Valuetronics

Valuetronics: PhillipCapital initiated with a Trading Buy and $0.43 TP, implying a potential upside of 28%. Established in 1992 and headquartered in Hong Kong, Valuetronics has grown through the years to become more than an integrated EMS provider with principal business segments ranging from Consumer Electronics Products (“CE”) to Industrial and Commercial Electronics products (“ICE”). Today, they pride themselves as a premier design, manufacturing partner for the world’s leading brands in the consumer, industrial and commercial electronics sectors, which span across a wide geographical region that covers America, Europe and Asia Pacific. Investment merits include: 1. Trading at attractive values with net cash accounting for 53% of market cap, a conservatively estimated idle cash of 26% of market cap. P/E of 5.5x, PE ex idle cash of 4.0x; 2. Company shows ability to maintain revenue and bottom line growth in their continuing operations ex loss making licensing business segment; 3. LED lighting for general lighting burgeoning at a value sweet spot - mid expansion phase amidst falling prices.

OSIM

OSIM: StanChart reiterates its Outperform rating and raised TP to $3.57, on the back of higher long-term growth forecast of TWG Tea, underpinned by sales growth in 2014 from its new massage chair, uDiva, (launched in Apr). In 1Q14, TWG Tea opened four new stores, and in Apr it added another three. It currently has 33 stores and management plans to reach 45 by year end. Management said the new stores have reported strong results, as they were opened in high-traffic, upmarket locations, including elite malls and airports. With $265m in cash, house reckons that OSIM has significant flexibility to pursue acquisitions. In the past, management said their M&A criteria included: (1) strong brands targeting the middle-upper income segment, (2) specialty retail concepts, and (3) strong cash flow generation. StanChart believes small acquisitions are a good fit for OSIM, as management understands branding and how to build a regional network. OSIM currently trades at 15.9x 2015E PER, an 11% discount to the ASEAN retailer average of 17.9x. However, on a growth-adjusted basis, OSIM trades at 0.7x, a 38% discount to ASEAN retailers’ price-earnings growth of 1.2x.

Sunvic

Sunvic: Despite the downbeat results and outlook posted on Friday, Sunvic's share price surged 6% higher on Friday to $0.535, but still well below its NAV/share of Rmb4.30 ($0.86). Although management did not provide any fresh update on its proposed sale of its Taixing production facilities to French chemical group Arkema for Rmb3.9b, the positive share price action could be indicative that the deal may be sealed soon. The proposed sale, if it materialises, would translate to an estimated gain of Rmb1.69b or Rmb3.16 ($0.63) per share. At the current share price of $0.535, the stock is trading at a deep value to its implied post deal valuation of $1.49 per share.

Land Transport

Land Transport: Maybank-KE reckons that the increasing traction of new players in Singapore's taxi industry looks set to shake up the market. The two app-based taxi booking entrants channel passengers to their existing network of taxi drivers and private vehicles, which may potentially translate into a loss of taxi booking income. However, Maybank-KE's analysis suggests minimal impact on the profitability of taxi operators- a hypothetical scenario of a 20% plunge in booking income translates into 3.4/ 4.3% potential loss on ComfortDelgro/ SMRT's operating income. Conversely, house argues that these new entrants would augment the overall revenue pool of the taxi industry, benefitting public transport operators in the long run, as it seeks to grow the taxi booking pie, currently at a low penetration rate of 10% of taxi journeys. Maybank-KE forecasts a 5ppts increase in penetration over the next three years, translating into an additional $52m in revenue, or $5.16 per taxi/day. However, this should be offset through higher rental fees by the operators. Overall, house has an Underweight rating for the sector, but prefers ComfortDelgro (Buy, TP $2.40) over SMRT (Sell, TP $0.50), due to its lower exposure to the loss-making fare-based business in Singapore.

Wilmar

Wilmar: Following a revised bid of A$0.70 per Goodman Fielder’s (Goodman) share, Goodman’s Board unanimously recommends that Goodman’s shareholders vote in favor of the revised proposal. The sweetened deal came after Wilmar and First Pacific’s bid for Goodman for $A0.65 per share was rejected, with the latter describing the deal as opportunistic, given it had just issued a profit warning early last month. The bid valuations for Goodman isn’t expensive, pricing Goodman at 8x EV/EBITDA vs 9.9x, based on the 40 baking and dairy takeovers globally over the past 5 years. Goodman Fielder owns famous brands such as Meadow Lea margarine, Praise mayonnaise and Wonder White breads.

