Noble Group - Still lack catalyst

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 1.46

Improvement in 4Q11

Noble Group (Noble) saw 4Q reported net profit fall 57% YoY to US$106m, but it was an improvement from the US$18m net loss in 3Q11. For FY11, revenue jumped 42% to US$80,732m, or 0.4% above our forecast, while reported net profit slipped 29% to US$431m, it was around 13% above. However, stripping out likely one-off items, we estimate that recurring earnings would have slipped 29% to US$288m. Noble has recommended a final dividend of 1.65 US cents/share, payable in cash or scrip, vs. 2.5 US cents last year.

Margins showing slow recovery

Although overall net margin slipped from 1.1% in FY10 to just 0.5% in FY11, its various segments have started to show steady recovery. For Agriculture business, operating margin has improved from 1.2% in 3Q11 to 2.8% in 4Q11, but off 4Q10's 10.9% margin. For Energy, operating margin has actually surpassed 4Q10's 1.1% and 3Q11's 1.3% to hit 1.6%. For its Metals, Minerals and Ores (MMO), operating margin also improved from 3Q11's 0.6% to 0.7%, but still way below 4Q10's 2.2%.

Worst is likely over but still lacks catalyst

Based on 4Q11 results, it appears that the worst is likely over. However, we note that there could still be a dearth of near-term catalyst. While Noble revealed that it expects some development on the Gloucester-Yancoal merger front next week, management does not expect any deal to take place in 1Q12. Management also did not elaborate much on its planned listing of its Agri-business on SGX other than saying it has a new CEO for that division.

Maintain HOLD with S$1.46 fair value

While we are increasing our valuation peg from 10.5x (one standard deviation below 5-year mean) to 11.1x (0.5 SD), a lower USD/SGD assumption negates the increase, thus maintaining our fair value at S$1.46. Given the limited upside for now, we maintain our HOLD rating. (Read full report)

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CIMB : Noble Group - En-route to recovery

Source : OCBC Research

MARKET PULSE: Noble Group, ECS, CSE, City Dev, Ezra, Midas, KS Energy & Hoe Leong (29 Feb 2012)

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.46

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.69

MARKET PULSE: Noble Group, ECS, CSE, City Dev, Ezra, Midas, KS Energy & Hoe Leong

29 Feb 2012

KEY IDEA Noble Group Ltd: HOLD - still lacks catalyst Noble Group (Noble) reported better performance in 4Q11, suggesting that the worst is likely over. For FY11, revenue jumped 42% to US$80,732m, or 0.4% above our forecast, while reported net profit slipped 29% to US$431m, it was around 13% above our forecast. However, we note that there could still be a dearth of near-term catalyst. While Noble revealed that it expects some development on the Gloucester-Yancoal merger front next week, management does not expect any deal to take place in 1Q12. Management also did not elaborate much on its planned listing of its Agri-business on SGX other than saying it has a new CEO for that division. While we are increasing our valuation peg from 10.5x (one standard deviation below 5-year mean) to 11.1x (0.5 SD), a lower USD/SGD assumption negates the increase, thus maintaining our fair value at S$1.46. Given the limited upside for now, we maintain our HOLD rating. We would be buyers closer to S$1.30. (Carey Wong) MORE REPORTS ECS Holdings: Strong execution deserves a re-rating ECS Holdings (ECS) reported FY11 results which were in line with expectations. Revenue grew 16.9% to S$3,607.2m, forming 100.6% of our forecast. Estimated core PATMI declined 17.1% to S$36.0m, or 0.5% shy of our projection. This was due to lower gross margin, a sharp spike in finance costs, and disruption caused by the Thailand floods. A dividend of 2.2 S cents was declared (FY10: 3.6 S cents), below our 2.6 S cents forecast. Nevertheless, a key positive came from ECS's strengthened balance sheet, which can be attributed to its effective working capital management. Its net gearing ratio was lowered significantly from 73.9% in 3Q11 to 33.8% in 4Q11. Given ECS's improved financial position and growing market risk appetite for cyclical stocks, we increase our valuation peg on ECS to 5.8x (previously 5.1x) FY12F EPS. This raises our fair value estimate from S$0.61 to S$0.69. Maintain BUY. (Wong Teck Ching Andy) CSE Global: Too early to turn positive CSE Global's FY11 revenue and net profit came in at S$457m (+2% YoY) and S$28m (-47%) respectively, and were in line with our forecast and consensus. Overall, 2011 was a difficult year as CSE faced cost overruns and project execution delays in its Middle East projects. It also suffered an operating cash deficit of S$6.9m due to increased working capital requirements. Considering the past issues, we think that investors should exercise caution. CSE needs to demonstrate that it is able to execute contracts well and manage its growth judiciously. Maintain HOLD with unchanged fair value estimate of S$0.80. (Chia Jiunyang) City Developments Limited:4Q11 results within expectations City Developments (CDL) reported 4Q11 PATMI of S$163m, down 32% YoY mostly due to the absence of gains recognized from strata unit sales at Chinatown Point in 4Q10. As a result, FY11 PATMI cumulated to S$799m which was mostly within our expectations. FY11 topline came in at S$3,280m - again in line with our FY11 forecast (S$3,301m). In the financial year, CDL (incl. associates/JVs) sold a total of 1,818 units for S$1,755m. The hotel segment also put up healthy numbers with M&C's global RevPar up 5.8% (constant currency terms), driven mainly by an increase in average room rates. In terms of its balance sheet, net gearing improved to 21% (versus 29% FY10) with a healthy cash balance of S$2.6b as of FYE11. Management proposed total final dividends of 13 S-cents (5 cents special, 8 cents ordinary). We would speak with management later today and, in the meantime, put our Hold rating and fair value estimate of S$8.38 (35% discount RNAV) UNDER REVIEW. (Eli Lee) Ezra Holdings: Achieves US$1b short-term subsea order book target Ezra Holdings (Ezra) announced that it has won a contract by Apache Energy to perform subsea transport and installation work for the Coniston Field Development in Northwest Australia. The base scope for the contract works is estimated to be up to US$70m with potential add-on work worth up to another US$30m. Engineering and planning activities will start immediately with offshore installation operations scheduled to commence around 1Q13. The group also recently secured a 2014 contract extension for its umbilical installation vessel for operations in Europe, and with these awards, Ezra has achieved its US$1b short-term order book target for the subsea division. Looking ahead, we believe that the focus will likely be on the execution of projects. Maintain BUY with S$1.51 fair value estimate. (Low Pei Han) Midas Holdings: FY11 earnings within expectations Midas Holdings (Midas) reported FY11 revenue this morning which was below our expectations but earnings met our forecasts. Revenue increased 4.9% to RMB1,080.7m, forming 94.9% of our projections, while PATMI of RMB187.4m (-22.2%) was 1.4% above our estimates. The decline in earnings was attributed to higher operating expenses and finance costs, and further exacerbated by a 81.9% plunge in contribution from its 32.5%-owned associate Nanjing SR Puzhen Rail Transport (NPRT). A final dividend of 0.5 S cents was declared (total FY11 DPS of 1 S cent), in line with our expectations and similar to FY10's 1 S cent dividend. Looking ahead, we opine that conditions in China's railway sector are likely to pick up, although near-term weakness should persist for Midas as 1Q is a seasonally slow quarter and contract wins would take some time to flow down from its customers. We will provide more details after speaking with management later. Until then, we are placing both our Hold rating and S$0.31 fair value estimate under review. (Wong Teck Ching Andy) KS Energy: Net loss in FY11 KS Energy (KSE) reported a 3.3% fall in revenue to S$492.7m and a net loss of S$78.8m in FY11 vs. a net loss of S$98.4m in FY10. Revenue was within our expectations but the net loss was greater than expected, mainly due to 1) stock provisions of S$15.3m with a new inventory policy in the Distribution division, 2) an S$18.6m expense for a non-core capital equipment asset to bring it in line with expected realizable value, and 3) higher finance costs. The group's performance has improved in terms of narrowing its net loss but we are still unsure when we can see a return to profitability. Pending further details from management, we maintain our HOLD rating but put our fair value estimate of S$0.91 under review. (Low Pei Han) Hoe Leong Corp: FY11 net profit up 156% to S$26m Hoe Leong Corp released its FY11 results last night. FY11 revenue was up 31% to S$81m, while net profit jumped 160% to S$26m. Both its revenue and net profit were in-line with our expectations. The improvements were mainly driven by a sale-and-leaseback transaction (which contributed S$14m) and share of results from associates and JVs (which increased by S$5.5m). Excluding the above mentioned, core pre-tax earnings would have decreased by 40%. We will speak to management to get further details. In the meantime, we put our Hold rating and S$0.20 fair value estimate UNDER REVIEW. (Research Team)

