute to economic, political and social development. Separately, US has also eased certain financial restrictions on Myanmar to allow non-governmental groups to operate in the country as it undertakes democratic reforms.

Note also that YOMA is holding a conference on 27 Apr'12. Keynote speakers include SG ex-Foreign Minister George Yeo and SpringSingapore Chairman Philip Yeo, we do not rule out a continued play up in the Myanmmar exposed stocks.

CDL H-Trust

CDL H-Trust: OCBC maintains Buy and raise TP to $2.04. House raises 2012 RevPAR growth estimates from 5.5% to 7.5% on the basis of strong SG hotel figures year to date and continued positive outlook.

Cite that a senior executive of Millennium & Copthorne (M&C) International expects room rates at M&C’s five Singapore hotels to grow 5% YoY from $219 in 2011, while occupancies could climb by 2-3 ppt from 87%. RevPAR for these hotels have already increased 10% in the first two months of this year. These five hotels are on master leases whereby CDLHT receives rent in the form of 20-30% of the hotel rev and 20% of the hotel gross operating profit, subject to minimum fixed rents.


YangZiJiang: Merrill Lynch retain Buy on Yangzijiang Shipbuilding TP: S$2.12, noting that frp is expected to be one of the key beneficiaries of mega-containership orders revival from late 2Q12. Expect YZJ to derive 30% of its rev in FY12E from containership orders, and 73% in FY13E.

Add that shipbuilder faces good re-rating prospects, as investor sentiment is expected to rebound strongly, given the prevalent views against mega-containership orders in 2012. Evergreen makes its move for mega-containerships

Latest check with YZJ reflects a rebound in clients’ enquires for mega-containerships vs early 1Q12. YZJ has 26 options/LOIs for 10,000-TEU containerships with Seaspan (a ship chartering company), and Peter Doyle.


Qingmei: profit warning.
Mgt expects profitability to be affected and report lower yoy sales for 3QFY12, mainly due to, i) slowdown in domestic mkt demand for its pdts due to intensified competition and consolidation of downstream sports shoes manufacturers and distributors, and ii) customers becoming more prudent under current mkt conditions.
Nevertheless, the Group expects to remain profitable for FYJun12.

The stock trades at 1.4x trailing P/E, 6.7x fwd P/E, likely reflecting an expected earnings decline.

CapitaMall Trust

CapitaMall Trust: Announced 1Q12 results which were in-line with expectations. NPI at 108.3m, +2.5% YoY, while distributable income at 76.6m, +4.6% YoY, although DPU was effectively flat at 2.3c, translating to an annualized yield of 5.04%.

Operations saw shopper traffic declined marginally by 1.9%, although tenant sales actually rose 3.9%. Occupancy rates remained strong at >99% for the malls that are not undergoing asset enhancements.

Looking ahead mgt note that asset enhancement works at Iluma are on track to complete by July 2012, and the mall will be rebranded as Bugis+ to better represent its synergy with Bugis Junction. Over 80% of the NLA has already been committed, with Japanese fast-fashion retailer UNIQLO set to open its largest duplex store at close to 20,000 sq ft.

We note that overall fundamentals remain strong, with a leverage ratio of 38.3% vs retail reit average of 25.8% and an interest coverage of 3.4x and average term to maturity of 3 yrs. At current price, grp trades at 0.92x P/B and an annualized yield of 5.04% vs Retail reit average of 0.8x P/B and 6.6% yield.


A-Reit: FYMar12 results inline, with stable underlying trends.
Full yr DPU of 13.6cts, +2.5% yoy, translating to 6.7% yield. 4Q DPU was 3.5cts, +7% yoy after adjusting for the rights issue.
NPI was +8.5% yoy, boosted mainly by new acq but impacted by higher expenses. NPI growth in the business park segment was the strongest (+30% yoy) driven by unvmts while the hi-tech segment was flat due to higher expenses.

Occupancy for the group dipped to 94.3% (96.0% in 3QFY12) due to low takeup rates (25%) at FoodAxis @ Senoko post redevelopment.
However, on a same-store basis, occupancy rates remained stable.
Positive rental renewal rates (5%-16%) were achieved across all segments.
The group has 13.8% of its leases due for expiry in FY13 and mgt expects rental renewals to remain in the positive territory as average passing rentals on its expiring leases are trending below market rents.

A-Reit’s portfolio grew by 17% yoy to $6.2b largely due to new investments. Mgt expects the pace of acquisitions to slow in FY13. Gearing for the group stands at 36.6% with average debt cost at 3.0%. Book value stands at $1.88/unit.

UOBK rates at Sell with raised TP $1.90 from $1.85.
BOA-ML has an Underperform rating, but raises TP to $2.05 from $2.
Morgan Stanley keeps at Equal weight.
JPM keeps at neutral with TP $2.20.
StanChart upgrades to Inline from underperform, raises TP to $2.07 from $1.93 on less negative rent outlook.
Deutsche keeps at Buy with TP $2.31.


SGX: 3QFY12 broadly inline with consensus.
Net profit came in at $77.8m, +16% yoy, +19% qoq. This was boosted by higher securities avg daily turnover (ADT) of $1.5b, as well as lack of merger expenses.
Securities related revenue rose by 22% qoq, but was still lower by 12% yoy.
Nevertheless, non-securities related revenues continued to come in strong, +10% yoy and +13% qoq, attributed to better interest and other income from the derivatives business.

On outlook. Goldman notes ADT has come down to $1.3b/ 1.2b in Mar/ Apr-TD, from the peak in Feb at $1.8b.
JPM expects consensus to reduce FY13 earnings and volume forecasts by ~5%, in line with recent trends. Says current street estimates imply $1.5b ADT for FY13 vs YTD volumes of $1.37b.

On High Frequency Trading, SGX indicated that added regulatory scrutiny combined with cautious feedback from current mkt participants will results in a more measured approach to the roll out. SGX also acknowledged that existing fee structures are unlikely to be appropriate for HFT activity. The co guided for a 12mth timeframe for introduction.
Other new initiatives in the pipeline include RMB pdts and Asean Link.

Goldman keeps at Neutral but raises TP to $7.20 from $7.
Deutsche keeps at Hold with TP $6.90.
JPM keeps at Neutral, lowers TP to $7.80 from $7.90.
BOA-ML maintains Underperform with TP $6.53.

SG Market

SG Market: S’pore shares are expected to swing back up on the back of the solid gains on Wall Street as investors cheer the upbeat IMF forecast for global economic growth, the good clutch of earnings reports plus relief over the successful debt auction by fiscally strapped Spain. Expect the STI to reclaim the 3000 mark and head towards the triple top resistance at 3030 with 2970 providing the underlying support.

On the corporate front, SGX, A-Reit and CMT results were broadly in line with estimates. Genting S’pore may see some disappointment after its $500m 2nd perpetual securities offer did not trigger the $200m overallotment option. Qingmei is also in the news after giving a profit warning for its 3Q results.

SG Market

SG Market: S’pore shares are expected to swing back up on the back of the solid gains on Wall Street as investors cheer the upbeat IMF forecast for global economic growth, the good clutch of earnings reports plus relief over the successful debt auction by fiscally strapped Spain. Expect the STI to reclaim the 3000 mark and head towards the triple top resistance at 3030 with 2970 providing the underlying support.

On the corporate front, SGX, A-Reit and CMT results were broadly in line with estimates. Genting S’pore may see some disappointment after its $500m 2nd perpetual securities offer did not trigger the $200m overallotment option. Qingmei is also in the news after giving a profit warning for its 3Q results.