SingPost

SingPost: FY14 net profit missed. 4QFY14 net profit rose 17.7% y/y to $30.7m, while revenue increased 5.9% to $193.3m, as new subsidiaries and e-commerce activities drive growth. Domestic mail volumes continued to decline, marking a second consecutive year. Bottom line was buoyed by a decline in finance expenses due to a bond repayment last year and the absence of a write-off on intangible assets. Management notes that whilst mail volumes is expected to continue a downtrend, operating costs, in particular manpower costs, have and will continue increasing. Nonetheless, it expects a $100m capex over 3 years beginning FY14 would help maintain its service quality standards. Management will also continue its focus on e-commerce in Asia Pacific. E-commerce related revenues made up 26% of FY14 revenue. SingPost is trading at 25.6x annualized 4QFY14 P/E. Final dividend of 2.5¢ proposed, bringing full year DPS to 6.25¢, implying full year yield of 4.3%

SG Market (19 May 14)

US Market: US stocks ended higher on Fri on a late reversal as a buy-on-dip strategy took hold amid mixed economic data. The DJIA advanced 45 pts to 16,491, while the S&P 500 added 7 pts to 1,878 after finding support at the 50-dma and the tech-heavy Nandaq rose 21 pts to 4,091. Housing starts jumped 13.2% in Apr to its highest level since Nov as gains in the volatile multi-family units helped overcome the slack in demand for single family homes. But separate data showed consumer confidence fell this month after reaching a 9-month high in Apr on a gloomy outlook for income growth. Market sentiment was boosted by better-than-expected earnings from retailers Nordstrom (+14.7%) and JC Penny (+16.3%). Telecom shares surged as Verizon (+2.3%) was bought up after Warren Buffet’s Berkshire Hathaway disclosed a stake. Homebuilders edged up 0.4% on the upbeat home construction news. S’pore shares are likely to see a mixed opening with the market searching for new direction following the end of the 1Q results reporting season. The STI is expected to hover between the the 3,285 and 3,220 trading range with the 20-dma at 3,254 providing immediate support. Investors this week will look to the minutes of the latest FOMC meeting due to be released on Wed, as well as possible announcement of Singapore’s new bus business model. Stocks to watch: *SingPost: Q4FY14 net profit rose 17.7% y/y to $30.7m, while revenue climbed 5.9% to $193.3m, as new subsidiaries and e-commerce activities drive growth. Domestic mail volumes continued to drop, marking a second consecutive year of decline. Bottomline was buoyed by lower finance expenses following a bond repayment last year, as well as the absence of one-off write-offs. Final DPS of 2.5¢ proposed, bringing full year payment to 6.25¢. *Wilmar: Board of Goodman Fielder has backed the improved A$0.70/share takeover bid by a Wilmar/First Pacific joint venture and recommends that Goddman’s shareholders vote in favour of the revised proposal. Due diligence is expected to take several weeks. Goodman owns brands such as Meadow Lea, Meadow Fresh, Praise, White Wings, Pampas, Mighty Soft, Helga's, Wonder White and Vogel's. *Olam: Investing US$61m to build a cocoa processing facility in Indonesia in order to leverage on the Indonesian cocoa sourcing network and growing cocoa consumption in Asia. The facility will have an initial capacity of 60,000 tonnes and will produce cocoa butter, cocoa cake and high quality cocoa powder, from Indonesian beans and Olam's farm-gate networks in Africa. *Del Monte Pacific: Issued profit warning that it expects to report a net loss for the Jan-Apr period (financial year end changed from Dec to Apr) due to non-recurring Del Monte Foods acquisition-related expenses, inventory step-up and a one-time write down of fixed manufacturing costs. Group will report its results on of before 14 Jun. *China Kunda: Expects wider net loss for FY14 due to lower gross margins and higher impairment losses on plant and equipment. *SingTel: Announced a share buyback of up to 595,000 shares, between 19-23 May period. *HanKore: Will go ex on 22 May for its 10-into-1 share consolidation.