SembMar - SembMarine target raised by DMG to $5.30 on new orders

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DMG

DMG raises SembCorp Marine’s (S51.SG) target to $5.30 from $4.70 and maintains its Neutral rating.



After SembMarine announced an order win from Noble Corp for two premium jackup rigs valued at US$400 million ($525 million) plus options for four more, the house estimates that SembMarine’s total outstanding order book is now around US$5.3 billion, with deliveries stretching up to 2Q 2013.



DMG raises its FY11-12F EPS estimates by 4.0% and 10% respectively to reflect the new jackup orders from Noble and higher margins on repeat orders.

Says its new SOTP target is valued at 19x FY11 P/E and FY12 P/E.



“We maintain Neutral given the limited upside of 6.0% from its last closing price and current valuation is already reflecting an upcycle for the rig building sector. Key upside risks are better-than-expected new order wins and stronger margins on new orders.” Its shares are up 1.8% at $5.08.

SembMar - SembMarine target lifted to $6.08 by DBS Vickers

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DBS Vickers

DBS Vickers keeps Sembcorp Marine (S51.SG) at Buy and raises the target price to $6.08 from $5.48 to factor in the rig-builder’s latest US$400 million ($525 million) contract win in its valuations.

The house says the new orders from Noble Corp. (NE), which has also awarded options to build four more rigs for another US$800 million, bode well for SembMarine; “this design should strengthen SembMarine’s niche and track record for premium jack-ups operating in a harsh water environment, leading to more contract wins of similar design.”



Expects SembMarine to get more than US$4.5 billion worth of orders next year. Shares are +1.8% at $5.08.

Wilmar - Wilmar target cut to $6.73 from $7.49 by Daiwa

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Daiwa

Daiwa cuts Wilmar’s (F34.SG) target price to $6.73 from $7.49, based on a lower 14.4x FY11 P/E vs 16.2x FY11 P/E previously, to reflect its concerns over the agribusiness group’s venture into the real estate business.



“We believe investors will see this as a strategic divergence from its core (business), will raise concerns that the company is running out of investment opportunities in its core business, and have investors questioning why Wilmar is being used for this project.”

But keeps its Outperform call as it thinks the surprise 3Q10 operating loss in Wilmar’s oilseed division is a one-off event; “we think that the subsequent quarter’s results will validate our view and cause investors to raise their expectations for the FY11 net profit.”



Shares are down 4.4% at $5.66.

SIA - SIA target raised by Goldman Sachs; More sanguine cargo outlook

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: Golman Sachs

Goldman Sachs downgrades the Asian airline sector to Neutral from Attractive following the sector’s outperformance in 2H 2010.



“Our downgrade is underpinned by three key reasons: (1) slower traffic growth momentum expected; (2) rising unit costs to result in margin pressure; and (3) sector appears fairly valued.”



Says investors should be selective in 2011, prefers Buy-rated Cathay Pacific (0293.HK), Singapore Airlines (C6L.SG), and CEA H- (0670.HK) and A-shares (600115.SH).

It raises SIA’s target price to $20.50 from $19.50, to reflect a more sanguine outlook in cargo traffic on houses recent upgrades on global demand and trade growth.



The house expects air cargo traffic to grow at an average of 5% on-year for 2011E and 2012E vs previous assumptions of about 1% on year growth, “resulting in a 10%-11% average increase in 2011-2012E EPS forecasts for non-Chinese carriers.”



SIA is +1.4% at $15.40.





 

Olam - Ivory Coast situation neutral for Olam: Daiwa

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Daiwa

Daiwa keeps Olam International (O32.SG) at Buy with a $3.52 target price. Expects the situation in Ivory Coast -- where there is civil unrest after a disputed election -- will have a neutral impact on Olam.



“We expect Olam to generate more cocoa volume sales, but a thinner unit contribution” in 2Q-3Q FY11. Says Olam would theoretically face a price risk from the change in cocoa prices from the time of the cocoa harvest (typically October-December in Ivory Coast) and the time it can reset its hedge via deliverable futures.

However, says “the conditions in Ivory Coast are volatile now, but at this point, we are not changing our FY11 net-profit forecast, as we think the impact of higher cocoa volumes will offset the lower cocoa unit contribution.”



Adds “we believe in Olam’s business model, and forecast an adjusted net-profit CAGR of at least 25% for FY09-15.” Shares are up 1.6% at $3.09.





 

STXPO 100 - STX Pan Ocean cut to Sell from Neutral by Goldman

Stock Name: STXPO 100
Company Name: STX PAN OCEAN CO., LTD.
Research House: Golman Sachs

Goldman Sachs downgrades STX Pan Ocean (GZ9.SG, 028670.SE) to Sell from Neutral as the company is the most leveraged to weak bulk spot rates within the bulk shipping sector.



“Furthermore, we think there is execution risk on diversification from its core bulk shipping business, hampering earnings recovery. Aggressive expansion in fleet also heightens the risk of over-investment.”

The house cuts its Singapore target price to $11.30 from $17.40 and its Korean target to KRW9,600 ($10.93) from KRW15,100, based on 1.35x 2011 EV/FV. It also lowers 2010-2012 EPS estimates to US$0.37 (49 cents), US$0.76 and US$1.43 from US$0.42, US$1.13 and US$1.37 respectively.



Shares flat at $13.22.

Semb Corp - SembCorp target raised to $5.70 from $5.20 by DBS Vickers

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: DBS Vickers

DBS Vickers raises SembCorp Industries (U96.SG) target price to $5.70 from $5.20 as the “core utilities and marine divisions are both revving up.”



The house says utilities are poised for more growth next year and beyond: “Apart from the first full year contribution from Cascal, which adds some 6% to utilities earnings, other new drivers include SembGas expansion by 26% (2011-12), and Salalah (Phase one in 3Q11; full completion in 2H12).”

The house adds, the second cogen plant on Jurong Island and the coastal power plant in India will start operations in 2013, noting marine, through SembCorp Marine (S51.SG), “will continue to make waves.”



DBSV raises FY12 order wins projection to $5 billion from $4 billion from FY11’s $4.5 billion.



“This, along with adjusted orderbook recognition schedule given shorter lead times, has raised Marine FY11-12 (earnings forecasts) by about 1%.” The house keeps at Buy.



The shares are flat at $5.01.

SembMar - SembMarine target raised to $6.08 by DBS Vickers

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DBS Vickers

DBS Vickers raises SembCorp Marine (S51.SG) target price to $6.08 from $5.48 and keeps Buy rating.



The house says since October, SembMarine has secured US$1.6 billion ($2.1 billion) in orders, reversing its orderbook decline, with orders at about US$5 billion currently from US$4.3 billion a quarter ago.



“Order momentum is gaining traction with SMM seeing a high level of enquiries for newbuild jackups and floaters, as well as production units, and not forgetting its outstanding options for seven newbuild jackups worth about US$1.4 billion.”

DBS Vickers adds, SembMarine’s new proprietary design is well sought after, which will keep it ahead of the competition. DBS Vickers raises FY12 order wins projection to US$5 billion from US$4 billion, compared with FY11’s US$4.5 billion.



“Together with adjusted orderbook recognition schedule on shorter lead times today, plus revised earnings forecasts for 30%-owned Cosco Shipyard Group, results in a 1%-3% adjustment to our FY11-12” forecasts.



Shares are +0.8% at $4.96.

SATS - SATS off 0.4%; Earnings tweaked higher on TFK buy

Stock Name: SATS
Company Name: SATS LTD.
Research House: Phillip Securities

SATS (S58.SG) off 0.4% at $2.83, giving back some of yesterday’s 0.7% gain which came amid a weak market on news the company has completed the acquisition of Japan Airlines International’s entire 50.7% stake in in-flight caterer TFK Corp. for $122 million.



Phillip Securities, which has a Buy call and raises its target to $3.48, says the purchase is a proxy to growth at Japan’s Narita and Haneda airports.

The house raises its earnings estimates for FY11, FY12 and FY13 by 0.6%, 4.4% and 4.6% respectively to account for the acquisition; it estimates TFK will contribute 18.4% of group sales, which could breach the $2 billion milestone in FY12E.



CIMB lifts its FY11-FY13 EPS estimates 1.0%-3.0% to account for the new contributions, but maintains its Underperform call due to rich valuations “and risks of competition in ground handling.”



