Singapore Stocks (SGX) Price Target: March 2011

Thursday, March 31, 2011

DBS ups Biosensors to buy from hold, target $1.35

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.
Research House: DBS Vickers

DBS Vickers has upgraded Singapore’s medical technology firm Biosensors International (BIOS.SI) to buy from hold and raised its target price to $1.35 from $1.13.

DBS raised its price target as it expects the firm to receive approval for one of its stents, the BioMatrix, from Japan in the next 12 months, which would be a catalyst for its share price.

“Apart from Japan, we believe Biosensors is making progress in other operational areas through market share gains or penetration, flanked by new product launches,” said DBS in a report

At 10:55 a.m., shares of Biosensors were 1.7% higher at $1.17. They have gained 4.5% since the start of the year.

DBS ups Biosensors to buy from hold, target $1.35

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.
Research House: DBS Vickers

DBS Vickers has upgraded Singapore’s medical technology firm Biosensors International (BIOS.SI) to buy from hold and raised its target price to $1.35 from $1.13.

DBS raised its price target as it expects the firm to receive approval for one of its stents, the BioMatrix, from Japan in the next 12 months, which would be a catalyst for its share price.

“Apart from Japan, we believe Biosensors is making progress in other operational areas through market share gains or penetration, flanked by new product launches,” said DBS in a report

At 10:55 a.m., shares of Biosensors were 1.7% higher at $1.17. They have gained 4.5% since the start of the year.

United Overseas Bank rated 'buy' by DMG

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD
Research House: DMG

DMG & Partners Securities in a Mar 30 research report says: "UOB will issue $1 billion of 3.45% subordinated notes, which qualify as Lower Tier 2 capital. We estimate this will raise its proforma December 2010 total CAR of 19.8% by 0.9 ppt.

Renewable Energy Asia Group rated 'buy' by DMG

Stock Name: RenewableEne
Company Name: RENEWABLE ENERGY ASIA GRP LTD
Research House: DMG

DMG & Partners Securities in a Mar 29 research report says: "Renewable Energy Asia Group (REAG), and its Executive Director, Lam Tak Shing (LTS), have inked a second supplemental agreement to the sale and purchase agreement in relation to the proposed disposal of fastening business which will be acquired by LTS.

Singapore Airport Terminal Services rated 'buy' by OCBC

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

OCBC Investment Research in a Mar 29 research report says: "Shares of SATS Ltd (SATS) have fallen by 9% (vs. STI -4%) since the group released its 3Q11 results, weighed down by concerns over food price inflation and the threat of heightened competition arising from the entry of a third ground handler at Changi Airport.

Asiatravel.com Holdings rated 'hold' by DBS

Stock Name: Asiatravel
Company Name: ASIATRAVEL.COM HOLDINGS LTD
Research House: DBS Vickers

DBS Vickers Securities in a Mar 30 research report says: "Despite continued growth in room night bookings in FY2010, earnings declined by more than 70% as the Group chose to diversify its business offerings.

Singapore Exchange rated 'buy' by DMG

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

DMG & Partners Securities in a Mar 28 research report says: "March 2011 average daily turnover (ADT) of ~$1.58 billion is below our expectations, and we cut our FY2011 ADT assumption to $1.74 billion, from $1.78 billion. This assumes 4QFY11 ADT of $1.91 billion, which is fair considering the improving market sentiments after the recent Japan earthquake concerns.

Biosensors International Group rated 'buy' by OCBC

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.
Research House: OCBC

OCBC Investment Research in a Mar 28 research report says: "Biosensors International Group (BIG) announced that it has obtained approval in-principle from SGX for the private placement of 216,325,800 new ordinary shares to Atlantis Investment Management Hong Kong Ltd and Ever Union Capital Ltd.

Wednesday, March 30, 2011

OCBC ups Sembcorp Marine to $6.30 vs $6.17

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

OCBC Investment Research has raised its target price for Sembcorp Marine (SCMN.SI), the world’s second largest oil rig builder, to $6.30 from $6.17 and kept its buy rating.

OCBC raised its order wins estimate for Sembcorp Marine this year to $4.5 billion from $4 billion after the firm announced its Jurong shipyard subsidiary will build two jack-up rigs for a total of US$427.6 million ($539.3 million).

The deal was part of 4 options that Noble Corp has signed with the company in December.

Currently Sembcorp Marine has eight jack-up rig options worth about $2 billion, OCBC said.

“With increasing rig prices, we think Sembcorp Marine’s customers may face increasing pressure to exercise their options earlier rather than later,” it said in a report.

The brokerage has also raised its earnings estimates for Sembcorp Marine by 1.5-2% for the next two years.

At 9:33 a.m., shares of Sembcorp Marine rose 0.52% to $5.77, and have gained 7.4% since the start of the year.

Tuesday, March 29, 2011

Olam International rated 'buy' by DBS

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: DBS Vickers

DBS Vickers Securities in a Mar 28 research report says: "Pursuant to the 1.3 million MT p.a. Gabon urea project previously announced on Nov 13, 2010, Olam today announced that it has now signed the Implementation and Assignment Agreement and Definitive Gas Supply contract with Republic of Gabon for a cumulative quantity of 0.75 trillion cubic feet (TCF) of natural gas for this phase of the project for a period of 25 years at a competitive fixed price.

Super Group rated 'buy' by Kim Eng

Stock Name: SuperGroup
Company Name: SUPER GROUP LTD.
Research House: Kim Eng

Kim Eng Research in a Mar 28 research report says: "Super and Petra Foods will invest $1.5 million initially in a 40:60 JV to market and distribute instant 3-in-1 coffeemix and other convenience beverages in Indonesia.

Mapletree Logistics Trust rated 'buy' by DBS

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST
Research House: DBS Vickers

DBS Vickers Securities in a Mar 28 research report says: "MLT announced that they have acquired Hiroshima Centre in Chugoku, western Japan for JPY 7.3 billion ($114.2 million). Initial yield is estimated to be c.7% (in line with its recent Japanese transactions which were done in the region of 7.0%-8.6%) and above its current implied yields of 6.5%.

Cosco Corporation (S) upgraded to 'neutral' by CIMB

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

CIMB in a Mar 28 research report says: "Cosco Nantong has surprised us by signing a letter of intent (LOI) with Sevan Marine to construct two Sevan 650 drilling units for US$525 million each with options for two more; we were originally expecting a contract award for only one unit. Signing of the final contracts is subject to the listing of Sevan Drilling.

Genting Singapore rated 'reduce' by Nomura

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC
Research House: Nomura

Nomura Research in a Mar 28 research report says: "Following the recent pullback post its 4Q earnings, GENS' share price has staged a mild recovery, mainly tracking the strong recovery in the share prices of global gaming companies. With earnings unlikely to surprise going forward, we see its share price trapped in a narrow trading range.

Lorenzo International rated 'increase exposure' by SIAS

Stock Name: Lorenzo
Company Name: LORENZO INTERNATIONAL LIMITED
Research House: SIAS

SIAS Research in a Mar 29 research report says: "Lorenzo is a vertically integrated furniture provider. We expect Lorenzo's revenue and net attributable profit to grow at a CAGR of 11.3% and 36.1% respectively over the next three years.

JPMorgan ups China Minzhong to $2 vs $1.70

Stock Name: ChinaMinzhong
Company Name: CHINA MINZHONG FOOD CORP LTD
Research House: JP Morgan Chase

JPMorgan has raised its target price for Singapore-listed vegetable producer China Minzhong (CMFC.SI) to $2.00 from $1.70 and kept its overweight rating.

JPMorgan has raised its net profit estimates by 3.6% for this year, and by 7.5% for 2012, as it raised its gross profit margin assumptions for processed and fresh vegetables.

The brokerage noted that China Minzhong's strategies of focusing on high-margin vegetable products and expanding its processing capacity rapidly sets it apart from competitors.

At 9:45 a.m., shares of China Minzhong were 0.64% higher at $1.57, and have gained 15% since the start of the year.

Monday, March 28, 2011

Cosco shares up on US$1.05b rig contract deal: Update

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

Shares of Singapore-listed Chinese shipbuilder Cosco Corp (COSC.SI) surged 4.5% on Monday and its share price hit a one-month high after it signed an agreement to build two rigs worth $1.05 billion ($1.33 billion), prompting a broker to upgrade its rating.
At 9:58 a.m., shares of Cosco were 4% higher at $2.09 with over 12.6 million shares changing hands.

