Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED
Market Pulse: Singapore Airlines Ltd and KSH Holdings (28 Sep 2011)
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Singapore Airlines: Catch a safe flight
Summary: Singapore Airlines Ltd's (SIA) share price has fallen 27% from this year's peak in Jan 2011, along with the rest of the aviation sector. The market seems to have already priced a recession into SIA's share price. Although the threat of a recession is real, it is probably too early to completely price it in. Instead, we assigned an adjusted ex-net cash P/B multiple of 1.01x, or one standard deviation below historical average, to derive a fair value of S$12.59 per share of SIA, representing an upside of 10.5%. And we initiate coverage on SIA with a BUY. Competition has intensified with the growing threats from Middle Eastern airlines and regional low-cost carriers. Qantas is also planning a new Asia-based full-service carrier, bringing the competition to SIA's backyard. But SIA has faced competition from global legacy airlines, LCCs and Middle Eastern carriers for years and has done relatively well. SIA's planned launch of a wholly-owned subsidiary LCC could provide it a new growth engine, if cannibalisation effects can be minimised. (Research Team)
KSH Holdings: Secures Mt. Alvernia Hospital contract
Summary: KSH Holdings announced that it has secured a S$49.9m construction contract from Mt Alvernia Hospital for additions and alterations to the hospital. We judge that the market would be mildly positive on this contract win, which brings the order book to an estimated S$385m. This project is expected to begin on 6 Oct 2011 and will last for 23 months. At this juncture, we believe that KSH has the capacity to take on two to three large contracts (>S$100m) and take its order book to S$600-S$800m. Management is likely tendering for contracts actively currently and we expect more contract wins ahead. Maintain BUYrating with a fair value of 28 cents (60% discount to RNAV). (Eli Lee)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- Markets rebounded yesterday as fears over Europe's attempts to contain Greece's debt crisis began to ease.
- The government is nudging developers of industrial properties to increase the minimum sizes of their units, sources told BT. The minimum unit size that URA is likely to approve is around 90 sqm or 969 sqft.
- Olam International said its long-term outlook for most agricultural commodities remain bright despite the threat of a slowdown in demand triggered by economic woes, but weak fundamentals may affect cocoa.
- Sembcorp Industries will be signing three MOUs to explore further collaboration on utilities projects in Liaoning province, China.
- Sunpower has made its first foray into India via US$12m contract with JSW Steel - 3rd largest steel manufacturer in India.
- Otto Marine's related company, GO Offshore Pty Ltd, has entered into an indicative term sheet with OCBC for a proposed mezzanine loan of up to US$20m.
- The average gross fixed rent of prime first-storey space in the Orchard/Scotts Road area increased by just 0.5% QoQ in 3Q11, according to estimates by DTZ Research.
Company Name: SINGAPORE AIRLINES LTD
| Research House: OCBC | Price Call: BUY | Target Price: 12.59 |
Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED
| Research House: OCBC | Price Call: BUY | Target Price: 28.00 |
Market Pulse: Singapore Airlines Ltd and KSH Holdings (28 Sep 2011)
FOCUS
Singapore Airlines: Catch a safe flight
Summary: Singapore Airlines Ltd's (SIA) share price has fallen 27% from this year's peak in Jan 2011, along with the rest of the aviation sector. The market seems to have already priced a recession into SIA's share price. Although the threat of a recession is real, it is probably too early to completely price it in. Instead, we assigned an adjusted ex-net cash P/B multiple of 1.01x, or one standard deviation below historical average, to derive a fair value of S$12.59 per share of SIA, representing an upside of 10.5%. And we initiate coverage on SIA with a BUY. Competition has intensified with the growing threats from Middle Eastern airlines and regional low-cost carriers. Qantas is also planning a new Asia-based full-service carrier, bringing the competition to SIA's backyard. But SIA has faced competition from global legacy airlines, LCCs and Middle Eastern carriers for years and has done relatively well. SIA's planned launch of a wholly-owned subsidiary LCC could provide it a new growth engine, if cannibalisation effects can be minimised. (Research Team)
KSH Holdings: Secures Mt. Alvernia Hospital contract
Summary: KSH Holdings announced that it has secured a S$49.9m construction contract from Mt Alvernia Hospital for additions and alterations to the hospital. We judge that the market would be mildly positive on this contract win, which brings the order book to an estimated S$385m. This project is expected to begin on 6 Oct 2011 and will last for 23 months. At this juncture, we believe that KSH has the capacity to take on two to three large contracts (>S$100m) and take its order book to S$600-S$800m. Management is likely tendering for contracts actively currently and we expect more contract wins ahead. Maintain BUYrating with a fair value of 28 cents (60% discount to RNAV). (Eli Lee)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- Markets rebounded yesterday as fears over Europe's attempts to contain Greece's debt crisis began to ease.
- The government is nudging developers of industrial properties to increase the minimum sizes of their units, sources told BT. The minimum unit size that URA is likely to approve is around 90 sqm or 969 sqft.
- Olam International said its long-term outlook for most agricultural commodities remain bright despite the threat of a slowdown in demand triggered by economic woes, but weak fundamentals may affect cocoa.
- Sembcorp Industries will be signing three MOUs to explore further collaboration on utilities projects in Liaoning province, China.
- Sunpower has made its first foray into India via US$12m contract with JSW Steel - 3rd largest steel manufacturer in India.
- Otto Marine's related company, GO Offshore Pty Ltd, has entered into an indicative term sheet with OCBC for a proposed mezzanine loan of up to US$20m.
- The average gross fixed rent of prime first-storey space in the Orchard/Scotts Road area increased by just 0.5% QoQ in 3Q11, according to estimates by DTZ Research.
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