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

NEWS HEADLINES - US stocks rose, with the Dow climbing 0.2% to close at 13,005.12, its first close above 13,000 since 2008. The euro gained 0.5% to $1.3471, the highest level of the year, before the ECB provides funds to support the banks later today. Oil dropped 1.9% to $106.55 a barrel. - Hong Leong Finance registered a net profit of S$99.8m for FY11, down 18.2%, due to the low interest rate environment. Interest on loans and hiring charges fell by 9.7% and 18.6% respectively. Final dividend was unchanged at eight cents a share. - Thai Beverage saw net income for FY11 of THB12.9b, a 30% rise above the FY10 restated figure, on the back of a 10% rise in revenue to THB132b.

Armstrong Industrial - Improved prospects priced in

Stock Name: Armstrong
Company Name: ARMSTRONG INDUSTRIAL CORP LTD

Research House: CIMB

Price Call: HOLD

Target Price: 0.32

Target S$0.32

The positive outlook on the recovery of the HDD sector and the growth potential of its automotive segment in China has set Armstrong on the path to recovery after being hit by the Thai floods. However, we believe most of the positives are priced-in for now.

Source: CIMB Day Break 28 February 2012, PDF Report

MARKET PULSE: Golden Agri, Swiber, Bumi Armada, CSE Global, ECS, Lian Beng & OKP (28 Feb 2012)

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.77

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.70

MARKET PULSE: Golden Agri, Swiber, Bumi Armada, CSE Global, ECS, Lian Beng & OKP

28 Feb 2012

KEY IDEA Golden Agri-Resources Ltd: 4Q11 disappoints; cut to HOLD Golden Agri-Resources (GAR) reported core earnings that missed our forecasts, coming in at US$90.6m, or 41.5% below. For FY11, revenue jumped 69.9% to US$5952.9m, or just 0.2% shy of our forecast; while core earnings climbed 47.6% to US$571.4m, it was 12.3% below our estimate (nearly 10% below consensus). Meanwhile, GAR declared a final cash dividend of 1.84 S cents, versus 0.77 S cent last year; payable on 15 May. In light of the latest results and also using a slightly higher CPO assumption of US$1000/ton (US$950/ton previously), we bump up our FY12 revenue estimate by 2.7%; but cut our earnings by 6.8% (due to lower margin assumptions). Still based on 12.5x FY12F EPS, our fair value eases from S$0.82 to S$0.77. Given the limited upside, we downgrade our call to HOLD; we would be buyers below S$0.70. (Carey Wong) MORE REPORTS Swiber Holdings: Results below expectations Swiber Holdings (Swiber) reported a 40.5% increase in revenue to US$654.5m but a 14% drop in net profit to US$32.1m in FY11. The latter was significantly below ours and the street's estimates due to 1) lower other operating income, 2) higher administrative expenses, and 3) a jump in income tax expense in 4Q11. We are confident of the group's ability to secure projects going forward, given the buoyant industry outlook and its strong foothold in certain geographical areas. However, we are expecting higher administrative costs and tax expenses which will impact core earnings. We are now assuming an US$850m new order win for 2012 after Swiber secured US$216m worth of work (excl. US$38m JV contract) YTD. Although this bumps up our fair value estimate to S$0.70, we maintain our HOLDrating due to limited upside potential. (Low Pei Han) Bumi Armada Berhad: Steady Execution Bumi Armada reported a good set of FY11 results, with full-year revenue and net profit largely within our and the street's expectations. FY11 revenue jumped 24% YoY to M$1.5bn, supported by stronger contributions from its FPSO, OSV (Offshore Support Vessel) and OFS (Oil Field Services) segments. However, FY11 net profit increased by only 2.5% to M$365m. This was due to higher vessel depreciation, interest charges and tax expenses. The group has also announced a 2.5 Mcts dividend. With our FY12F estimates largely unchanged, we keep our HOLD rating and M$4.00 fair value estimate. (Chia Jiunyang) CSE Global: FY11 Net Profit down 47% CSE Global announced its FY11 results last evening. FY11 revenue and net profit came in at S$457m (+2% YoY) and S$27.7m (-47% YoY) respectively and were within our and the market expectations. The decline in net profit was mainly due to cost over-run in its Middle East projects. Its order-book declined to S$455m as of end-Dec 11 (end-Sep 11: S$482m). CSE Global has also proposed a 2 S cents final dividend for FY11. Pending an analyst briefing later, we put our Hold rating and S$0.80 fair value estimate UNDER REVIEW. (Chia Jiunyang) ECS Holdings: FY11 results in line with expectations ECS Holdings (ECS) reported 4Q11 PATMI of S$9.0m (-38.5% YoY; -0.9% QoQ) on the back of a 10.0% YoY increase (-6.8% QoQ) in revenue to S$924.5m. FY11 results were within our expectations, with revenue growing 16.9% to S$3,607.2m, forming 100.6% of our forecast. PATMI dipped 26.0% to S$39.2m due to lower gross margin, a large spike in finance costs and disruption caused by the Thailand floods, which is ECS's second largest market. Adjusting for forex effects and exceptional items, we estimate that core earnings declined 17.1% to S$36.0m, or 0.5% shy of our projection. A dividend of 2.2 S cents was declared (FY10: 3.6 S cents), below our 2.6 S cents forecast and translates into a yield of 3.9%. Nevertheless, one of the key positives from ECS was its effective working capital management during the reported quarter, which helped to increase its net operating cashflows generated from S$21.3m in 4Q10 to S$128.6m in 4Q11. This enabled the group to repay some of its borrowings, and its net gearing ratio now stands at 33.8% as at 31 Dec 2011, versus 73.9% in 3Q11. We will provide further details pending the analyst briefing. Meanwhile, we place our Buy rating and S$0.61 fair value estimate under review. (Wong Teck Ching Andy) Lian Beng Group: Secures S$49m Mindef contract Lian Beng Group (LBG) last night announced it has secured a construction contract worth ~S$49m, with a contract period of 21 months, from Ministry of Defence. LBG added that this contract is expected to have a positive financial impact on its financial year ending 31 May 2012. At the end of 1HFY12, LBG had a strong order book of S$772m. We reiterate our BUY rating and fair value estimate of LBG at S$0.51/share. (Eric Teo) OKP Holdings: S$75m LTA contract win OKP Holdings (OKP) last night announced it has secured a S$75.3 million contract from the Land Transport Authority to expand the intersections of Central Expressway (CTE), Tampines Expressway (TPE) and Seletar Expressway (SLE). OKP expects to start work on this design-and-build project in Mar 2012 and complete it by 2015. This project will improve connectivity between Yishun, the new Seletar Aerospace Park and Singapore's expressway network. We are positive on this latest contract win as it adds a substantial amount to OKP's order book of S$249m at end-FY11. We maintain our BUY rating and fair value estimate of OKP at S$0.75/share. (Eric Teo)

