Tuesday, April 30, 2013


Singtel: UOB Kay Hian recommends investors take profit from previous technical Buy. Note that the stock was featured as a technical BUY when it opened at $3.58 on 16 Apr 13. It has since returned 7.3% on closing prices, one tick shy of hitting the target of $3.85. Some profits could be taken off the table should prices fail to close above $3.86 and watch to see if its Stochastics indicator could form a bearish crossover. House institutional research has a fundamental SELL with a TP of $3.41

Ramba Energy (technical)

Ramba Energy: UOB Kay Hian has Technical Buy Call with $0.625 TP. House note that the stock appears to be trending sideways and above its rising 100-day moving average. Prices also closed above its middle Bollinger band. Its Stochastics indicator has turned up after forming a bullish crossover. Watch to see if prices could break above its upper Bollinger band for it to trend higher.

Sound Global

Sound Global: 1q13 revenues increase 17.2% y/y to Rmb519.3m as the group benefits from the increased contribution from the turnkey engineering, EPC services, as the Group continues to be awarded and fulfilling its EPC projects in China; However, due to a 157% increase in finance costs to Rmb47.0m due to interest expenses related to USD senior notes issued in 3Q2012, earnings dipped 19.5% y/y to Rmb61.5m. Going forward, group focuses on its international expansion, such as Saudi Arabia and Southeast Asia particularly given its huge demand in EPC projects. Apart from that, the group intends to expand its market share in the EPC market and consolidate its leading market position by proactively seeking Sewage Treatment Plant upgrades and improvement projects following the govt's stringent regulatory standards. Sound Global trades at 8.9x trailing P/E, 1.4x P/B.


SCI: Deutsche cuts FY13-15e net earnings by 7-8%, citing rising competitive pressures for utilities, which should lead to lower power prices in the coming years and shrink Singapore utilities margins by 100-120 bps. Singapore contributed ~70% of FY12 utilities earnings. Given lack of further drivers, Deutsche expects the stock price to be range bound. Downgrades to Hold from buy, on reduced TP of $5.25 from $6.35.

Ascendas Hospitality

Ascendas Hospitality (ASHT): FYMar13 revenue (for period 27 Jul ’12 to 31 Mar ’13) missed expectations, but DPU beat due to cost savings. Note, there is no comparative P&L figures because the acquisition of the Portfolio of ASHT was only completed on 27 Jul ’12. Revenue came in at $138m, below HSBC’s estimate, due to weakness in Australian hotel revenue. Australia hotel RevPAR was A$130, weaker than expected, as the commodity sector and the general Australian economy remained soft. Ongoing refurbishments at 6 of the 7 Australia hotels in the portfolio, also put pressure on occupancy rates. Nevertheless, cost efficiencies achieved under Accor’s mgt helped the Australian hotels achieve an NPI margin of 32.5%, with the improvements coming in earlier than expected. This helped DPU at 4.9cts (including waiver of sponsor’s distribution) beat mgt forecast by 6.7%. ASHT’s China hotels performed broadly in line, while the Japanese asset, Ariake Sunroute, continued to experience some drag from the weaker JPY. HSBC maintains at Neutral with TP $0.95. Notes the latest Park Hotel acquisition will help diversify ASHT’s portfolio concentration away from Australia, but expects the acquisition to be 3-6% dilutive to DPU, given the recent softness in corporate demand for Singapore hotels. ASHT’s est annualized yield is approx 7.2%.

Genting SP

Genting SP: Deutsche expecting a seasonally good quarter, underpin by strong VIP rolling volume given Chinese New Year effect while mass market is likely to stay firm. House forecast EBITDA of $379m and rev of $830m. View gels well with Merrill’s recent report where the house believe earnings have hit trough and could surprise in the next few qets. Mgt reaffirmed its appetite for credit extension, which the house believe will continue to be a key driver of the 15% VIP roll growth that house is projecting.

Raffles Medical Group

Raffles Medical Group: SCB maintains Buy and raises its TP to $4.25 after the grp’s 1Q13 results. The key takeaway from the results briefing is mgt’s strategic decision to pursue hospital projects in China. House optimistic that Raffles will proceed with the new hospital in Shekou, China, and that there is potential for additional hospital projects in the future. ontinue to like Raffles for its steady growth, strong balance sheet and robust cash flow generation.


SMM: CIMB note that Upstream has reported that Noble Drilling is in pole position to secure a CJ-70 jack-up rig drilling chartering contract from Statoil, which could be announced soon. This could be followed by the award of rig construction to the Statoil-nominated yards of SMM and Daewoo Shipbuilding. The contract is said to be worth about US$600m for delivery in 2016. Maersk Drilling is also looking to invest in two more GustoMSC CJ-70 design jack-up rigs for delivery in 2016. The driller is exploring its options with SMM and Daewoo, after its option with KEP lapsed. KEP is at the moment building three CJ-70 rigs for Maersk, to be delivered in 2013-15. House believe SMM stands a high chance of winning in view of its track record for CJ-70. It had delivered one CJ-70 rig (West Elara) in 2011 and is building another unit (West Linus) for Seadrill, for delivery by end-2013. That said, Daewoo is new in the jack-up market and may sacrifice margins to break into this market. Recommend investors accumulate SMM. Believe its earnings growth of 10% (3-year CAGR), order wins and order-book expansion could continue to power its share price. Margins could also recover in 1Q13 with the lack of provisions for its rig accident in 4Q12.


Yongnam: A consortium comprising Yongnam Holdings, Changi Airport Planners and Engineers and Japan-based JGC Corp has submitted a proposal to design, build and operate the Yangon International Airport. In an announcement Mon, Yongnam said the consortium was successful in an earlier round of pre-qualification, and was subsequently invited in February to submit a tender. The proposal, submitted to the Myanmar Department of Civil Aviation, was for the right to design, construct, operate and maintain Yangon International Airport and its facilities on the basis of a public-private partnership agreement for a 30-yr concession period. We note that Yongnam stands to have a good chance of winning the contracts, recalling its track record that Yongnam had in the past built the Mumbai International airport too and is often considered one of Asia’s largest structural steel co’s, while Changi similarly often been voted as one of the world’s top airport.

World Precision

World Precision: UOB Kay Hian maintains Buy with $0.54 TP. House note that World Precision reported a 40% qoq increase in revenue in 1Q13, benefitting from a pick-up in orders, driven by demand from the automobile industry and a recovery from home appliances manufacturers. Growth momentum has so far maintained in 2Q13. Balance sheet has strengthened with reduced borrowings. World Precision benefitted from a pick-up in orders since March, helping to generate a sequential rebound in 1Q13. Sales for conventional stamping machines increased 35.8% qoq while sales for highperformance/ high-tonnage stamping machines gained 46.4% qoq. Business sentiment has improved after the smooth political power transition in China. World Precision was also able to increase ASP for conventional stamping machines by 10.5% yoy due to its leadership in this product segment. Orders have picked up since March and the positive momentum was maintained in April. Its orderbook has grown from Rmb118m in Feb13 to the current Rmb150m. Going forward, house note that there could be potential asset injections from parent co World Group, an industrial equipment conglomerate involved in the production of agricultural machinery, construction equipment, gantry cranes, horticultural tools and automobile component.

Lian Beng

Lian Beng: Secured three projects worth $211m for the construction of i) 32-storey office building- Oxley Tower @ Robinson; ii) 12-stroey residential condo development at Newton (used to be Poh Lian's); iii) 14-storey hotel development at 122 Middle Road- (currently Midlink Plaza, which the group has 19% interest in); Contracts won brings order book to a new high of $1.2b, which will provide construction revenue flow through 2016. Total year-to-date orders secured ~$969m, making it one of the top contenders within the construction space against peers Tiong Seng and Chip Eng Seng. Lian Beng currently trades at 6.7x trailing P/E, vs closest peer (by mkt cap) Tiong Seng of 8.0x, while Chip Eng Seng trades at 6.6x. Counter currently still provides the best value in terms of valuation.


Broadway: 1Q revenues declined 8% y/y to $145.1m, mainly due to the continued weakness in the HDD market, as the demand for personal computers fell. Sales from the non-HDD precision component business also fell due to a slowdown in the semi-conductor industry, which consequently led to an earnings declined of 96% y/y to $609k. The company's best segment came from the foam plastics division, increasing 37.2% y/y to $49.6m due to overall strong demand as well as the delayed sales of some packaging products. The strength of this segment does not seem sustainable in the longer term, with relatively lower profit margins coupled with a competitive packaging market; as well as the holdback of sales products from the product manufacturers which could possibly be due to a poor undertaking of demand. Going forward, research firms project a decline of 1.3% for PC shipments in 2013; Market Intel firm tracked 135.8m HDD shipments for 4Q12, and a marginal decline to 135.0m for 1Q13, suggesting that shipment volumes have bottomed out- in line with Western Digital and Seagate's guidance that shipments will begin to recover in 2H13 as customers had worked through their inventory rebalancing. Broadway is still cautious on its prospects for FY13; besides its right-sizing initiatives, the group is diversifying into non-HDD related business to optimise its capacity utilisation.

Wheelock Properties

Wheelock Properties: 1Q13 revenues increased marginally 3.4% y/y to $27m, due to the absence of sales from Scotts Square and Orchard View which was recognized in 1Q12. Earnings increased 701% to $105.3m, boosted by the disposal of SC Global's shares of $93.8m. Excluding the gain, earnings declined 12.5% to $11.5m, mainly due to the exchange differences arising from hedging of assets and translation of bank loan denominated in foreign currency. On its Development Properties: Scotts Square obtained its TOP on 22 Aug 2011, Certificate of Statutory Completion was obtained on 8 Jan 2013. As at 31 Mar 2013, 21% or 71 units remain unsold, representing 15% of net saleable area at last selling price of $4,004 psf. Ardmore Three has not been launched (reportedly soon), development expected to be completed by 2014. Comprises of 82 units, with an average of 1,800 sq ft each. 2 unit were sold previously at an average of $3,116 psf. Using last reported psf, a 100% sale of the 82 remaining units would bring $459.9m in revenues. On its Investment Properties: Wheelock Place had overall occupancy rate of 97% (98% for retail, 96% for office); Scotts Square had 95% occupancy rate in its retail space; Going forward, Wheelock will be focusing on its project at the recently acquired land parcel at Ang Mo Kio Ave 2, with planning and design currently in progress. The Fuyang residential project will launch its first phase (total four) in 4Q2013, and is expected to complete in 2016, before the group will start recognizing profits on the sale of residential units. NAV/share of $2.64, implied P/B of 0.74x.

Fragrance Group

Fragrance Group: Announced 1Q13 results which were boosted by contributions from non-controlling interests. 1Q13 rev at $110.5m, +17.3% yoy, while net profit at $17.6m, -20.2% yoy. Stronger topline was led by grp’s property segment which saw rev +20.9% to $96m, due to the rev contribution from Parc Rosewood, the ongoing residential condominium project, in which the Group has 60% interest. Other projects that contributed to revenue during this period include Suites @ Paya Lebar, Suites @ Bukit Timah and Parc Elegance. The grp’s hotel segment saw rev shrink 2.1% to $14.5m due to the marginally lower Average Occupancy Rate (AOR) of 89.6% and Revenue per Available Room (RevPAR) of $91.41 in 1Q13 vs AOR of 91.7% and RevPAR of $91.70 in the previous yr. Going forward, the grp note that uncertain global economic conditions and the expected addition of more hotel rooms in Singapore are likely to contribute to a more competitive operating landscape for the Singapore hospitality market. Nevertheless, believes that the performance of its economy-tier and mid-tier hotels will continue to be resilient. Barring unforeseen circumstances, the Group expects to remain profitable in FY13.

