United Industrial Corporation rated 'fully valued' by DBS

Stock Name: UIC
Company Name: UNITED INDUSTRIAL CORP LTD

Research House: DBS Vickers

Price Call: SELL

Target Price: 2.04

DBS Vickers Securities in an Oct 31 research report says: "UIC posted a 9% drop in revenue to $207.7 million as net earnings dipped 14% y-o-y to $47.7 million. Despite higher performance at Singland, which made up c.90% of earnings, the drag came from lower residential development activities with the completion of ongoing projects.

"Contributions from hotels grew y-o-y on higher Revpar in Singapore while the hotel in Tianjin added $5.3 million in revenue and $0.5 million in gross profit. UIC is currently trading at a 25% premium to our RNAV of $2.15 and a 0.94x P/Bk NAV, much higher than Singland's valuations, despite Singland accounting for the bulk 73% of its valuations. Target price of $2.04. MAINTAIN FULLY VALUED."

Ascendas India Trust rated 'buy' by DBS

Stock Name: AscendasIndT
Company Name: ASCENDAS INDIA TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.98

DBS Vickers Securities in an Oct 28 research report says: "Ascendas India Trust's (a-itrust) operational performance in INR terms remains robust, with topline growing by 17% y-o-y.

"However, the strong S$-INR, which appreciated 10% since a year ago, led to reported topline growth of only 6% to $31.4 million, mainly from the rental income from their new buildings (Zenith and Voyager) which are still ramping up. Net property income (NPI) of $18.4 million grew by a lower 2% y-o-y.

"Compared to 1Q12, results improved with DPU 3% higher. 1H12 performance formed 45% of our full year forecasts. We have trimmed our FY2012-2013 numbers by 4% to 6% and lowered our target price of 98 cents by 7% in view of the stronger S$ and later than expected contribution from its new buildings. MAINTAIN BUY."

Indofood Agri Resources rated 'trading buy' by CIMB

Stock Name: IndoAgri
Company Name: INDOFOOD AGRI RESOURCES LTD.

Research House: CIMB

Price Call: TRADING BUY

Target Price: 1.56

CIMB in an Oct 31 research report says: "At its 3Q results teleconference, we gather the weak 3Q results were partially due to one-off expenses including Rp63 billion founder tax relating to the listing of PT Salim Ivomas Pratama (SIMP) and Rp19 billion share transfer fees relating to the amalgamation of a wholly-owned subsidiary, Indofood Oil and Fats Pte Ltd with the company.

"We continue to like the stock due to its cheap valuations against peers and potential of its sugar division. 4Q earnings should improve with the absence of one-off costs and as inventory levels normalise.

"We lower our net profit forecasts by 12% to account for the one-off costs and our earnings cuts at SIMP. Unchanged target price of $1.56 (10% discount to sum-of-the-parts). TRADING BUY."

SMRT Corporation downgraded to 'sell' by Phillip Securities

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: Phillip Securities

Price Call: SELL

Target Price: 1.68

Phillip Securities Research in an Oct 31 research report says: "Quarterly revenue for SMRT showed improvement on all divisions, except for its engineering business that recorded lower sales due to termination of the Palm Jumeirah project in August 2010.

"Profitability of the group continued to be impacted from the startup expenses associated with CCL stages 4 & 5 opening and higher energy prices. Profits of the quarter declined 26% as compared to the same period last year and missed our estimates. SMRT maintained its interim dividend payout of 1.75 cents that will be paid on Nov 30.

"Target price of $1.68 and expect a total downside of 7% after factoring its dividend payout. We lowered our earnings estimates for FY2012E by 6% and revised our asset buyback estimates for the company. DOWNGRADE TO SELL."

GMG falls after rights issue

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: CIMB

Price Call: SELL

Target Price: 1.18

Shares of Singapore-listed rubber firm GMG Global (GMGG.SI) opened 4.3% lower on Thursday after it said it plans to raise $349.4 million through a sharply discounted rights issue.

At 9:01 a.m., shares of GMG were traded at $0.225 with over 2.7 million shares changing hands.

CIMB Research cut its share-price target on Singapore’s Suntec Real Estate Investment Trust (REIT) (SUNT.SI), which owns office and retail properties, to $1.18 from $1.38, and kept its underperform rating.

   

DBS downgrades NOL to fully valued

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: DBS Vickers

Price Call: SELL

Target Price: 1.05

DBS Vickers has downgraded Singapore container shipping firm Neptune Orient Lines (NOL) (NEPS.SI) to fully valued from hold and cut its target price to $1.05 from $1.11.  

First Real Estate Investment Trust rated 'increase exposure' by SIAS

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: SIAS

Price Call: BUY

Target Price: 0.97

SIAS Research in an Oct 24 research report says: "Despite increased operating expenses coming from the three new acquisitions, YTD net property income (NPI) and profit margins (excluding divestment of investment property) improved slightly increasing from 98.7% to 99.2% and 79.5% to 81.9% respectively.

"We expect further growth to their results coming from gradually increase in utilisation of their new acquisitions, MRCCC and Sarang Hospital. FREIT had announced a substantial increase in distributions for the 3rd quarter at 1.92 cents per share compared to its last quarter distribution of 1.58 cents per share. This increases its dividends yield to 8.6%. Intrinsic value of 97 cents. MAINTAIN INCREASE EXPOSURE."

Mapletree Logistics Trust rated 'buy' by DBS

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.07

DBS Vickers Securities in an Oct 24 research report says: "Revenues and net property income grew by 25% and 24% to $68.3 million and $58.9 million respectively, benefiting from an enlarged portfolio.

"MLT had acquired 14 properties in 2010 and an additional 4 assets since the start of 2011. DPU increased by lower 10% to 1.69 cents due to an enlarged share base. DPU includes 0.03 cents from divestment gains of 9 and 39 Tampines.

"Yields of close to 7.7-8.0% are attractive in our view; re-rating catalysts likely to hinge on the manager's ability to continue sourcing accretive acquisitions that will grow distributions. Target price is maintained at $1.07 as we roll forward our valuations to FY2012F. MAINTAIN BUY."

Ascott Residence Trust rated 'neutral' by CIMB

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: CIMB

Price Call: HOLD

Target Price: 1.04

CIMB in an Oct 21 research report says: "3Q11/9M11 DPU is broadly in line with consensus and our forecasts, at 26%/79% of FY11. We expect a slowdown in corporate travel to affect ART's serviced residences in Asia and Europe.

"While no major signs of stress were observed in 3Q11, y-o-y growth appeared to have slowed from 2Q levels as gross profit grew 89% vs. 2Q11's 98%. Excluding acquisitions, 3Q11 gross profit was almost flat against 2Q11.

"We refine our FY2011-2013 DPU estimates and DDM target price (discount rate 9.1%) to incorporate lower REVPAUs and higher interest costs going forward. Target price of $1.04. MAINTAIN NEUTRAL."

Keppel Corporation rated 'buy' by DMG

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: DMG

Price Call: BUY

Target Price: 11.40

DMG & Partners Research in an Oct 21 research report says: "9M11 earnings of $1.10 billion (+15% y-o-y) beat ours and consensus estimates by 5-16%, as offshore & marine (O&M) margins continue to surprise on the upside.

"3Q11 net profit rose +33% y-o-y, +16% q-o-q to $406 million, largely due to higher offshore & marine earnings. Petrobras is a key catalyst for the stock and we believe Petrobras has little room to delay the rig projects anymore.

"We raise FY2011-2012F EPS by 13% and 2% respectively on the stronger-than-expected margins and maintain FY13F EPS. Higher SOTP-derived target price of $11.40. MAINTAIN BUY."

Sabana Shari'ah Compliant Reit rated 'buy' by Phillip Securities

Stock Name: Sabana REIT
Company Name: SABANA SHARI'AH COMPLIANT REIT

Research House: Phillip Securities

Price Call: BUY

Target Price: 1.08

Phillip Securities Research in an Oct 21 research report says: "Sabana REIT reported slightly higher gross revenue and net property income, with an increase of 0.1% q-o-q to $17.4 million and $16.6 million respectively in 3Q11.

"Distributable income was $13.6 million, 1.5% q-q lower than previous quarter due to higher other trust expenses. With a dip in distributable income, DPU pared down to 2.14 cents. FY2013 DPU will slide down but recover in FY2014 and FY2015. Sabana REIT will keep refinancing risk at bay as loan will only mature in 2H 2013.