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

NEWS HEADLINES - The S&P 500 Index rose 0.1% to close at 1,367.59, the highest close since June 2008, as an increase in US home sales helped to stop a global drop in equities. Oil fell from a nine-month high, breaking a seven-day rally, while Treasuries and the Yen advanced. - Orchard Parade Holdings registered FY11 net profit of S$124m, up 50% YoY. Revenue had increased by 49% YoY to S$292m, mainly from the progressive recognition of revenue from a Floridian property development project. - Kingsmen Creatives recorded FY11 net profit of S$16.3m (+8.4% YoY). Revenue rose 11.7% to S$261m. The group has already secured ~S$106m of contracts for 2012 and expects good performance for the year. - Amara Holdings saw FY11 revenue flat at S$61.8m, but a substantial gain in fair value on investment properties of S$25.4 (vs. S$5.0m a year ago) helped NPAT surged 166% YoY to S$32.7m.

Swiber Holdings: Harvesting order backlog

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 0.94

Target S$0.94


Execution concerns could be assuaged by consistent performances over eight quarters. Swiber is finally making waves in the offshore construction segment with more orders in the pipeline.


Source: CIMB Research 27 Feb 2012

China XLX Fertiliser: In steady fashion

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: CIMB

Price Call: BUY

Target Price: 0.43

Target S$0.43

Results defied headwinds, with growth in key businesses. Management hints of coming excitement in the form of possible ASP hikes. We do not see any road bumps which could derail a record year in the making.

Source: CIMB Research 27 Feb 2012

CNA Group upgraded to 'neutral' by DMG

Stock Name: CNA
Company Name: CNA GROUP LTD.

Research House: DMG

Price Call: HOLD

Target Price: 0.16

DMG & Partners Research in a Feb 27 research report says: "CNA's 4Q11 net profit was above expectations, coming in at $1.6 million, versus a loss of $25.2 million a year ago. This was mainly attributable to a 52.4% y-o-y surge in revenue, with growth from its Singapore, China and Vietnam operations, as well as the absence of a $21.6 million loss on disposal of an associate.

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CWT upgraded to 'outperform' by CIMB

Stock Name: CWT
Company Name: CWT LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.53

CIMB in a Feb 24 research report says: "FY2011 core net profit ($56 million, +42.5% y-o-y) formed 131% of our FY2011 estimate and 119% of consensus. 4Q11 core net profit ($20.8 million, +31% q-o-q) formed 48.8% of our FY2011 forecast and 44% of consensus.

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Sino Grandness Food Industry Group downgraded to 'sell' by DMG

Stock Name: SinoGrandnes
Company Name: SINO GRANDNESS FOOD IND GP LTD

Research House: DMG

Price Call: SELL

Target Price: 0.37

DMG & Partners Research in a Feb 24 research report says: "4Q11 net profit of RMB22 million (-43% y-o-y, -52% q-o-q) was below our assumed RMB35 million, largely due to higher than expected selling expenses and convertible bonds related expenses.

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Petra Foods upgraded to 'outperform' by CIMB

CIMB in a Feb 24 research report says: "FY2011 profit is mildly below forecast at 94% of our FY2011 due to slightly lower-than-expected margins (98% of consensus). FY2011 net profit grew 36% y-o-y as there was broad-based margin and volume growth.

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Sembcorp Marine upgraded to 'buy' by Phillip Securities

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: Phillip Securities

Price Call: BUY

Target Price: 6.10

Phillip Securities Research in a Feb 24 research report says: "Sembcorp Marine reported FY2011 results that were slightly above expectations (6% above PSR's forecasts). Full year revenue came in at $3.96 billion (-13% y-o-y) and net income came in at $752 million (-13% y-o-y).

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ST Engineering rated 'buy' by OCBC

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.32

OCBC Investment Research in a Feb 24 research report says: "ST Engineering (STE) 4Q11 revenue fell 5% y-o-y to $1.5 billion but PATMI edged 2% higher to $152 million. For the full year, STE's FY2011 revenue remained flat at a tad shy of $6 billion while PATMI grew 7% to $528 million, missing consensus revenue and PATMI estimates by 8% and 4% respectively.

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UOL Group rated 'outperform' by CIMB

CIMB in a Feb 24 research report says: "4Q11 core earnings formed 18% of our full year and 17% of consensus, with FY2011 at 104%.UOL saw y-o-y growth in all segments in FY2011, with development revenue up 67%.

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Cosco Corporation (S) rated 'reduce' by Phillip Securities

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: Phillip Securities

Price Call: SELL

Target Price: 1.00

Phillip Securities Research in a Feb 24 research report says: "Cosco reported FY2011 revenue of $4.2 billion (+ 8% y-o-y) and net income of $140 million (-44% y-o-y). The fall in net profit was mainly due to lower dry bulk shipping income and higher operational costs (labor and raw material) in its shipyard businesses.

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YHI International rated 'buy' by DBS

Stock Name: YHI
Company Name: YHI INTERNATIONAL LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.52

DBS Vickers Securities in a Feb 24 research report says: "FY2011 earnings of $38.2 million were in line with our estimate of $37.9 million. Full year revenue growth of 10.2% was driven by the manufacturing business, with the Malaysian plant operating at full capacity to fulfill mainly ODM orders from Europe. Dividend payout was 30% at 1.96 cents, which yields 6.8% currently. YHI trades at compelling valuations of 4.5x FY12F PE. Earnings risk for the stock is low. In our view, YHI's buy/sell model for distribution has little downside to margin as it sells through on a cost-plus basis. Furthermore, distribution dominates its revenue mix at c.70% vs c.30% for manufacturing. Hence, the risk of significant margin pressure from high aluminium prices is low. Target price of 52 cents based on 8x FY12F PE. MAINTAIN BUY.

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Riverstone Holdings (RSTON SP; S$0.42; BUY)

Stock Name: Riverstone
Company Name: RIVERSTONE HOLDINGS LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 0.455

Riverstone Holdings (RSTON SP; S$0.42; BUY) - We like Riverstone for its high focus on nitrile gloves over natural rubber gloves and being a step ahead of its much bigger peers. We believe that this gives Riverstone a leg up. Maintain Buy with a slightly higher target price of S$0.455.