However, they are down 2.8% since the start of the year, less than the Straits Times Index’s <.FTSTI> 4% decline.

Cosco said on Friday its subsidiary signed a letter of intent to build two rigs worth for Norway’s Sevan Group (SEVAN.OL).

This brings Cosco’s order wins so far this year to US$1.29 billion, half of CIMB Research’s estimate of US$2.5 billion for the whole of 2011.

“We believe the sizeable win will dispel investors’ fears over potential shipbuilding order cancellations,” said CIMB in a report.

The brokerage had raised its target for Cosco to neutral from trading sell and increased its target to $2.38 from $1.74.

However, it noted that steel prices may rise further due to reconstruction efforts after a massive earthquake struck Japan, which may weigh on Cosco’s earnings.

Analysts said the potential order for cylindrical drilling platform — which is similar to a semi-submersible rig — is a boost to the industry which had not seen orders for such rigs since the recent economic downturn.

Friday, March 25, 2011

Ying Li Int'l Real Estate rated 'buy' by DBS

Stock Name: Ying Li
Company Name: YING LI INTL REAL ESTATE LTD
Research House: DBS Vickers

DBS Vickers Securities in a Mar 24 research report says: "Ying Li has sold c.16,000sqm of office space at the IFC at a better than expected average price of RMB24,000 per sqm, with a further 4,000sqm to be sold.

ComfortDelgro Corporation rated 'buy' by Phillip Securities

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD
Research House: Phillip Securities

Phillip Securities Research in a Mar 24 research report says: "We believe that CDG's efforts to grow its businesses beyond Singapore could lead to significant earnings growth in the future. It also reduces their dependency on the Singapore market, which has a limited scope for land transport growth.

Otto Marine upgraded to 'neutral' by CIMB

Stock Name: Otto Marine
Company Name: OTTO MARINE LIMITED
Research House: CIMB

CIMB in a Mar 24 research report says: "GC Rieber, the initial customer for hull no. 7040 (3,200 dwt PSV), has agreed to novate its shipbuilding contract (third party replacing the original party as party to the contract) in favour of Aries AP.

Starhill Global Reit rated 'buy' by OCBC

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: OCBC

OCBC Investment Research in a Mar 24 research report says: "Starhill Global REIT announced its plan to embark on asset redevelopment of Wisma Atria to boost the mall's positioning along Singapore's Orchard Road. The cost of the asset redevelopment works will be funded from the proceeds of the rights issue completed in 2009 and/or working capital.

DMG ups Otto Marine to neutral, keeps $0.25 target

Stock Name: Otto Marine
Company Name: OTTO MARINE LIMITED
Research House: DMG

DMG & Partners has upgraded Singapore’s offshore marine firm Otto Marine (OTTO.SI) to neutral from sell following a sharp selldown in the shares but kept the target price at $0.25.

DMG believes Otto Marine shares has been “excessively beaten down”, following a 20% price drop since it reported a quarterly loss of $9.3 million.

While there are concerns such as Otto’s failure to secure major shipbuilding contracts from third parties over the past two years as well as the threat of orders cancellation, DMG said there were also potential upsides from the sale of chartering vessels.

Otto could also benefit from better utilisation of two seismic vessels owned by subsidiary Reflect Geophysical.

At 10:36 a.m., shares of Otto Marine were flat at $0.235. They had earlier risen 2.1% to $0.24.

Thursday, March 24, 2011

Macquarie cuts StarHub to neutral; lowers target to $2.72

Stock Name: StarHub
Company Name: STARHUB LTD
Research House: MacQuarie

Macquarie has downgraded Singapore telecom and cable operator StarHub (STAR.SI) to neutral from outperform and lowered its target price to $2.72 from $2.97.

Macquarie said it expects StarHub to maintain the dividend policy of S$0.20 per annum, which is paid out quarterly, but its forecast for free cash flow in 2011 is below this estimated dividend payment.
StarHub may try to lower its gearing before increasing its dividend payments further, Macquarie said.

The brokerage added that it prefers StarHub’s rival M1 (MONE.SI) because of the firm’s cheaper valuation and stronger balance sheet.

Macquarie said upside for StarHub is likely to come from potentially lower mobile acquisition costs and stronger growth in the firm’s corporate data business as Singapore’s Next Generation Nationwide Broadband Network is rolled out.

At 10:59 GMT, StarHub shares were flat at $2.68 on a volume of 356,000 shares.

OCBC lowers Starhill Global to $0.69; keeps buy

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: OCBC

OCBC Investment Research has lowered its target price on Singapore’s Starhill Global Real Estate Investment Trust (STHL.SI) to $0.69 from $0.74, but maintained its buy rating.

OCBC said it positively views Starhill Global REIT’s plan to redevelop the Wisma Atria shopping mall in Singapore’s prime Orchard Road retail area as it could raise the occupancy and rental rates.

However, the brokerage said that electricity rationing in Tokyo following the Japan earthquake may affect in the near term the business operations of Starhill Global REIT, which has seven malls in the Japanese capital.

The nuclear radiation fears may also dent the number of tourist shoppers and retail sales, OCBC said, adding that a 5% drop in the rental income of Starhill Global REIT’s Japan assets will lower its fair value per share by 0.4 Singapore cents.

However, OCBC said Starhill Global REIT’s valuation remains compelling and it still believes in the firm’s prime assets positioning, strong sponsor and sound financials.

At 9:17 a.m., Starhill Global REIT shares were up 1.6% at $0.625 on a volume of 227,000 shares.

Wednesday, March 23, 2011

UBS ups Genting Singapore to Buy; bona-fide China play

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC
Research House: UBS

UBS upgrades Genting Singapore (G13.SG) to Buy from Neutral, noting the counter has underperformed the weighted performance of the 5 listed Macau operators by around 25% and the STI by around 7.0% YTD.

“We think Genting Singapore is turning into a bona-fide China (wealth creation) play, with strong growth in VIP from North Asia (especially China) expected to continue into 2011-2012E.”

It tips VIP volumes of US$18 billion ($22.8 billion)-US$20 billion per quarter at RWS in 2011 (putting RWS in the same league as the top-performing Macau properties). It expects HK/China to account for as much as 50% of RWS' total gross gaming revenue by 2012, when its VIP-targeted expansion will be rolled out.

Overall, the house says China VIP growth, capacity expansion in 2012, a net cash position and potential for new projects together make Genting an attractive stock at this valuation. It lowers its target to $2.30 from $2.39, based on 15X 2011E EV/EBITDA (vs 16X previously).

Shares rise 3.1% to $1.99.

Singapore Tech Engineering rated 'buy' by OCBC

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBC

OCBC Investment Research in a Mar 23 research report says: "Singapore Tech Engineering (STE) announced that its marine arm - ST Marine (STM) - has received a notice of termination from Louis Dreyfus Armateurs (LDA) regarding the shipbuilding contract for the Roll-on/Roll-off Passenger ferry (Ropax).

Raffles Education Corporation rated 'buy' by Kim Eng

Stock Name: RafflesEdu
Company Name: RAFFLES EDUCATION CORP LIMITED
Research House: Kim Eng

Kim Eng Research in a Mar 23 research report says: "Raffles Education's (REC) share price has fallen by 24% from its recent high amid the rising tension in the Middle East and the unfolding nuclear crisis in Japan.

Raffles Medical Group rated 'buy' by UOB KayHian

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD
Research House: UOB KayHian

UOB KayHian in a Mar 21 research report says: "Raffles Medical Group (RMG) recently announced the acquisition of commercial space in Orchard Road for a specialist medical centre. The centre will further improve customer service as well as help raise RMG's market share of foreign patients given its strategic location in Orchard.

Macquarie Int'l Infrastructure Fund rated 'invest' by SIAS

Stock Name: MacqIntInfra
Company Name: MACQUARIE INT'L INFRA FUND LTD
Research House: SIAS

SIAS Research in a Mar 22 research report says: "MIIF will increase its holdings in Taiwan Broadband Communications (TBC) through the participation in the planned issue of new securities by Cable TV SA, TBC's holding company.

Armstrong Industrial Corp rated 'buy' by Kim Eng

Stock Name: Armstrong
Company Name: ARMSTRONG INDUSTRIAL CORP LTD
Research House: Kim Eng

Kim Eng Research in a Mar 22 research report says: "It was a mixed month for Armstrong. Western Digital announced the purchase of Hitachi Global Storage Technologies (HGST), which we think will open up significant opportunities for the company.