"We raised the cost of equity to 10% to take into consideration of escalating macro-economic risks. This trims our target price to $1.08 with a potential upside 19.3%. BUY"

Genting Singapore rated 'reduce' by Nomura

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: Nomura

Price Call: SELL

Target Price: 1.41

Nomura Research in an Oct 19 research report says: "YTD end-August, monthly visitor arrivals to Singapore have averaged above 1mn, a big contrast to 2010's tourism monthly statistics where it only breached the 1 million mark twice - Jul (1.09 million) and Dec (1.13 million).

"We believe tourist arrivals to Singapore could at least hit 13.4mn, implying an impressive 14% rise in 2011F. The biggest surprise comes from the Chinese tourist arrival statistics, which averaged 183,834 from July to August, 46% higher than 1H's monthly average of 126,275. GENS could be a beneficiary of this trend.

"Despite the YTD 26% fall in share price, GENS remains a Reduce, as its valuations remain expensive with FY12 EV/EBITDA of 12.6x, at a 43% premium to regional peers. Target price remains at $1.41. REDUCE."

Hi-P International rated 'fully valued' by DBS

Stock Name: Hi-P
Company Name: HI-P INTERNATIONAL LIMITED

Research House: DBS Vickers

Price Call: SELL

Target Price: 0.44

DBS Vickers Securities in an Oct 24 research report says: "Hi-P warns that net profit in 3Q11 would be lower than 2Q11, compared to previous guidance of q-o-q growth. Despite the likelihood of higher volume in 4Q11, the rebound is insufficient to offset YTD earnings decline.

"We therefore cut FY2011/2012F estimates by 11.7% and 2.6%. Although Hi-P's stock price has fallen in excess of 50% from its peak in Feb this year, valuation is not exactly compelling at < -1SD PE on FY12 earnings whereas the barometer STI has corrected close to -1.5SD FY12 PE.

"In view of still uncertain outlook, Hi-P's share price may not have fully priced in all earnings risks. Target price of 44 cents based on 5.5x FY12 PE (-1SD). MAINTAIN FULLY VALUED."

Frasers Centrepoint Trust rated 'outperform' by CIMB

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: CIMB

Price Call: BUY

Target Price: 1.65

CIMB in an Oct 21 research report says: "FY2011 ended on a high note for FCT, aided by a rebound in occupancy and rental reversions from a partially-refurbished Causeway Point.

"We continue to like its resilient suburban retail exposure and see the refurbishment of Causeway Point as a key game-changer. FY2011 DPU was spot on for us though slightly above consensus. 4Q11 DPU forms 28% of our estimate on stronger Causeway Point contributions.

"Occupancy at its other assets also held up above 95%. We raise our DPU estimates and DDM-based target price (discount rate 8.4%) on lower interest costs. Target price of $1.65 (previous: $1.63).

First Ship Lease Trust rated 'hold' by DBS

Stock Name: FSL Trust
Company Name: FIRST SHIP LEASE TRUST

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.34

DBS Vickers Securities in an Oct 21 research report says: "As a result of full-quarter lease revenue from the two newly acquired vessels leased to TORM, revenue was up 22% to US$28.6 million.

"Cash earnings were boosted 16% y-o-y and 11% q-o-q to US$15.6 million due to the accretive TORM deal and lower interest expenses following the expiry of covenant waiver period in 2Q11. After loan repayments of US$7.2 million, net income available for distribution was up 38% y-o-y to US$8.4m, but management decided to maintain DPU of 0.95 US cents for the quarter.

"Our target price is revised down to 34 cents (14% target yield) as we account for the higher risk environment. Upside may be capped by recent round of equity placement at 35 cents. MAINTAIN HOLD."

JPMorgan upgrades SingTel to overweight

Stock Name: SingTel
Company Name: SINGTEL

Research House: JP Morgan Chase

Price Call: BUY

Target Price: 3.60

JPMorgan has upgraded Southeast Asia’s largest telecom firm Singapore Telecommunications (SingTel) (STEL.SI) to overweight from neutral and raised its target price to $3.60 from $3.40.

OCBC upgrades Frasers Centrepoint Trust to buy

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.68

OCBC Investment Research has upgraded Frasers Centrepoint Trust (FCT) (FCRT.SI), which owns shopping malls in Singapore, to buy from hold and raised its target price to $1.68 from $1.57. 

Phillip Securities raises Keppel Land to buy

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: Phillip Securities

Price Call: BUY

Target Price: 3.20

Phillip Securities upgraded Singapore property developer Keppel Land to buy from hold and raised its share-price target to $3.20 from $3.19.

Keppel Land said earlier this week that it will divest its entire 87.5% stake in the Ocean Financial Centre in Singapore to its unit K-REIT Asia for $1.57 billion.

Phillip said the deal is a timely move which positions Keppel Land for future strategic acquisitions, either in China or Singapore.

It forecast much higher contribution from China in the fourth quarter due to scheduled project completions.

The brokerage expects Keppel Land to pay a special dividend of 9 cents this year, implying a potential dividend yield of 6.6%.

On Wednesday, Keppel Land reported a 6.6% rise in third-quarter net profit, as lower revenue was partly offset by higher income from property investment, fund management as well as hotels and resorts.

At 12:17 p.m., Keppel Land shares were –1.8% at $2.68.

Marco Polo Marine rated 'buy' by AmFraser

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: AmFraser

Price Call: BUY

Target Price: 0.505

AmFraser Research in an Oct 18 research report says: "MPM announced that it has secured a shipbuilding contract worth US$27m for two units of 5,400bhp AHTS. By our calculation, this brings the shipbuilding order book up to $52.25 million, comprising 80% of our projected shipbuilding revenues for FY2012.

"Being only two weeks into FY2012 for MPM, this gives us greater confidence that MPM will meet our revenue expectations. Further, MPM also has in hand a $8.5 million contract for ship upgrading to be performed through FY2012.

"MPM's order book augurs well for a strong FY2012, and the early completion of the third drydock yields potential for upward revisions to earnings estimates. Fair value of 50.5 cents. MAINTAIN BUY."

Tiong Seng Holdings rated 'buy' by DBS

Stock Name: Tiong Seng
Company Name: TIONG SENG HOLDINGS LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.31

DBS Vickers Securities in an Oct 18 research report says: "Tiong Seng announced that the group has been awarded the $147 million Housing Development Board (HDB) contract for the construction of 804 units for "Waterway Terraces II" in Punggol West.

"This follows the group's first contract win of $192 million for the construction of 1,072 units. While not expected to have a significant impact on the group's earnings in the current financial year, this contract will boost Tiong Seng's order book to $1.2 billion, which is well ahead of peers in the construction industry, providing the group with good earnings visibility over the next 2 years.

"Target price of 31 cents (based on 35% discount to its SOTP). MAINTAIN BUY."

Keppel Tele and Trans rated 'outperform' by CIMB

Stock Name: KepT&T
Company Name: KEPPEL TELE & TRAN

Research House: CIMB

Price Call: BUY

Target Price: 1.46

CIMB in an Oct 19 research report says: "3Q11 core net profit fell 11.3% y-o-y as investments and logistics revenue declined following the disposal of non-core investments and redevelopment of a warehouse. The impact was partially cushioned by a 15% q-o-q increase in data-centre contributions.

"In the quarter, there was a $24 million gain from the sale of investments in Wuhu Annto ($18.4 million) and others ($5.8 million). KPTT's logistics business is trading at 4.7x CY13 P/E, near its 3x trough during the global financial crisis. Target price of $1.46.

"KPTT is determined to develop its core operations as it continues to divest non-core investments. While this temporarily affected 3Q11 results, we see longer-term rewards. Coupled with near-trough valuations, KPTT is still a buy! OUTPERFORM."

UOL Group rated 'buy' by Nomura

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 7.17

Nomura Research in an Oct 19 research report says: "The tender for a commercial site (99-yr LH, GFA = 0.94mn sq ft) next to the Paya Lebar MRT Station closed on Oct 18. A JV between UOL and SingLand submitted the only bid of $529.3 million, or $566psfppr, for the tender.

"Pending the award of the tender, our estimates and valuation are unchanged for now. The stock is trading at a 42.5% discount to our NAV estimate of $7.17 per share and FY2012F P/B multiple of 0.6x (vs an historical mean 0.8x; mean less 1SD = 0.6x).

"We believe the current share price therefore provides a good entry for investors into a property developer with solid landbanking track record and minimum inventory risk that is already trading at its historical trough valuation. MAINTAIN BUY."

China XLX Fertiliser upgraded to 'buy' by DBS

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.40

DBS Vickers Securities in an Oct 12 research report says: "China XLX's share price collapsed 57% since early 2011, under-performing STI by c.40% on the back of weak 1H earnings and investors' risk aversion towards small-mid cap and S-chips.