Its raises SATS’ target to $2.42 from $2.35.

 

SATS - SATS off 0.4%; Earnings tweaked higher on TFK buy

Stock Name: SATS
Company Name: SATS LTD.
Research House: CIMB

SATS (S58.SG) off 0.4% at $2.83, giving back some of yesterday’s 0.7% gain which came amid a weak market on news the company has completed the acquisition of Japan Airlines International’s entire 50.7% stake in in-flight caterer TFK Corp. for $122 million.



Phillip Securities, which has a Buy call and raises its target to $3.48, says the purchase is a proxy to growth at Japan’s Narita and Haneda airports.

The house raises its earnings estimates for FY11, FY12 and FY13 by 0.6%, 4.4% and 4.6% respectively to account for the acquisition; it estimates TFK will contribute 18.4% of group sales, which could breach the $2 billion milestone in FY12E.



CIMB lifts its FY11-FY13 EPS estimates 1.0%-3.0% to account for the new contributions, but maintains its Underperform call due to rich valuations “and risks of competition in ground handling.”



Its raises SATS’ target to $2.42 from $2.35.

 

SIA - DMG optimistic on SIA's China Cargo stake buy

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: DMG

DMG says it’s optimistic on the potential arising from Singapore Airlines’ (C6L.SG) acquisition of a 16% stake worth $65 million in China Cargo Airlines, announced Monday.



“While management has not provided any guidance on the outlook specifics, SIA’s pivotal role in the route optimization of China Cargo Airline’s freighter carriers could potentially see SIA offering direct connectivity between China and Singapore (and Asean for the matter) and Australia, while China Cargo Airlines would be dedicated to traffic in/from the mainland China region.”

Maintains stock’s Buy rating with an unchanged target price of $18.50. The house adds, the cash injection and reconfigured shareholding structure will allow China Cargo Airline to expand its fleet base and re-optimize its routes, to better compete with Cathay’s cargo venture with Air China, which is set to commence next year.



Shares are +1.6% at $15.42.

Pac Andes - DBSV upgrades Pacific Andes to Buy from Hold

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD
Research House: DBS Vickers

DBS Vickers upgrades Pacific Andes Resources (P11.SG) to Buy from Hold and raises its target price to $0.48 from $0.37 on news its subsidiary China Fishery (B0Z.SG) is seeking a dual-listing in Hong Kong by offering up to 200 million new shares.



“With the potential funds raised of (about) U$350 million, we believe CFG could be aggressively looking for acquisition of more quotas/fishing companies.”

DBS says it’s not factored in the potential dilution nor earnings accretion from the deployment of funds, but a successful dual-listing of CFG “would highlight the market value of PAH’s (about) 56% effective holding in CFH.



Currently, the market value of PAH’s stake in CFG is (about) $1.27 billion, which is a 30% premium to its own market cap.” The house’s new target is pegged to 9x FY11F P/E, a 30% discount to CFG’s target P/E and a 20% discount to peers’ average. Pacific Andes shares are +2.9% at $0.355.





 

China Fish - China Fishery +0.9%; Potential re-rating: DBS Vickers

Stock Name: China Fish
Company Name: CHINA FISHERY GROUP LIMITED
Research House: DBS Vickers

China Fishery (B0Z.SG) is +0.9% at $2.28 in light trade, with the prospect of higher valuations from a proposed Hong Kong dual listing partly offset by earnings dilution.



The company is planning a global offering of up to 175 million new share, excluding an over-allotment option for another 25 million shares.

The entire size represents 22.3% of its existing share base.



“While we believe there could be excitement and a potential re-rating from a dual-listing, this is partially offset by the large issue of new shares and limited visibility from the deployment of funds,” says DBS Vickers, which has a Neutral call and a $2.38 target; “we believe management could be aggressively looking for acquisition targets, and most likely pursue more quotas or fishing companies.”



The final offer price will be at a discount of no more than 10% of its Singapore price. Resistance is at the $2.30 52-week high.

Marco Polo - Marco Polo Marine downgraded to Hold by UOB KayHian

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.
Research House: UOB KayHian

UOB KayHian downgrades Marco Polo Marine (5LY.SG) to Hold vs Buy, cuts target to $0.36 vs $0.53 after lowering FY11-FY12 earnings estimates by 33.5%-11.6%; expects margin pressure to persist in FY11.

“We believe FY10 margins were aided by project-specific shipyard work, which we believe to be unsustainable. We also expect weaker ship chartering margins to persist due to higher sale and leaseback expenses.”

Suggests $0.30 entry price.



Tips sharp improvement in vessel charter rates, operating margins as catalysts.



Shares +1.2% at $0.41.

Mermaid - Mermaid Maritime off 4.6%; DBS Vickers cuts FY11 view

Stock Name: Mermaid
Company Name: MERMAID MARITIME PUBLIC CO LTD
Research House: DBS Vickers

Mermaid Maritime (DU4.SG) down 4.6% at $0.415 vs $0.40 intraday low, volume moderate at 1.2 million shares; fall comes after as oil & gas drilling group reports THB456.1 million ($19.9 million) FY loss.

DBS Vickers, which has Hold rating, lowers target to $0.49 from $0.52, says losses larger than expected, despite in-line revenue, due to Subsea division which suffered on back of lower utilisation, day rates, inherently high operating leverage.

Adds, LOIs with Keppel FELS for 2 newbuild jackups likely to be converted to firm orders soon, “however, even if Mermaid were to secure back-to-back charters today, contributions will only kick in from FY13 onwards, providing no support for near to medium term earnings.”



Expects FY11 net loss of THB96 million vs net profit of THB92 million previously. “Despite the weak earnings outlook for FY11, we believe Mermaid’s quality subsea assets should limit downside to current valuations.”

SuperGroup - Super Group initiated at Buy by UOB-KayHian, $1.66 target

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.
Research House: UOB KayHian

UOB KayHian starts Super Group (S10.SG) at Buy with a $1.66 target, based on a PEG valuation of 1.0x, “which we think is justified given its steady but solid growth outlook of 16% CAGR over the next three years.”



It says the company is “a leading instant food and beverage brand owner with a strong position in Southeast Asia. Super also owns more than 10 brands that are targeted at different consumer groups.”

The target implies a 2011F P/E of 16.4x, which is within its historical P/E trading range of 9.1x-17.7x since 2003. The house says the group has a top three market share (for the 3-in-1 coffee segment) in countries such as Singapore, Malaysia, Thailand and Myanmar.



“The group has a solid earnings track record, growing net profit at a 17% CAGR over the past five years.” Its shares are up 2.9% at $1.43.

NOL - NOL cut to Hold from Buy by Phillip; Eyes $2.41

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: Phillip Securities

Phillip Securities downgrades Neptune Orient Lines (N03.SG) to Hold from Buy due to limited upside of 11.6% from current share price to fair value estimate of $2.41, which is raised from $2.36 due to higher estimates.



The house is now more optimistic on the outlook of container shipping industry, while “NOL has also ordered new container vessels, which shows it is confident about the future.”

Raises net profit forecasts for FY2010 and FY2011, FY2012 by 23.4%, 35.8% and 14.3% to US$474 million ($622.7 million), US$621 million and US$678 million respectively.



Expects NOL to announce an annual dividend of $0.05 per share when it reports FY10 results in February, approximately 21.0% of its EPS. No dividend was paid in FY2009.



“As earnings continue to improve, we forecast annual dividends of $0.06 and $0.07 per ordinary share in FY2011E and FY2012E respectively.”



Shares up 0.5% at $2.17.

Yangzijiang - Yangzijiang +0.5%; DMG positive on JZME buy plan

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: DMG

Yangzijiang (BS6.SG) is up 1.1% at $1.91 after the shipbuilder says it has entered an agreement to acquire 100% of Jiangsu Zhongzhou Marine Equipment -- which owns shipbuilding facilities of 350,000 square metre yard space, 430 metre deep water coast line -- for RMB420 million ($82.7 million) (implied P/E of 7.7x and 1.2x NAV).

DMG says the acquisition will enable YZJ “to push for better productivity and the yard space at JZME will provide extra production capacity to YZJ as its existing yards will be full over the next two years with current orders”.



House upgrades the stock to Buy from Neutral, “as we see better long term growth prospect following a slew of yard/land acquisition deals at attractive pricing and potentially stronger new orders from the containership market.”