Global Premium Hotels

Global Premium Hotels: 1Q13 results was broadly in-line, although at the lower end of estimates. Rev at $14.5m, -2.1% yoy and -4.6% yoy while net profit at $4.3m, -32% yoy and flat qoq. Weaker results was on back of lower Hotel room rev at $14.3m, -1.1% yoy, due to the lower average occupancy rate (AOR) of 89.6% vs 91.7% yoy. Revenue per available room (RevPAR) remained relative stable at $91.4 in 1Q13 and 1Q12. Rental income for 1Q13 at $251k, -38.6% yoy due to the completion of disposals of Changi Road Property and Pasir Panjang Commercial Property in 2Q12. The grp saw a rise in admin expenses and finance costs which weighed on bottom-line. Admin expenses rose 13.6% to $5.6m due to the increase in staff costs in relation to the general increase in wages and higher depreciation expenses, while finance costs rose 211.2% to $1.95m mainly due to restructuring exercise undertaken by the Company pursuant to the IPO in 2Q 2012. Going forward the grp note that the uncertain global economic conditions and expected addition of 3,308 new hotel rooms in Singapore in 2013 are likely to contribute to a more competitive operating landscape for the SG hospitality market. Nevertheless, with increasing popularity of the budget airlines in the region, believes that the performance of its economy-tier and mid-tier hotels will continue to be resilient. The Group’s new hotel development at 165 & 167 Tyrwhitt Road currently under construction is targeted to open for business in 1H 2014. Upon completion, the new hotel will boost the Group’s hotel portfolio by another 270 rooms. At current price, valuations are compelling, with the grp trading at just 0.68x P/B. Ratings as follows: OCBC maintains Buy with $0.33 TP


SMRT: Weak set of 4Q13 results which was below estimates, as the grp registered a net loss of $11.9m vs a profit of $13.9m y/y. Result brings FY13 rev to $1.1b, +5.9% y/y and net profit to $83.3m, -30.5% y/y Results were weighed largely by the deteriorating profitability due to higher repair and maintenance (R&M) costs in Train and bus operations and higher staff costs for the Grp. In addition, there was a goodwill impairment of interest in associate Shenzhen Zona of $17.3m. For the year, SMRT’s Bus operations saw operating profit plunge 165% to a net loss $30.8m, while the group’s train operations saw operating profits losing 28.4% to 65.1m. Going forward, grp note that its profitability will be further eroded in the next 12 mths by the continuing misalignment btwn fares and operating costs, and losses in the bus business in particular will continue to increase due to higher operating costs associated with higher energy and staff costs. The group is currently in discussions with the govt on more sustainable models for both the Trains and Bus businesses. These models will have an impact on the short-term profitability and improve the long-term sustainability of the businesses. In line with the lower profit, the Board has proposed a final dividend of 1c per share. Including the interim 1.50c, this will bring total FY2013 dividend to 2.5c. (1.7% yield)


OCBC: 1Q13 results down, but above analysts’ expectations. Net profit at $696m, -16% yoy, +5% qoq. Yoy, the decline was due to gains from divestment of non-core assets, significantly higher trading income and mark-to-market invmt gains from the insurance business in 1Q12. Net interest income was $912m, -4% yoy, as revenue from asset growth was offset by lower net interest margin. Non-bank customer loans grew 10% yoy, with broad-based growth across consumer, corporate and SME segments in most key markets. Net interest margin (NIM) fell 22 bps to 1.64%, attributable to the persistently low interest rate environment, reduced opportunities in the interbank market, and competition in the Singapore housing loans segment. NPL ratio was 0.7%, down from 1.0% yoy. Overall, core non-interest income, excluding divestment gains in 1Q12, was 14% lower yoy at $676m. Fee and commission income rose 15% yoy to $316m, boosted by growth in wealth mgt, loan-related and fund mgt income. But trading income was lower compared to the strong 1Q12 performance, declining 65% to $56m. Great Eastern continued to record sound business growth, as reflected by a 17% rise in new business sales, driven by growth across its key markets, as well as from higher underwriting profits. However, Life assurance profit declined 19% to $198m on lower mark-to-market invmt gains. OCBC continued to focus on the wealth mgt segment. AUM increased 27% yoy to US$44b, contributing $520m revenue (stable yoy), comprising a third of total group revenue. On the Group’s performance and outlook, CEO Samuel Tsien notes business momentum is strong, and asset quality remains sound; will continue to strengthen the bank’s regional franchise to tap on the higher economic growth potential in key overseas markets. The stock trades at 1.6x P/B.

SG Market (30 Apr 13)

SG Market: S’pore shares may open higher following gains on Wall Street as markets continue to be buoyed by anticipation of further liquidity boosts from central banks, ahead of the Fed and ECB meetings later in the week. After breaking past the 3320 resistance, the STI is on track to trudge towards the next hurdle at 3400. Support is now reset at 3320 level. Stocks to watch out for: *OCBC: 1Q13 net profit declined 16% to $696m, above street estimates of $640m as an increase in fees and commissions (+15%) outweighed narrowing net interest margins, (-22bps to 1.64%). NPL ratio improved to 0.7% from 1% a year ago. Tier 1 CAR at 16.2% and NAV stood at $6.90. *SMRT: Weak set of 4Q13 results sinking into net loss of $11.9m vs $13.9m profit in prior period due to higher train repair and maintenance costs as group staff costs as well as a $17.3m goodwill impairment of interest in associate Senzhen Zona. Proposed final DPS of 1¢, bringing full year FY13 DPS to 2.5¢ vs 7.45¢ in FY12. *Wheelock Properties: 1Q13 net profit soared 8-fold to $105.3m, boosted by a $93m gain from its disposal of its 17.3% SC Global stake, while revenue grew 3% to $27m on progressive bookings from the 84-unit Ardmore Three. Latest NAV stood at $2.64. *Fragrance Group: 1Q13 net profit fell 20% to $17.6m as revenue rose 17% to $110.5m, mainly due to higher property contributions from Parc Rosewood, Suites @ Paya Lebar, Suites @ Bukit Timah and Parc Elegance as well as rental income from its investment properties. But share of earnings attributable to minority interests ate into its profit at the net level. *Global Premium Hotels: 1Q13 net profit fell 32% to $4.3m on a 2% decline in revenue to $14.6m due to lower occupancy rate of 89.6% vs 91.7% in prior period and higher admin and finance charges but RevPAR remained stable at $91.40. *Ascendas Hospitality Trust: 4Q13 distributable income came in 15.6% higher than forecast, while DPU of 1.89¢ exceeds forecast by 11.8%. Excluding sponsor waiver distribution, DPU would have been 1.68¢, which translates to annualised yield of 6.6%. NPI was 11.4% ahead of estimates with hotels in Australia and China outperforming. *Sound Global: 1Q13 net profit dropped 20% y/y to Rmb61.5m even as revenue climbed 17% to Rmb443.2m, gross margins improved 2.5 ppt to 32.9% and other income jumped 62% to Rmb27.9m. But bottomline was marred by a 158% spike in finance costs due to USD senior notes issued in 3Q12. *Broadway Industrial: 1Q13 net profit collapsed 97% y/y to $0.5m vs $15.2m prior period, mainly due to absence of fair value derivative gains ($14m in 1Q12). Revenue contracted 8% to $145.1m on continued weakness in hard disk drive market due to falling demand for PCs and slowdown in the semiconductor industry. *Yongnam: The consortium comprising Yongnam, Changi Airport Planners & Engineers and JGC Corp has submitted a proposal to design, construct, operate and maintain the Yangon Int’l Airport under a 30-year concession. *Lian Beng: Bagged 3 projects worth $211m for construction of Oxley Tower at Robinson Road ($86.3m), a 450-500 room hotel at Middle Road and to complete the construction of Goodwood Residences at Bukit Timah. *Thakral: Guiding for a marginal loss for 1Q13. *Hu An Cable: Expects to report a loss for 1Q13 due to impact of China’s economic slowdown on sales volume of cable and wire products, copper and aluminium rods and start-up costs of its new Yixing plant. *Sinostar: Expect to report a loss for 1Q13, citing price volatility of gasoline and diesel oil products affecting overall market demand and festive holiday season dampening sales of refined oil products.

Monday, April 29, 2013

SembMar (technical)

SembMar - While technicals is still looking relatively good for an uptrend, do note that RSI has hooked downwards, although Stochastics and ADX does suggest further upside ahead. Price is testing the 20 day MA at $4.31, which could prove to be the near-term support. Failture to hold could see the next support at $4.18.

DBS (technical)

DBS: Trading Central notes the stock has rebounded strongly last wk from the support at its 50 day moving avg, as well as a medium term rising trend line since Oct '12. The continued marking of new YTD highs, as well as daily RSI displaying strong upward momentum suggests as long as $15.50 (short term technical support) is not broken, there could be further advances to $16.55 and $17.10 in extension.

Far East Hospitality Trust

Far East Hospitality Trust: JPM initiates at Underweight with TP $1.05. Notes that Singapore hotel accommodation is no longer as cost-competitive as before given the appreciating SGD, and is now on avg 6% more expensive in USD terms relative to HK. Believes this, together with 20% growth in room supply over the next 3 years vs 18% target growth in visitor arrivals, is likely to cap the room rate growth for the sector. JPM highlights it has a flat earnings outlook, reinforced by on mgt’s lukewarm guidance, vs strong earnings outlook by consensus. Notes FEHT’s 5.1% Fy13e yield, and an implied cap rate of 4.8%, is not a compelling valuation. FEHT is a Singapore-listed hospitality REIT comprising a portfolio of 8 hotels and 4 service residences located in Singapore, with an aggregate appraised value of $2.4b. FEHT is managed and sponsored by Far East Organization. The sponsor holds 52% stake in the trust.


SingHaiyi: In an interview by Bloomberg, SingHaiyi, formerly SingXpress is undertaking ambitious moves to beef up its financial muscle and expand into the US property market. If it can pull off this strategy, this could see SingHaiyi even move up to the Singapore Exchange's mainboard. Grp’s CIO told The Straits Times on Tuesday that the progression "could be quite soon given that market cap is moving up. Add that development is difficult for very small players because it's very capital-intensive, which is why grp is shaping, engineering the co so thaycan actually play in this game in a substantial manner. Grp add that SingHaiyi was "looking quite aggressively" at land opportunities in SG, including tenders for residential and commercial sites as well as collective sales. It is also keen on developing relatively small landed projects here and picking up high-quality distressed assets in the US. In particular, the landed projects would be a good source of recurring income, Mr Chan said, adding that SingHaiyi was also looking at developing a revenue stream from project management. Grp noted that the firm would be "flush with capital and looking to deploy it" pending approval of a share placement and rights issue at an EGM to be held later. The share placement and rights issue, which will raise around $226.5m, prompted heavy trading in shares of the penny stock when it was announced on March 11. Recall SingHaiyi also announced then that Mr Neil Bush, the brother of former US president George W. Bush, would become chairman. Mr Bush became chairman on Monday ahead of schedule. His appointment was originally slated for after the EGM.


M1: Philip upgrades to Accumulate from neutral, lifts TP to $3.55 from $2.58. Likes M1’s stable earnings and free cash flow, believes data monetization will boost growth. Notes with continued strong demand for dividend yield stocks, investors will appreciate M1’s 4.6% yield.