Olam rises on positive outlook after correction

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Deutsche Bank

Shares of Singapore-listed commodity firm Olam International (OLAM.SI) rose as much as 4.9% on Wednesday as brokers said outlook remains positive and its valuations are attractive after the recent correction in soft commodity prices.

At 11:16 a.m., Olam shares were 3.8% higher at $2.75 with over 9.5 million shares changing hands. But they have fallen 12.4% since the start of the year, under performing the Straits Times Index’s <.FTSTI> 5% decline.

“The correction in soft commodities year-to-date and corresponding equity underperformance provide an attractive broad-based buying opportunity," said Nomura in a report.

It said Olam’s recent investments in a fertiliser project in Gabon and a sugar refinery in Nigeria could be a substantial boost to its earnings.

“Olam has lagged on concerns over accounting reclassifications, and export incentives. We think that this correction has been overdone...it is trading at extremely attractive valuations,” said Nomura.

Deutsche Bank also highlighted that Olam’s geographic and product diversification has helped to limit its exposure to countries facing unrest.

However, Deutsche cut its target for Olam to $3.20 from $3.60, to factor in market risks, but kept its buy rating.

Standard Chartered initiates Mewah at Outperform

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

Standard Chartered initiates Mewah (MV4.SG) at Outperform with a $1.10 price target. It says the decline in Mewah’s share price from January 18’s $1.20 high is “misplaced and overdone.”

The house notes, Mewah is not a palm oil price play and estimates asset-less earnings exposure to the Middle East of around 10%. “We capture this Middle East exposure by applying a 10% discount to our theoretical valuation.”

StanChart notes, Mewah is the second-largest palm refiner in Malaysia and the largest branded edible oil consumer pack entity in West Africa; “African exposure is a unique positive.”

It adds, planned capacity expansion, particularly of value-added products, should support solid volume and value growth, and the house forecasts six-year earnings CAGR approaching 10%: “importantly, this is volume and value, rather than palm oil price-driven growth.”

Shares are +4.4% at $0.960.

Olam +4.5%; earns growth, valuation attractive - Deutsche Bank

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Deutsche Bank

Olam (O32.SG) surges 4.5% to $2.77, leading gainers among blue chips and regaining levels last seen before the Japan earthquake-inspired market selloff.

Deutsche Bank says the stock is offering strong earnings growth of 24% per year, while its current valuation of 14X forward P/E “looks attractive as it translates to a PEG of 0.6X compared with the historical 0.7X-0.9X range”. “The drop in commodity prices should help to ease pressure on working capital funding while volumes and margins are expected to remain resilient.”

It adds, Olam, due to its geographic and product diversification, has limited exposure to countries facing geopolitical and national crises. “Uncertainties in Japan and the Middle East are unlikely to materially affect Olam's bottom line given its insignificant presence in these countries. Meanwhile, Olam's cocoa bean supply should remain largely unaffected by the unrest in Ivory Coast.”

The house reiterates its Buy call but revises its target to $3.20 from $3.60 due to an adjustment in cost of equity and market risk.

CIMB ups Singapore Land target to $10.22

Stock Name: Sp Land
Company Name: SINGAPORE LAND LIMITED
Research House: CIMB

CIMB Research has raised its target price for property developer Singapore Land (SLND.SI) to $10.22 from $10.18 and kept its outperform rating.

CIMB has raised its core earnings per share estimates for Singapore Land in 2011-2013 by 3-19% to acccount for its recent acquisition of a residential site in Singapore.

The brokerage noted that Singapore Land’s shares were sold down after an earthquake struck Japan, underperforming the broader market.

“But with no Japanese exposure at all, we see little reason for the sell-down and believe the selling pressure could have been worsened by the stock’s poor liquidity,” said CIMB in a report.

At 9:33 a.m., shares of Singapore Land were 0.15% higher at $6.49 and have fallen about 12% since the start of the year.

Swiber +2.6% on job wins;earnings unexciting - DMG

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED
Research House: DMG

Swiber (AK3.SG) is up 2.6% at $0.805 in active trade after it says it secured various contracts worth US$27 million ($34.2 million) in total, mainly for the charter of offshore construction and support vessels. DMG says with this new announcement of job wins, the third this month, YTD 2011 new orders hit US$186 million, 53% of its full-year forecast.

It estimates Swiber has a net outstanding order book of around US$870 million, equivalent to 1.8X FY10 revenue. “The various chartering contracts are expected to boost its fleet utilisation rate which is hovering around 60%-70%.”

The house makes no changes to its EPS estimates and $0.85 target, and maintains its Neutral call. “We keep our earnings forecasts unchanged as we have assumed US$350 million new job wins in 2011. We remain lukewarm on the stock as: we believe earnings will be unexciting this year due to poor order flow in 2H10; and Swiber needs significant order wins to offset the cost of maintaining a growing fleet.”

The March peak of $0.830 may cap in the near term.

Tuesday, March 22, 2011

K-REIT buy positive but yields not compelling - Citigroup

Stock Name: K-REIT
Company Name: K-REIT ASIA
Research House: Citigroup

K-REIT (K71U.SG) is flat at $1.29, after saying it will buy four floors of Prudential Tower for $125.1 million. Nomura says it sees two potential strategic positives as a result of this buy: a majority stake (over 90%) in Prudential Tower allows K-REIT to undertake asset enhancement initiatives to enhance the longer-term competitiveness of the property; a valuation lift for the 73% strata interest already owned, (valued at $1,950psf at end-2010).

“Valuing the existing 73% strata interest at $2,430psf would raise our current NAV estimate of $1.76/unit by $0.03/unit. With the stock currently trading at 0.9X book and 0.7X NAV, we maintain our Buy rating.”

Citigroup maintains its Sell rating; following the buy it estimates DPU will be enhanced by 2-3%, and raises its target price correspondingly to US$1.20 ($1.52) from US$1.18.

“Despite the sell-off, we believe yields are not compelling as yet and prefer Suntec REIT (T82U.SG) and CCT (C61U.SG), which offers FY12E yields of 6.0% and 5.7% respectively vs FY12E yield of 5.1% for K-REIT”.

JPMorgan upgrades CapitaMall Trust to Overweight

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST
Research House: JP Morgan Chase

JPMorgan upgrades CapitaMall Trust (C38U.SG) to Overweight from Neutral, with a $2.15 target price, “on the back of its strong and stable growth profile and undemanding valuation.”

The house says “the year-to-date underperformance has reflected the trust’s lack of near-term growth and priced in the dilution from its recent convertible bonds issuance.”

In addition, JPM notes the key concern of the stock becoming a funding source for S-REITs’ strong equity fundraising pipeline should be alleviated given the postponement of fundraisings.

“With the stock trading at 5.3% FY11E yield, a three-year DPU CAGR of 8.0% and a stable capital structure, CMT is likely to outperform in our view, especially in the current market environment.”

REIT is up 1.7% at $1.80.

SembCorp Marine +4.2%; attractive div yield - DBS Vickers

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

SembCorp Marine (S51.SG) extends gains, rising 4.2% to $5.71 in active trade after winning a $450 million harsh-environment jack-up rig order from Seadrill.

DBS Vickers says this brings SMM’s FY11 year-to-date order wins to $900 million, and outstanding order book to $5.4 billion, reversing its downtrend and lifting its book-to-bill ratio to 1.4X. “Momentum for order wins remains strong, with options on hand for 10 jackups worth US$2 billion ($2.53 billion).”

It adds, “further, Capital Ship Management Corp. is reportedly evaluating options to build two 400-foot jackups with SMM’s PPL Shipyard.” The house says the next wave of rig orders could be led by semi-submersibles,

“This follows the award of deepwater drilling permits in the U.S. Gulf of Mexico, post the Macondo disaster.” It notes, SMM is trading at mid cycle P/Es of 14X-15X with attractive final and special DPS of 31.0 cents, yielding 5.7%. The house keeps its Buy call and $6.63 target.

Valuetronics Holdings rated 'buy' by OCBC

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED
Research House: OCBC

OCBC Investment Research in a Mar 18 research report says: "We believe that Valuetronics Holdings (VHL) has been largely overlooked by the market despite reporting a strong set of results recently. As a recap, VHL reported a set of strong set of 3QFY11 results with bottomline jumping 133.8% y-o-y to HK$31.6 million.