Sets higher target price of $2.20, saying YZJ is “a good proxy to the Chinese shipbuilding sector.”



$1.97 December high may cap near-term.

ThinkEnv - Think Environmental cut by DMG; Keeps Sell

Stock Name: ThinkEnv
Company Name: THE THINK ENVIRONMENTAL CO LTD
Research House: DMG

DMG cuts Think Environmental (A78.SG) target price to $0.135 from $0.350 and keeps the stock at Sell after the company announced it has entered into a MOA with Mornington Offshore for the proposed investment in the latter which owns 100% stake in a gold exploration company, Societe Emas Mali.

The house says details of the investment in Mornington “remain scanty,” but views the move into offshore gold mining negatively “due to its shift in focus away from the troubled environmental business, and the lack of experience in offshore gold mining in a new country.”

The house also cuts its FY11F-FY12F earnings estimates by 95%-77% respectively due to disappointing delays in operations of Think’s UK-based associates, Think Environmental and Think Greenergy.

Shares are down 3.0% at $0.640.


 

Wilmar - Wilmar cut to Hold by Kim Eng; $6.24 target

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Kim Eng

Kim Eng Securities downgrades Wilmar (F34.SG) to Hold from Buy and cuts its target price to $6.24 from $7.20 (based on 15x FY11 P/E vs 18x FY10 P/E previously).

Flags the risk of margin compression given higher raw material costs due to rising prices of CPO and soybeans.

“The company is a net buyer of both, which feeds into its downstream edible oils and fats business. Depending on Wilmar’s purchase prices, this can impact margins significantly.”

Kim Eng says the plantation group may also be restrained in passing higher costs to consumers due to China’s price controls on food staples. The shares are up 0.7% at $5.95.

STXOSV - STX OSV rises on Goldman's 'buy' initiation

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED
Research House: Golman Sachs

Shares of Singapore-listed shipbuilder STX Offshore and Specialised Vessels <STXO.SI> rose as much as 7.3% on Thursday after Goldman Sachs initiated a "buy" rating and a target price of $1.54 on the stock, traders said.

At 9:24 a.m., STX OSV shares were up 4.6% at $1.15 on a volume of 5.4 million shares.

Goldman said it believes STX OSV will maintain its leading position in offshore and specialised vessels on the back of its research and development as well as geographical edge.

The brokerage added that it increasingly sees STX OSV as a strong proxy to Singapore's offshore and marine sector.

However, Goldman said key risks include slow orders, given the current global order backlog and tight financing for building of new specialised vessals used in the offshore industry, as well as poor execution, which may result in major cost overruns or delivery delays.

XinRen - Xinren started at Buy by DBS Vickers; Well positioned in China

Stock Name: XinRen
Company Name: XINREN ALUMINUM HOLDINGS LTD
Research House: DBS Vickers

DBS Vickers initiates Xinren Aluminium (MN5.SG) at Buy with a $0.70 target.

Says the company is well positioned in the Chinese aluminum industry as an integrated manufacturer with 275,000 tons smelting capacity and 50,000 tons fabrication capacity.

Notes Xinren was profitable in the last three years, unlike some of its peers; "profitability stems from its two cost competitive smelting plants, which were constructed at sites where there is abundant electricity at generally lower tariffs."

Target price pegged to 7.9x FY11F P/E, translates to 2.2x FY11F P/BV, a 38% discount to worldwide peers, adjusting for no equity ownership of the smelting plants, potential risk of policy changes and volatile aluminum prices, and zero dividends.

"Undemanding valuation and poor share performance since listing have excessively factored the risk."

Shares are up 5.5% at $0.480.

 

SIA - SIA downgraded by UOB KayHian: 'Dismal' Nov traffic growth

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: UOB KayHian

UOB KayHian downgrades Singapore Airlines (C6L.SG) to Hold from Buy and cuts its target price to $15.90 from $18.00 after the carrier's November passenger traffic growth was a "dismal" 1.1% on year.

"For the past two months, growth averaged 0.3% and 4Q is a traditional peak period for SIA. This number does not lend much confidence to SIA's growth prospects."

Notes passenger load factor fell 3.0 ppts in November, double October's decline, while cargo traffic slowed as expected. Says the "much vaunted traffic recovery did not materialise...SIA's profit recovery came on the back of a yield recovery, surge in cargo traffic and lower fuel prices.

The ability to sustain these remains questionable, especially in the wake of ongoing competition from low-cost carriers and the Middle Eastern carriers."

Cuts its FY11 net profit forecast by 1.4% and FY12 by 18.5% on lower traffic growth assumptions.

The shares are off 1.2% at $15.28.

Semb Corp - Sembcorp started at Buy; $5.90 target

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: BNP Paribas

BNP Paribas starts Sembcorp Industries (U96.SG) at Buy with a $5.90 sum-of-the-parts target price.

Expects the stock's performance to be driven by its unit SembMarine (S51.SG), which historically has a 90% price correlation with oil prices.

Says orders for SembMarine are likely to increase to $3.3 billion next year from the $1.25 billion trough in 2009, driven by a rig replacement cycle and better returns from its high-specification rigs.

Adds Sembcorp's core utilities business and its defensive energy arm are complemented by its offshore and marine unit.

"We expect the impending capacity expansion for both the energy and water businesses to be completed by 2012-2013, which should help create a more balanced growth profile for the group, with the extended reach potentially creating synergies between its energy, environment and industrial park operations."

The shares are +1.0% at $5.00.

Yangzijiang - DBS Vickers ups Yangzijiang target 9.2% to $2.60

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: DBS Vickers

DBS Vickers raises Yangzijiang's (BS6.SG) target price to $2.60 from $2.38 after rolling over its valuation to blended 2011-2012 earnings and increasing 2011-12 earnings forecasts by 4% and 14% respectively in anticipation of increased orders.

The house expects the China-based shipbuilder to clinch US$1.5 billion ($1.97 billion) of contracts next year, compared with US$600 million tipped previously: "As one of China's largest and best containership builders, Yangzijiang will be a big winner of the expected strong order flow for containerships in 2011."

DBS Vickers keeps a Buy call on the stock.

Shares are flat at $1.90.

CoscoCorp - Cosco target raised by DBS Vickers to $2.76 vs $2.35

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD
Research House: DBS Vickers

DBS Vickers lifts its target price for Cosco (F83.SG) to $2.76 from $2.35 after rolling forward its valuation to blended 2011-2012 earnings to align with its Singapore peers.

Keeps its Buy call and upgrades 2011 and 2012 earnings forecasts by 2% and 17% respectively to assume increased orders.

Expects US$2.5 billion ($3.3 billion) worth of new orders in 2011 compared to its previous US$2.15 billion estimate.

Says Seven Drilling’s order in March for a second rig is a strong vote of confidence in Cosco; “we believe Cosco would be the forerunner of the growing offshore market in China.”

Shares are flat at $2.11.

NOL - CIMB positive on containers; NOL top pick

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED
Research House: CIMB

CIMB maintains its Overweight stance on container shipping, as “order book relative to the existing fleet is light compared to the bulk and tanker sectors.”



Though the house expects an interim dip in freight rates in 2011 after a strong 2010, “rates should move up again in 2012 and beyond as supply growth is set to moderate and demand growth will pick up pace.”

The house’s top pick in the sector is Neptune Orient Lines (NO3.SG), rated Outperform with a $2.63 target. It says NOL will benefit from structural cost reduction when it replaces 150,000 twenty-foot equivalent units of expensive chartered-in ships with cheaper owned tonnage in 2012-2013. NOL shares are flat at $2.19.

Yanlord - Yanlord started at Buy by Samsung Sec, $1.95 target

Stock Name: Yanlord
Company Name: YANLORD LAND GROUP LIMITED
Research House: Samsung Securities

Samsung Securities starts Yanlord Land (Z25.SG) at Buy with a $1.95 target price, based on a 20% discount to a 2011 NAV estimate.

Says the China-based high-end developer continues to surprise the market with its ongoing success with quality project launches.

Expects Yanlord to achieve contracted sales of RMB12.1 billion in 2011 and RMB17.0 billion in 2012, +34% and 41% respectively from 2010; “we attribute Yanlord’s success to its detail-orientated architecture and sales tactics that target end-users rather than speculators.”