Source: CIMB TraderAM - 27th Feb 2012

YHI (YHI SP; S$032; BUY)

Stock Name: YHI
Company Name: YHI INTERNATIONAL LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 0.57

YHI (YHI SP; S$032; BUY) - FY11 in line with expectations. Sales grew 10.2% yoy but raw material costs were also higher, growing 11.8% yoy. At 32 S cts, the dividend yield is 6.1%. Maintain BUY, TP S$0.57.

Source: CIMB TraderAM - 27th Feb 2012

UOL Group delivered a strong FY11

UOL Group delivered a strong FY11 (in line) following yoy growth in all segments in FY11, with development revenue up 67%. Hotel revenues rose 11% yoy with Singapore RevPAR up 8%. Strong hotel indicators and recent office deals provide the share price drivers. Maintain Outperform, Target price S$5.31.

Source: CIMB TraderAM - 27th Feb 2012

Venture Corporation 4Q11 sales and core profits down

Venture Corporation 4Q11 sales and core profits were down 10% and 34% yoy respectively, marking the third consecutive quarter of contraction. The company anticipates improved traction with several key customers in 2012, and expects to capture full year revenue from products launched towards the end of 2011. According to Venture, it expects 2H12 to be better than 1H12 and 1Q is typically a low season. Upgrade from Underperform to Neutral, target price S$7.66.

Source: CIMB TraderAM - 27th Feb 2012

Sheng Siong Group net profit decimated

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.51

Sheng Siong Group experienced an unexpected tax charge, IPO expense, a drop in miscellaneous  income and margin pressure from increased competition over the festive period, decimating net profit. While we are disappointed, we believe this quarter is a one-off. Maintain Outperform with same target price of S$0.51

Source: CIMB TraderAM - 27th Feb 2012

Petra Foods FY11 results were mildly below expectations

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 1.62

Petra Foods FY11 results were mildly below expectations, missing our estimate by 6% and consensus forecast by 2%. 4Q11 net profit grew 13% yoy to US$18.4m, bringing FY11 net profit up 64% to US$60.6m. The stock has lagged the broad market rally since Jan, and we could see room for catch-up, especially with its resilient earnings. Maintain Neutral, target price S$1.62.

Source: CIMB TraderAM - 27th Feb 2012

CIMB ups UOL target price to $5.31

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 5.31

CIMB Research has raised its target price for Singapore’s property developer UOL Group to S$5.31 from S$4.90 and kept its outperform
rating.

By 9:18 a.m., shares of UOL were 1.3% lower at $4.73. The stock has risen 18.3% since the start of the year.

UOL posted on Friday a 12% fall in full-year net profit to $664 million, mainly due to higher taxes and lower fair value gains, which was in line with CIMB’s estimates.

CIMB said it expected UOL’s residential and retail development Lion City to see strong sales when it was launched in the second quarter.

Growth in retail rents would also help offset lower office rents as 40% of UOL’s retail leases would be due this year, the brokerage added.

   
 

CIMB upgrades Venture to neutral

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 7.66

CIMB Research has upgraded Singapore electronics contract manufacturer Venture Corp to neutral from underperform and raised its target price to $7.66 from $4.90.

By 9:29 a.m., shares of Venture were 2.8% higher at $8.09, and have surged about 30.5% since the start of the year.

Venture said its fourth quarter net profit fell 30% to $38 million from $54.2 million a year ago, weighed by lower sales, largely in line with CIMB's forecasts.

However, Venture‘s cash flows were strong and it ended the year with more than $300 million in net cash. This allowed it to declare a final dividend of 55 cents a share, translating to a dividend yield of 7%, CIMB said.

“The market may have priced in the weak fourth quarter and possibly first half, from its resilient share price. We think Venture deserves to trade at a higher valuation with the resumption in earnings growth in the second half,” said CIMB in a report.

 

Sembcorp Marine: Blockbuster order year

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: CIMB

Price Call: BUY

Target Price: 6.28

Sembcorp Marine [ PDF] Blockbuster order yearSMM SP / SCMN.SI |  OUTPERFORM - Maintained  |  Share Price S$5.23- Tgt. S$6.28 Offshore & Marine  | - by Siew Khee LIM

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2012 could be a record order yearfor SMM as the yard has secured S$1.25bn of contracts, or 15% of our S$8bntarget. We believe margins could surprise on the upside as more fast-trackprojects are clinched. FY11 net profit was slightly above expectations,forming 107% of our forecast and consensus, from stronger margins. SMMdeclared final/special dividend of S$0.20. We introduce our FY14 forecasts.Our unchanged target price is based on 18x CY13 P/E. Maintain Outperform.


Source: CIMB 24 February 2012

ST Engineering: Rewards outweigh risks

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD

Research House: CIMB

Price Call: BUY

Target Price: 3.49

ST Engineering  [PDF] Rewards outweigh risksSTE SP / STEG.SI |  OUTPERFORM - Maintained  |  Share Price S$3.08- Tgt. S$3.49 Conglomerate  |  - bySiew Khee LIM

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STE emerged stronger this crisis,delivering 7% earnings growth vs. its 6% earnings contraction during theGFC. Net profit also surpassed its peak in 2007 with sustainable growthexpected ahead. FY11 net profit meets expectations at 101% of our forecastand 96% of consensus. A final dividend of S$0.125 brings FY11 DPS to S$0.155(90% payout). We refine our EPS for FY12-13 by 1-2% and introduce FY14.Maintain Outperform and target price, based on blended valuations.



Source: CIMB 24 February 2012

United Overseas Bank: Pay me for liquidity!

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: CIMB

Price Call: HOLD

Target Price: 19.42

United OverseasBank  [ PDF] Pay me for liquidity!UOB SP / UOBH.SI |  NEUTRAL - Maintained  |  Share Price S$18.40 -Tgt. S$19.42 Banks  |  - by KennethNG, CFA / Daniel LAU

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Although results merely met expectations,we liked the tone. Up went margins as UOB raised pricing in a world oftight liquidity. Fees did not weaken further in a seasonally slow quarter.Trading did well even after losses in trimming down debt securities. 4Q11profit (S$558m) was within our expectations (S$574m) & consensus (S$572m).Strong NII was the key positive, though offset by a spike in credit costs.We adjust FY12-13 EPS, introduce FY14. We factor in higher loan-growthestimates and raise our GGM target price. Maintain Neutral.


Source: CIMB 24 February 2012

Cosco Corporation: Juggling more than it can handle

Stock Name: CoscoCorp
Company Name: COSCO CORPORATION (S) LTD

Research House: CIMB

Price Call: SELL

Target Price: 1.23

Cosco Corporation [ PDF] Juggling more than it can handleCOS SP / COSC.SI |  UNDERPERFORM - Maintained  |  Share Price S$1.23- Tgt. S$0.92 Offshore & Marine  | - by Siew Khee LIM

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As Cosco scales up the offshoreladder, it is booking more provisions for cost overruns. Investors mayhave to grit their teeth as the Chinese yard faces more hiccups in execution.FY11 net profit meets expectations, at 98% of our forecast and consensus.We are concerned about its unending provisions for cost overruns and cutour FY12-13 EPS by 7-16%. We also introduce FY14 numbers. Our target priceis intact at 1.5x P/BV. Maintain Underperform.