Courts Asia

Courts Asia: Continues to ramp up its expansion plans as the group announced the site of its first ‘Big-Box’ Megastore in Malaysia. This will be the Group’s largest store in Malaysia, and will be located in 8trium in Bandar Sri Damansara (Klang Valley). Scheduled for opening in Aug13, the 108,000 sqft two-storey Sri Damansara Megastore will offer the largest range of electrical, IT and furniture products in Malaysia and a host of multi-channel shopping experiences and serve an immediate population of over 750,000. Its opening is part of the Group’s growth strategy of increasing its retail area in Malaysia by an average of 120,000 sf. annually over the next two to three yrs. Separately we note that Courts appears to be on track to ramp up its presence, with another Big Box Megastore scheduled to make its debut in Indonesia, Jakarta by 2014, while the group similarly attempts to similarly increase same store sales and expansion in SG and Msia. If the group is able to continue replicating its success in Msia and Indonesia, we do not share price seeing a further rerating upwards, on back of a strong and growing domestic/consumption market in the 2 countries.At current price, Courts Asia trades at 13x forward P/E vs regional peers who trades at 25x forward P/E.


SGX: Starting 1 Jul, SGX will double min initial listing fee to $100k, variable rate for an IPO will remain at $100 per $1.0m mkt cap. From 1 Jan' 14, ongoing annual listing fee will be $30 per $1.0m vs $25 current. With minimum charge increasing from $25k to $30k. SGX highlights the new fees take into account "significant developments in the global regulatory environment" since the last revisions, and CEO acknowledged that listing on the mainboard cld now be more expensive than on rival mkts.


Kreuz: (The Edge) New vessel expected to bring in higher margin projects to subsea service provider. Recall Kreuz recently announced plans to acquire a multipurpose subsea dive suppert and construction vessel worth US$113.7m. As Kreuz only provides subsea installion for shallow water rigs, the new vessel should allow the co. to venture into deeper waters where dd is rising. The proposed vessel will also increase the geographical reach and scope of services that Kreuz can offer. DBSV note that Kreuz should be able to derive min incremental rev of US$50m and net profit of up to US$15m from the new vessel. The new vessel should help Kreuz reduce its dependence on projects and rev from parent co. Kreuz. In FY12, Kreuz closed the yr with an orderbook of abt US$200m, of which 90% will be recognised in FY13. While for the yr, the grp has already secured an additional US$40.5m worth of orders. Kruez b/s remains strong with net gearing at 10%. Overall, Kreuz should benefit from rising demand for subsea services by global O&G Co’s.


Vard: formerly known as STX OSV, the counter commences trading under the new trading name Vard wef today. Separately, OCBC quizzed mgt on the 4% fall in its share price last Friday, though mgt replied that it is equally baffled and has not seen any negative developments which could have triggered such a sell-off. If anything, mgt is now more excited about the new majority shareholder and the opportunities they would bring. OCBC currently has a Buy rating with TP $1.52, and will provide further updates together with its 1Q results due 14 May.

China Animal

China Animal: NRA Capital removing the stock off its Buy List. House note that share price hit a recent high of $0.29 yesterday. There is still no firm announcement on its possible delisting although its 10 April 2013 announcement on a fund raising exercise with Lily Nederland Holdings BV for $120m provides the much needed funds for the exercise. The subscription price for the new shares and warrants is $0.30 which is also the indicative exit offer price of China Animal of $0.30 should it decide to proceed with its delisting plans. Given that these plans are now likely to proceed with the requisite funding now in place, and with the exit price just 3.44% higher than yesterday's price of $0.29 - there is little further upside for existing shareholders. Investors who are not prepared to go through the proposed delisting exercise should and when it is triggered, should considering selling their shares in the market now.

Raffles Medical

Raffles Medical: 1Q13 results inline. Revenue at $81.1m, +11% yoy, mainly due to contributions from the Hospital and Healthcare Services segments, which increased by 16% and 4% respectively. Net profit at $13.5m, +16% yoy, boosted by higher operating efficiencies. Mgt remains optimistic that the group will continue to grow in FY13. Growth drivers include: i) more specialists joining the hospital, ii) expansion and refurbishment of the Intensive Care Unit (ICU), and iii) on-going process to extend the main Raffles Hospital premises at North Bridge Road. At 35.1x annualized 1Q13 P/E, 4.6x P/B, absolute valuations appear steep, but are inline local listed peers, IHH (32.5x P/E) and Q&M (34.1x P/E). OCBC places its Hold rating and TP $3.01 under review, pending results briefing.


Ntegrator: Secured two contracts worth $3.3m from repeat customers- for the full turnkey solutions for the supply of communications equipment to Myanmar Radio and Television, and the supply of manpower for project management services for an international information and communications technology solutions provider in Singapore. Mgmt is positive on Myanmar's economic liberalisation, as it continues to generate opportunities for industry players. The contract provides a recurring income to the group, as a percentage of its project-based business. Ntegrator trades at 3.2x P/B


Neratel: 1Q13 earnings declined 10.0% y/y to $5.8m, led by a 16.3% decline in revenues to $36.5m. The decline in revenues were mainly due to both its Telecom and Infocomm business segments- lower sales volumes of microwave radio equipment and satellite equipment, as well as network equipment to the service provider market sector due to delay in projects. Going forward, Group cites the intense competition within the Telecoms segment, as well as the mobile operators being cautious in their capital investments due to uncertainties in regulations, spectrum and licensing in some countries. The group is more optimistic in its Infocomm segment despite the competition, as service providers will still continue to expand and upgrade their networks with the rapid growth in the internet traffic. IT spending will grow with increased spending from businesses to improve their competitiveness and security. The brightest spot comes from govt's spending in IT, in line with their initiatives to lower costs and improve public service standards. Neratel trades as 13.1x trailing P/E, 3.9x P/B.

Starhill Global

Starhill Global: First quarter results were in line with street estimates, with an increase of 28% y/y on its DPU of 1.37¢, on the back of a 29.2% increase in revenues to $53.6m and a 12.3% increase in NPI. The increase was largely due to a 10% increase in rent from the Toshin rent review at its Ngee Ann City mall, of which resulting arrears from June 2011 – Dec 2012 were received in the quarter. Excluding the rental arrears payout, DPU would have increased 10.3% y/y to 1.18¢, still considerably well. NPI margin for 1Q13 fell 1ppt to 78%, as a result of higher property taxes and operating expenses. Gearing increased marginally to 30.5% as of 1Q13, vs. 30.3% as of 4Q12. The REIT’s average cost of debt decreased to 3.1%, down from 3.2% in 4Q12. SGREIT’s gearing remains fairly low in relation to its peers. Both Wisma Atria as well as Ngee Ann City achieved 100% occupancy for both retail and office this quarter, as the Singapore portfolio performance made up for weaker overseas portfolio as revenues from JP dipped 14.7% q/q to $1.5m, due to the sale of Roppongi Primo in Feb 2013 and the depreciation of JPY. Its exposure in Chengdu saw increased competition and a weakened retail market appear to have impacted the Renhe Zhongbei mall; revenues declined 7.8% y/y to $4.0m and NPI declined 12.8% y/y to $2.5m. Starhill adopts a natural currency hedge strategy (capital hedge), which maximises the use of local currency denominated borrowings, whenever possible, to match the currency of the asset investment. SGREIT is currently trading at 1.0x P/B, FY13F DPU yield of 5.0%; Retail reit peers are trading at 1.28x P/B, 4.9% yield.

Frasers Commercial Trust

Frasers Commercial Trust: 2QFY13 results in-line with street estimates; NPI declined 7% y/yto $23.0m due to the loss of income arising from divestments of KeyPoint and the Japan properties. However, distributable income grew 16.8% to $13.1m due mainly to savings following the redemption of its Series A Convertible Perpetual Preferred Units (CPPUs). DPU for the quarter stood at 1.9883¢, representing a 14.4% YoY growth. FCOT trades at 1x P/B, FY13 yield of 4.7%;

Indofood Agri

Indofood Agri: Weak set of results which were below estimates. Rev at $395m, -3% yoy and -6.8% q/q while net profit at $14m, -72% yoy and -33.5% q/q. Gross margins collapsed to 20.6% vs 34.3% yoy. Higher sales volume of CPO at 208k mt (+15% yoy) was substantially offset by lower ASP of key plantation crops and weaker sales of Edible Oils and fat, although the weaker sales performance was partly offset by positive sales contribution from sugar products. For the qtr, ASPs for CPO was down 16%, palm kernel was down 33% and rubber was down 17%, which was in line with the general decline in agricultural commodity prices. The grp achieved total FFB production of 844,000 tons, -5% yoy and CPO production fell 4% to 182,000 tons on lower purchases from external in 1Q13. FFB yield fell slightly at 3.5 MT per Ha vs 3.9 MT yoy, while CPO extraction rate at 22.2% was relatively flat on a yoy basis. Going forward, grp note that concerns over slowing down economic growth particularly in China and Europe, slower biodiesel demand in Europe and expectations of bumper soybean crops from South America will continue to weigh on commodity prices. On a positive note, Indonesia has now become one of the largest consumers of palm oil together with China and India and the group expect Indonesia's growing food and beverage industry to sustain domestic demand for palm oil products. At current price, annualizing current qtr EPS would see grp trade at hefty valuations of an annualized 32x FY13E P/E.


CapitaLand: 1Q13 broadly inline. Excluding one-off gains of $55m mainly from the sale of a residential site in Beijing, core net profit was $133m, +70% yoy, +20% qoq. This was driven by contribution from CMA, as well as devt profits in Singapore and China. Focus will be on the strong residential sales take-up this quarter. In 1Q13, CapitaLand sold 544 units in Singapore (1Q12: 57 units, 4Q12: 352 units), dominated by D’Leedon which was priced to sell. In China, CapitaLand sold 955 units, up 3-fold yoy, although down 19% qoq due to seasonal factors. Going forward, mgt targets to launch Marine Point (120 units) and Bishan St14 site (700 units) in 2H13, and will continue to bid for well located sites. In Danga Bay Iskandar, master planning is in progress, with launch expected in 1H14. In China, 3,500 units are expected to be launch-ready in 2013. For mall, Bedok Mall and Westgate remains on track to open in 4Q13. Nomura keeps at Neutral with TP $4.00, notes valuation at 23% discount to its RNAV is not expensive, but prefers CMA. HSBC lowers TP to $4.35 from $4.40, but upgrades to Overweight from neutral on valuation grounds. BNP rates at Buy with TP $4.40, expects CapitaLand to benefit from greater financial flexibility to capture invmt opportunities in a slower mkt; tips sale of Australand as catalyst. Deutsche maintains Buy with valuations attractive at 26% discount to its NAV vs 11% over the last 8 yrs, lifts TP by 1% to $4.43. OCBC maintains Buy with TP $4.29, believes mkt will likely react positively to the latest results.