Forecasts a 21% net profit CAGR over 2009-2012; “while we are less positive on high-end developers compared to mass-market ones, we recognize that Yanlord’s end-user focus should support the company’s growth under the current policy environment.”

The shares are +0.6% at $1.68.

SMRT - SMRT upgraded to Underperform from Sell by CLSA

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD
Research House: CLSA

CLSA upgrades SMRT (S53.SG) to Underperform from Sell as the shares are now trading nearer to its $2.05 target.

But it says there are still no catalysts in the short-term. It expects the rail operator's new Circle Line to take another 3-4 years to breakeven.

“Our checks indicate only a slight increase in daily Circle Line ridership for October and November.”

It adds, near-term cost pressure is mounting as SMRT adds 220 more trains each week in December to cater to the holiday season and suggests switching to rival ComfortDelgro (C52.SG) for better valuations and prospects.

The shares are +1.0% at $2.03.


 

DBS - DBS's RBS China buy is small but positive: JPMorgan

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: JP Morgan Chase

DBS’ (D05.SG) acquisition of RBS’ China assets is a small but positive transaction which involves the right geography and is part of the Singapore bank’s strategy to generate 30% of group revenue from Greater China, says JPMorgan, which has an Overweight call and a $18.00 target.

“We expect DBS to differentiate itself from the past on two aspects: good execution of plans and passing over unsuitable and costly M&A deals. Hence, we believe DBS could shape up as one of the biggest turnarounds amongst Asian banks in 2011.”

DBS is acquiring RBS’ retail and commercial banking business in Shanghai, Beijing and Shenzhen for an undisclosed amount, giving it up to 25,000 RBS customers. The deal is expected to be completed within 6 months. Shares are down 0.3% at $13.98, tracking the broad market pullback (the STI is down 0.8%). Support is at the November low of $13.70.


 

STXPO 100 - CIMB Neutral on dry bulkers; STX Underperform

Stock Name: STXPO 100
Company Name: STX PAN OCEAN CO., LTD.
Research House: CIMB

CIMB remains Neutral on dry bulk shipping, as it believes the sector “is in for rough seas in 2011-2012 as supply growth is outstripping demand, particularly for capesize.”

The house says the BDI dropped 3.4% last week, and has declined 9.5% over the past month, dragged by the capesize sector where rates ended last week 26% below the Nov. 12 close.

The house adds, higher Chinese steel output and iron ore imports have been overwhelmed by capesize fleet growth. But the house expects a harsh Chinese winter to lift coal imports, and rising Chinese steel production to raise iron ore demand.

“This could prompt Vale to return to the market and increase tonne miles shipped...we may see a freight rate rally in the next few weeks though the overall outlook for 2011 is clouded by high newbuilding deliveries.” Rates STX Pan Ocean (GZ9.SG) at Underperform with a $13.85 target. The shares are up 0.2% at $13.12.


 

CITYDEV - CityDev raised to Hold by RBS; Ups target to $11.90

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED
Research House: RBS

RBS upgrades City Developments (C09.SG) to Hold vs Sell and lifts its RNAV-based target price to $11.90 vs $10.93 to reflect the higher valuations of the developer’s commercial properties and its Millennium & Copthorne (MLC.LN) unit.



“We expect the capital value of CDL’s commercial portfolio to appreciate next year on the back of higher transaction volume and rents.”

Says the hotel arm M&C should continue to do well as global economic conditions improve.



But expects housing-market curbs in Singapore to continue to weigh; “due to continued high liquidity in Asia, we consider it highly probable that the government will introduce harsher regulations to deflate the property bubble.”



The shares +1.2% at $12.98.

Wilmar - OCBC cuts Wilmar target to $6.48 from $7.04

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: OCBC

OCBC cuts Wilmar’s (F34.SG) target price to $6.48 from $7.04, based on 18X FY11 P/E, after lowering FY11 earnings forecast by 8.0% to reflect the risk of a prolonged squeeze on the plantation group’s margins. 

Says margins for its edible oil and oil seeds crushing business could remain under pressure due to the persistent rise in raw material prices; “because its consumer products are typically deemed to be essential food items, it could also face difficulties in passing on the higher raw material prices to consumers” due to price caps imposed by governments to control inflation. OCBC keeps its Hold call. 

The shares are flat at $5.98.

GoldenAgr - Golden Agri upgraded to Buy from Hold by OCBC

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: OCBC

OCBC upgrades Golden Agri-Resources (E5H.SG) to Buy from Hold as house raises its fair value estimate to $0.91 from $0.78, which now provides upside of over 10%.

Says Golden Agri “is likely to see further boost from the continued run-up in CPO prices over the next six months, underpinned by supply-side issues” brought on by weather conditions in Indonesia. House again revises its CPO base assumption, in view of the current supply issues, to US$950/tonne from US$900/tonne.

“This as we expect to see prices edging up even more in early 2011 before dropping off after mid-June 2011.”

OCBC increases its FY11 revenue and core earnings estimates by 5.0% and 9.1% respectively as a result of the CPO price revision, also raises its valuation to 17x FY11E EPS from 16x.

Shares +1.9% at $0.79.

Yangzijiang - Yangzijiang target raised to $2.57 vs $2.15 by CIMB

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: CIMB

CIMB lifts Yangzijiang’s (BS6.SG) target price to $2.57 vs $2.15, based on 14x P/E vs 11x previously, after increasing its 2011 order-win assumption to US$1 billion ($1.3 billion) vs US$800 million.

Adds, the China-based shipbuilder secured US$1.3 billion worth of news orders in 3Q10; “we believe the strength in containership orders could make up for the softer demand for bulk carriers in 2011.”

Says FY11-FY12 consensus earnings estimates for Yangzijiang appear too low; “a blanket upgrade by the Street is very possible as the market could have underestimated YZJ’s profit margins and revenue recognition.” Keeps its Outperform call.

The shares are flat at $1.94.

Gallant - Gallant Venture +6.9%; Still Undervalued: Kim Eng

Stock Name: Gallant
Company Name: GALLANT VENTURE LTD.
Research House: Kim Eng

Gallant Venture (5IG.SG) +6.9% at $0.385, extending its recent gains (+45% since start of November vs STI +1.5%) as interest in Gallant -- which has landbank in Bintan about a quarter of the size of Singapore -- has been revived after Kim Eng initiated the counter at Buy with a $0.75 target on Nov 23.



Then, the brokerage noted “with land sales in Bintan going at 36 times its book value, it is becoming clear that the company’s landbank in the island is grossly undervalued.”

Today, Kim Eng says despite the stock’s 41% rise since initiation, it still maintains its view “that the company is undervalued and if tourist arrivals to Bintan should beat forecasts, the upside to our target price will increase as more developers will come on board to speed up the rejuvenation of the island as a regional tourist hub.”



Orderbook quotes suggest a $0.40 cap.

AscottREIT - Ascott Residence Trust started at Neutral by Credit Suisse

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST
Research House: Credit Suisse

Credit Suisse starts Ascott Residence Trust (A68U.SG) at Neutral with a $1.30 target price. Says the hospitality REIT’s earnings have become more stable after its recent acquisition of 26 serviced apartments in Europe, with 47% of its EBITDA now derived from stable income vs 4% previously.

But expects the overall DPU to increase only 2%-6% in FY10-12, mitigated by the average low single-digit growth in certain European markets like France and Germany, and other Asian markets like Vietnam and China.

Says ART could acquire up to $1 billion worth of assets in China, Singapore, Malaysia and India in the next 12 months, but adds a cash call may be necessary given a limited debt headroom of $140 million and 41% gearing. The REIT is flat at $1.22.

FirstRes - Palm plays tad higher; DMG likes First Resources

Stock Name: FirstRes
Company Name: FIRST RESOURCES LIMITED
Research House: DMG

Palm stocks edge up with Golden Agri (E5H.SG) +0.7% at $0.775 and Indofood Agri (5JS.SG) +1.4% at $2.82; though volume is fairly light as the overall market is generally lackluster and investors are likely to be more cautious on palm plays now that most are near 2.5-year highs.

DMG, which is Neutral on the sector, notes Malaysia’s palm oil inventory started to decline last month as production began on a seasonal downcycle.

“This, plus the still-tight supply in 1H next year, should keep prices relatively firm and give plantation stocks the opportunity to appreciate further,” says analyst Selena Leong.

However, given the recent rainfall, she says a bumper crop is in the making “and we would see strong production from mid-2011 onwards.”