Sembcorp Industries rated 'buy' by DMG

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD
Research House: DMG

DMG & Partners Securities in a Mar 21 research report says: "Sembcorp Industries (SCI) held a briefing on Friday to provide an update on the Industrial Park business. Key takeaways from the briefing: (1) The Industrial Park unit could undertake more commercial and residential (C&R) real estate developments.

ECS Holdings rated 'buy' by UOB KayHian

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED
Research House: UOB KayHian

UOB KayHian Research in a Mar 21 research report says: "ECS is a leading information and communications technology (ICT) products and services provider with a network of over 23,000 channel partners in China, Thailand, Malaysia, Singapore, Indonesia and the Philippines.

Riverstone Holdings rated 'invest' by SIAS

Stock Name: Riverstone
Company Name: RIVERSTONE HOLDINGS LIMITED
Research House: SIAS

SIAS Research in a Mar 21 research report says: "We paid a visit to Riverstone's new Taiping plant and were impressed with the facilities inside. The plant is approximately 8 hectares in size with three single lines and two double lines operational.

Golden Agri-Resources rated 'buy' by OCBC

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

OCBC Investment Research in a Mar 21 research repot says: "GAR has seen its share price coming under some pressure of late, easing some 9.2% from its recent $0.705 high; no doubt weighed by the decline in CPO (crude palm oil) prices, given that the group is one of the largest oil palm plantation owners in Indonesia.

CIMB ups K-Reit Asia target to $1.52, keeps neutral

Stock Name: K-REIT
Company Name: K-REIT ASIA
Research House: CIMB

CIMB Research has raised its target price for K-Reit Asia (KASA.SI) to $1.52 from $1.50 and maintained its neutral rating after the property trust bought another four floors of an office building.

K-Reit is managed by property developer Keppel Land (KLAN.SI).

CIMB raised its distribution per unit estimates by 1-2% for 2011, 2012 and 2013 to reflect K-Reit’s acquisition of four office levels at Prudential Tower in Singapore’s central business district for $125.1 million.

However, CIMB noted that with a purchase price of $2,430 per square foot for the office space, the estimated initial yield of 2.9-3.1% is lower than market yields.

At 9:24 a.m., K-Reit units were trading 0.78% lower at $1.28. The units have fallen 9.2% since the start of the year.

SembMarine +1.5%; CIMB's top O&M pick

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

SembCorp Marine (S51.SG) is up 1.5% at $5.56, among the STI’s top percentage gainers, after it says its Jurong Shipyard secured an order worth US$450 million ($569.6 million) from Seadrill to build a harsh-environment jack-up rig.

CIMB, which maintains its Outperform rating and a $6.38 target price, based on blended DCF and 18X CY12 P/E, says the win brings its year-to-date orders to $1.0 billion.

It notes the Gusto MSC CJ70-designed rig is scheduled for delivery in 3Q13; “it still has yard capacity for 2012 delivery of shallow-water jack-up rigs and we expect its orders to catch up. We keep our order target of S$10.8 billion (including Petrobras orders) and earnings estimates for FY11-FY13.”

It adds, SMM is its preferred pick in the O&M sector given its year-to-date lag in orders. “We see stock catalysts from a stronger order momentum and higher margins.”

Orderbook quotes hint near-term resistance at $5.60.

Monday, March 21, 2011

Credit Suisse cuts Hong Leong Asia target to $3.45

Stock Name: HL Asia
Company Name: HONG LEONG ASIA LTD.
Research House: Credit Suisse

Credit Suisse cut its target price on Singapore’s consumer goods manufacturer Hong Leong Asia (HLAA.SI) to $3.45 from $4.35, but kept its outperform rating.

Credit Suisse cut its earnings-per-share forecasts by 16-22% for 2011-2012 due to expectations of worsening margins. The brokerage also said the outlook for the company’s unit that makes refrigerators, Xinfei, will remain challenging.

“Near term, the sales outlook for Xinfei should remain challenging, as it pushes into Tier 1 and Tier 2 cities amid rising competition,” said Credit Suisse in a report.

At 9:39 a.m., shares of Hong Leong Asia were 1.2% higher at $2.58. They have fallen 17.6% since the start of the year.

UOB Kay Hian starts ECS Holdings at Buy; targets $1.18

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED
Research House: UOB KayHian

UOB KayHian initiates ECS Holdings (E18.SG) at Buy with a $1.18 target, representing a 42.2% upside from the current price.

“In our view, ECS is an attractive proxy to rising IT spending in Asia and provides exposure to a slice of the rapidly expanding Chinese information and communications technology market. In addition, we believe ECS is ripe for a revaluation given its recent high profile additions - distribution rights to Apple's iPhone and iPad, Dell, Lenovo and Samsung products.”

It notes, ECS has been aggressively expanding brand portfolio and distribution network, while margin expansion schemes will enhance profitability.

It adds, the potential listing on the Taiwan exchange could be a catalyst; “ECS is planning a secondary listing in Taiwan through issuing Taiwan Depository Receipts. The group plans to use the proceeds for working capital to fund its growth in the region and hopes to achieve a more attractive valuation, with investors in Taiwan being highly savvy about technology stocks.”

Shares are +2.4% at $0.850.

IIFL initiates Ying Li International at Buy

Stock Name: Ying Li
Company Name: YING LI INTL REAL ESTATE LTD
Research House: IIFL

IIFL initiates Ying Li International (5DM.SG) at Buy with a $0.49 target price. It says Ying Li “is uniquely placed among Chinese developers, with a record of over 17 years in developing landmark commercial buildings in Chongqing,” which the house describes as “the pearl of western China.”

It says Chongqing is the world’s most populous city, with a population of 28.3 million and its GDP growth exceeded 16% in 2010. In addition, the urbanization rate is still at 52% (as compared to 80%-90% in Beijing and Shanghai), with the government’s target to reach 70% by 2020: “this presents a huge opportunity for property investors.”

It notes Ying Li currently holds around 1 million square metres of land, which is due for completion in phases over the next 3-4 years. “Funding is in place for development and acquisition plans till 2012. We estimate rental income will grow by 6X and adjusted net profit by 18X over the next two years.”

Shares are off 1.4% at $0.365.

Keppel Land +1.7%; capital square price in line - DBS Vickers

Stock Name: UOL
Company Name: UOL GROUP LIMITED
Research House: DBS Vickers

Keppel Land (K17.SG) is +1.7% midday at $4.16, after it Sunday says its property fund management arm and NTUC agreed to buy Capital Square for $889 million or $2300 psf, with each taking a 50% stake.

DBS Vickers, which has a Buy call and $5.09 target, estimates gross rent to average of $9-$10 psf pm, translating to gross/net yield of 5.2%/4.0% respectively, “in line with some of the recently transacted office cap rates of between 3.8% to 4.0%.”

It says that with the transaction, values of nearby properties such as Ho Bee’s (H13.SG) strata space at Samsung Hub and K-REIT’s (K71U.SG) Prudential Tower are also likely to benefit.

“Commercial landlords will continue to benefit from the strong recovery in capital values...with office rents still some way below their recent peak, we believe a lack of policy overhang and robust fundamentals points to the potential for a faster reflation in commercial landlords’ RNAVs in the medium term.” The house prefers UOL (U14.SG), rated Buy with a $5.31 target.

Keppel Land +1.7%; capital square price in line - DBS Vickers

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED
Research House: DBS Vickers

Keppel Land (K17.SG) is +1.7% midday at $4.16, after it Sunday says its property fund management arm and NTUC agreed to buy Capital Square for $889 million or $2300 psf, with each taking a 50% stake.

DBS Vickers, which has a Buy call and $5.09 target, estimates gross rent to average of $9-$10 psf pm, translating to gross/net yield of 5.2%/4.0% respectively, “in line with some of the recently transacted office cap rates of between 3.8% to 4.0%.”

It says that with the transaction, values of nearby properties such as Ho Bee’s (H13.SG) strata space at Samsung Hub and K-REIT’s (K71U.SG) Prudential Tower are also likely to benefit.

“Commercial landlords will continue to benefit from the strong recovery in capital values...with office rents still some way below their recent peak, we believe a lack of policy overhang and robust fundamentals points to the potential for a faster reflation in commercial landlords’ RNAVs in the medium term.” The house prefers UOL (U14.SG), rated Buy with a $5.31 target.

