Company Name: SINGAPORE TECH ENGINEERING LTD
| Research House: OCBC | Price Call: BUY | Target Price: 3.01 |
Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST
| Research House: OCBC | Price Call: BUY | Target Price: 0.87 |
Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.
| Research House: OCBC | Price Call: HOLD | Target Price: 0.43 |
Market Pulse: ST Engin, FCOT, Marco Polo Marine (25 Nov 2011)
FOCUS
ST Engineering: Recent decline provides better entry point
Summary: Despite Singapore Technologies Engineering's (STE) recent contract win worth S$441m, its share price has fallen in line with the weakness in the Singapore equities. The latest contract win constitutes the construction of eight 97.2m long Offshore Supply Vessels (OSV) with additional options for up to 24 vessels. STE's EPS growth has been relatively stable through the years, largely buoyed by its strong order book. As the global environment remains challenging, we continue to favour stocks with resilient earnings. At current price level, and with an estimated dividend yield of 5.6%, we reiterate our BUYrating on STE and maintain our fair value estimate of S$3.01. (Eric Teo)
Frasers Commercial Trust: Expecting better performance in FY12
Summary: Frasers Commercial Trust's (FCOT) FY11 DPU of 5.75 S cents came in within our and consensus expectations. Going into FY12, we maintain our view that FCOT may continue to post improvement in its operating performance, barring any fallout in the office rental market. According to management, China Square Central's average passing rents is below the recently contracted rents. With management's intention not to renew the lease but to take over the management of the property upon its expiry, we are likely to see further rental growth on this front. We also note that the group had recently secured a new A$105m loan facility. This facility, which will be used to repay the outstanding amount relating to its existing A$150m loan facility, has an interest rate based on Australian BBSY rate plus margin of 1.55% (vs. existing 2.65%). Hence, we may expect DPU uplift from interest savings. We make minor adjustments to our FY12 forecasts to factor in these recent developments. Retain BUY and DDM-based fair value of S$0.87. (Kevin Tan)
Marco Polo Marine: Declares S$0.01 special dividend
Summary: Marco Polo Marine (MPM) reported a 38% YoY rise in revenue to S$20.3m and a 27% increase in net profit to S$3.5m in 4QFY11, such that FY11 figures accounted for 101% and 93% of our full year estimates, respectively. Net profit was lower than expected mainly due to a higher effective tax rate of 28.4% in 4QFY11 compared to an average rate of 12.2% in 9MFY11; this was because of higher contributions from Indonesia and Australia which had higher corporate tax rates. Looking ahead, MPM expects its ship chartering results to be supported by its relatively young offshore business, while its shipyard is expected to deliver two additional units of offshore support vessels by 3QFY12. The group has declared a special dividend of S$0.01 per share for FY12, which will be paid on 22 Dec 2011.Our Hold rating and fair value estimate of S$0.43 is under review, pending an analyst briefing later in the afternoon. (Low Pei Han)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- German Chancellor, Angela Merkel, stated that joint euro bonds would send a "wrong signal", dampening optimism about a potential remedy for the region's debt problems. The euro (against the dollar) touched a seven-week low after her comments.
- According to DTZ, buyers from mainland China have been snapping up homes in Singapore, accounting for 30.6% of all private home transactions in Q3, vs. 26% in Q1 and Q2.
- NH Ceramics posted net profit of S$511k for FY11, down c.44%. This is partly due to lower sales from supplying building materials.
- Heng Long International, the crocodile skin tannery, moves closer to delisting as SGX raised no objections against its proposal. LVMH launched a takeover bid for Heng Long in Oct, offering S$160.8m.
- SingTel Optus has priced an A$75m, seven-year fixed rate note issue. The notes are to be issued on 5 Dec 2011 and will extend Optus's maturity profile as well as add diversity to its debt structure, according to SingTel.
- Even as liquidators of MF Global reported progress in winding down the business, customers of MF Global Singapore are still waiting to recover approx. US$307m, before monies and assets can be released.
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