This could end the two-year price upcycle. First Resources (EB5.SG) is DMG’s top sector pick; rated Buy, targeting $2.05; shares are +0.7% at $1.54.

Gallant - Gallant Venture jumps on Kim Eng report

Stock Name: Gallant
Company Name: GALLANT VENTURE LTD.
Research House: Kim Eng

Shares of Singapore’s infrastructure firm Gallant Venture <GLVT.SI> rose as much as 11% on Monday to a 14 month high after a broker issued a report highlighting that its stock is undervalued.

At 0143 GMT, shares of Gallant Venture, which develops resorts in Indonesian island Bintan, were up 8.3% at $0.39 with over 23.7 million shares changing hands.

“If tourist arrivals to Bintan should beat forecasts, the upside to our target price will increase as more developers will come on board to speed up the rejuvenation of the island as a regional tourist destination,” said Kim Eng Securities in a report.

The brokerage has a “buy” rating and target price of $0.75, representing a further 92% upside to its current traded price. 

MapletreeLog - OCBC upgrades S-REIT sector to overweight

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST
Research House: OCBC

OCBC upgrades the S-REIT sector to Overweight from Neutral; says going into 2011, “the persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher.” 



Coupled with hot capital inflows pouring into Asia, says it’s likely that spot rental rates and asset prices will continue to be inflated. “At the same time, many REIT managers are capitalizing on the recovery cycle for further asset enhancement initiatives and acquisitions.” 

Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year. 

Preferred picks among large-caps are Mapletree Logistics Trust (M44U.SG), Buy with $1.00 fair value, Ascendas REIT (A17U.SG), Buy, $1.38 fair value. 

Ascendasreit - OCBC upgrades S-REIT sector to overweight

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST
Research House: OCBC

OCBC upgrades the S-REIT sector to Overweight from Neutral; says going into 2011, “the persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher.” 



Coupled with hot capital inflows pouring into Asia, says it’s likely that spot rental rates and asset prices will continue to be inflated. “At the same time, many REIT managers are capitalizing on the recovery cycle for further asset enhancement initiatives and acquisitions.” 

Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year. 

Preferred picks among large-caps are Mapletree Logistics Trust (M44U.SG), Buy with $1.00 fair value, Ascendas REIT (A17U.SG), Buy, $1.38 fair value. 

MapletreeLog - OCBC upgrades S-REIT sector to overweight

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST
Research House: OCBC

OCBC upgrades the S-REIT sector to Overweight from Neutral; says going into 2011, “the persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher.” 



Coupled with hot capital inflows pouring into Asia, says it’s likely that spot rental rates and asset prices will continue to be inflated. “At the same time, many REIT managers are capitalizing on the recovery cycle for further asset enhancement initiatives and acquisitions.” 

Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year. 

Preferred picks among large-caps are Mapletree Logistics Trust (M44U.SG), Buy with $1.00 fair value, Ascendas REIT (A17U.SG), Buy, $1.38 fair value. 

Ascendasreit - OCBC upgrades S-REIT sector to overweight

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST
Research House: OCBC

OCBC upgrades the S-REIT sector to Overweight from Neutral; says going into 2011, “the persistently low interest rate environment is expected to stimulate the property market and continue to drive prices higher.” 



Coupled with hot capital inflows pouring into Asia, says it’s likely that spot rental rates and asset prices will continue to be inflated. “At the same time, many REIT managers are capitalizing on the recovery cycle for further asset enhancement initiatives and acquisitions.” 

Expects investors’ interest in S-REITs to remain piqued in 2011, being an inflation hedge, but says different sectors may experience different rates of recovery; says “the recovery is likely to be more pronounced for the office sector, followed by the industrial sector,” while retail is likely to remain subdued next year. 

Preferred picks among large-caps are Mapletree Logistics Trust (M44U.SG), Buy with $1.00 fair value, Ascendas REIT (A17U.SG), Buy, $1.38 fair value. 

Consciencefood - Conscience Food up on DBS' 'buy' initiation

Stock Name: Consciencefood
Company Name: CONSCIENCEFOOD HOLDING LIMITED
Research House: DBS Vickers

Shares of Singapore-listed Conscience Food <CSHL.SI>, a manufacturer and seller of instant and snack noodles in Indonesia, rose as much as 8% on Friday after DBS Vickers initiated a “buy” on the firm with a target price of $0.38.

At 10:16 a.m., Conscience Food shares were up 6% at $0.265 on a volume of 25.7 million shares.

“The share price went up because DBS has a ‘buy’ call on the stock. It is an Indonesian company and the market in Indonesia is very big because of the large population size, so there are strong growth prospects there,” said a local trader.

DBS Vickers said the immediate growth driver of Conscience Food, which sells its products across six provinces on Sumatra island, is its expansion into cup noodle production in its 2011 financial year.

The brokerage added that the firm is planning to establish or acquire a production facility around Jakarta, Indonesia’s capital, to reduce reliance on its original equipment manufacturing suppliers and lower production costs.

DBS has valued Conscience Food shares at $0.38, based on seven times the firm’s 2011 financial year earnings, adding that the main risk is its inability to ramp up its upcoming capacity on time.

CapitaMall - CapitaMall started at Overweight by HSBC, target $2.22

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST
Research House: HSBC

HSBC initiates CapitaMall Trust (C38U.SG) at Overweight with $2.22 target price; says the REIT’s stable income profile ensures steady payouts while its asset enhancement initiatives will result in continued rental uplift.

Says the “recent correction (is) an opportunity to go long on Singapore’s oldest REIT.”

Bank also starts coverage on CapitaCommercial Trust (C61U.SG) at Underweight with $1.47 target; says the roll-over of high rentals will likely be a drag over the next 2-3 years and says developers provide cleaner exposure to rising office values.

Adds, the recent run-up in unit price reflects improving fundamentals. CMT is flat at $1.94, CCT is down 1.4% at $1.46.

OSIM - Osim cut to Neutral by DMG on valuation grounds

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD
Research House: DMG

DMG downgrades Osim (O23.SG) to Neutral from Buy as the stock has breached its $1.66 target price.

Says the shares, based on yesterday’s $1.70 close, are now worth 18.5x FY11 P/E, the average multiple from 2006-2008.

Says any re-rating will hinge on whether sales from new outlets and profit margins beat expectations.

Adds, the massage-chair maker’s plan to list in Taiwan is positive as the sale of treasury shares will generate $76 million, which, together with its $54 million net cash, could mean bumper dividends or imply acquisition activity.

The shares are down 3.5% at $1.64.

CapitaComm - CapitaCommercial Trust started at Underweight by HSBC, target $1.47

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST
Research House: HSBC

HSBC initiates CapitaMall Trust (C38U.SG) at Overweight with $2.22 target price; says the REIT’s stable income profile ensures steady payouts while its asset enhancement initiatives will result in continued rental uplift.

Says the “recent correction (is) an opportunity to go long on Singapore’s oldest REIT.”

Bank also starts coverage on CapitaCommercial Trust (C61U.SG) at Underweight with $1.47 target; says the roll-over of high rentals will likely be a drag over the next 2-3 years and says developers provide cleaner exposure to rising office values.

Adds, the recent run-up in unit price reflects improving fundamentals. CMT is flat at $1.94, CCT is down 1.4% at $1.46.

IndoAgri - Indofood Agri Resources cut to Neutral by CIMB

Stock Name: IndoAgri
Company Name: INDOFOOD AGRI RESOURCES LTD.
Research House: CIMB

CIMB downgrades Indofood Agri Resources (5JS.SG) to Neutral from Trading Buy on valuation grounds.

Still, it lifts target price to $3.24 from $3.17, based on 18x forward P/E, after increasing FY11-12 earnings estimates by 3% to account for higher rubber prices for unit London Sumatra (LSIP.JK) and lower taxes.

Says Indofood’s latest move to reduce its stake in London Sumatra to 59.5% from 64.4% will boost its balance sheet, with net gearing falling to 32% from 40%.

Shares were sold for $183.8 million. Stock off 0.4% at $2.88.

Consciencefood - Consciencefood started at Buy by DBS, $0.38 target

Stock Name: Consciencefood
Company Name: CONSCIENCEFOOD HOLDING LIMITED
Research House: DBS Vickers

DBS Vickers starts Consciencefood Holding (L1D.SG) at Buy with a $0.38 target based on 7x FY11 P/E.