DMG ups Goodpack to buy from neutral, cuts target to $2.00 from $2.12

Stock Name: Goodpack
Company Name: GOODPACK LIMITED
Research House: DMG

DMG & Partners has upgraded Singapore’s transportation and storage firm Goodpack (GPAK.SI) to buy from neutral, but cut its target price to $2.00 from $2.12

DMG has downplayed the business impact of the Japan’s earthquake crisis on Goodpack, the world’s largest owner of Intermediate Bulk Containers (IBCs), as only 8 to 9% of the firm’s revenue is attributable to Japan.

“Given most of Goodpack’s customers operate in central and southern Japan, most of the Intermediate Bulk Containers (IBC) are ferried in and out of Japan via the Tokyo and Kobe ports which have already resumed operations,” the brokerage said in the statement.

DMG added that the only customer to cancel leasing of Goodpack’s IBCs is based in Sendai, one of the worst-hit towns in Japan’s quake, but the customer accounts for less than 0.5% of Goodpack’s revenue.

At 9:58 a.m., Goodpack shares are up 3.45% at $1.80.

Friday, March 18, 2011

Goldman Sachs downgrades Straits Asia Resources to Sell on rich valuations

Stock Name: StraitsAsia
Company Name: STRAITS ASIA RESOURCES LIMITED
Research House: Golman Sachs

Goldman Sachs downgrades Straits Asia Resources (AJ1.SG) to Sell from Neutral, cuts its target to $2.00 from $2.30, citing rich valuations, while market expectations appear too high.

“Our 2011E-2012E net profit estimates are 31%-37% below Bloomberg consensus driven by lower ASPs (in line with company guidance) and higher costs. Even if we assume a higher ASP of US$90 ($114.8)/ton (guidance is US$80-US$85), our analysis implies consensus downside risk to EBITDA of 7.0%.”

It lowers its 2011-2013 net profit estimates by 16%-17% on high costs, driven by stronger inflation and higher strip ratio for Jembayan mine (11.3X vs 10X previously).

“With lower earnings, SAR screens as one of the most expensive stocks globally on EV/EBITDA and overvalued versus cash returns.” It notes the new loader in Jembayan is expected to commission soon but ramp up to full capacity may take time (expected 4Q11), so costs in 2011 may remain high as a large part of volumes may be supported by temporary loading facilities.

Shares are flat at $2.46.

CLSA stays underweight Singapore banks; UOB top pick

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: CLSA

CLSA stays Underweight on Singapore banks, with UOB (U11.SG), rated Buy with a $22.00 target price, its top pick. “While the December rise in bond yields fired the optimism of some observers, we think that recovery in Singapore interest rates - and thus bank net interest margins - remains unlikely in 2011.”

It notes SIBOR remains tied to U.S. interest rates and there is little sign in the Singapore or U.S. yield curves of a rate recovery in 2011; “More rapid appreciation of the SGD could loosen the correlation between SIBOR and LIBOR, but we still expect SIBOR to follow U.S. interest rates directionally.”

It adds, while bank NIMs should bottom out in 1H2011, “we caution that recovery in NIMs - required to power material pre-provision earnings growth - remains a 2013 story in our view.”

The house rates OCBC (O3.SG), down 0.1% at $9.01, at Underperform, with a $9.25 target and DBS (D05.SG), +0.6% at $14.12, at Underperform with a $13.60 target.

UOB shares are +0.7% at $18.24.

CLSA stays underweight Singapore banks; UOB top pick

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP
Research House: CLSA

CLSA stays Underweight on Singapore banks, with UOB (U11.SG), rated Buy with a $22.00 target price, its top pick. “While the December rise in bond yields fired the optimism of some observers, we think that recovery in Singapore interest rates - and thus bank net interest margins - remains unlikely in 2011.”

It notes SIBOR remains tied to U.S. interest rates and there is little sign in the Singapore or U.S. yield curves of a rate recovery in 2011; “More rapid appreciation of the SGD could loosen the correlation between SIBOR and LIBOR, but we still expect SIBOR to follow U.S. interest rates directionally.”

It adds, while bank NIMs should bottom out in 1H2011, “we caution that recovery in NIMs - required to power material pre-provision earnings growth - remains a 2013 story in our view.”

The house rates OCBC (O3.SG), down 0.1% at $9.01, at Underperform, with a $9.25 target and DBS (D05.SG), +0.6% at $14.12, at Underperform with a $13.60 target.

UOB shares are +0.7% at $18.24.

CLSA stays underweight Singapore banks; UOB top pick

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD
Research House: CLSA

CLSA stays Underweight on Singapore banks, with UOB (U11.SG), rated Buy with a $22.00 target price, its top pick. “While the December rise in bond yields fired the optimism of some observers, we think that recovery in Singapore interest rates - and thus bank net interest margins - remains unlikely in 2011.”

It notes SIBOR remains tied to U.S. interest rates and there is little sign in the Singapore or U.S. yield curves of a rate recovery in 2011; “More rapid appreciation of the SGD could loosen the correlation between SIBOR and LIBOR, but we still expect SIBOR to follow U.S. interest rates directionally.”

It adds, while bank NIMs should bottom out in 1H2011, “we caution that recovery in NIMs - required to power material pre-provision earnings growth - remains a 2013 story in our view.”

The house rates OCBC (O3.SG), down 0.1% at $9.01, at Underperform, with a $9.25 target and DBS (D05.SG), +0.6% at $14.12, at Underperform with a $13.60 target.

UOB shares are +0.7% at $18.24.

Phillip Securities upgrades Keppel Land to buy from hold

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED
Research House: Phillip Securities

Phillip Securities has upgraded Singapore property developer Keppel Land (KLAN.SI) to buy from hold, but maintained its target price of S$4.99.

Phillip Securities said Keppel Land’s top bid of $286.8 million for a condominium site in Sengkang, Singapore, is "reasonable" because of the site’s accessibility to public transportation, shopping malls and schools.

The brokerage added that Keppel Land could break even at the range of $880-910 per square foot (psf) and the development could easily fetch $980 psf.

“This project serves well as another landbank for its residential operation in Singapore and we believe Keppel Land is very likely to be awarded the site,” Phillip said in a report.

At 9:11 a.m., Keppel Land shares were up 1% at S$4.16 on a volume of 250,000 shares.

Thursday, March 17, 2011

Singapore Post rated 'hold' by OCBC

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED
Research House: OCBC

OCBC Investment Research in a Mar 16 research report says: "Singapore Post (SingPost) announced that it had acquired 56.8 million shares of GD Express Carrier Bhd (GDEX), a company listed on the ACE Market of Bursa Malaysia Securities Berhad, through block trades.

Singapore Airlines rated 'buy' by Phillip Securities

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: Phillip Securities

Phillip Securities Research in a Mar 16 research report says: "Jetfuel prices are currently at a very high price of c.US$130/bbl. During our 3QFY11 results update, we highlighted that a key risk to our upgrade is that Jetfuel prices could soar to higher than expected levels.

Keppel Land rated 'outperform' by CIMB

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED
Research House: CIMB

CIMB in a Mar 16 research report says: "KepLand has put in the highest bid of $287 million or $502psf ppr for a GLS tender in Sengkang. The Sengkang site is located near a train station in an area with good upgrader demand. Based on recent ASPs, we expect the site to be profitable (estimated ASP of $950psf).

Goodpack rated 'buy' by DBS

Stock Name: Goodpack
Company Name: GOODPACK LIMITED
Research House: DBS Vickers

DBS Vickers Securities in a Mar 15 research report says: "Goodpack's business model taps into the rubber industry's increasing preference for using Intermediate Bulk Containers (IBC) for packaging and transportation instead of wooden boxes.

Ezion Holdings rated 'outperform' by CIMB

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED
Research House: CIMB

CIMB in a Mar 15 research report says: "Ezion's liftboats appear to be superior if not equal to those of its peers, strengthening our belief in the potential of its marine supply bases. However, we downplay near-term contributions from its bases, factoring in development delays.

City Developments rated 'buy' by Kim Eng

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED
Research House: Kim Eng

Kim Eng Research in a Mar 10 research report says: "CDL recently launched the leasehold H2O Residences in Sengkang. Of the 200 units launched, about 150 were sold at an ASP of $920 psf - a respectable price and take-up rate, in our opinion.

