MARKET PULSE: Cache Logistics, Karin, Ezra & KSH Holdings (10 Jan 2012

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.28

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.36

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

MARKET PULSE: Cache Logistics, Karin, Ezra & KSH Holdings

10 Jan 2012

KEY IDEA Cache Logistics Trust: Poised to repeat its success Cache Logistics Trust (CACHE) is due to release its 4QFY11 results on 18 Jan. We project that the REIT would deliver healthy performance in its gross revenue and DPU, bolstered by additional rental income from its recent acquisitions. While the Singapore economy growth is anticipated to moderate in 2012, we believe the impact to CACHE's financial performance is likely to be limited. Pertaining to the recent anti-speculative measures taken by government in the industrial space, we are of the view that it will be beneficial to CACHE, as we expect better stability in the end-user demand as well as opportunities for asset injection. Maintain BUY rating and S$1.14 fair value. (Kevin Tan) MORE REPORTS Karin Technology: Visit to Hong Kong and Shenzhen operations We visited Karin Technology's (Karin) offices in Shenzhen and Hong Kong recently. The group also celebrated its 35th anniversary last week. According to management, Karin achieved profitability every year since its first year of operations. We believe that broad-based growth opportunities exist for Karin, and like the group for its attractive dividend yield and experienced management team. Nevertheless, macroeconomic risks, especially from the euro zone debt crisis, form the biggest threat to Karin's operations, in our opinion. But we have already lowered our valuation peg on the group recently to account for this. With potential total returns of c.31% now, we upgrade Karin from Hold to BUY. Fair value estimate remains unchanged at S$0.28. (Wong Teck Ching Andy) Ezra Holdings: Secures up to NOK600m worth of contracts Ezra Holdings (Ezra) announced that its subsea division, EMAS AMC, has won two contracts from Statoil for mooring chain and riser replacements in the North Sea on the Norwegian Continental Shelf. The total contract value is about NOK425m (~US$70.5m) and could rise to NOK600m assuming contract options are exercised. Engineering and planning work will commence immediately, and offshore operations will take place in 3Q12. Execution risk should be lower as EMAS AMC has done similar work for Statoil previously in 2009. We estimate that Ezra's subsea order book has exceeded US$800m with these new contracts, nearing its US$1b short-term order book target. Maintain BUY with S$1.36 fair value estimate. (Low Pei Han) KSH Holdings: New S$110m Seastrand contract KSH announced that it has secured a S$110m construction contract for the Seastrand condominium development at Pasir Ris. This contract win was awarded by a JV between Far East Organization and a Fraser Centrepoint Limited subsidiary, and brings KSH's order-book up to S$467m. We expect the market to react positively to this event. This win is in line with our expectations for order book growth to S$600m-S$800 in FY12-13, and we anticipate healthy profit margins over 10%. The Seastrand contract is expected to take place over 30 months and KSH would build nine residential blocks with 473 units, in addition to other facilities. Our valuation model currently factors in such contract wins and hence our fair value estimate remains unchanged at S$0.30. Maintain BUY. (Eli Lee)

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

NEWS HEADLINES - US Consumer borrowing surged in November by the most in 10 years, increasing by US$20.4b to US$2.48t. The advance was almost twice the highest forecast given by economists surveyed by Bloomberg. - German industrial output of investment and consumer goods fell in November. Industrial output fell 0.6% from October, during which it had risen 0.8%. - F&N's Australian subsidiary has announced today that it appointed a contractor in a A$99.7m construction contract for its Queens Riverside's 'QIII' apartments in East Perth's new urban quarter. - Keppel Offshore and Marine's US subsidiary has landed a US$150m deal from long-time customer Diamond Offshore, to build and upgrade a semisubmersible rig. - Synear Food said it expects a loss for the forth quarter ended 31st December 2011 as a result of bad publicity regarding a batch of its products. - CDL has received over 800 e-applications for its 466-unit executive condominium project, The Rainforest, by 5pm yesterday.