"Current valuations at GFC trough levels of 0.76x 12-month forward P/BV and 7.6x PE are attractive entry points in our view. Our target price is raised to 40 cents, as we roll over our valuation to blended FY2011/2012 EPS, still based on 12x PE (-1.0SD), translating to 1.1x P/BV (-1.0SD).

"In spite of our conservative forecasts (16-17% below consensus) and valuation methodology, current share price still offers 51% upside to our target price, suggesting stock is oversold and undervalued. UPGRADE TO BUY."

Cosco Corporation (S) rated 'hold' by Phillip Securities

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: Phillip Securities

Price Call: HOLD

Target Price: 0.91

Phillip Securities Research in an Oct 13 research report says: "Cosco Corp reported 2Q11 PATMI of $32 million (-53.4 % y-o-y) respectively. PATMI fell sharply mainly due to (1) lower profits from dry bulk shipping (2) lower margins from marine engineering projects and (3) higher tax expenses due to deferred tax benefit adjustments.

"Since the release of 2Q11 results, Cosco's share price has greatly underperformed the market. We arrive at our revised target price of 91 cents after lowering our P/E assignment to 14x FY12e EPS (from 15x previously) to reflect weaker sentiments in the shipbuilding sector.

"We also cut our EPS forecast for 2011e and 2012e to 7.2 cents and 6.6 cents respectively as we lower our expectations of future offshore order wins and margins for Cosco shipyard operations. MAINTAIN HOLD."

ASL Marine Holdings rated 'hold' by OCBC

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.54

OCBC Investment Research in an Oct 13 research report says: "ASL Marine (ASL) announced that it has secured new shipbuilding contracts worth about $267 million for the construction of five vessels.

"We estimate gross margins of 8-9% for these projects, and correspondingly tweak our overall gross profit margin for FY2012 slightly lower from 14.6% to 14.2%. New order flow has picked up for ASL Marine, with the group securing $426 million worth of new contracts in the past four months alone.

"We are encouraged by the pick up in new orders, but it is still early to conclude that the recovery is a sustainable one. With the slight adjustment in our gross profit margin assumption, our fair value estimate slides from 57 cents to 54 cents, still based on 10x FY12F core earnings. MAINTAIN HOLD."

Singapore Press Holdings rated 'hold' by DBS

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 4.20

DBS Vickers Securities in an Oct 13 research report says: "Revenue and earnings were down -9% and -20% y-o-y as contribution from property development Sky11 ceased in FY2011.

"Revenue excluding Sky 11 grew 8%, driven by rental income (+25% y-o-y to $168 million) and 'others' which includes the exhibition business (+37% to $69.8 million). PBT growth (ex Sky11) of 5% was supported by treasury and investment income (+40% to $41.6 million).

"The stock currently trades fairly at 14.7x forward earnings vs average PE valuation of 14.6x. As earnings are within our expectations and we do not foresee any significant catalysts going forward, we are leaving our earnings estimates and target price unchanged. Target price of $4.20. MAINTAIN HOLD.

Cambridge Industrial Trust rated 'buy' by DBS

Stock Name: Cambridge
Company Name: CAMBRIDGE INDUSTRIAL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.58

DBS Vickers Securities in an Oct 14 research report says: "Gross revenues and net property income were up by 13.9% and 10.3% to $20.7 million and $17.6 million respectively. Distributable income came in at $12.9 million, +19% y-o-y.

"DPU was lower by 8.8% y-o-y due to increased share base from share placement in April 2011, but is an improvement from a quarter ago. Ongoing asset recycling by the manager will ensure that CREIT's portfolio remain fresh and relevant. Gearing of 33% is comfortable and with no debt refinancing over the next 2 years.

"Prospective FY2011-2012 DPU yield of 9.5-11.1% is attractive. Revised target price of 58 cents. We slightly raised our FY2012/2013 earnings to account for new acquisitions/BTS projects. BUY"

Tiger Airways Holdings rated 'sell' by DMG

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: DMG

Price Call: SELL

Target Price: 0.62

DMG & Partners Research in an Oct 13 research report says: "Tiger Airways has issued a corrective email notice to clients after being ordered to do so by the Australian Competition and Consumer Comission (ACCC).

"This latest incident is yet another thrust into the negative limelight in Australia where the LCC is struggling to regain customer confidence. The airline just reported its operating statistics for the month of September 2011, which saw a 15% y-o-y fall in number of passengers carried to 395,000 from 464,000 a year ago.

"Average load factors have fallen by 9ppt y-o-y to 78%. This was attributed in large part to its restricted Aussie operations at 22 sectors per day, a far cry from its previous 60 sectors per day pre-grounding. Target price of 62 cents. MAINTAIN SELL."

Yangzijiang Shipbuillding rated 'buy' by AmFraser

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: AmFraser

Price Call: BUY

Target Price: 1.60

AmFraser Research in an Oct 17 research report says: "On Oct 17, YZJ management announced that it is "confident to deliver not less than 30% growth in net profit attributable to equity holders of the Group in the upcoming 9 months results announcement."

"Considering that they earned CNY2.96b last year, YZJ is definitely on track to make record profits this year. The announcement contained very little news beyond the assurance of at least 30% PATMI growth. It was, however, necessary since the media has had a field day at YZJ's expense given the recent Wenzhou incident.

"Our earnings estimates are unchanged (we see record profits of CNY4 billion maintained for the next 3 years), and with YZJ's consistent 30% payout dividend policy, we see dividend per share at 6.0-6.5c over the next 3 years, translating into a very decent 6.5% yield. Fair value of $1.60. BUY"

OCBC upgrades A-REIT to buy from hold

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.23

OCBC Investment Research upgraded Singapore’s Ascendas Real Estate Investment Trust, which owns industrial properties, to buy from hold and raised its share-price target to $2.23 from $2.17.

OCBC raised its fiscal 2012 forecasts for A-REIT by 2.4-5.7% to reflect its strong second-quarter results.

A-REIT said total amount available for distribution increased 14.1% to $70.5 million in the second quarter, helped by higher gross revenue from completion of investment projects.

“A-REIT continued to deliver during the quarter, despite the current uncertain economic environment,” as its occupancy rates improved and it achieved positive rental reversion, OCBC said.

At 11:40 a.m., shares of A-REIT were down 0.5% at $1.985.

CIMB downgrades SGX to underperform

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: CIMB

Price Call: SELL

Target Price: 5.86

CIMB Research downgraded Singapore Exchange to underperform from neutral and cut its share-price target to $5.86 from $5.93.

Singapore Exchange warned market activity in the near-term could be hit, even as it posted an 18% forecast-beating rise in quarterly profit on strong derivative revenues. 

CIMB cut its fiscal 2012-2014 earnings-per-share estimate as it expects costs to rise from the second quarter, and as October’s daily trading value was not promising, the brokerage said.

“Sure, first quarter results were good, with cost-control the star. Unfortunately, subdued costs are a mirage with revenue reflecting a quarter when market lethargy has yet to set in,” CIMB said in a report.

Shares of SGX is down 1.3% at $6.21 as at 11:38 a.m.

SC Global Developments rated 'buy' by Kim Eng

Stock Name: SCGlobal
Company Name: SC GLOBAL DEVELOPMENTS LTD

Research House: Kim Eng

Price Call: BUY

Target Price: 2.37

Kim Eng Research in an Oct 12 research report says: "Constantly innovating to raise the bar on fine living and achieve record-breaking selling prices, it offers the purest play on Singapore's luxury property market.

"We believe the high replacement cost of $4,700 psf and a tightly-held supply will continue to support primary market prices in the luxury segment. The breakeven for 65% of SC Global's unsold inventory stands at $1,600-1,900 psf, lower than today's cost of land in prime Orchard Road.

"At the current share price, the company is valued at $416 million, which is less than the estimated profits from the sale of 30 units at its flagship development, The Marq, which makes up only 15% of its Singapore's inventory. Target price of $2.37. BUY (initiating coverage)."

Stamford Land Corporation rated 'buy' by DMG

Stock Name: StamfordLd
Company Name: STAMFORD LAND CORPORATION LTD

Research House: DMG

Price Call: BUY

Target Price: 0.78

DMG & Partner Research in an Oct 10 research report says: "We like STL for: (1) its quality assets comprising prime commercial and hotel properties in Australia; (2) resilient earnings outlook underpinned by strong hospitality earnings and development profits; (3) management's efforts to unlock value through capital-recycling initiatives, which should narrow the valuation gap.