CIMB upgrades Fraser & Neave to Outperform

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

CIMB upgrades Fraser & Neave (F99.SG) to Outperform from Neutral but cuts its target price to $6.84 from $6.91. It notes F&N has been de-rated by 19% since the house downgraded the stock to Neutral in November 2010, underperforming the STI by 9% YTD, and it now believes value has re-emerged.
“Despite nuclear-meltdown concerns in Japan, we believe its solid F&B franchise in ASEAN will continue to grow through rising volumes and earnings, with Kirin still the wild card for longer-term restructuring potential.”

F&N now replaces Keppel Land (K17.SG) as one of its key picks for the sector. It says stock catalysts are further streamlining of capital-recycling.

The house raises its sum-of-parts estimate by 9% to $7.60 primarily on a higher APB (A46.SG) share price and a variety of recent corporate actions, though sets its target price at a 10% discount to SOP (from parity previously) to factor in greater policy risks in the property sector. Shares are off 1.9% at $5.32.

DBSV reiterates Noble at Buy; $2.60 target

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED
Research House: DBS Vickers

DBS Vickers reiterates its positive view on Noble Group (N21.SG), rated Buy with a $2.60 target price. It expects a FY11F earnings growth to come from agriculture and energy: Berau contribution, higher Gloucester Coal volumes, contributions from existing and soon-to-be acquired sugar refineries, oil & gas ramp up, and a strong rebound in carbon credit prices.
It says damage to Japanese nuclear reactors and some steel mill closures following the March 11 earthquake should have a minimal impact on Noble, assuming Chinese, Korean and Southern Japanese mills take-up any shortfall from affected mills on reduced power supply. “While we expect rebuilding efforts to eventually increase steel demand; this should only take place longer term.”

It adds, “no meaningful impact on thermal coal demand is expected, as we understand peak-load plants in Japan are mostly oil-fired” and while the disaster may provoke a rethink on future nuclear power generation, “there is no evidence as yet of a concerted global switch to thermal-coal plants.”

Shares are down 1.0% at $2.03.

Kim Eng downgrades Singapore Airlines to Hold vs Buy

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: Kim Eng

Kim Eng downgrades Singapore Airlines (C6L.SG) to Hold from Buy and cuts its target to $14.40 from $18.90, due to “a plateau in loads, as well as the potential economic fallout from the situation in Japan.”
Analyst Rohan Suppiah says while yields have been robust, “it's a matter of time before they will weaken.” He says SIA's February load factor was below expectations, down 4.8 ppts on-year at 75.1%, and while cargo had been surprisingly robust YTD, even this sector has shown signs of peaking.

He notes, fear of a nuclear fallout from quake-damaged Japan power plants will likely affect travel sentiment to Japan for at least several months. “Based on the run rate of loads and capacity for the 11 months to FY March 2011, and taking into account the above negative risk factors, SIA is unlikely to meet our original target assumptions.”

Kim Eng cuts its FY11 earnings forecast by 12%, FY12 by 19% and FY13 by 30%. Shares are off 1.2% at $13.04.

OCBC keeps Hyflux at Buy; upbeat on L/T prospects

Stock Name: Hyflux
Company Name: HYFLUX LTD
Research House: OCBC

OCBC keeps Hyflux (600.SG) at Buy with a $2.41 fair value based on 22.5X FY11 forecast EPS. Analyst Carey Wong notes reports that Hyflux will let a US$100 million Libya contract lapse and will not proceed with talks to build two mega desalination plants there; “we have not included the two mega projects in our estimates; we also note that Hyflux has yet to commit any resources to the Tobruk project.”

He notes management expects the contribution from MENA to fall to just 30% in 2014 from 60% in FY10. Instead, Hyflux expects to see the revenue contribution from Southeast Asia increase to 30% from 14% in FY10. He adds there’s also huge potential in China, while Hyflux intends to look to Indonesia and Australia for opportunities.

Wong notes Hyflux has addressed Middle East concerns and more, and “while the stock price may remain volatile in the near term...we continue to believe in the long-term growth prospects of the group.”

The stock is down 1.0% at $1.93.

Wednesday, March 16, 2011

Yangzijiang +1.8%; strong contender for seaspan job - Credit Suisse

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD
Research House: Credit Suisse

Yangzijiang Shipbuilding (BS6.SG) is +1.8% at $1.69 in active trade, likely on hopes of a large order win after ship owner Seaspan says it has signed a letter of intent “with a leading Chinese shipyard for a significant order of New Panamax 10,000 TEU vessels.”

Credit Suisse says “Yangzijiang is a strong contender” for the order. It notes, at its FY10 results analyst briefing, management confirmed it was in discussion with Seaspan for a large order. It also says YZJ “is one of the few yards in China that has a vessel design for the 10,000 TEU containership,” and among the few Chinese yards that have the capacity.

Credit Suisse reckons a LOI rather than a firm contract has been signed to allow the customer time to arrange financing. It adds, management indicated it expects gross margin to be 10%, “which should improve as it moves up the learning curve.”

Credit Suisse maintain its Outperform rating and $2.40 target. A spokesman for Yangzijiang declined to comment.

DMG downgrades SIA to neutral; target $14

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

DMG & Partners Research has downgraded Singapore Airlines (SIA) (SIAL.SI), the world’s second-biggest carrier by market value, to neutral from buy and lowered its target price to $14 from $17.20.

SIA said it filled 66.9% of the space available on its planes for passengers and cargo in February, down from January and the same period a year ago.
SIA’s passenger load factor was lower partly because of the airline’s recently added capacity on flights to Manchester, Tokyo and Los Angeles, DMG said, adding that the higher fuel surcharge may drive passengers to resort to cheaper carriers.

DMG said SIA has significant exposure to Japan as it flies to the country almost on a daily basis to four routes, and demand for passenger travel may also be worsened by the unrest in the Middle East.

At 10:42 a.m., SIA shares were up 0.3% at $13.14 on a volume of 1.1 million shares.

CLSA upgrades Wilmar to outperform from sell

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

CLSA upgrades Wilmar International (F34.SG) to Outperform from Sell, and raises its target price to $5.80 from $4.70 as the house believes inflation in China has likely peaked and the company’s recent investments provide assurance that it remains focused on its agri business.

“The decreasing likelihood of runaway inflation is positive for Wilmar as it reduces the risk of regulatory intervention,” CLSA says.

The house also says that Wilmar management bought $22.1 million worth of shares in February, signaling belief in better prospects. Wilmar is up 1.4% at $5.07.

Tuesday, March 15, 2011

Saizen most quake-affected among S-REITS - OCBC

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT
Research House: OCBC

OCBC says among the seven S-REITs with Japan exposure, Saizen REIT (DZ8U.SG), not rated, with 22 properties in Sendai will be the most affected.

For MLT (M44U.SG), it places its Buy rating and $1.03 fair value under review pending more updates from management on Sendai Centre, MLT’s only property (out of 14) with serious damage.

OCBC notes Frasers Commercial Trust (ND8U.SG) says its three properties in Tokyo and Osaka (6.9% of portfolio value) did not suffer any damage. “With FCOT’s limited exposure in Japan, we maintain our BUY rating and fair value of $0.92.”

OCBC adds Starhill Global REIT (P40U.SG) has seven malls in Tokyo (6.6% of portfolio value and 4.6% of gross revenue). “The manager has stated that there is no known damage to the malls. In addition, the properties were also partially covered by earthquake insurance, providing some form of assurance for unitholders. We expect retail sales in Japan to be impacted somewhat but maintain our BUY rating and target price of $0.74.”

Saizen most quake-affected among S-REITS - OCBC

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST
Research House: OCBC

OCBC says among the seven S-REITs with Japan exposure, Saizen REIT (DZ8U.SG), not rated, with 22 properties in Sendai will be the most affected.

For MLT (M44U.SG), it places its Buy rating and $1.03 fair value under review pending more updates from management on Sendai Centre, MLT’s only property (out of 14) with serious damage.

OCBC notes Frasers Commercial Trust (ND8U.SG) says its three properties in Tokyo and Osaka (6.9% of portfolio value) did not suffer any damage. “With FCOT’s limited exposure in Japan, we maintain our BUY rating and fair value of $0.92.”

OCBC adds Starhill Global REIT (P40U.SG) has seven malls in Tokyo (6.6% of portfolio value and 4.6% of gross revenue). “The manager has stated that there is no known damage to the malls. In addition, the properties were also partially covered by earthquake insurance, providing some form of assurance for unitholders. We expect retail sales in Japan to be impacted somewhat but maintain our BUY rating and target price of $0.74.”

