MARKET PULSE: SPH, Lian Beng and TEE International (12 Jan 2012)

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.99

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

Research House: OCBC

Price Call: BUY

Target Price: 0.51

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

MARKET PULSE: SPH, Lian Beng and TEE International

12 Jan 2012

KEY IDEA Singapore Press Holdings: Retail landlord strategy coming along nicely Singapore Press Holdings (SPH) reported 1Q12 PATMI of S$97.5m or 6 S-cents per share, down 4.7% YoY. This was mainly due to a poorer performance from the Newspaper and Magazine segment, offset by added contributions from Clementi Mall. 1Q12 PATMI formed 26.3% of our FY12 forecast and is broadly in line with expectations. Clementi Mall contributed S$9m to revenues as it ramped up into full operations this quarter, its contributions buttressing earnings significantly. We like the visibility of recurring income from a suburban retail mall, and believe management's strategy of building a stable counterweight to the print business is coming along nicely. Upgrade to BUY at a fair value estimate of S$3.99 and expected dividends of S$0.24 in FY12. (Eli Lee) MORE REPORTS Lian Beng: Reasonably decent 1HFY12 showing Lian Beng reported a reasonably decent set of 1HFY12 numbers that were just slightly below our expectations. The group recorded YTD sales of S$237.7m, down 4.7% YoY, but 1HFY12 profits of S$30.5m showed a 33% improvement. The sales decline is attributed to lower recognition of construction contract revenue while the net profit jump was contributed by gains from the sale of its property at New Industrial Road. Without which, we estimate that net profit would have been largely flat. Construction remains an important revenue driver (73% of total revenue) and given that Lian Beng still holds a sizeable net order book of S$772m, we expect its earnings to improve when it picks up pace on the execution of its newly awarded contracts. We maintain our BUY rating and fair value estimate of S$0.51. (Benjamin Lim) TEE: Higher overseas contribution, better margins TEE saw 34% and 19.4% YoY decline in revenue and net profits respectively due to lower revenue recognition from local projects. Going forward, we expect the group to pick up pace on several overseas projects, which typically provide better margins. Management believes that FY13 will be a more representative year of its operations. Factoring in slower execution, but stronger margins from overseas projects, we update our assumptions and lower our fair value estimate to S$0.30 (previously S$0.34). With an expected dividend yield of around 5%, total anticipated return on the stock is ~33%; therefore we maintain our BUY rating. (Benjamin Lim)

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NEWS HEADLINES - US manufacturing and mining helped led the largest annual employment increases in five years in 2011. Employers added a total of 1.64m workers in 2011, the best since 2006, after a 940k increase in 2010. - Cooper futures rose to a four-week high with the anticipation that China's will pursue monetary easing and thus drive metal demand. Zinc, tin and lead prices also rose, while nickel dropped. - CapitaLand's wholly-owned serviced residence business unit, The Ascott Limited, has secured a new management contract for its first Citadines Apart'hotel in Surabaya, Indonesia. The 288-unit property is scheduled to open in 2014. - China Fishery drops plan for HK dual listing due to persisting poor market conditions. The proposed flotation was first announced in December 2010 and was delayed multiple times before. - SPH's flagship paper, The Straits Times (ST), will launch an Android application next Monday to garner subscriptions through all-in-one packages that will also comprise the daily ST newspaper.