Aussino: Potential negative news after the financial adviser for Aussino Group recommends that the co should voluntarily withdraw its application for its $70m RTO of the energy business of Max Myanmar group, owned by Zaw Zaw, although Aussino's board has rejected this advice. Aussino’s CEO however note that the board's decision is that the co will not withdraw the application. Recall Aussino announced a definitive RTO agreement to buy Max Strategic Investments (MSI), which operates 21 petrol kiosks across Myanmar, in Jul last year. PrimePartners Corporate Finance note that SGX has raised several concerns over the RTO at a meeting on Wed, which includes the fact that Zaw Zaw continues to remain on the US govt's watchlist with earlier reports saying that the US Treasury Department deemed him "a regime crony" because of his past friendship with former dictator Than Shwe. SGX also had concerns over allegations of human rights violations by the Max Myanmar Group of co’s, allegations that the Max Myanmar Group is under investigation by Myanmar's tax authorities, and the status of land occupational rights critical to the company's operations post-acquisition. As these concerns require more time to be addressed, SGX offered two options: either it would return the company's RTO application, or the company could choose to voluntarily withdraw it. PPCF's view was that the latter move would be in the co's best interest. Voluntary withdrawal would also give the company better control, be perceived less negatively, and would not place the company in a reactive position, PPCF added. But the board decided that it will not withdraw the application. The co said that it would keep shareholders informed and advised caution in trading of its shares. Trading halt will be lifted at 9.30 a.m

SG Market (29 Apr 13)

SG Market: S’pore shares are likely headed for a flat open on the mixed cue from Wall Street after US 1Q GDP came in weaker than expected. Attention this week will be on the Fed and ECB policy decisions with expectations of an ECB rate cut this week likely to lend support to the market. Myanmar theme stocks may take a hit after Aussino’s RTO deal appears to be on very shaky ground. The STI ended last Fri at its highest close in 5 years and is on track to challenge the 3400 psychological hurdle with support at 3320. Stocks to watch out for: *CapitaLand: 1Q13 net profit +41.2% to $188.2m with core profit +70% to $133.3m. Revenue +3.2% to $661.9m on strong residential sales in S’pore (544 units, similar to entire 2012) and China (955 units, 3x over 1Q12). NAV stood at $3.61. *UIC: 1Q13 net profit -10% to $39.8m, revenue -36% to $150.1m due to lower property sales and completion of The Trizon residential project in May 12 but buoyed by progressive profit booking from the Archipelago condo development. NAV stood at $3.43. *S’pore Land: 1Q13 net profit -11% to $49.6m, revenue -41% to $114.7m due to lower property sales and completion of The Trizon residential project in May 12 but buoyed by progressive profit booking from the Archipelago condo development. NAV stood at $12.55. *CDL Hospitality Trusts: Weak 1Q13 results with distributable income -3.2%, DPU -3.2% y/y to 2.69¢. Gross revenue -1.3% as lower sales from S’pore hotels were partially offset by higher revenue from overseas properties. RevPAR for SG hotels slipped 7.9% to $191 in 1Q13, while average occupancy dipped 1.2 ppt to 87%. *Starhill Global: 1Q13 DPU +28% y/y rise to 1.37¢, which included accumulated rental arrears from the Toshin master lease, barring which DPU would be up 10.3% to 1.18¢, giving an annualised yield of 5.38%. NPI +12.3% to $41.9m, mainly due to strong contributions from its SG portfolio +25.3%, driven by full occupancy and positive rental reversions from both the retail and office segments. *China Aviation Oil: 1Q13 net profit +5.3% to US$21.5m, revenue +30.2% to US$3.78b due to increased supply of jet fuel and trading volume of gas oil to 3.81m tonnes (+35.1%), offset by FX loss from currency swaps. *Jardine C&C: 1Q13 net profit -13% to US$231m, revenue -6% to US$5.21b due to reduced market share of Astra and difficult trading conditions in auto finance services, heavy equipment & mining, agribusiness, infrastructure & logistics and other motor interests in S’pore and Malaysia. *Aussino: Board rejects financial adviser's recommendation to voluntarily withdraw its application for its $70m RTO of energy business of Max Myanmar, owned Zaw Zaw after SGX raises concerns over Zaw Zaw remaining on US govt's sanctions list, alleged human rights violations by Max Myanmar, tax and land rights issues. SGX had given 3 May deadline for these concerns to be addressed or it may return co's RTO application. Co shares will resume trading today.

Friday, April 26, 2013

Sino Grandness

Sino Grandness: OSK DMG raises TP to $1.74 from $1.18 and maintains Buy call. House hosted SinoGrandness for a non-deal roadshow in HK last week. The 22 client meetings held over two days received positive response. House raise our 2013 earnings projections for Garden Fresh from RMB 220m to RMB 250m and change valuation method from P/E to sum-of-parts. This entails a 6x conversion for the CBs issued which will dilute Sino’s stake in GF from 100% to 75%. House assume a 20% new share issuance which will further dilute the stake to 62.5%. Assuming a 12x P/E for GF’s IPO (vs HK peers >20x), we value Sino’s stake in GF at $377m or $1.28 p/share. For its canned food business, ascribe a 5x P/E to our projected earnings of $27m to derive a valuation of $136m or $0.46 p/share. New TP translates into an undemanding FY13F P/E of 7x.

Ascott Residence Trust

Ascott Residence Trust: 1Q13 results missed expectations. Revenue at $69.2m, -3% yoy, mainly due to divestment of Somerset Grand Cairnhill Spore and Somerset Gordon Heights Melbourne, and lower contribution from existing properties, mainly in Singapore and Japan (partially due to weaker yen). REVPAU at $124, -10% yoy. Gross profit at $33.8, -9% yoy, was down mainly due to lower revenue, higher staff costs and depreciation. Unitholders’ distribution at $27.6m, +14% yoy, boosted by a realized exchange gain of $8.1m from repayment of foreign currency bank loans. Excluding this one off, distribution would have fallen by 19% yoy. DPU at 2.25 cts, +5%, due to placement of 114.9m new units at $1.305/unit. Mgt will continue to actively look for accretive acquisitions in key gateway cities in Asia as well as London, Paris and key cities in Germany. Expects FY13 to remain profitable. The Reit trades at 1.1x P/B, 6.2% annualized 1Q13 yield.


STX OSV: the stock is down 2.7% at $1.08, at a new 52 wk low, and breaking a key $1.10 technical support. The momentum indicators are negative at the moment. The takeover by new parent Fincantieri, and hasty exit of previous significant shareholder Och-Ziff Management, has left the counter’s remaining ~44% float held by a fragmented pool of shareholders, likely a large portion being retail investors. No major recent corporate bad news to highlight. Nevertheless takeaways from the Maybank KE roadshow held yday are as follows, - 2013 will be a "tough" year, with earnings growth to kick in only from 2014 - outlook appears flattish, with operating margins to stay around 11-13% - the Brazil yard is currently a drag on the group; an overheated shipyard industry has resulted in professional and labor shortages, and the yard has been fraught with delivery delays. - the Vietnam yard currently suffers from lack of orders given limited demand for high-spec vessels in Asia - consensus order win estimates at ~NOK 9-11b, which would keep outstanding order book roughly constant - key catalysts are order wins with regard to large-sized Petrobras-related orders (timing unknown), and faster than expected ramp up of its second Brazil yard to alleviate pressures from its first yard. On Fincantieri, - the parent group has an ambition to eventually become a major global shipyard group, - integration is still on-going, but will take time - no indication of M&A angle at this point On valuations, the stock trades at 6.6x P/e, 1.9x P/B, offers 5.2% FY13e yield. 1Q13 results are due 14 May.


WBL: Group reports a profit warning, expects a net loss for 2Q13, mainly due to weak results of its US-listed subsidiary Multi-Fineline Electronix (MFLEX). MFLEX also did a write-down of $11m on its inventory due to unusable components. WBL will be releasing its 2Q13 results on 8 may.

Croesus Retail Trust

Croesus Retail Trust (CRT): Trust has lodged its preliminary prospectus- available on the left "Files" panel. CRT's offering of up to 248m units for its IPO, will be made up of up to 226.5m for institutional investors, and 21.5m units offered to the public, indicative listing price will be $0.93 per unit. Croesus will be open for the Public Offer on 3 May 9.00am, and will close at 12pm on 8 May; Listing will be scheduled for 10 May 2013. Asia Pacific retail trust has an initial portfolio in Japan, comprises of 4 properties- Aeon Town Moriya, Aeon Town Suzuka, Luz Shinsaibashi and Mallage Shobu. Properties have an aggregate net lettable area of 180,622 sqm, with occupancy rate of 100% as at 31 Dec 2012. CRT will be distributing 100% of its distributable income to unitholders for FY14 and FY15, and 90% from FY16 onwards. Distributions will be paid in Singapore dollars, and CRT will be distributing them on a semi-annual basis. Its first distribution after its listing, however, will be paid on or before 31 Mar 2014, for the period ending on 31 Dec 2013. Forecasted DPU for FY14 and FY15 would be $0.074 and $0.0749 respectively, which represents an annualized distribution yield of 8.0% and 8.1% for FY14 and FY15. The distributable income for FY14 and FY15 is hedged, at a rate of 79.19 jpy/sgd. Thereafter from FY16 onwards, at least 80% of each semi-annual cash flow distribution will be hedged. CRT is backed by Daiwa House Industry Co. and Marubeni Corp. 163.7m units have been secured by cornerstone investors, which include Citadel Asset Management, D.E. Shaw Valence International, Eastspring Investments and Hong Leong Asset Management.


Yangzijiang: 1Q13 results below estimates; Revenues declined 22% y/y to Rmb2.87b, together with a 30% decline in earnings to Rmb717.2m; Gross profit margin improved to 36% because of improved performance of investment segment; shipbuilding-related segment margins maintained at 26%. Financial Investment segment bolstered group’s revenues vs its decline in shipbuilding-related segment amid industry downturn. YZJ continues its focus to becoming an integrated marine service provider, focusing on building up its supplementary revenue streams in Financial Investments, Property Development and Shipping Logistics. Mgmt says shipbuilding industry may have hit the trough, and recently seen signs of renewed activity. Current order book of US$3.3b; total contracts orders year-to-date of $US600m.

OCBC (technical)

OCBC: remains strongly bullish above its medium term rising trend line since Nov '12, and just hit its new YTD high yday. In the short term, a pattern of higher tops and bottoms becomes visible, which signal buying pressure. In addition, the 20 dya and 50 day moving avgs are heading upwards, which play as strong support roles. With RSi having bounced of its neutral area at 50%, this calls for further advance to $11.20 and $11.65 in extension.

Wilmar (technical)

Wilmar: UOB Kay Hian has Technical Buy Call with $3.60 TP. House note that the stock appears to be supported near its resistance-turned-support level near $3.25 and looks poised to break above its downward sloping trendline. Its Stochastics has moved out of its oversold region and its MACD indicator has formed a bullish crossover. House institutional research has a fundamental BUY with a target price of $3.80.

GLP (technical)

GLP: UOB Kay Hian has Technical Buy Call with $3.10 TP and tight stops placed below $2.66. Note that the stock looks poised to form a new 52-wk high should it be well supported above its rising 50-day moving average. Its MACD continues to trend higher above its centreline and RSI indicator has turned up above a reading of 40.


SMM: has secured a small contract worth approx £7m to fabricate the Bridge and Flare Structures for Nexen Petroleum UK’s Golden Eagle Project in the UK North Sea. SMM is already the EPC provider for the Project’s Living Quarters Platform which, together with the Bridge and Flare Structures, is scheduled for delivery in May 2014.


F&N: UOB Kay Hian note that the recent sharp pull-back in share price reflects the expiry of the General Offer (GO) and the removal of the stock from various indices. A conglomerate discount of 10-20% suggests a potential valuation of S$8.60-9.70. As at Dec 12, F&N had net cash of $3,384m, or $2.35/share. This included the proceeds from the sale of its stake in APB and Asia Pacific Investment for $5.6b. To date, there has been no announcement of plans for the massive cash hoard. Although there was an initial offer of a 1-for-3 capital reduction, this was subsequently thwarted by the GO for F&N by TCC Assets. In the absence of any significant M&A, think F&N could consider raising its dividends to upstream funds to its major shareholders (TCC Assets and ThaiBev). House have a RNAV estimate of $10.80/share. Based on a 10-20% conglomerate discount, a potential valuation range for F&N is $8.60-9.70/share. House believe that with a new major shareholder, appointments of advisors and a significant cash war chest (>S$3b), seepotential M&A/restructuring catalysts to drive the share price closer to a discount of 10-20%.