"STL is trading at a 54% discount to our SOTP valuation of $1.12. We believe this is overly steep given management's ability to unlock value and grow NAV through capital-recycling initiatives. Ascribing a 30% discount, we derive a fair value of 78 cents, implying a 52% upside. The counter offers a yield of 6%, with prospects for additional payouts upon a successful asset sale. MAINTAIN BUY."

Singapore Exchange rated 'neutral' by CIMB

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 5.93

CIMB in an Oct 11 research report says: "A long-drawn recession is SGX's bane. Although SGX benefits from current volatility, volumes suffer in a protracted recession when market interest peters out. Current share price have factored in that anticipated market lethargy though.

"Our DDM-based target price falls from $8.14 to $5.93 (discount rate: 9.5%, terminal growth 3.5%), after the earnings cut. In our view, current valuations are not excessive enough to call a sell, especially when there could be earnings upside from new initiatives such as REACH, and the re-pricing of derivative contracts.

"We cut FY2012-2014 average daily turnover assumptions by 16-18% and earnings fall 12-14%. We would be convicted buyers at 16x CY13 P/E, or $4.67. MAINTAIN NEUTRAL."

TEE International rated 'increase exposure' by SIAS

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.45

SIAS Research in an Oct 12 research report says: "TEE's recent property launches were well received and this provided us with reasons to believe that this division is likely to perform well in FY2012. Our preliminary estimate is profit after tax of about $9 million.

"We expect revenue recognition to come in firmly in the subsequent quarters (especially in 3Q FY12) as most of the milestones for the M&E and real estate divisions will be met. We are setting our FY2012F revenue and profit after tax at $253 million and $20 million respectively.

"TEE's final year dividend of 1.75 cents (final and special) will go XD over the next one month and we expect the company to distribute at least 1.75 cents dividend annually from FY2012 onwards. The latter represents an annual yield of 7.0%. Intrinsic value of 45 cents. MAINTAIN INCREASE EXPOSURE."

OCBC cuts SPH target price to $3.99

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 3.99

OCBC Investment Research has cut its target price for Singapore Press Holdings, the city-state's leading newspaper publisher, to $3.99 from $4.19 and kept its hold rating.

Phillip upgrades Keppel to buy from hold

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Phillip Securities

Price Call: BUY

Target Price: 9.86

Phillip Securities has upgraded Singapore oil rig builder Keppel Corp to buy from hold and raised its target price to $9.86 from $8.50.

Market Pulse: Bumi Armada & Lian Beng (11 Oct 2011)

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.51

Market Pulse: Bumi Armada & Lian Beng (11 Oct 2011)

FOCUS

Bumi Armada Berhad: Good geographical spread and strong orderbook

Summary: Bumi Armada Berhard is a leading offshore oil & gas service provider based in Malaysia. It owns and operates one of the largest fleets of OSV in South East Asia. Its FPSO fleet is also growing rapidly; and the group hopes to undertake 2 FPSO projects annually. We believe the FPSO business will provide the next stage of growth. The long-term outlook for the FPSO market is positive as production increasingly moves into more remote locations and deeper waters. Taking into account the group's strong growth momentum, we value its shares at 18x FY12s EPS giving a fair value estimate of M$3.36. As the stock looks fairly valued at current price level, we initiate coverage with HOLD. (Chia Jiun-Yang)

Lian Beng: Promising start to FY12

Summary: Lian Beng's 1QFY12 results showed impressive top-line improvement due to steady contribution from its core construction business, as well as concrete and property development segments. Revenue grew 21% YoY; unadjusted net profit increased 76%. The sharp earnings increase is attributable to gains from sale of a property. Net of this non-recurring item, the net profit was up 6%. We continue to like Lian Beng for its excellent track record, strong order book and undemanding valuations. We maintain our BUY rating, with a fair value estimate of S$0.51, based on 5x FY12 core EPS, for a potential upside of 53%. (Benjamin Lim)

For more information on the above, visit www.ocbcresearch.comfor detailed report.

NEWS HEADLINES

- New research has found that U.S. household income declined more in the two years after the recession ended than it did during the recession itself.

- Singapore President Tony Tan said that the nation can still grow 3 - 5% despite tougher conditions.

- The Securities Industry Council is reviewing the Singapore Code on Takeovers and Mergers to improve disclosure and to protect minority shareholder interest should the takeover fail.

- Sky China Petroleum yesterday said that Ernst & Young has quit as its auditors with immediate effect.

- Ezra Holdings and its 46.5%-owned associate is expected to get a boost from a FPSO vessel charter, with Vietnam's Chim Sao offshore oil project hitting first oil yesterday.

- A unit of Ryobi Kiso Holdings and its joint-venture partner have secured a 51.2b dong (S$3.2m) piling contract to provide foundation works for a luxury apartment project in Vietnam.

- Food Junction Holdings warned that it expects a loss for the Jul-Sep quarter, attributed mainly to the closing of its Malones Cafe and Restaurant operation in Suzhou, China.

- According to Jones Lang Lasalle, redevelopment of CK Tang's department store and the Marriott Hotel into a hotel-cum-commercial building would yield a market value of S$350m, which is S$10m less than the store's current net book value.

Tat Hong Holdings rated 'hold' by OCBC

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.59

OCBC Investment Research in an Oct 7 research report says: "We suspect it may take some time before we see a recovery in Australia's construction sector. As the country is a key market for Tat Hong Holdings (TAT) and accounted for more than half of the group's revenue (FY10: 59%; FY11: 54%), delays in its recovery could have a substantial impact on TAT's near-term financial performance.

"Due to the lack of clarity in Australia's construction outlook and the uncertainty in the timing of its recovery, we put off adjusting our estimates for now and await clearer signs of a recovery.

"However, we are lowering our valuation peg from 11x to 9x (one standard deviation below its long-term average) on blended FY12/FY13 EPS, in line with the weaker overall market. Lower fair value estimate of 59 cents. MAINTAIN HOLD."

Epicentre rated 'buy' by DMG

Stock Name: Epicentre
Company Name: EPICENTRE HOLDINGS LIMITED

Research House: DMG

Price Call: BUY

Target Price: 0.60

DMG & Partners Research in an Oct 7 research report says: "Following the announcement of Apple's founder Steve Jobs' passing, Epicentre tumbled 10% before closing up 1% yesterday. Likewise, shares of Apple Inc's remained relatively unchanged.

"We believe this is reflective of investor confidence in the future of Apple. Jobs had named his successor Tim Cook whom he had relinquished his position to on Aug 24 and with the current products it has in its stable, the general market believes Apple's current products will last several product cycles due to its forefront technology.

"Target price of 60 cents, pegged to 9x FY12F P/E. At current price, stock offers a decent 6% yield. BUY"

Singapore Airlines rated 'buy' by OCBC

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: BUY

Target Price: 12.59

OCBC Investment Research in an Oct 7 research report says: "Singapore Airlines (SIA) saw passenger kilometres (RPK) grew 3.0% y-o-y and passenger capacity (ASK) increased by 5.1% y-o-y in August. SIA's falling load factors in both passenger and cargo segments are expected and have previously been factored into our earnings model.

"Although SIA's share price has fallen 0.9% since we issued our initiation report on 28 Sep 2011, it displayed some of its defensive nature when compared to the 4.5% drop in the FTSE STI over the same period.

"We are maintaining our fair value estimate of $12.59 per share, representing a potential upside of 11.4% from current level. MAINTAIN BUY."

City Developments rated 'hold' by Kim Eng

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: Kim Eng

Price Call: HOLD

Target Price: 11.05

Kim Eng Research in an Oct 10 research report says: "CDL recently announced that it will take a 30% effective stake in a development acquired by Millennium & Copthorne (M&C) in Ginza, Tokyo. M&C owns the remaining 70% stake.

"The acquisition allows M&C to gain a strategic foothold in Ginza at what we believe is a reasonable price. Going into 2012, the potential slowdown in M&C's European (ex-London) operations is unlikely to have a significant impact on its bottomline.

"Given the strong likelihood of a recession next year, we see few positive catalysts to upgrade our call. Target price of $11.05, peggedat 15% discount to RNAV. MAINTAIN HOLD."

Micro-Mechanics Holdings rated 'hold' by OCBC

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.45

OCBC Investment Research in an Oct 10 research report says: "In light of the weakening macroeconomic environment which is expected to take its toll on the cyclical tech sector, we are lowering our estimates for MMH and now expect revenue and net profit to decline by 1.3% and 7.8% instead of a 4.8% and 2.1% rise in FY2012 respectively (FY2013 earnings estimates also cut by 8.1%).