IIFL starts Straits Asia Resources at Buy

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

IIFL starts Straits Asia Resources (AJ1.SG) at Buy with a $3.55 target price (54% upside). It says the company is a coal pure-play and is a good proxy to underlying benchmark coal prices: “in-line with rising demand for seaborne coal and strong benchmark coal prices, we expect SAR to deliver 66% earnings CAGR during FY11-FY13,” driven by 16% CAGR in coal production (from 10.5mt in FY10 to 16.5mt in FY13); 8.0% CAGR in average sales price (from US$72.8 ($92.4)/tonne in FY10 to US$94/tonne in FY13); and 700bps expansion in net margin between FY11-FY13 driven by strong cost control.

It notes the stock currently trades at 6.4X FY11 and 4.2X FY12 EV/EBITDA. The house says its 16% coal production CAGR assumes production at the Northern Leases to start by 3QFY11; “Sebuku will experience economies of scale, due to the ramp up of production at Northern Leases, and Jembayan will benefit from the installation of the new loader in April 2011.”

Shares are up 0.8% at $2.43.

Cache Logistics flat; buy yield favorable - OCBC

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST
Research House: OCBC

Cache Logistics Trust (K2LU.SG) is flat at $0.935, outperforming a weak broader market, after it announces Monday evening that it has entered into sale and purchase agreements of two Singapore properties for an aggregate price of approximately $39.8 million (6 Changi North Way for $30.9 million and 4 Penjuru Lane for $8.9 million).

OCBC analyst Ong Kian Lin says “the combined NPI yield is 8.0% based on the aggregate NPI expected from the two properties, which compares favourably to the NPI yield of 7.7%” for Cache’s existing portfolio as at December 31.

The house notes with the addition of these acquisitions, Cache’s total assets under management will increase to $783.9 million; both acquisitions will be fully funded by debt, and the aggregate leverage of Cache will increase from 23.7% (as at Dec. 31) to 27.6% as a result of the buys.

The transactions are expected to be completed within 1H11. “We presently have a Buy rating on Cache and are likely to review our fair value of $1.03”.

Cosco Corporation (S) rated 'outperform' by CIMB

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

CIMB in a Mar 10 research report says: "The rig that Cosco delivered to Sevan Marine in 2009 has been able to command competitive market day rates. Sevan Driller I, chartered to Petrobras, was 97% utilised in February 2011.

Breadtalk Group rated 'buy' by OCBC

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED
Research House: OCBC

OCBC Investment Research in a Mar 10 research report says: "BreadTalk Group Ltd started out in 2000 as a local bakery chain best known for its signature floss buns, before firmly establishing its brand name and evolving into a major food retailer in less than 10 years.

Tiger Airways Holdings rated 'underperform' by CIMB

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED
Research House: CIMB

CIMB in a Mar 10 research report says: "We are positive on Tiger's plans to start a new cadet pilot training programme, which should provide a sustainable source of pilots to Tiger and lower risks of a re-enactment of the flight cancellations in September 2010 from pilot shortage.

Ascendas India Trust rated 'outperform' by Standard Chartered

Stock Name: AscendasIndT
Company Name: ASCENDAS INDIA TRUST
Research House: StanChart

Standard Chartered Research ion a Mar 9 research report says: "AIT, a Singapore-listed business trust that invests in business space in India, is sponsored by Ascendas Pte Ltd.

Cambridge Industrial Trust rated 'buy' by DMG

Stock Name: Cambridge
Company Name: CAMBRIDGE INDUSTRIAL TRUST
Research House: DMG

DMG & Partners Securities in a Mar 11 research report says: "CREIT is proposing to raise $56.7 million through a fully underwritten renounceable 1-for-8 rights issue. Net proceeds of $53.8 million from the EFR would be utilized, together with $40.9 million debt financing and existing cash to fund 3 acquisitions of $116.8 million.

Mapletree Logistics Trust rated 'outperform' by CIMB

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

CIMB in a Mar 14 research report says: "MLT's 14 Japanese assets which contribute 16% to its net property income are largely intact after the 8.9-magnitude earthquake in Japan on Friday.

Cache Logistics Trust rated 'buy' by OCBC

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST
Research House: OCBC

OCBC Investment Research in a Mar 14 research report says: "Cache Logistics Trust (CLT) was listed on SGX-ST on Apr 12, 2010 at an offering price of 88 cents. Compared to many companies listed last year that are still in the red, CLT's share price has gone up 6.3% since IPO.

Monday, March 14, 2011

OCBC stays Overweight for Singapore healthcare sector

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.
Research House: OCBC

OCBC stays Overweight Singapore’s healthcare sector, which it says “thrives upon steadfast fundamentals such as a greying population and improving health awareness.”

It notes the FTSE ST Health Care Index has declined 2.9% YTD, less than the broader market’s 4.6% fall. In the healthcare providers segment, it has a BUY rating on Raffles Medical (R01.SG) with a $2.45 fair value; in the medical device space, it rates Biosensors (B20.SG) at Buy with a $1.36 fair value ($1.13 accounting for dilution).

The house says rising wealth is likely to result in higher demand for private healthcare services; the expansion of Medisave to cover outpatient treatment for more diseases and screening will help reduce out-of-pocket expenses, so “private healthcare providers would be able to benefit from an increased takeup in their services.”

It views any move to means testing positively, “as it encourages wealthier people to takeup private healthcare services.” It adds, medical tourism is thriving, +19% in receipts to $940 million in 2010, “but competition is heightening.”

OCBC stays Overweight for Singapore healthcare sector

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD
Research House: OCBC

OCBC stays Overweight Singapore’s healthcare sector, which it says “thrives upon steadfast fundamentals such as a greying population and improving health awareness.”

It notes the FTSE ST Health Care Index has declined 2.9% YTD, less than the broader market’s 4.6% fall. In the healthcare providers segment, it has a BUY rating on Raffles Medical (R01.SG) with a $2.45 fair value; in the medical device space, it rates Biosensors (B20.SG) at Buy with a $1.36 fair value ($1.13 accounting for dilution).

The house says rising wealth is likely to result in higher demand for private healthcare services; the expansion of Medisave to cover outpatient treatment for more diseases and screening will help reduce out-of-pocket expenses, so “private healthcare providers would be able to benefit from an increased takeup in their services.”

It views any move to means testing positively, “as it encourages wealthier people to takeup private healthcare services.” It adds, medical tourism is thriving, +19% in receipts to $940 million in 2010, “but competition is heightening.”

P-Life REIT flat; Japan assets not impacted: DBS Vickers

Stock Name: PLife REIT
Company Name: PARKWAYLIFE REIT
Research House: DBS Vickers

Parkway Life REIT (C2PU.SG) is flat at $1.70, holding steady after its 2.3% fall Friday after the healthcare REIT Sunday said most of its properties are located in the Kansai and Kyushu regions of Japan -- relatively less affected by Friday’s earthquake, while investigations indicated that none of its properties have been structurally affected, including those nearer to the earthquake zone.

DBS Vickers, which has a Buy rating and S$1.90 target price, says the Japan earthquake “did not have an direct impact on P-Life REIT’s assets there, as we have earlier expected.”

It notes, P-Life REIT has 38% gross revenue from Japan and its nursing homes are not within the Sendai area, the nearest being in Akita, about 200km away and on west side of Honshu island.

The house notes, “management and staff of the REIT, operators and residents are accounted for with no reported injuries.” DBSV adds, management will continue to monitor the situation and developments closely and will provide updates when available.

Xinren Aluminium target raised to 76 cents by DBSV

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

DBS Vickers raises Xinren Aluminium (MN5.SG) target price to $0.76 from $0.70 and keeps its Buy recommendation after the China-based aluminum producer announced it intends to acquire 100% of the equity interest in two China smelting plants, Liupanshui Shuangyuan and Yichang Changjiang, for an aggregate consideration of no more than RMB442.4 million ($86 million), financed by internal funds; the total smelting capacity of the plants, currently owned by group majority shareholders the Zeng family, is 275,000 tons.

DBS Vickers analyst Eun Young Lee says “we believe the valuation discount should narrow going forward given that the reason for the discount was its indirect ownership in the two smelting plants, its major revenue-generating assets.” The new target is pegged at 9.5x FY11 P/E, reflecting the transition to direct ownership, which translates to 7.2x FY11 EV/EBITDA and 2.5x FY11 P/BV.

The new target is also benchmarked at a 20% discount, against 25% previously, to the weighted average of its global peers. The stock is +1.1% at $0.45.