UOB: UOB will look outside Asean for acquisitions, said Wee Cho Yaw, the bank's newly-installed chairman emeritus. Add that UOB is still very small and it has to expand. Organic growth is very slow though acquisitions and subsequent integration is difficult; moreover, there are "very limited opportunities" in Asean. Personal view is that potential targets lie in Australia and Hong Kong. Add that the bank will have double-digit organic growth in South-east Asia. Outside this region, if there are opportunities, UOB will look at them. But note acquisitions are "expensive, capital-intensive" and "difficult", given that most governments are protective of their local banks.

Technics Oil & Gas

Technics Oil & Gas: Bad set of results as group's 2Q13 earnings declined 98% to $143k, dragged by a 84% decline of revenues to $8.2m to which management referenced its reduction in shareholding in Norr Offshore Group Ltd (NOG) which was done in Aug 2012, as well as the challenging conditions of the global economy. The spin-off of NOG reduced the group's stakeholding from 52.5% to 40.2% makes NOG an associate for equity accounting. However, the reported share of profit from equity-accounted associates reported for the period of $672k, even if it is reported as a subsidiary, would have resulted that the group took a big hit in its recognition of revenues. Management highlighted that its project schedules are subject to changes due to external factors like variances to original project specifications, etc. Eversendai's recent 20.1% entry into Technics in Jan 2013 have not shown any concrete results, given the publicly announced "encouraging enquiries" on projects in the onshore and offshore space on 6 Apr. Technics Oil & Gas trades at 10.6x P/E on its last close, 3.2x P/B.

Sheng Siong

Sheng Siong: Good set of results which was in-line. 1Q13 rev at $179.4m, +12.3% yoy and +11.5% qoq, while core net profit at $10.5m, +31% yoy and +31% qoq. Gross margins increased further to 22.5% vs 20.8% yoy as 1Q12 margin was depressed by aggressive competitive pressures which started in 4Q11. Good set of results was led by contribution from new stores of 14.2%, which was off-set by a contraction in comparable same store sales of 2.0%. Contribution from new stores was slightly lower than the 15.9% achieved in 4Q12 as it was affected by the closure of the Teban outlet in March for a major renovation and declining sales in the Bedok Central outlet as the car park in the vicinity was closed to facilitate the construction of a new neighborhood hub. The Teban outlet re-opened in early Apr13, whereas construction work in Bedok Central may continue for the next two yrs. Comparable same store sales were flat, excluding the impact of these two stores. Going forward, the key driver of grp's strategy will be to expand retail presence in SG, particularly in areas where they do not have a presence and to nurture the growth of the new stores. The Group will also seek to enhance same store sales and to continue to extract more value from the operation of its Mandai Distribution Centre. Ratings as follows: CIMB maintains O/P with $0.75 TP


Suntec: 1Q13 results slightly below street estimates; 1Q distributable income declined 8.4% y/y to $50.3m, as DPU declined 9.2% y/y to 2.228¢; the DPU included a 0.12¢ capital distribution from the Chijmes proceeds- excluding that DPU would have fallen 14% y/y; NPI of $30.7m declined 37.4% y/y mainly due to partial closure of Suntec City Mall and Suntec Spore for AEI works. This was partially mitigated by higher office income, with Suntec office revenues, at $29.9m, up 8% y/y and 1% q/q due to positive rental reversions for office space. Retail portfolio overall committed occupancy 99.4%; Office portfolio overall committed occupancy 99.7%; The stock trades at 0.96x P/B (vs. LT avg of 0.8x), offering FY13e and FY14e yields of 4.6% and 4.8% respectively, implying 320bps spread (LT avg of 502bps). Broker recommendations: UOB Kay Hian maintains BUY with TP of $2.27; CS maintains UNDERPERFORM with TP of $1.65; DB maintains HOLD, increasing TP to $1.87; Nomura maintains NEUTRAL with TP of $1.68;


Olam: announces the much anticipated annual strategic review, broadly in line with market expectations. The co introduced initiatives to improve balance sheet strength and cash flow, although this will be weighed against a slower profit growth trajectory (shed the $1b net profit target by FY16). Capital spending will be slashed by ~$1b. Olam will seek to raise approx $1.5b in cash by FY16 by selling assets and scaling down some operations. Olam will spend between $1.2b to $1.6 b in the 3 years through FY16, compared with an earlier target of $2.2b to $2.6b. It also wants to cut its gearing ceiling (ie. debt to equity), to a max of 2x, from 2.5x, as it seeks to become free cash flow positive from FY14. Olam will also seek to reduce its stake in the proposed Gabon fertilizer plant (original est cost of US$1.3b), to less than 50%, which will take it off balance sheet. The commodity trader also wants to save $80-100m pa in operating costs by 2016. The company will seek to restructure its wood and dairy businesses, and make its sugar business “more asset light”. The results of the review come five months after short-seller Muddy Waters first questioned the finances of Olam and likened it to failed energy traded Enron Corp. Nomura (Buy, TP $2.30) thinks the strategy should alleviate the stock market sentiment, as it addresses investors’ key concerns surrounding cash flows and pace of capex. StanChart (Outperform, TP $2.12) sees the strategic review as share price supportive; should act as the catalyst for the market to start re-thinking upside potential. Believes risk reward dynamics are positive. Maybank KE however maintains a Sell with TP $1.37 (from $1.30), believes current share price has likely priced in this strategic recalibration, expects time wil be needed for both the equity and debt risk premium to be restored.

SG Market (26 Apr 13)

SG Market: S’pore shares could see a positive start, tracking upbeat US leads, after reaching its highest close in more than 5 years. On Thu, the STI broke past its 3320 resistance, above a 3-month consolidation pattern, whcich could set the index up for the next run to the next stop at the 3400 psychological level. The key domestic risk will be Mar industrial production data due today. Olam will be in in focus after saying it will slow its pace of investments and reduce loans, addressing some of the key concerns raised by short-seller Muddy Waters. Stocks to watch out for: *Olam: Strategic review plans to generate free cashflow more quickly, reduce gearing and capex and streamline its business to make it less complex. Aims to optimise balance sheet through sale and leaseback deals for its 20-odd upstream assets, into an asset securitisation structure akin to a business trust structure. *Suntec: 1Q13 distributable income -8.4% to $47.6m, DPU -9.2% to 2.228¢, which translates to an annualised yield of 4.5%. Gross revenue -32.2%, NPI -37.4% due to partial closure of Suntec City Mall and Suntec S’pore for ongoing AEI works. *Sheng Siong: 1Q13 core net profit +31.3% to $10.5m on +12.3% revenue growth to $179.4m, mainly from contributions from new stores and improved gross margins. *Technics O&G: Appalling 2Q13 results with net profit plunging to near breakeven vs $6.1m in prior year as revenue dived 84% to $8.2m due to spin-off of Norr Offshore Group and significant drop in sales. *Sembcorp Marine: Subsidiary Singmarine secured £7m UK contract to fabricate bridge and flare structures for Nexen Petroleum’s Golden Eagle project with delivery in May 14.

Thursday, April 25, 2013

Genting SP

Genting SP: Merrill Lynch upgrades to Buy from Neutral with $1.81 TP. House believe earnings have hit trough and could surprise in the next few quarters. Meanwhile, the stock has declined 15% in the past 2-3 mths and is now trading close to trough levels relative to Macau peers. Houses sees 3 reasons to buy it: 1) VIP – sustained credit appetite + receivables in check/ Management reaffirmed its appetite for credit extension, and house believe will continue to be a key driver of the 15% VIP roll growth that we are penciling in. Importantly, the recently released 2012 annual report reveals that the aging of their receivables has been in check, thus reaffirming the credit risk profile of the group. 2) Mass – hold rate could surprise as operations fine-tuned. The group has hired a team of experienced casino executives to revamp its mass market operation. Initial results are promising as the mass market hold reached a record level of 24% in 4Q12. Think there is still scope for upside. Meanwhile, the group will intensify its marketing efforts outside ASEAN once all the attractions in MLP are in operation, and this will be further supported by the opening of the new Jurong hotel in 2015 that will add 30% to room inventory. 3) Inorganic overseas expansion optionality - Meanwhile, investors are also getting the optionality of overseas expansion growth. With $4.5bn cash in its balance sheet, the co is well placed to bid for assets to grow further. Korea and Japan remain the core focus market. The group’s historical internal IRR for investments have ranged between 12-15%.

Wee Hur (technical)

Wee Hur: appears to have found support at the 50% Fibo level, having bounced off the $0.43 level. The indicators have started to hook up from oversold levels which bodes positively for near term price action. The 20day MA may begin to tilt back up again, which would add a confirmation of the positive momentum. If resistance at $0.47 is broken, the stock may test $0.525 next (coincide with the 50day MA peak in Mar).

STX OSV (technical)

STX OSV: technical chart doesn't look good , with share price continuing its decline to new 52 wk lows. See first support at $1.10, though firmer support lies at $1.00. The indicators are in oversold territory but show no signs of reversal yet. For now, we would wait for share price to claw back above the $1.20 resistance before turning more positive.


Aussino - No Co. specific news out yet to explain its fall today. Note that counter's future is very much dependent on a successful RTO by Zaw Zaw, as of which there have been no new updates on the situation yet.


Olam: Bloomberg notes post Muddy Water attack on Olam, the company has become more responsive to investors, scoring a victory for shareholders. Short interest in Olam peaked at a record 13.4% of outstanding shares on Nov. 15, and subsequently declined to 7.8% as of Apr 19, though still the highest among the 30 companies in the STI. Olam has won increased backing from Temasek, which now holds 24% of Olam (from 16% in Nov), and is Olam’s largest shareholder. The investment firm remains “comfortable with Olam’s credit position and longer term prospects”. Eyes will be on Olam’s annual strategic review due later today.


Wilmar: announced new 51/49 JV with Tereos, to acquire and operate a corn starch facility in Tieling, Liaoning province, with a current annual processing capacity of 700k tons of corn. Both companies previously sealed a partnership in 2011 for wheat based starch and derivatives pdtn. The latest invmt will enable the pdtn of a range of starches based on both wheat and corn for the Chinese market by 2014. Since 2010, China has become the world’s leasing mkt for starch, accounting for 30% of global consumption. The consumption of isoglucose in China has increased 4-fold over the past 6 yrs, climbing to 11% of all sugar consumed. Wilmar continues to express its positive industry view by expanding its China agri and sugar ambitions. The stock trades at 1.2x P/B, 13.6x P/E.


SIA: Acquiring another 9.9% stake in Virgin Australia, raising it's total stake to 19.9%. The total consideration for the 9.9% stake would be A$122.6m (A$0.48/share). SIA last acquired a 10.0% stake in Virgin Australia for a total of A$105.3m (A$0.4288/share) back in Nov 2012. The two airlines entered into a long-term partnership in 2011, encompassing codesharing, reciprocal frequent-flyer programme benefits and lounge access, coordinated schedules to provide seamless connections, and joint sales, marketing and distribution activities. SIA trades at 0.97x P/B.

Singtel/ Starhub

Telcos: MDA has ordered SingTel to share all BPL matches over the next 3 years with rival Starhub. Starhub customers will be able to watch the BPL games via their Starhub set-top boxes and don't need to subscribe to a SingTel box just for this content alone. But for this content, the Starhub customer will have a direct billing relationship with SingTel (and SingTel collects the ARPU). There will be a carriage-fee that SingTel would need to pay Starhub, that is close to the actual cost of transmission. This would be positive for Starhub, as its Pay-TV ARPU and market share has always been of concern for investors. Singtel, on the other hand, may see some subscriber churn after its pay-TV subs increased from 200k to 400k during the period which it has the exclusive rights to BPL in the 2010-2012 period. Alongside the increase in pay-TV subs, its pay-TV market share has also increased from 22% in Dec 2009 to 43% in Dec 2012. SingTel has stated that it will appeal this decision and seek legal recourse if necessary.