"Notwithstanding our lower forecasts, we are keeping our dividend estimates for FY12 at 3 S cents, unchanged from FY2011. At this level, it implies a prospective yield of 6.7%, which should provide some downside support to MMH's share price. new fair value estimate of 45 cents (previously 50 cents), still based on 10x FY12F EPS. MAINTAIN HOLD."

Goodpack rated 'hold' by DBS

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.35

DBS Vickers Securities in an Oct 10 research report says: "Goodpack's top line grew 3% y-o-y in FY2009, as its market share for SR increased from 10% in FY08 to 15.3%; while its NR revenues dropped by 19%.

"The tepid revenue growth was insufficient to compensate for higher costs base from prior year's investment in intermediate bulk container (IBC) fleet as well as expansion of international network. Consequently, FY2009 earnings fell by 12%, as overheads surged 50% - while depreciation jumped by 31%. Rise in effective tax rate to 9.4% from 7.2% further dragged earnings.

"Target price lowered to $1.35 due to higher equity risk premium (ERP) in our DCF estimates to 10.5% from 6.5% to account for slower GDP outlook. No change in earnings forecasts made. MAINTAIN HOLD."

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP

Research House: Credit Suisse

Price Call: HOLD

Target Price: 8.40

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: Credit Suisse

Price Call: BUY

Target Price: 19.30

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 12.50

Market Compass

10 October 2011~ Good Morning Singapore!

Singapore Idea Snippets:

Singapore Stock News Singapore's Straits Times Indexrose 1.4 percent to 2,640.30. Banks: OCBC Cut to Underperform, UOB Lowered to Neutral by Credit Suisse. - OCBC downgraded from overperform because co. is most exposed to capital markets, most expensive on relative valuations, analyst Sanjay Jain writes in note to investors. Cuts PT 24% to S$8.40. - UOB downgraded from outperform, PT cut 20% to S$19.30; stock is most defensive in Singapore banking and remains CS top pick. - DBS maintained neutral, PT cut 24% to S$12.50 Commodity suppliers: The Thomson Reuters/Jefferies CRB index, which tracks prices of 19 commodities ranging from copper to corn, fell 0.4 percent in New York Oct. 7, snapping two days of advance. Noble Group Ltd. (NOBL SP), a Hong Kong-based commodities supplier, slipped 1.1 percent to S$1.365. Olam International Ltd. (OLAM SP),a Singapore-based supplier of agricultural commodities, gained 0.9 percent to S$2.28. Heng Long International Ltd. (HLONG SP): LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods maker, said it agreed to purchase 51 percent of the Singapore-based crocodile-leather tannery for S$160.8 million ($124.2 million), the Paris-based company said in a statement. Heng Long climbed 2.8 percent to 56 Singapore cents when it last traded on Oct. 5 Medi-Flex Ltd. (MDFX SP): The maker of disposal gloves said fourth-quarter net income dropped 33 percent from a year earlier to 1.7 million ringgit ($537,889). The stock slumped 12 percent to 6 Singapore cents when it last traded on Sept. 29. Tiong Woon Corp. (TWC SP): The crane-leasing company said it won a contract to provide lifting and installation services to a refinery project being developed by Japan's JGC Corp. in Singapore. Financial details weren't disclosed. Tiong Woon was unchanged at 20 Singapore cents. Asia Stock News Most Asian stocks rose as Germany pledged to protect European banks from a debt crisis after Fitch Ratings downgraded Italy and Spain, easing concern the region's troubles will escalate and hurt export earnings. The MSCI Asia Pacific Excluding Japan Index was little changed at 382.87 as of 9:11 a.m. in Tokyo. About twice as many stocks rose as fell after German Chancellor Angela Merkel said European leaders would do "everything necessary" to ensure banks have adequate capital. Commodity News Oil climbed for a fourth day in New York as investors bet that fuel demand may increase on signs of an economic recovery in the U.S. and a pledge by Europe to contain its sovereign-debt crisis. Crude for November delivery advanced as much as 37 cents to $83.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $83.29 at 10:32 a.m. Sydney time. Gold for December delivery increased 0.3 percent to $1,641.20 an ounce, while silver rose 1.2 percent to $31.350 an ounce. Gold for immediate delivery was little changed at $1,639.80 an ounce. Source: Bloomberg

Chasen Holdings rated 'increase exposure' by SIAS

Stock Name: ChasenHldg
Company Name: CHASEN HOLDINGS LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.58

SIAS Research in an Oct 10 research report says: "As a specialty mover, Chasen's niche is in the handling of high tech equipment. Chasen offers a resilient business that helps companies to relocate when they expand or restructure their operations.

"More importantly, the company is expanding its scope of services and looks set to gain from the dual themes of China's move into high tech and manufacturing and inland development. Chasen announced a strong set of 1Q (ended Jun 2011) FY12F results earlier this year with net attributable profit growing by 147% y-o-y from $1.3 million to $3.3 million.

"Sales grew by 68% from $17.0 million to $28.6 million in 1Q FY12F. We value Chasen at 58 cents per share, representing an upside of 41.5% from its close of 41 cents on Oct 6. Our valuation is based on an explicit forecast horizon from FY12F to FY14F. INCREASE EXPOSURE (initiating coverage)."

Biosensors International Group upgraded to 'buy' by DBS

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

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.71

DBS Vickers Securities in an Oct 6 research report says: "BIG has completed the acquisition of the remaining 50% stake in joint venture company, JWMS.

"We believe its outlook will be rosier on the back of: (i) higher earnings contribution from JWMS; (ii) sustained strong licensing revenue from Terumo; and (iii) longer term catalysts from the approval of BioMatrix Flex for the China market. BioMatrix Flex's approval for sale in China will be a longer term catalyst for BIG. Hypothetically, a 5% market share could add another 8% to FY2012F's revenue of US$312 million.

"We have raised FY12/13F earnings by 56%/34% after taking into account consolidation of JWMS and strong licensing revenue outlook. Our SOTP valuation of BIG at $1.71 translates to 16x forward earnings, equivalent to peers and -0.5 standard deviation PE, 52% potential upside. UPGRADE TO BUY."

Market Pulse: SATS and Micro-Mechanics (10 Oct 2011)

Stock Name: SATS
Company Name: SATS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 2.36

Market Pulse: SATS and Micro-Mechanics (10 Oct 2011)

FOCUS

SATS Ltd: Value in selling Daniels?

Summary: SATS Ltd confirmed that it is in talks to sell its UK subsidiary the Daniels Group but clarified there is no certainty that a deal will be done; and Daniels will remain part of SATS if a sale does not materialise. Our scenario analysis resulted in six possible fair values for SATS, ranging from a low of S$2.13 to a high of S$2.41 per share. We can infer from the purported sale of Daniels that management does not view Daniels as an integral part of its vision for the future. But until we get more details, we maintain our HOLDrating on SATS and a fair value of $2.36 per share. We would be buyers closer to S$2.00. (Research Team)

Micro-Mechanics: Lowering estimates on weakening industry outlook

Summary: The tepid macro economy, excess semiconductor inventory levels and rising consumer pessimism signal tough times ahead for Micro-Mechanics Holdings (MMH). Industry watchers have recently pared their forecasts for global semiconductor sales for 2011 and 2012. On a positive note, we opine that MMH's healthy balance sheet would provide the group with a buffer against the increasing cyclical risk in the sector, especially since it carries no debt on its books. We believe that MMH would continue to showcase its resilience in today's difficult operating environment, backed by its strong management team. However, in light of the weakening macroeconomic and industry outlook, we are lowering our estimates for MMH and now expect revenue and net profit to decline by 1.3% and 7.8% instead of a 4.8% and 2.1% rise in FY12 respectively (FY13 earnings estimates also cut by 8.1%). Maintain HOLD for its attractive prospective yield of 6.7% with a new fair value estimate of S$0.45 (previously S$0.50), still based on 10x FY12F EPS. (Wong Teck Ching Andy)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- German Chancellor Angela Merkel and French President Nicolas Sarkozy promised swift response to the eurozone debt crisis, insisting they were united on plans to shore up Europe's banks.

- MAS is studying whether financial institutions here need to draw up plans for a quick recovery or a clean closure in the event of a crisis, similar to what regulators in a number of developed markets are enforcing.

- SGX-listed and Hong Kong-based developer SingXpress Land will launch its maiden property project, a 21-unit freehold cluster on Charlton Road, in November 2011.