Says the immediate growth driver for the Indonesia-based instant noodles maker is its expansion into cup noodle production in FY11.

Adds, cup instant noodles have higher selling prices and profit margins; “as a food manufacturing company, we see very little risks apart from natural disasters and contamination issues. The main risk to our earnings forecast is CSF’s inability to ramp up its upcoming capacity on time.”

Cites CSF’s extensive network of 55 distributors in Indonesia and string of international networks as a key strength. Shares +11.1% at $0.25.

TigerAir - Tiger Airways started at Sell by Phillip Securities

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED
Research House: Phillip Securities

Phillip Securities starts Tiger Airways (J7X.SG) at Sell with a $1.65 target. Says the stock is 1 of the most expensive for airlines as it trades at 17x forward P/E and 6x P/B.

Says the low-cost carrier market is highly competitive, making it hard for Tiger to price tickets at a premium.

Adds Tiger’s cost advantage in Singapore over other LCCs is no longer as strong after the recent price hike announced by the Changi Airport Group.

Tips jet fuel costs as the wild card as they make up most of Tiger’s operating expenses; “the key to the profitability of Tiger Airways would be the ability to pass on the fuel costs to end-customers. The other components of the operating costs are fairly predictable and generally within the control of the company.”

Shares flat at $1.86.

Sunmart - Asiasons starts Sunmart at Buy, $0.33 target

Stock Name: Sunmart
Company Name: SUNMART HOLDINGS LIMITED
Research House: Asiasons WFG

Asiasons WFG Securities starts Sunmart Holdings (C2J.SG) at Buy with a $0.33 target price.



Expects China-based maker of spray pumps and bottles to benefit from robust demand from country’s pharmaceutical and fast-moving consumer goods sectors; “fast-moving consumer goods as well as pharmaceuticals are showing strong growth rates within China and internationally. This would be advantageous to Sunmart’s operations” as they derive about 55% of sales from overseas and 45% locally. 

Says Sunmart’s recent proposal to dual list in South Korea will give it access to funds to buy equipment and lower debt; “being in Korea opens doors for the group to tap potentially new customers and thus widen its geographical reach.” It’s shares are +9.8% at $0.225.

Mewah - Mewah started at Buy by Nomura, $1.30 target

Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.
Research House: Nomura

Nomura starts Mewah International (MV4.SG) at Buy with a S$1.30 target price. Says the palm oil refiner’s large scale and risk management capability help it achieve stable margins.

Cites company’s strong distribution network in Africa’s downstream business as one of its key strengths, given that more than 40% of consumer pack earnings have come from the continent over the past 3 years.

Forecasts 17% earnings CAGR over the FY10-FY13 period, driven by volume and margin growth. House says Mewah should be able to take on as much as US$500 million ($658 million) in loans to fund expansion.

Adds, valuations are attractive as the stock trades at 10.2X FY11 P/E vs Wilmar’s (F34.SG) 16.4x, Ruchi Soya’s (500368.BY) 13.9x.

Shares +2.7% at S$0.995.

Wilmar - Wilmar cut to Neutral by Goldman; Target $6.25

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Golman Sachs

Goldman Sachs downgrades Wilmar (F34.SG) to Neutral from Buy, and cuts its target to $ 6.25 from $ 7.00 as it now values company against the Southeast Asian commodities sector instead of the plantations sector.

“The Asean plantations sector may not be as good of a comparable for Wilmar as its earnings are not as highly leveraged to CPO prices.”

Says Wilmar’s cooking oil margins in China may come under pressure in the near term as Beijing has told major producers not to raise selling prices for the next 4 months.

Adds Wilmar’s expansion in China’s flour and rice markets may yield thin margins in the near future as it focuses on building up its market share to achieve a critical mass.

Expects Wilmar’s sugar plantation investments to make a significant contribution only after 2012. Shares down 1% at $ 5.98.

Olam - Olam started at Neutral by Goldman; $3.20 target

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Golman Sachs

Goldman Sachs starts Olam (O32.SG) at Neutral with a S$3.20 target price. Says the commodity trader’s ROE peaked at 30% in FY08 and has since de-rated to 17% in FY09-10.

Notes while the company is selectively investing in upstream and midstream businesses to boost margins and restore ROE, this may take time to mature, with upsteam earnings subject to agriculture commodity prices.

“Olam tends to sell on a forward basis for a long duration which we think may reduce the correlation with spot prices in the short term.”

Shares –0.6% at $3.19.

Noble Grp - Noble Group started at Buy by Goldman with $2.60 target

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED
Research House: Golman Sachs

Goldman Sachs starts Noble Group (N21.SG) at Buy with a $2.60 target price, implying 15.3x FY11 P/E.

Says commodity supply chain manager could benefit from a strong 2011 macro outlook as pro-cyclical commodities like coal and oil, plus metals are expected to account for 60% of next year’s earnings.

Expects oil and gas volumes to get a boost next year, driven by Noble’s recent acquisition of Semfuel and Northville oil storage and distribution assets.

Says recently-acquired US-based Sempra Energy Solutions could also start contributing from 2011. Adds, valuations are attractive with the stock trading at 12.8x FY11 P/E, lowest among its Singapore peers.

Shares +1.4% at $2.14.

Mun Siong - Mun Siong Eng started at Buy by DMG, $0.28 target

Stock Name: Mun Siong
Company Name: MUN SIONG ENGINEERING LIMITED
Research House: DMG

DMG starts Mun Siong Engineering (MF6.SG) at Buy with a $0.28 target price.

Says the provider of mechanical and electrical engineering services is well placed to ride the strong growth in petrochemical industry in Singapore, where oil giants Shell and Exxon Mobil have set up new petrochemical plants.

“Domestic players with a strong track record like Mun Siong Engineering are well-positioned to tap the new wave of downstream investments coming into Singapore.”

Forecasts 25.9% net profit CAGR over FY09-11, driven by maintenance contracts from major oil companies. Says the company is now in a stronger financial position to pursue M&A opportunities after its October listing. Shares +5.6% at $0.19.

ARA - Credit Suisse raises ARA Asset Management target to $1.74

Stock Name: ARA
Company Name: ARA ASSET MANAGEMENT LIMITED
Research House: Credit Suisse

Credit Suisse lifts ARA Asset Management (D1R.SG) target to $1.74 from $1.18 after increasing FY10-FY12 EPS estimates by 10%-25% to account for higher acquisition fees and a larger asset portfolio. 

Expects its acquisition of a one-third stake in phase 1 of the Marina Bay Financial Centre by Suntec REIT (T82U.SG), which ARA manages, to boost ARA’s assets-under-management by 10% to $16.1 billion by end-2010 and boost its recurring annual fee income by $7.7 million from FY11. 

Says ARA will benefit from the upswing in property cycles in the 4 markets it operates in: Singapore, HK, China, Malaysia. Keeps its Outperform call. The stock is +0.7% at $1.45. 

JMH 400US$ - Jardine Matheson, Jardine Strategic targets raised by CLSA

Stock Name: JMH 400US$
Company Name: JARDINE MATHESON HLDGS LTD
Research House: CLSA

CLSA lifts target prices for Jardine Matheson (J36.SG) to US$54 ($70.5) vs US$52 based on 20% discount to NAV, Jardine Strategic (J37.SG) to US$31 vs US$30 on 30% discount to NAV.



Keeps both at Outperform; “steep NAV discounts and low valuation multiples renders the risk-reward positive for these holding companies.” Says earnings prospects hinge on sustainability of growth in Southeast Asia, “which seems plausible at present”.

Says stronger Asian currencies bode well for companies, which report results in USD. Adds hotel unit Mandarin Oriental (M04.SG) still benefiting from recovery off low base due to fallout from global financial crisis, while growth at retail arm Dairy Farm (D01.SG) “typically surprises on the upside during inflationary periods”. Matheson off 2.6% at US$44.80, Strategic off 1.3% at US$26.52.

SIA - SIA kept at Overweight by HSBC; Sector top pick

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: HSBC

HSBC says Singapore Airlines (C6L.SG) one of top picks among Asian conglomerates, transport stocks, as remains “positive on passenger driven airlines, hotels and conglomerates leveraged to Asian consumption.”