Cache Logistics Trust started at Buy by OCBC

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST
Research House: OCBC

OCBC starts Cache Logistics Trust (K2LU.SG) at Buy with a $1.03 fair value. It says CLT has six quality logistics properties in Singapore, which are 100% leased. It says FY10 DPU of 5.558 S-cents represents an annualised yield of 8.2%; “with forward yields of circa 8.0% for FY11/FY12, CLT also compares favorably with the overall S-REITs sector average yield of 6.9%.”

However, OCBC remains cautious on CLT’s outlook due to increased competition and inflation risks: “CLT has about 97.3% of portfolio GFA in modern ramp-up warehouses, representing 24.9% market share of ramp-up warehouse space in Singapore.

Notwithstanding that this differentiates CLT from its competitors, it also manifests as a concentration risk.” The house adds, “we recognize CLT’s competitive advantage in the ramp-up space in the near term. However, CLT’s assets...are expected to face increased competition due to new warehouse and logistics developments. It says further catalyst for raising its fair value includes yield-accretive acquisitions both locally and overseas. REIT is flat at $0.935.

Genting Hong Kong started at Buy bu KE starts; Targets US$0.54

Stock Name: Genting HK US$
Company Name: GENTING HONG KONG LIMITED
Research House: Kim Eng

Kim Eng starts Genting Hong Kong (S21.SG) at Buy with a SOTP-based target price of US$0.54 ($0.69) with approximately half its valuation attributed to gaming operations as the company evolves from a cruise operator into a gaming-focused enterprise.

“The unrealised potential from its casino operations in Manila is mind-blowing, to say the least. Trading at an adjusted FY11F EV/EBITDA of 10.6x and P/B of 1.6x, GenHK is the cheapest gaming stock in the world, in our view.” Kim Eng notes, the “crown jewel” of GenHK is its Philippines gaming licence, which allows up to 2,000 tables and 7,000 slots in two locations in Manila.

“The licence is currently held by its 50%-owned associate, Travellers International Hotel Group. When fully utilised, the attributable value to GenHK from Travellers alone could amount to as much as US$0.56 per share.” It adds, the proposed IPO of Norwegian Cruise Line, expected to take place this year, could unlock more value for GenHK. Shares are off 1.3% at US$0.39.

Friday, March 11, 2011

CIMB cuts Berlian Laju to trading sell

Stock Name: BerlianLaju
Company Name: PT BERLIAN LAJU TANKER TBK
Research House: CIMB

CIMB downgrades Berlian Laju Tanker (B66.SG) to Trading Sell from Outperform, with a lower target of $0.05. The house notes, the Indonesian government has announced that planned implementation of cabotage requirements from May for offshore oil and gas vessels has been abandoned; (cabotage is the movement of goods between two points in the same country by a foreign-owned vessel).

“Previously, Berlian has banked on the implementation of the cabotage requirements to help it secure some domestic Floating Production storage and Offloading contracts. Abandonment of the cabotage rule could result in a more competitive environment for future FPSO bids.”

Following this change, it says planned listing PT Buana Listya Tama could lose its attractiveness to the market, and investor interest might be impacted.

It adds, the recent sale & leaseback agreement worth US$93 million ($118.3 million) and US$685 million refinancing package could be a “short term gain, long term pain.”

Shares are down 10% at $0.045.

Ying Li Int'l Real Estate rated 'increase exposure' by SIAS Research

Stock Name: Ying Li
Company Name: YING LI INTL REAL ESTATE LTD
Research House: SIAS

SIAS Research in a Mar 8 research report says: "Ying Li Int'l Real Estate ended 2010 impressively with a fourth quarter net attributable profit of RMB256 million as a result of fair value gains from the International Financial Center (IFC) retail podium.

Telechoice International rated 'invest' by SIAS Research

Stock Name: TeleChoice
Company Name: TELECHOICE INTERNATIONAL LTD
Research House: SIAS

SIAS Research in a Mar 8 research report says: "TeleChoice reported an expected set of FY2010 results with revenue and profit forming 104% and 97.2% of our forecasts respectively. FY2010 revenue rose 23% y-o-y to $267 million owing to robust regional sales and contribution from the prepaid card business, which more than offset the drop in StarHub's sales.

DBS Group Holdings rated 'outperform' by CIMB

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD
Research House: CIMB

CIMB in a Mar 8 research report says: "Our meeting with DBS HK CEO, Sebastian Paredes, revealed that the Hong Kong franchise can turn out to be a much more valuable springboard into China than previously thought, possibly becoming a strong stock price catalyst over the medium term.

Fraser and Neave rated 'buy' by DBS

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

DBS Vickers Securities in a Mar 9 research report says: "F&N's jointly controlled subsidiary, Heineken-APB (China) Pte Ltd (HAPBC), has announced its that they have reached an agreement with a potential buyer for purchaser for the sale of its 21.37% stake in Kingway Brewery Holdings Ltd (KBH) for RMB1.08 billion.

Hong Leong Finance rated 'buy' by DMG

Stock Name: HL Fin
Company Name: HONG LEONG FINANCE LIMITED
Research House: DMG

DMG & Partners Securities in a Mar 8 research report says: "Management said their efforts to drive loans have led to a 4Q10 sequential loan increase. For FY2010, loans expanded 2.3%. We forecast 2011 loan growth of 8%.

Roxy Pacific Holdings rated 'buy' by OCBC

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED
Research House: OCBC

OCBC Investment Research in a Mar 9 research report says: "Roxy-Pacific Holdings (ROX) is a specialty property and hospitality group in Singapore. In FY2010, 77% of revenues and 59% of earnings were derived from the property development segment.

Thursday, March 10, 2011

DBSV prefers rigbuilders over shipbuilders

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

DBS Vickers Research reiterates its preference for rigbuilders over shipbuilders; “we expect the strong momentum in order flows for rigbuilders since 4Q2010 to be sustained, anchored by a fleet renewal cycle and greater E&P spending. This will lead to increased earnings visibility, and EBIT margins are also expected to normalize around the mid-teens.”

On the other hand, it says shipbuilding could be challenging beyond 2012 on weaker order flows and possible margin compression.

The house maintains its Buy calls on Keppel Corp. (BN4.SG) with a $14.63 target price, on SembMarine (S51.SG) with a $6.63 target and on Cosco Corp. (F83.SG) with a $3.16 target.

KepCorp is down 1.0% at $11.88, SMM is off 1.2% at $5.70 and Cosco is flat at $2.00. The house pegs Cosco’s near-term support at current levels, with resistance in the $2.10-$2.15 area.

DBSV prefers rigbuilders over shipbuilders

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

DBS Vickers Research reiterates its preference for rigbuilders over shipbuilders; “we expect the strong momentum in order flows for rigbuilders since 4Q2010 to be sustained, anchored by a fleet renewal cycle and greater E&P spending. This will lead to increased earnings visibility, and EBIT margins are also expected to normalize around the mid-teens.”

On the other hand, it says shipbuilding could be challenging beyond 2012 on weaker order flows and possible margin compression.

The house maintains its Buy calls on Keppel Corp. (BN4.SG) with a $14.63 target price, on SembMarine (S51.SG) with a $6.63 target and on Cosco Corp. (F83.SG) with a $3.16 target.

KepCorp is down 1.0% at $11.88, SMM is off 1.2% at $5.70 and Cosco is flat at $2.00. The house pegs Cosco’s near-term support at current levels, with resistance in the $2.10-$2.15 area.

DBSV prefers rigbuilders over shipbuilders

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: DBS Vickers

DBS Vickers Research reiterates its preference for rigbuilders over shipbuilders; “we expect the strong momentum in order flows for rigbuilders since 4Q2010 to be sustained, anchored by a fleet renewal cycle and greater E&P spending. This will lead to increased earnings visibility, and EBIT margins are also expected to normalize around the mid-teens.”

On the other hand, it says shipbuilding could be challenging beyond 2012 on weaker order flows and possible margin compression.

The house maintains its Buy calls on Keppel Corp. (BN4.SG) with a $14.63 target price, on SembMarine (S51.SG) with a $6.63 target and on Cosco Corp. (F83.SG) with a $3.16 target.

KepCorp is down 1.0% at $11.88, SMM is off 1.2% at $5.70 and Cosco is flat at $2.00. The house pegs Cosco’s near-term support at current levels, with resistance in the $2.10-$2.15 area.

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