- China Aviation Oil (Singapore) Corporation (CAO) is planning to invest about S$37m in a 26% in Oilhub Korea Yeosu Co (OKYC), making it second biggest shareholder in OKYC after Korea National Oil Corp (KNOC).

- Tannery Heng Long International said it has received a conditional cash offer from LVWH Asia to acquire all its issued and paid up ordinary shares for S$0.60 per share.

- China's Sinopec International Petroleum Exploration and Production Corp announced it will buy Canadian oil and gas company Daylight Energy Ltd for about C$2.2 bn /US$2.1bn.

Market Pulse: Singapore Airlines, Tat Hong & Keppel (7 Oct 2011)

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: BUY

Target Price: 12.59

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.59

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.12

Market Pulse: Singapore Airlines, Tat Hong & Keppel (7 Oct 2011)

FOCUS

Singapore Airlines: Weakness factored into earnings; maintain BUY

Summary: Singapore Airlines Ltd (SIA) added passenger capacity faster than air travel demand growth in August. This resulted in a fall in passenger load factor to 76.6%, below the recently released load factors of international flights worldwide and in Asia Pacific (from the IATA). SIA may continue to experience falling passenger load factors if 1) it continues its 5% capacity increase for the rest of FY11 and 2) the upcoming peak air travel months disappoint. In cargo, SIA was able to better manage its cargo capacity increase but its cargo load factor continued to fall. Higher cargo capacity and stagnating cargo volumes, due to no growth in world trade, have caused cargo load factors to be on a downtrend. SIA's falling load factors are expected and have previously been factored into our earnings model. With no change to our earnings model, we maintain our BUY rating and a fair value estimate of S$12.59 per share of SIA, representing a potential upside of 11.4%. (Research Team)

Tat Hong Holdings: Maintain HOLD with lower fair value of S$0.59

Summary: Tat Hong Holdings (TAT) could face tougher market conditions down under. According to Australia Industry Group (AIG)'s recent findings, the downturn in the country's construction industry continues to deepen in Aug 2011, driven by a further fall in activity and sharp reduction in new orders. On the other hand, our channel checks indicate increased level of activity in a number of oil & gas and mining projects. Majority of these projects are at the conceptual and design stage and construction has yet to commence. We maintain our HOLD rating as we wait for clearer signs of recovery in Australia. In the meantime, we lower our fair value estimate to S$0.59 (based on 9x blended FY12/FY13 EPS), in line with the weaker overall market. (Chia Jiunyang)

Keppel Corporation: Secures jackup order worth US$245m from Ensco

Summary: Keppel Corporation (Keppel) announced that Ensco plc has exercised one of its two rig options to build an enhanced KFELS Super A Class harsh environment jackup rig for US$245m. The price tag is 11% higher than two rigs of same design ordered by Ensco in Feb this year. Payment terms would be 20% due at contract signing and 80% upon delivery. According to Ensco's press release, an option for an additional ultra-premium harsh environment jackup rig has expired and we think this may be the other rig option that Ensco had with Keppel. Still, Keppel has secured S$8.4b worth of new orders YTD, almost topping our full year estimate of S$8.5b. This is a record high for Keppel which won S$3.2b orders last year, and S$7.4b in FY07 (its previous peak year). Despite uncertainties in the global economy, we keep our FY12 new order estimate of S$5b intact for now as industry fundamentals remain supportive of continued capital expenditure by oil companies. Maintain BUY with S$12.12 fair value estimate. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor detailed report.

NEWS HEADLINES

- The European Central Bank offered new emergency loans to banks yesterday to help them through the turmoil of the government debt crisis; benchmark interest rates were kept at 1.5% despite fears of an economic slowdown.

- Singapore Exchange said it is open to all mergers and acquisition talks, but stop short of specifically commenting on the news that it is joining hands with London Stock Exchange to bid for London Metal Exchange.

- Hyflux, is set to move into power generation, when it starts building a 411-megawatt combined cycle gas turbine plant this quarter.

- ST Engineering's subsidiary unit - ST Synthesis, has secured a five year contract worth approx. S$125m from Singapore's Defence, Science and Technology Agency.

- Dyna-Mac's 1QFY12 (ended 31 Aug 2011) net profit fell 55.5% YoY to S$4.17m. This is mainly due to lower volume of work, as works for projects were substantially completed by the previous quarter.

- AIMS AMP REIT reported that its distribution per unit for 2QFY12 ended 30 Sep 2011 increased by 26% to reach 2.5 cents. Revenue and net property income rose 27.8% and 28.2% respectively YoY.

Market Pulse: Sembcorp Marine & Wilmar (6 Oct 2011)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 4.78

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.70

Market Pulse: Sembcorp Marine & Wilmar (6 Oct 2011)

FOCUS

Sembcorp Marine: FPSO conversion work from repeat customer

Summary: Sembcorp Marine (SMM) announced recently that its wholly owned subsidiary, Jurong Shipyard, has secured an FPSO conversion project worth about S$130m from MODEC. Delivery to MODEC is scheduled to be in 2Q13 in Brazilian waters, which still remains a major source of work where oil related companies are hopeful of securing more orders. SMM has secured S$2.8b worth of new orders YTD, accounting for 62% of our full year estimate. The group has eight outstanding rig options worth about S$2b which we estimate should expire by 1H12. Meanwhile, it is also in the running for additional projects. As the contract value of individual projects can be substantial (recall PTTEP's S$600m integrated platform order), the securing of two such projects would increase SMM's order book considerably. However, should we fail to hear of more new orders in the near term, the group would be exposed to higher earnings risk. Meanwhile, we keep our earnings estimates intact for now and maintain our BUY rating with S$5.70 fair value estimate. (Low Pei Han)

Wilmar: Lower S$4.78 fair value on weaker China outlook

Summary: Wilmar International Limited's (WIL) shares saw a massive sell-down over the past two days, likely spooked by the looming specter of a hard landing for China's massive economy. As WIL derives 60% of its earnings from China in 1H11, any significant economic contraction would have an impact on its performance. We believe that its crushing business may be the most affected; but we are less concerned with WIL's cooking oil business. In line with the weaker overall market, as well as the more muted outlook for China, we are reducing our valuation peg from 16x to 12x (-1 standard deviation from its 4-year mean) and when applied against its FY12F EPS, we derive a new fair value of S$4.78. Given the limited upside, we maintain our HOLD rating. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor detailed report.

NEWS HEADLINES

- US service industries expanded in September at a slower pace than August, the Institute for Supply Management's non-manufacturing index fell from 53.3 to 53.

- According to Ernst & Young reports, 3Q IPOs in Asia have raised the least money since the 2Q 2009, as companies hold back listings.

- Singapore Post appoints its new CEO after a long hunt - an internal candidate, Wolfgang Baier, the CEO of the company's international division will take over as group CEO.

- Hsieh Fu Hua, has stepped down from his role as President of Temasek Holdings after a 13 month stint, citing "personal priorities" for the move.

- UOB aims to double cross border business lending within three years, riding on a wave of foreign direct investment into Asia's fast growing economies.

- Great Group Holdings, a garment manufacturer based in China and listed in Singapore since 2009, announced yesterday that it has received in principle approval from Singapore Exchange to list up to 42m new shares on the London Stock Exchange.

- COE premiums for 3 out of 5 car categories climbed, after Transport Minister Lui Tuck Yew's comments about taking further action to curb vehicle population in Singapore.

Keppel Corporation rated 'hold' by Phillip Securities

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Phillip Securities

Price Call: HOLD

Target Price: 8.50

Phillip Securities Research in an Oct 4 research report says: "Keppel Corp announced last evening that it has secured a US$199 million order for a KFELS B Class jack up rig from Safin Gulf FZCO. Keppel Corp share price has fallen 38% since our last report, in tandem with weak market conditions.

"Although we lower our expectations on future rig order wins due to the worsening macroeconomic conditions, we believe that this might already been amply reflected in Keppel's share price performance and unless the macroeconomic situation deteriorates further, lower prices should not be warranted.

"We also think that Keppel's strong orderbook and good dividend yield (approx. 5%) will provide support to its share price at current levels. At our target price of $8.50, Keppel will be trading at approximately 12x FY12e EPS. MAINTAIN HOLD."

HPH Trust rated 'buy' by DMG

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: DMG

Price Call: BUY

Target Price: 0.75

DMG & Partners Research in an Oct 5 research report says: "HPH Trust's major assets are Hongkong International Terminals (HIT) (100%), COSCO-HIT (50%) and Yantian Ports (51.6-56.4%). HPH Trust has committed to pay out 100% of its distributable income.