Source: CIMB 24 February 2012

Eratat Lifestyle: A surprise RMB 51.7m sales incentive

Stock Name: Eratat
Company Name: ERATAT LIFESTYLE LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 0.122

Eratat Lifestyle (ERAT SP; S$0.122 -HOLD) - A surprise RMB 51.7m sales incentive offset against outstandingreceivables caused 4Q11 net profit to fall 82% yoy. Expect further write-offof receivables in 1Q12/1H12 for renovation subsidy. We continue to advocatecaution.


Source: CIMB 24 February 2012

Otto Marine: No recovery in sight

Stock Name: Otto Marine
Company Name: OTTO MARINE LIMITED

Research House: CIMB

Price Call: SELL

Target Price: 0.14

Otto Marine  [PDF] No recovery in sightOTML SP / OTTO.SI |  UNDERPERFORM - Maintained  |  Share Price S$0.14- Tgt. S$0.10 Offshore & Marine  | - by Zhi Bin YEO

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Otto is struggling to stay afloat.All of its business segments have underperformed. While FY11 could havemarked the bottom, we project it to remain in the red. Without a concretebusiness strategy to steer its way ahead, we advise investors to stay clearof the stock. 4Q core net loss was larger than expected (full-year at 286%).We now expect losses for FY12 and cut FY13 EPS by 40%. We also introduceFY14 numbers. We lower our target price, still at 0.6x CY12 P/BV (bottomend of its trading range). Maintain Underperform.



Source: CIMB 24 February 2012

Serial managed to still grow its top line in FY11

Stock Name: Serial
Company Name: SERIAL SYSTEM LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.147

Serial System (SERL SP; S$0.147 - BUY)- Serial managed to still grow its top line in FY11 despite a tough 2H11.Dividend yields of between 5.8-7.8% also makes Serial an interesting buy.


Source: CIMB 24 February 2012

Rotary Engineering: Slim pickings

Stock Name: Rotary
Company Name: ROTARY ENGINEERING LIMITED

Research House: CIMB

Price Call: SELL

Target Price: 0.75

Rotary Engineering [ PDF] Slim pickingsRTRY SP / ROTE.SI |  UNDERPERFORM - Maintained  |  Share Price S$0.75- Tgt. S$0.63 Oil & Gas - Equipment &Svs  |  - by Zhi Bin YEO

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The outlook for downstream EPCservice providers remains dour. Fierce competition on Jurong Island hasresulted in margin slippage. The government's aid to help infrastructurecompanies internationalise cannot come quickly enough. At 21% of FY11 (full-yearat 77%), 4Q was 53% below our forecast due to lower-than-expected revenuebut broadly in line with consensus. We cut our FY12-13 EPS forecasts andintroduce FY14 numbers. However, we raise our target price, now at 1.2x(1x before) CY12 P/BV, at 1 SD below mean. Underperform maintained.



Source: CIMB 24 February 2012

MARKET PULSE: Sembcorp Marine, UOB, ST Engineering, Sheng Siong & Global Palm (24 Feb 2012)

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: HOLD

Target Price: 5.70

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: OCBC

Price Call: BUY

Target Price: 19.74

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.32

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.44

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

MARKET PULSE: SEMBCORP MARINE, UOB, ST ENGINEERING, SHENG SIONG & GLOBAL PALM

24 Feb 2012

KEY IDEA Sembcorp Marine: Looking beyond FY11 Sembcorp Marine (SMM) reported a 1.5% YoY rise in revenue to S$997.6m and a 4.3% fall in net profit to S$229m in 4Q11 such that FY11 net profit was 8% higher than our expectations. This was mainly due to foreign exchange gains and substantially lower general and administrative expenses in 4Q11. Besides lower margins going forward, we also note that there are hardly any major catalysts left in the medium term after Petrobras awards its drillships orders. We have tweaked our estimates to take into account our higher new order wins assumption and updated the market value of SMM's stake in Cosco Corp. As such, our fair value estimate rises from S$5.63 to S$5.70. SMM's stock price has rallied about 37% YTD vs the STI's 12% rise and the FTSE Oil and Gas index's 24% gain. As we now see limited upside potential in the stock price, we downgrade SMM to HOLD. (Low Pei Han) MORE REPORTS UOB: Below expectations 4Q UOB Group turned in FY11 net earnings of S$2327m, down 14%, and below market expectations of S$2407m (4Q net earnings of S$558m). While Net Interest Income rose 4% to S$3678m, Non-interest Income slipped 11% to S$2020m. Impairment charge went up 10% to $523m, or S$225m in 4Q alone. Net Interest Margin reversed from 1.89% in 3Q11 to 1.95% in 4Q11. We expect corporate banking to continue to do well in FY12 as it grows its regional franchise. We are leaving our FY12 estimates intact, but raising our fair value estimate to S$19.74. Maintain BUY. (Carmen Lee) ST Engineering: Near miss with positive outlook ST Engineering (STE) 4Q11 revenue fell 5% YoY to S$1.5b but PATMI edged 2% higher to S$152m. The 4Q11 PATMI gain was primarily driven by two factors - 1) a total of S$10m of one-off losses in 4Q10 and 2) a lower tax rate of 16% in 4Q11. For the full year, STE's FY11 revenue remained flat at a tad shy of S$6b while PATMI grew 7% to S$528m, missing consensus revenue and PATMI estimates by 8% and 4% respectively. STE disclosed a record order book of S$12.3b at end-FY11 and announced a total dividend payout of 12.5 cents/share, made up by a final dividend of 4 cents/share and a special dividend of 8.5 cents/share. We increased our fair value estimate of STE to S$3.32/share, from S$3.01/share previously, and maintain our BUY rating. (Eric Teo) Sheng Siong Group: FY11 results within expectations Sheng Siong Group's (SSG) FY11 results were broadly in-line with our expectations. Revenue fell 8% YoY to S$578m following the closure of the two key outlets while net profit fell 36.1% to S$27.3m in the absence of trading gains. SSG's top-line figure exceeded our revenue projections slightly by 2.3% but an unexpected tax charge caused SSG's net profit to come in under our projected S$31m. The increase in tax was related to sale of investments in 2009 and SSG is currently requesting IRAS to review the tax assessment. A final dividend of 1.77 SG cents per share was declared (90% of net profit as previously committed) for a dividend yield of 3.6%. We will be speaking to management at SSG's results briefing later this morning and put our HOLD rating and fair value estimate of S$0.44 UNDER REVIEW. In the meantime, as mentioned in our previous report, we could see some initial selling pressure at market open due to the lower net profit. (Lim Siyi) Global Palm: Poor 4Q11 finish Global Palm Resources (GPR) ended FY11 on a pretty weak note. 4Q11 revenue grew 8.9% YoY but declined 13.3% QoQ to IDR79.23b, which the group attributed to weaker ASPs of CPO. While net profit jumped 410.6% YoY and 302.8% QoQ to IDR55.8b, it was mainly due to non-cash biological asset revaluation gains. Stripping that out, we estimate that core earnings would have been around IDR12.1b, or 3.9% below our forecast, while revenue was 10.6% below. For FY11, revenue of IDR345.6b was 2.6% below our estimate, while core net profit of IDR57.8b was 5.5% below. GPR has declared a final dividend of S$0.002/share. The group also added just 951ha in FY11, way short of its 1.6-1.7k ha target for this year. We will be speaking with management later; until, then, we place our Hold rating and S$0.195 fair value UNDER REVIEW. (Carey Wong)

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

NEWS HEADLINES - The euro rose to a 10-week high against the US$ after better-than-expected data on German business sentiment (the highest in seven months) reduced concerns about the outlook for the eurozone. - Singapore's CPI eased to 4.8% in Jan from 5.5% in Dec 2011, but core inflation, which strips out accommodation and private transportation costs, reached a 3-year high of 3.5%. The government said that core inflation is likely to hover around 3% in the next few months. - Cosco Corp. (Singapore) saw profit attributable to equity holder decline 44% to S$139.7m for FY11, due to higher operational costs in its shipyard business and higher taxes. Sales had increased by 8% to S$4.16b. - Gallant Venture reported a 44% YoY increase in revenue to S$62.9m for 4Q11. Total comprehensive income attributable to equity holders jumped to S$11.6m from S$1.05m a year ago.

