MARKET PULSE: Ezra, CSE and City Dev (13 Jan 2012)

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.36

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.06

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 8.38

MARKET PULSE: Ezra Holdings, CSE Global and City Developments

13 Jan 2012

KEY IDEA Ezra Holdings: 1QFY12 results in line; to tap debt markets this year? Ezra Holdings (Ezra) reported a 138% YoY rise in revenue to US$180.5m but saw flat net profit of US$13.3m in 1QFY12. Results were within expectations. AMC's loss has narrowed substantially from 4QFY12's US$6-7m loss. The subsea division has also been building up its order book in the past half a year - compared to an order book of more than US$300m as at 14 Jul 2011, the figure has grown to an excess of US$800m currently. We look at the group's cash requirements this year and we think it is likely that the group may look to the debt markets for funds this year. Meanwhile, we maintain our BUY rating and S$1.36 fair value estimate on the stock. (Low Pei Han) MORE REPORTS CSE Global: Look out for Australia LNG project win We think that a potential catalyst could come from the Australia, where LNG projects appear to be finally gaining momentum. CSE Global has been strengthening its position in the country over the past few years and it has a good chance of winning a major LNG contract. Separately, we note that long-term value investor Chartered Asset Management has increased its stake to 13.5% from 12.8% in Dec 11. With a greater proportion of its shares held by long-term investors, we believe there is lower downside risk to its share price. We also find the current 5.4% dividend yield attractive. Maintain BUY with unchanged fair value estimate of S$1.06. (Chia Jiunyang)

City Developments Limited: Acquisitions in Phuket and Bangkok City Developments (CDL) announced yesterday that it has paid US$157.6m for a 49% stake in Dolrutei, which in turn holds 95% of Phuket Square. Phuket Square owns two properties in Patong, Phuket Island: Jungceylon Shopping Mall (a retail development with NLA 63k sqm) and Millennium Resort Patong Phuket (a hotel with 418 rooms). It also owns Millennium Mall, a retail mail under construction (est. completion 1H12) in Sukhumvit, Bangkok with an NLA of 3k sqm. We understand the value attributed to these properties under the transaction is US$222m, versus an open market valuation of S$225.8m by Colliers International. Pending further discussion with management, we maintain our HOLD rating with a fair value estimate of S$8.38 (35% discount RNAV). (Eli Lee) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Spanish and Italian borrowing rates fell following debt auctions, sending Australian equities and Japanese stock futures upwards on the increasing optimism that European economies are stabilizing with cash injections from the ECB. - In Dec, China's inflation rate cooled to a 15-month low of 4.1%, indicating that the government may have more room to employ monetary easing to support the economy. - Wilmar prices bonds totalling S$350m yesterday, with S$250 of five-year 3.5% notes and S$100m of seven-year 4.1% notes. - F&N's service residence arm, Frasers Hospitality, began construction of its second property in Jakarta. The 45-storey development comprising of ultra deluxe service residences and penthouses is expected to be completed in 2014. - Far East Organizations' The Hiller project in Hillview Avenue has sold approximately three-quarters out of the 411 units that have been released so far. Units were sold at an average of $1,200 psf. - Hiap Seng Engineering said yesterday that the CPIB has concluded its probe. The company had announced in Sep that the probe mainly concerned contractual arrangements between the company and certain sub-contractors.