"We forecast FY11F (annualised) and F12F DPU of US5.34 cents and US5.57 cents respectively. At current share price, HPH Trust offers 8.6% and 9.0% dividend yield for FY11F (annualised) and FY12F respectively.

"We like HPH Trust given: (1) the three deep-water container ports under its portfolio are strategically located in the Pearl Delta River (PRD) with dominant market share; (2) Sell-down in shares has more than reflected the slowdown in throughput volumes. We think FY12F yield at 9.0% is attractive. Target price of US 75 cents. BUY (initiating coverage)."

LionGold Corporation rated 'increase exposure' by SIAS

Stock Name: LionGold
Company Name: LIONGOLD CORP LTD

Research House: SIAS

Price Call: BUY

Target Price: 1.035

SIAS Research in an Oct 3 research report says: "LionGold Corp Ltd (LionGold, formerly The Think Environmental Co Ltd) announced the commencement of commercial production in Ghana on Sept 28.

"LionGold intends to use this site as a model and training ground to build more mine development teams that will be deployed to subsequent sites. At the same time, LionGold is watching the neighbours adjacent to its site for opportunities to accumulate resources.

"While LionGold's 1H FY12F (ended Sep) results are likely to be muted, 2H FY12F will most likely see a significant jump in profitability. We are currently waiting for at least one quarter of full gold production before we revisit our model. Intrinsic value of $1.035. MAINTAIN INCREASE EXPOSURE."

Lipo Malls Indonesia Retail Trust rated 'increase exposure' by SIAS

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: SIAS

Price Call: BUY

Target Price: 0.795

SIAS Research in an Oct 3 research report says: "We paid visits to the three Lippo Malls Indonesia Retail Trust's ("LMIRT") malls - Cibubur Junction, Plaza Semanggi and Gajah Mada Plaza during our Indonesia trip to gain a better understanding of LMIRT's underlying assets.

"We concluded our LMIRT visit on a positive note, being highly impressed with (1) the operations of the malls and (2) the tenant allocations. We believe that both of these have augmented the mall in bringing out its relevance to the neighborhood as well as taking advantage of their spending power.

"We also see the potential for higher positive rental reversion on the resulting from effective asset enhancements moving forward. We are maintaining our current price on LMIRT at 79.5 cents. MAINTAIN INCREASE EXPOSURE."

Noble Group rated 'buy' by DBS

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.70

DBS Vickers Securities in an Oct 5 research report says: "The Investor Daily newspaper today reported that Noble Group is prepared to subscribe for up to 15% of Atlas Resources when it goes public.

"Noble Group had provided a loan to Atlas Resources on Apr 27, and the contract has an option to convert this into a 10.1% stake in the company; post listing Noble's stake would be diluted to 7%. We believe this potential arrangement would add value to Noble.

"Besides additional associate income, the group would be able to recycle its capital as well as get US$25 million cash by becoming a marketing agent, which we believe may fetch c.4% commission. Target price of $1.70. MAINTAIN BUY."

Neptune Orient Lines rated 'buy' by Phillip Securities

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: Phillip Securities

Price Call: BUY

Target Price: 1.40

Phillip Securities Research in an Oct 4 research report says: "NOL underperformed the market by 27% over the past year on concerns over free falling freight rates, overcapacity in the container shipping industry and more recently, a weakening economic outlook.

"We revised our earnings forecasts southwards and expect more severe losses in FY11E and expect only marginal profits for FY12E. Our downwards revision for FY11E is due to lower than expected freight rates for P7 to P8, which we had earlier expected to reflect uplifts from surcharges.

"FY12E is lowered on downward revisions to our volume assumptions on weaker economic outlook and trade flow expectations. "We derive our target price of $1.40 based on 0.92X FY11/12e blended BVPS of US$1.15 and translating it at an exchange rate of 1.32SGD/USD. Upside of 31%. BUY"

PEC rated 'buy' by AmFraser

Stock Name: PEC
Company Name: PEC LTD.

Research House: AmFraser

Price Call: BUY

Target Price: 1.36

AmFraser Research in an Oct 4 research report says: "PEC announced that it has won a $45 million contract with JGC Corp to provide steel structure erection, piping and electrical and instrumentation works for a refinery in Singapore for an oil major.

"This brings the order book to about $348 million by our estimation (taking into account the recent USD rise). This order book does not include maintenance contracts nor the Rotterdam JV. This is a record order book for PEC, which will most likely drive 2012 to become a bumper year.

"PEC is also still in the middle of negotiations for additional contracts, which we expect will materialize through 2012. PEC is now trading at 0.9x P/B, 4.6x forward P/E, and a shockingly-low EV/EBITDA of 0.6x (2011A) and 0.3x (2012F). We leave our fair value unchanged at $1.36. MAINTAIN BUY."

Sembcorp Industries rated 'outperform' by CIMB

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: CIMB

Price Call: BUY

Target Price: 6.07

CIMB in an Oct 5 research report says: "Our takeaway from a recent SCI non-deal roadshow was the high likelihood that SCI Utilities could emerge from a recession unscathed.

"Despite threats of a recession, we are still forecasting 8% earnings growth for Utilities in FY12, backed by strong power spreads in Singapore and capacity expansion at Salalah, Oman's independent water and power plant (IWPP). At 7.5x CY12 P/E, the market appears to be pricing in a 10% earnings drop for SMM.

"SCI is the cheapest Singapore conglomerate at trough valuations of 1.4x P/BV, or 2008-09 lows. At current implied market cap for Utilities ($1.4 billion), investors are only paying for the replacement costs of existing assets on Jurong Island ($1.5 billion invested to date); the rest is free. Target price of $6.07. MAINTAIN OUTPERFORM."

United Envirotech rated 'buy' by OCBC

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.53

OCBC Investment Research in an Oct 3 research report says: "UEL has acquired another waste-water treatment project in China; this after exercising a call option to acquire the entire equity interest of Tongji Environmental (China) Pte Ltd (Tongji) for RMB34.03 million.

"With the plant already running at 80% capacity, UEL expects to see income contribution from October; and we estimate that the plant should generate around $0.3 million in quarterly income for the group.

"With the proceeds from the issue of US$113.8 million worth of convertible bonds to KKR coming in some time in early October, management believes that it should provide the group with enough powder keg for more potential acquisitions for the next one year. We maintain our FY2012 and FY2013 estimates for now. DCF-based fair value remains at 53 cents. MAINTAIN BUY."

Wilmar International downgraded to 'hold' by Phillip Securities

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: Phillip Securities

Price Call: HOLD

Target Price: 4.47

Phillip Securities Research in an Oct 5 research report says: "We expect better 3Q11 results on the back of higher CPO to soybean oil discount, greater availability of CPO supply and lower CPO prices. We also believe that the group's drive into higher value added products would improve margins over time.

"We expect production to increase over the next 3 years as more of Wilmar's palm plantation enters prime age. Lifting of price caps in China should improve margins and sales volume in 3Q11. We arrive at a target price of $4.47 based on our sum-of-the-parts methodology.

"We value Wilmar's plantation and palm oil mills business based on 2.5x book value and its palm & laurics, oilseeds & grains, consumer products and sugar businesses based on 10x/5.5x/20x/11x FY12e earnings respectively. We value its share of associates and other businesses at 10x FY12e earnings. DOWNGRADE TO HOLD."

Market Pulse: Lian Beng, Midas, Keppel, Biosensors and PEC Ltd (04 Oct 2011)

Stock Name: Lian Beng
Company Name: LIAN BENG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.52

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.435

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.12

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

Research House: OCBC

Price Call: BUY

Target Price: 1.68

Stock Name: PEC
Company Name: PEC LTD.