Neptune Orient Lines rated 'reduce' by Phillip Securities

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: Phillip Securities

Price Call: SELL

Target Price: 1.24

Phillip Securities Research in a Feb 23 research report says: "NOL reported a very weak set of results due to high fuel costs and lower freight rates in the year. Net loss of US$320 million in the 4th quarter accounted for majority of losses in the year of US$478 million.

"While the Group's logistics business recorded a 6% improvement in core EBIT, its contributions are insufficient to offset huge losses from the Liner business. During the results briefing, management highlighted a cost savings goal of US$500 million for FY2012E to enhance the competitiveness of the Group's Liner business.

"We expect losses to narrow in FY2012E with the improved cost structure of the Group's new deliveries. Target price of $1.24, based on 1.0X FY12E BVPS. MAINTAIN REDUCE."

Genting Singapore rated 'outperform' by CIMB

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: CIMB

Price Call: BUY

Target Price: 1.85

CIMB in a Feb 23 research report says: "FY2011 core profit, at only 93% of our forecast (88% of consensus), undershot our expectations due largely to weaker-than-expected volume.

"4Q EBITDA rose 6% q-o-q as stronger EBITDA margins (partly from lower bad-debt provisions of $36 million vs. 3Q's $57 million) more than offset the 2% q-o-q revenue slippage. Despite an exceptionally high VIP win rate of 3.9%, gross gaming revenue (GGR) fell 9% q-o-q in 4Q as VIP volumes contracted 26%.

"One positive was the declaration of a 1 cent tax-exempt final DPS. We cut our FY2012-2013 EPS and sum-of-the-part target price and introduce FY2014 numbers. Target price of $1.85. MAINTAIN OUTPERFORM."

Hyflux rated 'buy' by DBS

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.78

DBS Vickers Securities in a Feb 23 research report says: "FY2011 core profit of $46.3 million (-56% y-o-y), in line with consensus' $47.7 million. The decline reflected completion of the MENA projects (FY2011: 24% of sales; FY2010: 60%) and lower divestments.

"Excluding $12 million preference share dividend, earnings were $41 million against our estimate of $43 million. Net gearing was 0.18x. Hyflux exited FY2012 with $931 million EPC backlog. Our FY2012 new win forecast is $500 million, down from $982 million in 2011.

"Despite surging 27% since early Jan, valuations have yet to reach historical mean. We believe steady growth and contract newsflow will drive stock price closer to mean and our SOTP objective of $1.78. MAINTAIN BUY."

Wilmar International rated 'buy' by DBS

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 5.80

DBS Vickers Securities in a Feb 23 research report says: "Excluding biological asset and one-off gains, Wilmar booked US$264.5 million (125% y-o-y; -40% q-o-q) net profit in 4Q11 - significantly below our expectations of US$451 million.

"This brought FY2011 core profit to US$1,517 million (+44% y-o-y). Including BA gains, 4Q11 net profit was US$500 million. Drop in oilseeds and grains pretax margin was the main reason for underperformance. Wilmar is expanding its Indonesian refining capacity by 50-60%.

"We expect the bulk of this to appear in FY2013; thereby offsetting weaker margins elsewhere. However, we expect crushing margins in China to ease towards 2.5% this year (from 4% in previous assumption) - as it may take longer to rationalise the overcapacity. Thus we cut our FY2012F-2014F earnings by 7-9% and target price to $5.80. MAINTAIN BUY."

CIMB downgrades Hyflux to trading sell

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: CIMB

Price Call: SELL

Target Price: 1.23

CIMB Research downgraded Singapore water treatment firm Hyflux to trading sell from neutral and cut its target price to $1.23 from $1.28.

By 10:46 a.m., shares of Hyflux were 3.8% lower at $1.52, but have gained 26% since the start of the year.

Hyflux said on Wednesday its net profit for 2011 fell 40% to $53 million, hurt by lower sales as its projects in the Middle East neared completion and the Arab Spring riots

affected new contracts.

MARKET PULSE: Genting, Hyflux, NOL, SIA, Rotary, SingPost and Ezion (23 Feb 2012)

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: OCBC

Price Call: BUY

Target Price: 2.02

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.55

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 1.15

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

Stock Name: Rotary
Company Name: ROTARY ENGINEERING LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.61