Rates SIA at Overweight with $19.00 target; “we forecast our Asian airline coverage will generate an aggregate 2010 recurring profit of US$6.8 billion ($8.9 billion), a sharp rebound from recurring losses in 2009. The earnings recovery has been driven by a strong pick-up in passenger and cargo demand which has boosted load factors and yields.”

Adds, while airline outlook remains good, tips 2011 profit growth will stall, largely as expects cargo profit to fall on year; but says SIA more passenger focused, has significant net cash balances, is best value Asian airline.



Notes, at target SIA would trade at 12x FY12E P/E, 1.4x P/BV, provide FY12E dividend yield of 5%; “compelling value.” Shares off 0.3% at $15.78.

Kep Corp - DMG Keeps Keppel at Buy, SembMarine at Neutral

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: DMG

DMG keeps Buy on Keppel Corp (BN4.SG), US$12 ($15.7) target, Neutral on SembMarine (S51.SG), $4.70 target (on sector leading valuation at 17.4X FY11F EPS) after Upstream article says Petrobras disqualifies two highest bidders for seven-drillship package in 28-rig tender; five yards still in hunt for up to four packages of 7 drillships; Keppel, SMM bids were third lowest, fourth lowest respectively. 

Says Alusa-Galvao consortium could drop out of race if they fail to convince Petrobras of their plans, will be positive for other bidders. “Keppel and SMM are in contention to win the seven drillships package given the ranking of their bids, assuming Petrobras awards the full four packages or more.” 

Makes no changes to EPS forecasts “as we have priced in both yards winning the seven-drillships package and earnings contribution from FY12 onwards.” SMM off 0.8% at $4.980, Keppel down 0.7% at $10.82.

SembMar - DMG Keeps Keppel at Buy, SembMarine at Neutral

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DMG

DMG keeps Buy on Keppel Corp (BN4.SG), US$12 ($15.7) target, Neutral on SembMarine (S51.SG), $4.70 target (on sector leading valuation at 17.4X FY11F EPS) after Upstream article says Petrobras disqualifies two highest bidders for seven-drillship package in 28-rig tender; five yards still in hunt for up to four packages of 7 drillships; Keppel, SMM bids were third lowest, fourth lowest respectively. 

Says Alusa-Galvao consortium could drop out of race if they fail to convince Petrobras of their plans, will be positive for other bidders. “Keppel and SMM are in contention to win the seven drillships package given the ranking of their bids, assuming Petrobras awards the full four packages or more.” 

Makes no changes to EPS forecasts “as we have priced in both yards winning the seven-drillships package and earnings contribution from FY12 onwards.” SMM off 0.8% at $4.980, Keppel down 0.7% at $10.82.

MapletreeInd - DBS starts Mapletree Industrial Trust at Buy

Stock Name: MapletreeInd
Company Name: MAPLETREE INDUSTRIAL TRUST
Research House: DBS Vickers

DBS Vickers starts Mapletree Industrial Trust (ME8U.SG) at Buy with $1.16 target price. Forecasts 10% DPU CAGR over FY11-13 for Singapore-focused industrial REIT, underpinned by potential for higher rents, occupancy, as current portfolio "under-rented", with average rents 18%-36% below market rates due to existing rental caps which expire June 2011. 

Expects occupancy to rise to 92.7% by end-FY12 from 90.9% currently. Says current 38% gearing allows MIT to take on another $265 million of debt to fund expansion before reaching optimal 45% gearing level; “apart from relying on its sponsor for growth, we believe there are other (acquisition) opportunities given that 73.6% of the aggregate single- and multi-user flatted factories and business parks in Singapore are owned by fragmented private owners, owner-occupiers or individual investors.” 

REIT flat at S$1.06. 

Venture - Venture Corp fair value raised to $12.10 by OCBC

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED
Research House: OCBC

OCBC raises Venture Corp. (V03.SG) fair value to $12.10 from $10.73 as the house rolls forward 15x valuation from blended FY10F/FY11F EPS to FY11F EPS; keeps at Buy.

“After recently posting a fairly decent set of 3Q10 results, Venture Corp expects to see sequential revenue growth going into its seasonally strong quarter, noting most of its customers have maintained their positive sentiment.”

In the medium term, says the company remains driven to achieving profitable growth, will continue to make a push for higher-margin ODM business; it also intends to build up its solutions/enterprise segment with its own Intellectual Properties.

“Besides being encouraged by the group’s business transformation into an ODM player, which we believe should herald a new era for the group, we also have confidence in its ability to execute and deliver on its ‘blue ocean strategy.”

Names stock a top pick in Singapore technology space; shares are +0.9% at $9.16.

Allgreen - Allgreen Properties cut to Underperform by CIMB

Stock Name: Allgreen
Company Name: ALLGREEN PROPERTIES LTD
Research House: CIMB

CIMB downgrades Allgreen Properties (A16.SG) to Underperform from Neutral on view stock lacks catalysts despite valuations being undemanding. Keeps target at $1.25.



Says as residential development remains central to Allgreen’s business, housing-market curbs in Singapore “remain a threat”.

Tips every 10% fall in residential prices to shave 5% off RNAV estimate.



Expects company to be passive on acquisition front in 2011; “past participation in government land tenders had not yielded rewards for the group. We believe it is likely to tap its existing land bank for future launches.”



Shares flat at $1.16.

Kep Corp - Phillip starts Keppel Corp at Buy; $12.52 target

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: Phillip Securities

Phillip Securities initiates Keppel Corp. (BN4.SG) at Buy with $12.52 target; “we feel that the outlook for Keppel is good as the increase in oil prices has led to more orders for oil rigs and production platforms. We also expect Keppel to win orders to build some of the 28 rigs for Petrobras.” 

Adds property, infrastructure businesses expected to perform well in next 3 years; “with strong operating cash flows from its various businesses, we anticipate Keppel will pay dividends of $0.41, $0.44 and $0.46 per ordinary share in FY10, FY11, and FY12.” 

Tips on-year increase in net profit of 9.6%, 2.3%, 4.0% for FY10, FY11, FY12 respectively from FY09 net profit of $1.265 billion. Shares last +0.7% at $10.90. 

StraitsAsia - Nomura cuts Straits Asia Resources to reduce

Stock Name: StraitsAsia
Company Name: STRAITS ASIA RESOURCES LIMITED
Research House: Nomura

Nomura downgrades Straits Asia Resources (AJ1.SG) to Reduce from Buy, cuts target to $2.21 from $2.80 after lowering FY11, FY12 earnings estimates by 27%, 10% respectively to reflect lower volumes from Sebuku mine, higher costs next year.

“We believe the market is ignoring operational risks - both on volumes and margins (cost increase on oil) - and there exists significant downside risks to street estimates and valuations,” says house. 

Adds, even if Indonesia-based coal miner gets regulatory approval for work on Sebuku mine over next 2-3 months, it won’t be able to mine significant volumes from Northern leases area in FY11. 

Says recent price rally driven more by optimism than fundamentals; “Northern leases permits remain a moving target, and we’re building in another few months delay.” 

Shares flat at $2.75. 

F &amp; N - Fraser & Neave target raised to $7.24 by Nomura

Stock Name: F & N
Company Name: FRASER AND NEAVE, LIMITED
Research House: Nomura

Fraser & Neave (F99.SG) off 1.7% at $6.25, pulling back after Thursday’s 2.6% gain.



Share price has retreated around 8.8% since mid-November high of $6.85, which Nomura puts down to dampened sentiment towards stock due to rising input costs, “but we believe stronger volume growth and the ability to pass on higher costs will mitigate margin pressures.”

Keeps Buy rating, raises target to $7.24 from $7.18; expects F&B business to show good growth as expands footprint in Asean; says acquisition of 23% stake in Cocoaland and King’s Creameries will broaden product range.

On property front, says with successful launch of Esparina project (87% sold), group has been acquiring more sites to maintain healthy pipeline. Ups FY11, FY12 earnings estimates by 2.2%, 0.9% respectively.



Modest volume suggests further downside unlikely beyond $6.21 intraday low.

Genting SP - Genting companies up on DBS Vickers report

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC
Research House: DBS Vickers

Shares of casino operators Genting Singapore <GENS.SI> and Genting Hong Kong <GENH.SI> rose on Friday after DBS Vickers said the Singapore gaming sector is poised for strong growth on the back of junkets and entry into new markets.