Research House: OCBC

Price Call: BUY

Target Price: 1.12

Market Pulse: Lian Beng, Midas, Keppel, Biosensors and PEC Ltd (04 Oct 2011)

FOCUS

Lian Beng: Initiate with BUY - Strong order book with room for more

Summary: We initiate coverage on Lian Beng Group with a BUY rating - TP of S$0.52 (derived from applying 5x P/E on its FY12F earnings) implies c.54% upside from here. Lian Beng's current order book is one of its strongest in history and yet it is trading at a steep discount to peers. We like Lian Beng for 1) their track record in both private residential and public housing construction projects; 2) its strong order book giving management room to focus on improving margins; and 3) its undemanding valuations. (Research Team)

Midas Holdings: Double whammy; but still a BUY

Summary: The outlook for Midas Holdings (Midas) has grown increasingly murky in recent times, due to accidents involving both high-speed and metro trains in China in Jul and Sep this year respectively. Media reports have also surfaced that China has postponed construction of 80% of its railway projects, which seems substantial, in our view. Any delay in contract tenders would affect the earnings visibility of upstream railway parts suppliers such as Midas. Despite the current overhang on China's rail transport sector, we opine that the long-term prospects are still positive, driven by the fundamental need to fulfil China's rising transportation needs and continued economic development. We are keeping our estimates for now until there is greater clarity on the Chinese government's railway policies. Nevertheless, given the macroeconomic uncertainties and significant de-rating of China's railway sector related stocks, we see the need to lower our valuation peg on Midas to 8x blended FY11/FY12F EPS (previously 16x), in-line with the average forward PER of its railway parts manufacturing peers. Consequently, our fair value estimate is reduced from S$0.805 to S$0.435. Notwithstanding this, we are maintaining our BUY rating on valuation grounds. (Wong Teck Ching Andy)

Keppel Corporation: US$199m contract for rig refurbishment and upgrade

Summary: Keppel Corporation (KEP) announced that it has secured a contract for its high-spec KFELS B Class rig from Safin Gulf FZCO (Safin) worth US$199m. Delivery time is shorter with completion scheduled for 3Q12 as the rig will be a refurbishment and upgrade of a KFELS B Class jack-up rig that Keppel FELS purchased earlier this year. The earlier delivery is valued by Safin as the tight jack-up market has resulted in dwindling yard slots for the local rig builders. We believe this is the reason why KEP could command such a high price for the refurbishment and upgrade work since a typical newbuild of similar design is also about the same price - Gulf Drilling had ordered a KFELS B Class Bigfoot jackup worth US$197m in May 2011 while Japan Drilling had ordered a KFELS Super B Class jackup for US$210m in Mar 2011. KEP has secured S$7.8b worth of contracts YTD, accounting for 92% of our full estimate. Maintain BUY with fair value estimate of S$12.12 on KEP. (Low Pei Han)

Biosensors International Group: Completes acquisition of remaining 50% stake in JWMS

Summary: Biosensors International Group (BIG) announced that it has completed its acquisition of the remaining 50% stake in JW Medical Systems (JWMS) from Shandong Weigao Group Medical Polymer (Shandong Weigao). As a result, Shandong Weigao has received (i) a cash payment of S$160m; (ii) 260m new ordinary shares, making it a key shareholder of BIG; and (iii) US$120m principal amount of 4% convertible notes due 2014. We believe that BIG would now be able to concentrate on increasing its penetration into the Chinese DES market given JWMS's strong positioning there. The group would also be able to leverage on Shandong Weigao's experience in China. We had already incorporated this acquisition in our assumptions and consolidated JWMS's numbers in our estimates from 3QFY12 onwards. As such we retain our forecasts and fair value estimate of S$1.68. Given an attractive upside potential of 45.4% from current price level, we reiterate our BUY rating on the stock. (Wong Teck Ching Andy)

PEC Ltd: Contract wins of S$45m

Summary: PEC yesterday announced recent contract wins worth S$45m, including one with JGC Corporation to provide steel structure, piping and electrical & instrumentation works for a refinery in Singapore for an oil major, bringing its current order-book past the S$300m mark. We believe the market impact will be neutral. Recall PEC's order-book was already at S$300m as of end-June. Thus, we believe part of the S$45m contract wins would be used to replenish order-book that were used up during the quarter ended Sep. Maintain BUY with fair value estimate of S$1.12. (Chia Jiunyang)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- US manufacturing data unexpectedly accelerated in Sep - the Institute for Supply Management (ISM) factory index climbed to 51.6 from 50.6 in Aug.

- Prices of HDB resale flats and mass-market private condominiums climbed in 3Q11. URA's flash estimates show that overall private home price index rose 1.3% QoQ, albeit slower than the 2% increase in 2Q.

- Reflecting the buoyant industrial property market last year, JTC posted a total surplus of S$918m for the FY ended 31 Mar, +39%.

- Avic International Investments - which recently acquired the Singapore listing status of Sino-Environment following a scheme of arrangement announced yesterday that building of two vessels on its order books will be suspended.

- Ascendas REIT has bought Ascendas Z-Link, a business park property in Zhongguancun Software Park. It is their maiden purchase in Beijing.

- SATS clarified news reports and stressed that ongoing discussion for sale of UK unit is not complete yet - discussions are at a stage where there is no certainty that a definitive agreement may be arrived at.

- Stamford Land has signed a memorandum of understanding for the sale of three hotel properties in Australia for an indicative consideration of A$316m.

China Minzhong Food Corp upgraded to 'buy' by DBS

Stock Name: ChinaMinzhong
Company Name: CHINA MINZHONG FOOD CORP LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.28

DBS Vickers Securities in a Sept 30 research report says: "In our view, MINZ is oversold. MINZ's share price has fallen 52% from its peak of $1.85 in Feb 28. The stock currently trades at 3.8x FY12 PE and 0.7x FY12 P/BV, at about -2 standard deviation from its average valuations of 7x PE and 1.3x P/BV. 4QFY 06/11 and FY06/11 results were within expectations.

"We expect fundamentals to be intact supported by favourable operating environment. In view of the strong earnings visibility, the current valuation gap is unjustifiable.

"Based on lowered target valuation of 5.5x FY12 PE (in line with valuation of S-chip companies under our coverage), we revised our target price to $1.28, representing P/BV of 1.0x. Upside of 43%. UPGRADE TO BUY."

Market Pulse: Rotary Engineering and United Envirotech (03 Oct 2011)

Stock Name: Rotary
Company Name: ROTARY ENGINEERING LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.66

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.53

Market Pulse: Rotary Engineering and United Envirotech (03 Oct 2011)

FOCUS

Rotary Engineering: Upgrade to BUY - Attractive entry point

Summary: Rotary Engineering announced that it has secured S$110m worth of contracts between Jul and Sep 2011, including a multi-million dollar contract from Taiwan-based Chang Chun Group to undertake the construction of a petrochemical plant on Jurong Island. Compared with its average quarterly revenue of S$155m (over the past eight quarters), we feel that Rotary would need to win more contracts to replenish its order-book. However, we believe that the decline in its share price year-to-date has been excessive. It is currently trading at 6x PER and 1x P/B, also about one standard deviation below its averages over the past 5 years. With an estimated dividend yield is about 6%, we believe current valuation is attractive for long-term investors. Upgrade to BUY with an unchanged fair value estimate of S$0.66. The key risks include worsening geopolitical risk across the Middle East region, a sharp cut in capex by oil companies and project execution risks. (Chia Jiunyang)

United Envirotech: Growing its recurring income stream

Summary: United Envirotech Limited (UEL) has acquired another waste-water treatment project in China; this after exercising a call option to acquire the entire equity interest of Tongji Environmental (China) Pte Ltd (Tongji) for RMB34.03m. Tongji is the holding company of Aton Environmental (Shenyang) Co, where the latter has a 30-year BOT (Build-Operate-Transfer) concession agreement with the municipal government to treat 50k m3 of wastewater daily. According to UEL, the move is part of its business strategy to increase recurring income streams through the investment in water treatment projects. Management continues to remain upbeat about the growth prospects in China's wastewater industry and intends to invest in similar projects in economically developed provinces; and the proceeds from the issue of US$113.8m worth of convertible bonds to KKR due in early Oct would come in handy. But until we see a more sizable EPC project, we maintain our FY12 and FY13 estimates for now. Hence our DCF-based fair value remains at S$0.53. Maintain BUY. (Carey Wong)


For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES

- European governments are exploring speeding up the start of a permanent rescue fund. Finance officials will weigh the cost advantages of setting up the European Stability Mechanism a year earlier than its planned Jul 2013 start.

- According to MAS data, total Singapore-dollar bank loans increased 3% in Aug from Jul, to reach S$393.2b. This was mainly driven by increase of business loans - which make up more than half of Sing-dollar bank loans.

- According to US treasury data, Singapore-based investors re-entered the US market in the Q2 of 2011, piling up their portfolios with both US equities and Treasury bonds.

- GIC and the bankrupt owners of Doral Resorts and four other luxurious resorts, reached settlement to recover US$360m in loans. This settlement was obtained after GIC previously tried to acquire the five resorts for US$1.465b in cash and debt.

- Lippo Malls Indonesia Retail Trust is buying two retail malls in Indonesia for approx. S$388m, to be fund partly by a rights issue.

- First deliveries of additional Indonesian piped gas supplies (86m standard cubic feed daily) will begin this month. The supplies will be brought in by Sembcorp Gas under a deal struck three years ago.