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.18

MARKET PULSE: Genting, Hyflux, NOL, SIA, Rotary, SingPost and Ezion

23 Feb 2012

KEY IDEA Genting Singapore: Expect near-term sell-down Summary: Genting Singapore (GS) could see a near-term sell-down as its FY11 earnings of S$1,011.1m (+55%) were 12% below Bloomberg consensus; but were still 9% above our forecast. Market may also be disappointed to learn that GS has again lost market share to Marina Bay Sands, including the VIP market share due to its exceptionally high hold rate in 4Q11; although it has managed to maintain its profitability. Nevertheless, GS believes that quality of the VIP customers are more important than quantity; and expects to attract more high rollers with its newly-opened luxurious Beach Villas. We maintain our BUY call with S$2.02 fair value, given its strong cash-flow generating ability, which increases the odds of a higher dividend this year. As a recap, GS declared an unexpected final dividend of S$0.01 for FY11. (Carey Wong) MORE REPORTS Hyflux: Upping fair value to S$1.55; HOLD Summary: Hyflux Ltd posted a much better-than-expected FY11 showing, with revenue of S$482.0m coming 10% and 3% above our and consensus forecast respectively; net profit of S$53.0m was also 7% and 11% above. Hyflux also declared a final dividend of S$0.021, bringing the full-year payout to S$0.0277, down from the S$0.0417 in FY10. Going forward, we expect Hyflux to focus more on Asia, especially Singapore, as the short-term outlook for MENA remains uncertain. In view of the better-than-expected results, we are modestly bumping up our FY12 estimates by 1.4-6.0%. We also raise our fair value from S$1.28 to S$1.55, based on 18x FY12F EPS (versus 15x previously). But given the limited upside, we maintain our HOLD rating. (Carey Wong) Neptune Orient Lines: Nightmare of a quarter Summary: Neptune Orient Lines (NOL) surprised the street by turning in a net loss of US$320m in 4Q11, which was even higher than consensus' full year net loss estimate of US$275m. 4Q11 revenue fell 13% YoY to US$2.4b, while FY11 revenue eased 2% YoY to US$9.2b. Thus far in 1Q12, freight rates have averaged 7% higher but bunker prices have more than kept pace by climbing 8%. Much will now depend on how successful liners are in rate hikes for both Asia-Europe and transpacific trade lanes. Given the possibility of shipping liners successfully raising freight rates, we increase our fair value estimate of NOL to S$1.15/share, based on a 0.9x P/B multiple or half a standard deviation below historical average. However, we reiterate our SELL rating on NOL after a dreadful 4Q11 and an equally challenging outlook. (Eric Teo) Singapore Airlines: Reduced freighter capacity by 20% Summary: Singapore Airlines (SIA) yesterday said SIA Cargo has moved to reduce its freighter capacity by 20% after seeing continued weakness in demand and high fuel prices. The move comes after SIA Cargo's freight load factor fell to 58.5%, which is also the first time that it dropped below 60% since Apr 2009. The recently reduced capacity will continue into the northern summer operating season, which starts late next month. We feel the reduction of freighter capacity is a much needed move for SIA, especially when its belly-hold cargo capacity is increasing in tandem with passenger capacity increase. We maintain our fair value estimate of S$10.85/share and HOLD rating on SIA.(Eric Teo) Singapore Post: Proposed issue of senior perpetual cumulative securities Summary: Singapore Post (SingPost) has announced a proposed issue of SGD-denominated senior perpetual cumulative securities, which is expected to be launched in the near future, subject to market conditions. The group has appointed DBS Bank as the lead manager and bookrunner, and investor meetings in Singapore will start tomorrow. SingPost has a strong cash balance of S$273m (excluding held-to-maturity assets) as at Dec 2011 but it has a S$300m 10-year bond maturing in Apr next year. The group is also on the lookout for acquisition opportunities for growth. Pending more details from management, we maintain our BUYrating with S$1.14 fair value estimate on the stock. (Low Pei Han) Rotary Engineering Ltd: Results within expectations. Summary: Rotary Engineering Ltd ("Rotary") reported a 19% and 69% YoY decreases in its revenue and net profit to S$130m and S$8m respectively for 4Q11, mainly due to fewer projects executed in the quarter. FY11 revenue of S$531m (down 25%) and net profit of S$31m (51% decline) were within our expectations but were below the street's expectations. Rotary's current order-book also decreased to S$690m from S$758m as end-Nov 11. Meanwhile, the group has proposed a 2 S cts final dividend. Pending an analyst briefing later, we put our Hold rating and S$0.61 fair value estimate UNDER REVIEW. (Chia Jiunyang) Ezion Holdings: To raise S$94.6m via placement Summary: Ezion Holdings (Ezion) has proposed a placement of 110m shares at S$0.88 per share, representing a discount of about 6.6% to the weighted average price of S$0.9422 for trades done on 21 Feb 2012 before the trading halt yesterday. This will increase Ezion's existing issued and paid-up share capital by ~15.4%, and though this is EPS dilutive, proper allocation of funds to projects with decent ROE could mean that this is an earnings accretive move in the longer term. The placement will allow Ezion to raise net proceeds of about S$94.6m, of which 70-90% will be used for the acquisition of offshore & marine assets (likely the expansion of the service rig business), and the rest for general working capital. Meanwhile, Ezion will seek the approval of SGX for the listing of the shares. The stock price may open lower this morning in response to the proposed placement, but is unlikely to be substantial given that the discount to the last traded price is about 6.9%. Maintain BUY with S$1.18 fair value estimate. (Low Pei Han)

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

NEWS HEADLINES - Stocks fell worldwide and US Treasuries rose on after weaker manufacturing reports out of Europe and China. European services and manufacturing output unexpectedly shrank in Feb after expanding in Jan (Markit Economics), and China's manufacturing may shrink for a fourth month (HSBC and Markit). - Chip Eng Seng recorded that net profit for 4Q11 fell 28% YoY to S$28.8m as total revenue fell 58% to S$57.5m. - China Aviation Oil Singapore (CAO) saw 4Q11 fall 43% YoY in earnings to US$5.7m despite a 31% YoY increase in revenue to US$2.14b. This was mainly due to the provision of doubtful debts for amounts due from MF Global following the bankruptcy of its holding company.

Capitalmalls Asia rated 'buy' by DBS

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.02

DBS Vickers Securities in a Feb 20 research report says: "CMA is buying the remaining stakes in 3 assets in Japan currently held through its Japan Fund. The deal, which is debt funded, will be earnings accretive as the properties have a NPI yield of 7.6% and can add an estimated $8 million net profit.

"This translates to an earnings lift of 1.5-2.5% to bottomline. However, the added stake will have a marginal impact on RNAV. We continue to like CMA for its leadership position in Asian retail real estate.

"The company will continue to enjoy sustainable NAV and earnings growth since completed and income generating assets accounted for more than 70% of its NAV. Target price of $2.02, which translates to 23% upside. MAINTAIN BUY."

United Envirotech rated 'buy' by OCBC

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.50

OCBC Investment Research in a Feb 16 research report says: "Revenue saw a 57.5% y-o-y jump to $20.1 million, largely buoyed by higher engineering income, which climbed 77.5% to $14.2 million for the quarter. Treatment income increased 22.9% to $5.9 million.

"But reported net profit saw a 53.8% plunge to $1.9 million, mainly due to higher interest cost arising from the recent issuance of US$113.8 million worth of convertible bonds. For 9MFY12, revenue climbed 13.8% to $66.2 million, meeting 74.3% of our full-year forecast, while net profit declined 36.4% to $9.1 million, meeting just 57.5% of our original FY2012 forecast.

"Company continues to deliver on the revenue front, supported by an estimated $40 million order book (which is likely to be delivered over the next three quarters). DCF-based FV improves to 50 cents from 42 cents. MAINTAIN BUY."

ARA Asset Management rated 'buy' by DBS

Stock Name: ARA
Company Name: ARA ASSET MANAGEMENT LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.74

DBS Vickers Securities in a Feb 22 research report says: "ARA reported 4Q11 PATMI of $13.2 million (-48%% y-o-y) bringing FY2011 PATMI to $68.2 million (+7%), in line with expectations. Performance would have been stronger at $73.3 million (+15% y-o-y) if not for $6.1 million mark-to-market loss for acquired Suntec REIT units.

"Contribution to its strong performance were from (i) increased fees for the enlarged AUM largely from Suntec REIT's 1/3 interest in Marina Bay Financial Centre and (ii) $18.5 million performance fee relating to ARA Harmony Fund.

"ARA proposed a final dividend of 2.7 cents (full year dividend of 5 cents or c55% payout ratio), which is expected to be sustainable in the coming years. a revised SOTP-based target price of $1.74 as we include recent Fortune REIT acquisition in our earnings forecasts. MAINTAIN BUY."

Hutchison Port Holdings Trust rated 'buy' by DBS

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.85

DBS Vickers Securities in a Feb 22 research report says: "4Q11 revenue came in at HK$3,089 million, slightly ahead of our estimates as throughput growth held up well on the back of a delayed peak season. Operating costs were again well controlled, with staff costs tracking below IPO estimates.

"Overall, net profit and free cash flows were well within guidance and the Trust declared 23.4 HK cents or 3.0 US cents DPU for 2H11, as expected. We expect free cash flow growth of c.4% in FY2012, and our revised FY2012 DPU estimate of 6.3 US cents is about 5% off IPO guidance, which the management remains committed to.

