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