WBL/UE/ STC: UE extends deadline for its $4.15/share offer for WBL to 5.30pm on 10 May; As at 23 Apr, UE controls 39.64% of WBL. Straits Trading Co (STC) which owns 44.58% stake in WBL, let its own takeover bid lapse in Mar, leaving UE as the only contender. STC has highlighted there was little reason to accept UE's offer. Independent financial adviser KPMG had recommended shareholders not to accept UE's offer as it was "not fair from a financial pt of view", and gave a SOTP valuation of $4.27-5.16/share for WBL.


Yoma: disclosed that CEO Andrew Rickards sold 7m shares via the open market on 22 Apr at $0.808/sh, reducing his stakes from 1.25% to 0.65%. The stock is down 0.6% at $0.805.


QAF: 1Q13 revenues increased 4% y/y to $250.8m, earnings increased 14% y/y to $11.5m. The improvement in earnings were due to a 36% drop in taxes as the income made by subsidiaries benefited from the tax relief. Operating profits, however, took a dip by 6% y/y to $15.4m due to the spike in grain prices resulting in an 8% increase in costs of materials. Margins in turn, came down to 6.1% from 6.8% in 1Q12. QAF expects new product launches in its Bakery operations to result in higher sales, as well as the continued growth in sales volume from Rivalea- its fully integrated producer of meat located in Australia. QAF expects its operating costs to remain high due to the sustaining level of raw materials as well as other operating costs. NAV/share increased 4.0% to $0.778, QAF last closed at $0.955.

Stats Chippac

Stats Chippac: Revenue for 1Q13 + 4.2% yoy to $406.4m but -15.4% qoq, which had the benefit of an extra week. Excluding the extra wk, 1Q13 rev was -8.9% vs qoq. The first qtr revenue saw seasonal demand weakness, tight inventory control in the wireless handset, tablet and consumer markets, and continued softness in the personal computer market. Net income was $3.5m, +25% yoy and +106% qoq. Going forward, grp note that based on current visibility, expect net revenues in 2Q13 to increase approximately 2% to 6% compared to the prior qtr, with adjusted EBITDA in the range of 21% to 25% of revenue. Strees however that the outlook for 2Q13 is subject to a number of risks and uncertainties that could cause actual events or results to differ materially from those disclosed in the outlook statements. Separately we note and re-highlight that recently TSMC, the world’s largest contract maker of chips, forecast record quarterly sales and raised its spending plan as continued growth in the smartphone market drives demand. Recall that TSMC is a key customer of Stats Chippac, and we do not rule out some positive momentum to flow through, on back of TSMC’s positive guidance.

Cache Logistics

Cache Logistics: 1Q13 results was inline with expectations. 1Q13 DPU at 2.23c, +4% QoQ and +7% YoY, with portfolio occupancy remaining stable at 100% with a weighted average lease expiry of 3.7 yrs and CACHE retaining its pole position in the ramp-up logistics warehouses space (~4.7m sqft) with ~20+% market share in Singapore. During the qtr, Cache signed on a new lease within APC Distrihub with Agility Logistics, and with this letting, Cache has no remaining space due to expire in 2013. Mgt maintains that it will continue to seek accretive acquisitions in Singapore, China and Malaysia. CACHE also notes that it has for the first time since IPO, obtained a corporate rating from Moody's (Baa3 with a stable outlook). This means that CACHE will be able to leverage up to 60% from the current restriction of 35% for REITs without a credit rating, as of 31 Mar 2013, its gearing stands at 29.2%.The grp currently trades at FY13 DPU Yield of 6.1% and P/B of 1.4x. Ratings as follows: Maybank-KE maintains neutral with $1.39 TP UOB Kay Hian maintains Buy with $1.52 TP CIMB maintains O/p with $1.50 TP OCBC maintains Buy with $1.45 TP


CMA: 1Q13 results above expectations. Revenue rose 29.1% yoy to $91.5m, mainly due to new contribution from Olinas Mall (acq Jul ’12) and The Star Vista (opened Sep ’12). In addition, CMA received higher project mgt fee as projects achieved targeted milestones, and higher property mgt fee due to opening of new malls. Net profit rose 9.6% yoy to $73.2m, as contributions from new properties and higher share of results from associates helped offset the lack of one-off revaluation gains (nil in 1Q13, vs $32.0m in 1Q12). Excluding the gains, core net profit would have doubled over 1Q12. CMA saw better performances at its properties, CMT, ION Orchard, its China Funds, and better contribution from Minhang Plaza and Hongkou Plaza. Mgt expects its key markets of Singapore, China and Malaysia to perform well in 2013, on the back of healthy tenant sales growth. Notes the malls that opened in 2012 will also start to contribute meaningfully to earnings in 2013. The stock trades at 25.9x annualized 1Q13 P/E, 1.16x P/B.

SG Market (25 Apr 13)

SG Market: S’pore shares may see a muted start after the mixed close on Wall Street and speculation that the ECB will slash interest rates. The STI may test its 3320 resistance and a any breakout above the 3-month consolidation pattern may take the index to the next hurdle at 3400. Psychological support remains at 3300. Stocks to watch out for: *CapitaMalls Asia: 1Q13 came in above expectations with net profit +9.6% y/y to $73.2m and revenue +29.1% to $91.5m as contributions from new properties Olinas Mall and Star Vista offset the lack of one-off gains from asset revaluations. NAV stood at $1.70 as of Mar 13. *Cache Logistics: 1Q13 distributable income +18.3% to $15.8m, DPU +7.1% to 2.234¢, which translates to an annualised yield of 6.5%. Gross revenue +13.3%, NPI +12.4% from rental reversions and contributions from new acquisitions in 2012. *STATS ChipPAC: 1Q13 net income +26.8% y/y to US$3.5m, revenue +4.2% but -15.4% q/q to US$406.4m due to seasonal demand weakness, tight inventory control in wireless, handset, tablet and consumer markets and continued softness in PC market. Gross margins dropped to 15.4% vs 16.1% in 1Q12 and 18.3% in 4Q12, outlook cloudy. *QAF: 1Q13 net profit +14% to $11.5m on 4% rise in revenue to $250.8m with higher cost of raw materials and utilities offset by lower finance charges and recovery of doubtful debts. *Yoma: CEO Andrew Rickards sold 7m shares on Apr 22 @ $0.80829, taking His holding from 1.25% to 0.65%. *WBL: UE extends closing date of its mandatory cash offer to 10 May.

Wednesday, April 24, 2013

DBS (technical)

DBS: Trading Central notes the firm uptrend , supported by the bounce of the ascending 50 day moving avg. Sees a strong base around the $15.25 levels. Tips a buy on dips, with targets at $16.10 and $16.55 in extension.


Iskandar: JPM notes eyes will be on the upcoming maiden launches in Iskandar by well known local developers, ie. Mah Sing, E&O and Sunway, which previously focused mainly in Klang Valley and Penang. i) upcoming launch of “Meridin” condo by Mah Sing, to be soft launched in May ’13, comprising 756 units with initial gross devt value (GDV) of RM535m, and priced at RM630-780 psf (close to pricing of RM 550-756 psf for UEM Land’s higher end East Ledang devt). Bookings for 'Meridin' have reached 27% for units opened to pre-selected VIPs over the last weekend before launch, and with a total of over 4,000 registrants. ii) Avira project by E&O in a JV with Temasek and Khazanah; to be soft launched sometime in 2Q13, starting with 458 units of terraced houses with pricing of close to RM1m per unit, where a total of 900 bookings have been received. iii) Sunway, the second largest land-owner in Iskandar after UEM Land, will also start to launch commercial components in Medini by late-2013, followed by landed residential units by 2014. iv) UEM Land recently announced the disposal of 12.5 acres of land at Puteri Harbor, Iskandar, for RM182m to a Kuok Brothers/ Khazanah JV, valuing the land at RM333 psf, or 12% above the RM297 psf for sea-fronting land in the area transacted recently in Jan ’13. The continued sales transactions at higher prices in Iskandar bodes well for Rowsley and CapitaLand, which have both announced major development projects in the region. Concerns over the upcoming Msia elections (polls 5 May) have resulted in a broader pullback in Msian stocks, though a number of houses have highlighted this could provide a window to buy on dips. Rowsley is +1.4% at $0.365, CapitaLand is +0.6% at $3.49.


Ezion - Latest possible news which could impact on the counter was 2 wks back, where recall Woodside announced today that it had dumped plans for the controversial $45b project at James Price Point. Grp’s CEO note that decision to dump the plan for James Price Point was tough, saying the project was subject to cost pressures. Grp would not be drawn on the cost estimate of the James Price Point development but said Woodside had tried everything to significantly reduce the budget, including reducing the size of the proposed LNG trains, in an effort to enhance the economics. In the end the costs had not come down sufficiently for the Browse project to be viable.This leaves the future of what was going to be one of Australia's biggest-ever resources projects in limbo. We note that the canning of the massive LNG project in WA will have significant flow-on impact of support industry players. Affected co’s could well include Ausgroup, Civimec and possibly Ezion Seperately also note that SG O&M play's share price have been pretty muted in recent wks, e.g STX OSV, Swiber, Ezra, in-line with a CS report citing that recent weak Oil prices could weigh upon O&M activities in the region.

Genting HK

Genting HK: is up at least 7% since the start of the wk, on a media rpt saying that GENHK and its Philippines partner Alliance Global (AGI) are planning to list their 50-50 JV Travellers’ International, in an IPO that could raise more than US$500m to fund further forays in the Philippine gambling market. The IPO could be launched in 3Q13, according to sources, with proceeds likely funneled into its upcoming Resorts World Bayshore (RWB), a US$1.1b casino resort in Entertainment City Manila (ECM) due to open in 2016. UOBK reckons the news may have been mostly priced into GENHK’s ~38% ytd price rally. While mgt had said it was in no rush to list Travellers, the house reckons a listing, sooner rather than later, would be more positive to GENHK amid upbeat sentiment over the potential size of the Philippine gaming market. The house believes a listing of Travellers would unlock the value of Travellers and also part fund capex to the tune of US$1.1b for RWB (to break ground this quarter, slated for completion 2016), and remaining capex of US$450m at the existing Resorts World Manila (RWM). Nevertheless, UOBK maintains its Hold rating with SOTP-based TP of US$0.41. Chooses to be conservative, in view of rising competition in Manila amid significant capital outlays, and subdued growth in the Hong Kong cruise gaming market. Notes Philippine gaming peer, Bloomberry has seen is share price slide 24% to P12.66 since peaking at P16.58 in early-Mar. Tips August to be a critical month, as Bloomberry's 2Q13 results would be revealed with a full quarter's contribution from the Solaire integrated resort. In a blue sky scenario, UOBK tips an optimistic valuation of GENHK at US$0.59.


UE E&C: Awarded a contract for $20.7m, for the supply and installation of air-conditioning and mechanical ventilation, building management, fire protection, electrical and engineering smoke control services for the 4-storey commercial development with 5 basements at Sengkang West Avenue / Fernvale Road at The Seletar Mall, developed by Kajima Overseas Asia Pte Ltd. UE E&C currently trades at 4.4x trailing P/E, 1.1x P/B.