Genting Singapore shares rose as much as 2.5% and Genting HK gained as much as 3.6%.

At 10:36 a.m., Genting Singapore shares were up 2% at $2.08 on a volume of 79.1 million shares. Genting HK shares were trading at $0.435 with 10.5 million shares changing hands.



“DBS has a favourable report on the gaming market today, which shows that there is still room for growth,” said a local trader.



However, another trader expressed reservations about the ability of casino operators to sustain performance.

“I have some reservations because looking at the region there are a couple of mixed reports at the moment. The question is whether we are having a seasonal effect or continued growth into early next year,” he said.



DBS Vickers maintained its “buy” call on Genting Singapore with a target price of $2.70, adding that the company remains the market leader with 53% share of net revenue and 52% of EBITDA.

CNA - CNA Group downgraded to Sell by DMG; Tips FY10 loss

Stock Name: CNA
Company Name: CNA GROUP LTD.
Research House: DMG

DMG downgrades CNA Group (5GC.SG) to Sell from Neutral, cuts target to $0.19 from $0.23; following divestment of 49.9%-owned Standard Water, (tips transaction results in loss of around $19.8 million, accounted for FY10).



“We believe CNA will be mired in losses to the tune of $12.2 million in FY10. While we expect it to return to the black in FY11, it will likely be below our initial forecast of $6.4 million.”

Cuts FY11 earnings forecast to $5.4 million (down 14.8%) to factor in potentially weaker-than-expected core earnings (3Q10 earnings were below expectations, at loss of $1.5 million).



“On the bright side, CNA may declare a special dividend for shareholders, with the sale proceeds. Net gearing would be reduced to around 0.01x and the excess cash would be channelled back into the business. However, investors will probably take a while before revisiting this stock.”



Shares off 4.3% at $0.22.

Wilmar - Wilmar +0.8%; modest impact from FFM buy - Nomura

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Nomura

Wilmar’s (F34.SG) 20% stake investment in PPB Group’s (4065.KU) unit FFM in bid to expand flour milling business doing little to boost investor interest. Stock +0.8% at $6.06 but volume paltry as underlying concerns over plantation group’s China business still persist given Beijing’s bid to rein in food inflation.

Wilmar will pay MYR378.1 million ($156.8 million) for stake in FFM, which operates 4 flour mills in Malaysia, 1 each in Vietnam, Thailand, Indonesia.

Nomura, which has Buy call with $7.60 target, tips modest earnings contribution of just US$5 million($6.54 million)-US$6 million in FY11 for Wilmar, but says acquisition “strategically positive” in long-term as complements company’s existing distribution franchise in China. 

Separately, Wilmar plans to sell to FFM 20% stake in some of its China units, which operate in same business as FFM. Selling price yet to be determined. Resistance tipped at this week’s $6.15 peak. 

Wilmar - Wilmar target cut by Morgan Stanley; Tips 1Q11 next catalyst

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Morgan Stanly

Morgan Stanley cuts Wilmar International (F34.SG) target price to $6.80 from $7.45, keeps Overweight; but says next catalyst is 1Q11.

Notes industry midstream margins have held up well despite rising feedstock costs, outlook for CPO refining looks solid, outlook for Chinese soybean crushing margins worse than before, but does not expect collapse.

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Kep Corp - OCBC overweight O&G service sector; Tips Keppel, SembMarine

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: OCBC

OCBC expects oil & gas companies with expertise in deepwater production to fare better vs those limited to shallow waters in 2011.



“The demand for premium deeper water jack-ups has returned, and Keppel Corp. (BN4.SG) and SembCorp Marine (S51.SG) are likely to see more of such high-spec orders.”

Says push for even more technical assets likely to continue, benefiting companies that do not scrimp on R&D, outlook for smaller offshore support vessels (anchor handling tug supply vessels, platform supply vessels) dimmer than construction vessel segment, given oversupply situation; “however, charter rates of larger and more sophisticated supply vessels are expected to be more resilient given still relatively healthy demand and fewer vessels available.”



Keeps Overweight on sector, says oil prices likely to remain high enough to sustain capex while financing still improving. Preferred picks: Keppel, Buy, $12.50 fair value, SembCorp Marine, Buy, $5.70 fair value.

SembMar - OCBC overweight O&G service sector; Tips Keppel, SembMarine

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: OCBC

OCBC expects oil & gas companies with expertise in deepwater production to fare better vs those limited to shallow waters in 2011.



“The demand for premium deeper water jack-ups has returned, and Keppel Corp. (BN4.SG) and SembCorp Marine (S51.SG) are likely to see more of such high-spec orders.”

Says push for even more technical assets likely to continue, benefiting companies that do not scrimp on R&D, outlook for smaller offshore support vessels (anchor handling tug supply vessels, platform supply vessels) dimmer than construction vessel segment, given oversupply situation; “however, charter rates of larger and more sophisticated supply vessels are expected to be more resilient given still relatively healthy demand and fewer vessels available.”



Keeps Overweight on sector, says oil prices likely to remain high enough to sustain capex while financing still improving. Preferred picks: Keppel, Buy, $12.50 fair value, SembCorp Marine, Buy, $5.70 fair value.

Yangzijiang - UOB KayHian starts Yangzijiang at Buy, $2.37 target

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: UOB KayHian

UOB KayHian starts Yangzijiang (BS6.SG) at Buy with $2.37 target price, based on 15X 2012 P/E. Says China-based shipbuilder 1 of few yards spared order cancellations during global financial crisis, thanks to its good order execution. 

Expects orders to soar as container shipping market recovers; “if the freight rates in the end-year lull season are beyond market expectations, we may see a consistent flow of new containership orders and YZJ will be a beneficiary.” 

Expects new orders worth US$1.60 billion ($2.1 billion) for 2011, US$1.72 billion for 2012 vs US$979 million so far this year. Shares +1.6% at $1.86. 

 

Boustead Sp - Boustead Singapore cut to Hold by DBS Vickers

Stock Name: Boustead Sp
Company Name: BOUSTEAD SINGAPORE LIMITED
Research House: DBS Vickers

DBS Vickers downgrades Boustead Singapore (F9D.SG) to Hold from Buy, trims target price to $1.00 from $1.10, which translates to 9.6x FY12 P/E.

Changes reflect sluggish pace of contract wins, with $100 million worth of orders secured in current FY vs house’s $400 million forecast.

Says while enquiries on engineering group’s services “still very robust”, potential clients slow to conclude negotiations.

Adds 2H11 performance likely to be affected by further delays in Boustead’s Libyan township project, secured in 2006 but little progress achieved so far due to “severe red tape”.

Shares last down 1.8% at $1.10.

OSIM - Osim started at Buy by IIFL, $1.80 target

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD
Research House: IIFL

India Infoline (IIFL) Securities starts Osim (O23.SG) at Buy with $1.80 target price, implying 21.3X FY11 P/E, 17.0x FY12 P/E.



Says massage-chair maker well placed to deliver 45% profit CAGR over FY09-12, driven by focus on more profitable markets and products, addition of 75 new Osim stores and 85 new Richlife outlets annually in China from FY10-12, improved margins on cost efficiencies and lower taxes.

“The growing network of Osim stores spread over a larger number of cities (in China) would help the group take advantage of the rising income base across the country.”



Expects Richlife brand, which sells health and nutrition supplements, to benefit from trend of greater lifestyle awareness; “although the concept is quite prominent in the US, the idea is still catching up in emerging economies like India and China.”



Shares +0.7% at $1.45.

SGX - SGX kept at Outperform by Daiwa, cuts target

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: Daiwa

Daiwa keeps Singapore Exchange (S68.SG) at Outperform; says share-price decline of 9.3% since merger proposal with ASX (ASX.AU) “has more than priced in the key negative factors, such as ROE deterioration, increased gearing, and a potential market-share loss for ASX.”



Continues to like SGX as merger should improve operating efficiency, “we also believe an enlarged market could make SGX more attractive as a fund-raising location for companies.”

Lowers target to $9.76 from $10.60, due to change in valuation approach to discounted free-cash-flow-to-equity, revises up EPS forecasts by 23% for FY12, FY13 to reflect estimated financial impact of merger.



“In addition, SGX offers a dividend yield of 4.3%-4.5% on our FY12-13 DPS forecasts, revised up by about 10% as a result of the merger.” Shares off 0.5% at $8.58.