Tiger Airways

Tiger Airways: CIMB maintains U/p with $0.63 TP. House note that Tiger’s proposed JV with Virgin Australia has received approval from Australia’s ACCC. It also concluded its capital-raising this week, though the bulk of its PCCS issue has been subscribed by SIA. Operational risks appear lower now. Add that the above developments have strengthened Tiger’s balance sheet and should limit the drag on its cash by associates. A stronger partner in Australia should also give Tiger Australia a much-needed boost to compete with the incumbent giant, Jetstar. However, remain wary of the cash burn by associates in Indonesia and the Philippines, which in the most optimistic case should only break even in three years’ time. Overall, think it is too early to buy into Tiger’s recovery. Maintain Underperform with de-rating catalysts expected from its continued cash burn. House SOP target price is based on 13.5x CY14 P/E.

First Resources

First Resources: UOB Kay Hian maintains Buy with $2.35 TP. House note that the lower qoq and yoy FFB production will likely be due to seasonal factors and oil palm trees in Riau’s estate undergoing the biological stress cycle after two good years of production. But CPO production should rise yoy on higher external crop intake. Production is expected to pick up in 2H13 during the peak production season. House cut 2013 net profit forecast by 20% to factor in lower CPO ASP.


Plastoform: OCBC met with mgt. Tips removal from the SGX Wach list as likely, as the co has recently submitted the relevant documents to SGX for review. Plastoform’s pre-tax profit of HK$3.6m in FY12 and market cap of $54m means that it has fulfilled the primary criteria to be removed from the SGX Watchlist. Plastoform is a HK-based manufacturer of audio products. Its major customers include Dell, Logitech, Brookstone, Imation and Monster Cable. Its latest product – Bluetooth mobile speakers – are seeing growth in demand, and will likely be the key revenue growth driver going forward. IMS Research estimates Bluetooth technology consumer pdts to increase at 11.7% CAGR over 2011-17, to some 3.1b units. OCBC does not provide a rating. Notes the stock trades at 21x FY12 core P/E, 2.4x P/B.


Olam: plans to release the results of its annual strategic review tmrw, 25 Apr, after market. The results of the review will likely be of greater interest this yr, with attacks on the firm by Muddy Waters back in Nov last yr, still fresh in investors’ minds. Given Olam’s aggressive acquisition strategy over the past years, Citi believes investors may now desire a more cautious approach, with preference for Olam to re-focus on an asset-light strategy, and on shorter gestation projects with greater focus on agri. Citi thinks investors are looking for comfort from this strategic review that Olam’s ROE will show a sharper recovery trend in the coming years, with poorer projects pruned and a renewed focus on agriculture. The house maintains Buy with TP $2.60.


FNN: Deutsche notes the 15% fall in stock price since the counter resumed trading Monday, likely driven by concerns on removal of FNN from key indices (i.e. MSCI DM index and FSSTI) and concerns over plans to restore the free float. Longer term, the house believes, i) there could be synergies btwn FNN’s consumer and property business and Thai Bev/ TCC’s existing operations, and ii) potential return of capital following the divestment of APB last yr which yielded $5.6b in proceeds (~$3.89/sh) which put FNN in a net cash position. Deutsche maintains its Hold rating with TP $9.72 (15% discount to SOTP), pending greater clarity over the shareholders’ strategic review and plans to restore the free float, but notes the sharp correction has taken FNN to nearly 30% discount to its SOTP of $11.43.

City Dev

City Dev: StanChart believes Singapore policy makers are not planning new cooling measures, amid high sales volume and low price growth. This comes after DPM Tharman made similar comments last wk. StanChart believes a combination of high inventory, high completions, buyer and seller stamp duty and low loan-to-value caps should keep price growth in check, and could entail no further cooling measures for the private residential market for the next three years, as the measures in place are already highly punitive. The house comes ahead of the Street, upgrades City Dev to Outperform, lifts TP to $13.60 from $12.10. Notes while City Dev’s historical landbank in Singapore is depleting, it could potentially continue to grow by investing in residential projects in China and by redeveloping or restructuring its existing assets and businesses. Tips CDL’s retail portfolio is now sizeable enough to potentially list as a retail REIT or to divest piecemeal. Other avenues to extract value could be through its 55%-owned Millennium & Copthorne.

Hong Leong Finance

Hong Leong Finance: 1st quarter earnings declined 8.9% to $15.3m, as the 13.7% y/y growth in net loan assets to $9.0b being offset by a lower loan yield due to competition. This could reflect a lower loan yield for the 3 bigger banks for the 1st quarter of 2013, after the recent govt budget measures of financing restrictions on vehicle loans and property measures starts to impact the financing companies. HL Finance trades has NAV/share of $3.72, trades at P/B of 0.74x.


Guocoleisure / Guoco Group: In an announcement by Guoco Group released yesterday night, the grp revised their previous offer: unconditional cash offer of HK$88/share to 1) an unconditional cash offer of HK$88/share if privatization condition is not satisfied or waived, and an additional HK$12 (total cash offer of HK$100) if privatization condition is satisfied or waived 2) new conditional cash offer of HK$100 if privatization condition is satisfied (shareholders can choose either one of the options) The HK$100/share offer is 13.6% higher than the previous offer of HK$88/share and a 2.6% premium to the previous closing of Guoco Group. It is to encourage previous disinterested shareholders to accept the privatization offer. As at FY12, the BV/share for Guoco Group is HK$134.35/share. UOB Kay Hian note that the increase in offer by Guoco indicates that they see deep value in Guoco Group, which may be visible in the pending valuation report to be released by 30 April. Since Guocoleisure is a subsidiary of Guoco Group, believe this is positive news for the stock as it does have a portfolio of undervalued assets (London hotels and Oil and gas royalty) held at cost on balance sheet. House currently have a buy recommendation on Guocoleisure, with a TP of $1.19


VARD: Entered a Letter of Intent with Simon M√łkster Shipping for the design and construction of one Platform Supply Vessel (PSV), scheduled for delivery in 1Q2015. Based on historical contract prices, a base-model PSV costs NOK250m (~S$52m). The PSV 06 LNG is an dual-fuel LNG / diesel-electric ship built with a focus on lower consumption emissions of greenhouse gases. Year-to-date VARD has reported total orders of NOK2.4b, excluding the Letter of Intent above. Share price has been lacklustre recently after the close of offer by Fincantieri, as investors focus on the company's longer-term margins, and also perhaps Fincantieri's silence to minority shareholders. Management is optimistic on subsea construction orders going forward; Petrobras also recently announced its intention on ordering 24 Offshore Support Vessels by Jul 2013, part of its Fleet Renewal Plan. VARD currently trades at 7x trailing P/E;


Boustead: Secured contracts worth $60m to design, engineer and construct key process systems and waste heat recovery units for downstream oil refineries and gas processing plants in Canada, Finland, Nigeria and Saudi Arabia. These deals raised the group's orderbook backlog to $415m. As of the last reported financials (3QFY13 ending 31 Dec 2012), cash position of $218.5m is equivalent to $0.426/ share, making trailing P/E ex-cash 5.7x;

Nam Cheong

Nam Cheong: Potential positive sentiment after grp announce that it has secured a US$59m (Rm180.4m) worth of contracts for two units of Accommodation Work Barges (AWBs). The two AWBs were sold to Perdana Petroleum, an established, major offshore marine services provider for the oil and gas industry in Malaysia and the Southeast Asian region. With the Contracts, Nam Cheong’s order book stands at approximately RM1.4b to date, underpinning earnings visilibity for the next 4 yrs. Ytd grp has secured abt RM807.0m worth of contracts. We note that grp’s order wins momentum appears on track to exceed those of FY12, with more then half of its orderbook being secured this yr already. OCBC maintains Buy with $0.30 TP.

First Real Estate Investment Trust

First Real Estate Investment Trust: Posted good set of results which was in-line. Stripping the gain on divestment of the Adam Road property, which was paid in Q3 2011 through to Q2 2012, the DPU of 1.74c represents an improvement of 9.4% over the 1.59c yoy. Results was led by gross revenue, +25.0% to $17.5m, mainly due to the full quarter contribution from the two new properties acquired in Nov12 – Siloam Hospitals Manado & Hotel Aryaduta Manado, and Siloam Hospitals Makassar. Going forward, First REIT will continue on its expansion path by searching for more yield-accretive, quality healthcare assets in Asia, especially in particular, Indonesia, is expected to see steady growth in its healthcare expenditure, supported by the govt’s on-going initiative to attain universal health coverage for its population. Its sponsor, Lippo Karawaci, has another 15 hospitals to which First REIT has first right of refusal, providing a steady and strong pipeline of healthcare assets available for acquisition. At current price, grp trades at an annualized yield of 5.1% with a 1.7x P/B. Share price been hitting 52 wks highs. Ratings as follows: OCBC maintains Hold with $1.31 TP

Mapletree Industrial Trust

Mapletree Industrial Trust: 4QFY13 results were slightly better than street expectations; 4Q revenue increased 8.8% to $72.1m, as NPI increased 7.8% to $49.6m. Growth led by higher occupancies of 95.4% and a 4% increase q/q on rents, as well as the full contribution from JTC's Tranche two acquisition, which completed in Aug 2011. DPU increased 10% y/y to 9.24¢, overall gearing remains comfortable at 34.8%, which provides some headrooms for acquisitions/ AEIs. MINT has a forward yield of 5.9%, one of the most attractive in the sector. CS maintains NEUTRAL, TP of $1.70; DB has a BUY, TP of $1.63;

SG Market (24 Apr 13)

SG Market: S’pore shares may rebound following positive Wall Street leads but the erratic price movement in the markets seems to suggest that investors are confused by the raft of mixed economic data from US and China over the past weeks. Resistance for the STI is tipped at 3320 with psychological support at 3300 and key support at 3250 levels.. Stocks to watch out for: *MIT: 4Q13 results surpass expectations with distributable income +3.4% to $38.9m, DPU +2.2% to 2.37¢, which translates to an annualised yield of 6.1%. Gross revenue +4.2%, NPI +1% due to higher rentals achieved for both new and renewal leases across all property segments as well as higher occupancies. *First Reit: 1Q13 results in line with distributable income +16.5% to $11.6m, DPU +9.4% to 1.74¢, which translates to an annualised yield of 5%. Gross revenue +25%, NPI +23.4% due to maiden contributions from newly acquired hospitals in Makassar and Manado. *Nam Cheong: Sold 2 accommodation work barges to Perdana Petroleum for US$59m, which comes on the heels of a 6-vessel sale in late Mar with order book now hitting RM1.4b. *Boustead: Secured $60m of oil & gas contracts in Canada, Finland, Nigeria and Saudi Arabia, bringing order backlog to $415m. *UE E&C: Awarded $20.7m sub-contract by Kajima Overseas for supply and installation M&E equipment at The Seletar Mall with completion by Nov 14. *Sarin: Listed Japanese bridal jewellery chain CIMA launching Sarin Light light performance grading report for polished diamonds in all its 54 stores across Japan. *Cheung Woh: Appalling results in 4Q13 with net loss of $2.2m vs $3.6m profit in previous year as revenue shrank 44.5% to $12.7m. Excluding certain disposed units, revenue would have been 21% higher due to resumption of business from the 2012 Thai floods but the hard disk drive maker would have still ended up in a loss position. *China Oilfield: Entered into non-binding MoU to acquire Kaiming Wind Tower, a wind tower maker from its Chairman and concurrently disposing its existing loss-making oilfield equipment business. *Sino Construction: Profit warning of loss in FY12 due to intense competition, slower growth and property cooling measures in China, which resulted in smaller contracts of lesser value as well as Rmb228m bad debt provision and impairment of assets. *Action Asia: Profit warning of loss in 1Q13 due to drop in revenue arising from lower selling prices of its consumer lifestyle entertainment products. *KDX: Deadline to submit a resumption of trading proposal extended till 30 Jun, failing which SGX will proceed to delist the company.

Tuesday, April 23, 2013

Geo Energy

Geo Energy - No Co. / industry specific news avilable to explain its sharp drop in price today. Infact industry news has been mildy supportive, with Peabody (world's largest private sector coal miner) tipping a recovery in thermal coal for this yr, after the grp reported a smaller then expected qtrly loss last wk. Apart from that, latest news on the co. was last wk where the co entered into a conditional sales & purchase agreement for its 5th mine concession in 2013. The new concession, spanning a total concession area of 4,600 hectares, is estimated to contain higher calorific value coal of 7,200 kcal/kg (GAR) and semi-coking coal, expanding the Group’s range of production. On the previous four concessions which the group entered on 25 Feb: four mining concessions in Kutai Barat Regency, East Kalimantan. Each of the four options to purchase agreements, when converted, will result in Geo holding an aggregate of 93% interests in the 4 mining concessions in East Kalimantan totaling 21,377 ha. These 4 target companies have not commenced coal production and are currently loss-making. All the five potential mine concessions are situated in areas neighbouring the Group’s current BEK mine in East Kalimantan and will allow the Group to synergise its upcoming operations to cater to its operations in the aforementioned mining concessions.

JES (technical)

JES - Technicals looking poised for more downside, with Stochastics and RSI all hooknig downwards. The 200 day MA at $0.160 should provide some support for now.


Guocoleisure - Recall that Street has been touting the independent valuation report by SCB, on GuocoGroup assets to be released somewhere in the end of April, which would cast further light on the actual valuations of its subsidiary GuocoLeisure. Recall that GLL’s properties are held at deep discount to book value. GLL carries its hotels and property, plant and equipment at historical cost less accumulated depreciation. According to mgt, the last revaluation date was in 2005. With an independent valuation report of GLL’s assets likely to be issued in the near term (due to privatisation of Guoco Group, the ultimate holding company of GLL), market watchers believe it will shed light on the highly undervalued property portfolio.


Wilmar: Grp has acquired a strategic 27.5% stake in Cosumar SA, a Morocco-based sugar producer – for MAD2.3b (US$263m), funded by internal funds and bank borrowings. Wilmar believes that Cosumar provides the group with the opportunity to service a large and growing structural deficit in sugar in Morocco and the surrounding regions of Southern Europe, Northern and Western Africa. OCBC note that the latest acquisition dovetailing nicely with Wilmar’s strategy of becoming a global sugar player, and the near-term impact is likely going to be muted by still-weak sugar prices. Weaker sugar prices notwithstanding, house believe that Wilmar’s large distribution network in China puts the group in a good position to capitalize on the expected increase in sugar consumption there. Overall, house maintain BUY with an unchanged S$3.90 fair value (based on 15x FY13F EPS)

HPH Trust

HPH Trust: Deutsche recommends to switch out of Reits to HPH Trust. Notes S-REITs valuations and yield have compressed following their extended run up, and with equity issuance a potential speed bump, the house sees limited total return potential for the REITs over the next 12 mths. HPH Trust on the other hand, is Deutsche’s top yield name within its portfolio, offering 7.4% FY13e and 7.9% FY14e. The house remains positive on the Chinese ports sector, on expected strong recovery of China’s exports. Notably for HPH Trust, its HK and Yantian terminals are well positioned to seize the opportunity of growing container vessel sizes, which suggests that it should further expand its market share going forward. The house sees limited impact from the recent strike, with operations having recovered to 80-90% of normal levels. Deutsche rates HPH Trust at Buy with TP US$0.92. . StanChart believes the impact on earnings and DPU is likely to limited if the strike ends soon. While the house has an Inline rating with TP US$0.81, it would be a buyer of the stock at US$0.75 if further weakness plays out.


BBR: has secured two new contracts worth RM 286m (~S$116m) to build two bridges in Terengganu and Sarawak in Msia. Work has commenced for both projects, with the first one to be completed end 2015, and the second one scheduled to complete in 2Q16. The stock trades at 6.5x P/E, 0.8x P/B.

Tiger Airways

Tiger Airways: Australia's regulators have given Tiger the green light on its proposed 60% stake sale of Tiger Airways Australia to Virgin Australia. An approval of the sale of Tiger Australia may be a positive as the Company has been undergoing yield deterioration from the intense competition within the Australia domestic market, putting a drag on the Group’s earnings. Tiger Airways will get S$120m one-time gain on disposal of Tiger Australia. Both Tiger Airways and Virgin Australia have committed to invest a further A$62.5m to fund growth in Tiger Australia. Tiger Australia will pay Tiger Airways an annual licence fee based on % of revenue for 20 years. However, the future strategy for SIA is questionable, as Tiger’s unique advantage was within its Australia domestic operations. A quick check aross Tiger, Silkair and Scoot websites shows that Tiger has only 5 unique destinations it flies to (ex-Australia domestic flights), out of its 38 destinations. Including Tiger Australia, Tiger has 14 unique destinations. The 5 remaining unique destinations after Tiger Airways sells a 60% stake in its Australian operations will be mainly in Philippines- Bacolod, Boracay, Puerto Princesa, Iloilo, Tacloban; OCBC has a SELL rating, with TP of $0.63.

Rickmers Maritime

Rickmers Maritime: 1Q13 charter revenues almost flat, losing 1% y/y to US$35.5m as earnings increased 30% to $10.7m. The increase in earnings were mainly due to lower bunker expenses for a vessel's repositioning that did not occur this quarter, as well as lower finance expenses resulting from reduced loan balances. On the outlook for 2013, with containership capacity growth expected to grow in-line with global trade growth at 6.1% and as the risk to global economic growth from the uncertainty within the Eurozone still exists, time charter rates and vessel values are not expected to increase materially. Having said that, the mgmt expects charter rates to gradually improve in 2014 onwards. Rickmers announced DPU of US0.6¢, unchanged from 1Q12. Concurrently, the Trust has achieved approval on its 1:1 non-underwritten renounceable rights issue, issuing up to 423.7m new units. Proceeds from the rights issue will be used for the repayment of bank loans, which will lower pro forma gearing from 59.3% to 51.8%.


Dukang: revealed yday that it has joined the ranks of 5 or 6 other white liquor brands endorsed by China’s Ministry of Foreign Affairs to serve foreign dignitaries with. Business Time notes, with the official stamp of approval, the co hopes the brand will gain greater prominence in China and beyond. Other brands on the list include established first-tier brands like Kweichow Moutai and Wuliangye Yibin. Yday, Dukang also signed agreements with the Henan provincial alcoholic beverages industry association and the Singapore Chinese baijiu association to promote the brand in the region. It also signed a letter of intent to distribute Dukang baijiu with local distributor Oasis Global. Dukang is a small player in China's highly fragmented and competitive baijiu market. It has a 3% market share in densely-populated Henan province where it is currently the top local brand. The company is banking on the cultural and historical connotations surrounding its distinctive name. Dukang is the name of a legendary inventor of Chinese wine, mentioned in a poem by Chinese warlord Cao Cao. The company is expanding and marketing itself aggressively. Singapore is the first stop for Dukang’s proposed world tour, with possible next destinations being France and Spain. Dukang intends to promote Chinese baijiu in countries which have a drinking tradition; the company also hopes to make its products available to overseas Chinese. Dukang shares have hit a one-year high, having surged under heavy trading volume the past few trading days. The stock trades at 5.7x P/E, vs overseas peers Moutai at 12.9x, Wuliangye at 8.0x, and Sichuan Swellfun at 20.9x.

Tiong Seng

Tiong Seng: In discussion to set up joint venture with Myanmar construction giant, Shwe Taung, to explore setting up a precast plant to cater to rising demand for affordable housing in Myanmar. This comes at a time where Myanmar govt’s plan to build more than 1m houses over 20 yrs. Residential construction accounts for 51%, or US$1.5b, of Myanmar’s total construction output. In Yangon alone, the demand for affordable housing is 200,000 units every year, whereas only 20,000 units are supplied every year. We note that Tiong Seng who already boasts the largest orderbook in SG’s construction segment, stands to potentially benefit if Myanmar could potentially provide another avenue of growth for the co.

Mapletree Commercial Trust

Mapletree Commercial Trust: Strong set of results ahead of estimates, with the Grp posting DPU of 1.737c for 4Q13, beating its forecast of 1.449c by 19.9%. Strong results were on back of a 21.6% jump in rev to $60.7m, and a 23.4% jump in NPI to $44.2m. For the full year, DPU rose 23.1% to 6.487c, beating its forecast by 19.7%. Strong set of results was driven by strong reversions in VivoCity (33.1%) and PSAB (44.3%), contribution from Alexndar Retail Centre (ARC), rent step-up in Merrill Lynch Harbour Front (MLHF) and the recently acquired Mapletree Anson. Apart from ARC, committed occupancy was sustained at 100% for all assets with all leases expiring in FY12/13 renewed/ re-let. Leasing at ARC has been relatively slow with commitments rising from 80.4% to 81.9%. Gearing rose to 40.9% post-Anson and MCT has diversified its funding sources and lengthened debt maturity to 3.5 yrs after the recent 8-year notes with 74.5% of debt fixed At current price, grp trades at 1.3x P/B and at a forward yield of 4.8%. CIMB maintains Neutral with $1.47 TP Deutsche maintains Hold with $1.46 TP HSBC maintains neutral with $1.45 TP

SG Market (23 Apr 13)

SG Market: S’pore shares could extend gains in line with the Wall Street advance but US stocks but investors are likely to remain watchful of economic data cues such as China's HSBC flash manufacturing PMI and S’pore's Mar CPI numbers, both due later in the day. The STI appears fairly resilient and continued to consolidate in a tight range, above its 20 and 50-dmas. The next test for the STI could be the immediate resistance at 3320 with psychological support at 3300 and key support at 3250 levels.. Stocks to watch out for: *MCT: 4QFY13 distributable income +19.8% y/y to $34.7m, DPU +11.8% to 1.737¢, which translates to annualized yield of 4.9%. Gross revenue +21.6%, net property income +23.4% due to contributions from Mapletree Anson as well as higher rents achieved upon renewal of existing leases across all properties in its portfolio. *Tiong Seng: Signs MoU with Myanmar construction firm Shwe Taung to explore setting up 30/70 JV precast plant in Myanmar. *BBR: Won 2 Malaysian contracts worth RM286m to build 2 bridges in Trengganu (expected completion end 2015) and Sarawak (expected completion 2Q156). *Dukang: Among baijiu brands endorsed by China's Ministry of Foreign Affairs. Hopes that with the official stamp of approval, the brand will gain greater prominence in China and beyond. *First Ship Lease: Incurred 1Q13 loss of US$7.1m due to US$5.3m impairment of investment in tanker co TORM and 11.6% drop in revenue from its 25 vessels, in part due to payment defaults by Berlian Laju Tanker. Net gearing stood at 122%. No DPU declared as part of agreement with lenders to relax loan covenant. *Rickmers Maritime: 1Q13 distributable income +1% y/y to US$23.7m, revenue +1% to US$35.5m. net profit +30% to US$10.7m, helped by lower finance expenses. *Tiger Airways: Obtained approval from Australian regulators for sale of 60% of loss-making Tiger Australia to Virgin Australia. Tiger will book a one-time gain of $120m from the disposal.