"Yield remains attractive at ~8.5% at current prices. Coupled with c.5% growth in DPU over the near to medium term, HPH Trust offers good value. Target price of 85 US cents. MAINTAIN BUY."

Lippo Malls Indonesia Retail Trust rated 'increase exposure' by SIAS

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: SIAS

Price Call: BUY

Target Price: 0.61

SIAS Research in a Feb 20 research report says: "LMIRT ended the year with top line within expectation with gross revenue of $136.1 million and NPI of $92.0 million.

"Fair value gains for LMIRT was below our estimates but foreign currency translation gains compensated for this, ending the year with comprehensive income more than doubling prior year's result (2010: $55.3 million vs 2011: $110.8 million). LMIRT's two new acquisitions, Pluit Village and Plaza Medan Fair, had begun producing maiden inflows since they were acquired on Dec 6, 2011.

"LMIRT remains a relatively undervalued counter with a relatively large discount on this counter with a discount to NAV of 35% (over last closing price of 39 cents), and yielding an adjusted average DPU yield of 7.5% for FY 2011. Intrinsic value of 61 cents. MAINTAIN INCREASE EXPOSURE."

Oversea-Chinese Banking Corporation rated 'sell' by Maybank-Kim Eng

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP

Research House: Kim Eng

Price Call: SELL

Target Price: 7.50

Maybank-Kim Eng Research in a Feb 21 research report says: "While 2011 earnings were flat y-o-y, underlying trends were commendable, with healthy topline growth (investment income aside), cost containment and growing regional contributions (41% of group pretax with 29% of group pretax from OCBC Malaysia).

"OCBC's 2011 core net profit of $2.28 billion (+0.7% y-o-y) was within our and consensus expectations. Net interest income rose 15.7% y-o-y led by loan growth of 27% y-o-y, offset in part by a 12bps compression in net interest margins (NIM).

"However, valuations at this stage are not enticing with the stock trading at a prospective 2012 P/BV of 1.3x for a relatively low prospective 2012 ROE of 10.9%. Our target price of $7.50 tags on a P/BV of 1.1x to the stock. MAINTAIN SELL."

Overseas Union Enterprise rated 'outperform' by CIMB

Stock Name: OUE Ltd
Company Name: OVERSEAS UNION ENTERPRISE LTD

Research House: CIMB

Price Call: BUY

Target Price: 2.92

CIMB in a Feb 22 research report says: "4Q11 core earnings formed 36% of our full year and 41% of consensus. Revenue in 4Q11 soared 63% y-o-y to $106 million driven by a strong hotel division.

"Net asset value (NAV) per share rose 4% q-o-q to $3.21 in 4Q11 as its hotel and retail assets saw higher book values. These form 45% of OUE's gross asset value. We believe the stock is attractively priced at 0.8x P/BV or 36% disc to RNAV, backed by a FY2012F core EBIT growth of 32%.

"OUE has proposed an 11 cents dividend for FY2011 (8 cents special dividend), translating into a nice yield of 4.4%. We introduce our FY2014 forecast, tweak FY2012-2013 core EPS, and raise our target price to $2.92 (25% disc to RNAV) on less conservative hotel forecasts. Overseas Union Enterprise (Feb 22:
MAINTAIN OUTPERFORM."

Ziwo Holdings rated 'sell' by Phillip Securities

Stock Name: Ziwo
Company Name: ZIWO HOLDINGS LTD.

Research House: Phillip Securities

Price Call: SELL

Target Price: 0.095

Phillip Securities Research in a Feb 21 research report says: "Ziwo issued profit guidance that financial results for 4Q11 and FY2011 will be substantially lower compared to 2010. This is due to slower sales of products, lower gross profit margins and increases in operating expenses.

"The company also mentioned the potential impairment of trade receivables. We are projecting FY2011 revenue and net profit to fall 7.5% and 39.2% respectively. In 3Q11, receivables spike up 27% despite sales dropping 15% sequentially. Share price had run up from its trough along with the small cap rally before the profit warning announcement which we think is unjustified.

"On a P/B basis, stock appears cheap at 0.5x with zero debt on its balance sheet and high cash balance of approximately 12 cent per share. Unchanged target price of 9.5 cents. MAINTAIN SELL."

SG: Ezion Holdings - Strong FY11 results in line

EZION HOLDINGS 22 Feb 2012

Strong FY11 results in line - Results within expectations - Clinches service rig contract for Myanmar - Fund raising in the pipeline? Ezion Holdings (Ezion) reported a 8.7% fall in revenue to US$107.0m but a 44.6% increase in net profit to US$58.1m in FY11, accounting for 100.2% and 100.7% of our full year estimates, respectively. Ezion has also clinched its fourth service rig contract worth up to US$118m from a European-based customer, which is likely to be Total S.A. We estimate a decent ROE of 25-30% for this project. Management is optimistic about opportunities in the service rig and logistics segments, and given the amount of potential work that may come up, there is a possibility of a fund raising. Meanwhile, we roll over our valuation to 10x FY12F earnings and as such our fair value estimate rises to S$1.18 (prev. S$0.97). Maintain BUY.

Wheelock Properties rated 'neutral' by CIMB

Stock Name: Wheelock
Company Name: WHEELOCK PROPERTIES (S) LTD

Research House: CIMB

Price Call: HOLD

Target Price: 1.67

CIMB in a Feb 21 research report says: "4Q core EPS is below expectations at 10%/13% of our/consensus forecasts (FY2011 at 91%) due to vacancy at Wheelock Place and higher taxes.

"Lower recognition of development sales in 4Q11 was a drag on FY2011 revenue, as Scotts Square was the only property completed in the year and new sales remained slow. Development profits were down 30% y-o-y. No new units at Orchard View and Scotts Square have been sold since Dec 11.

"Despite a stronger net-cash position ($921 million) from proceeds from development properties, we see limited opportunities for tapping its strong balance sheet. We still see little upside at 0.7x P/BV, given policy headwinds.

"We introduce FY2014 and adjust FY2012-2013 EPS on slower sales and higher rents. Target price of $1.67. MAINTAIN NEUTRAL."

MARKET PULSE: Hospitality Sector, Ezra, Wilmar & CCT (22 Feb 2012)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.51

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: OCBC

Price Call: BUY

Target Price: 2.02

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 4.78

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.29

MARKET PULSE: Hospitality Sector, Ezra, Wilmar & CCT

22 Feb 2012

KEY IDEA Hospitality Sector: Strong Prospects The hospitality landscape continues to have positive developments with upcoming attractions and the opening of the International Cruise Terminal in 2Q12, which should boost the business of the IRs and cruise operators. The government has also just announced that it will inject S$905m into the Tourism Development Fund. Visitor arrivals should grow at 6.6% p.a. to reach the STB's target of 17m in 2015. We project solid hotel room demand growth at 6.4% p.a., which would exceed overall room supply growth of 3.8% p.a. We initiative with an OVERWEIGHT view on the sector and our picks are CDL Hospitality Trusts [BUY, FV: S$2.00] and Genting Singapore [BUY, FV: S$2.02]. (Sarah Ong) MORE REPORTS Ezra Holdings: Beneficiary of buoyant subsea market After announcing contract wins worth up to US$225m YTD, Ezra Holdings' overall order backlog has exceeded a record US$1.6b. Industry expert Douglas Westwood is also forecasting higher subsea capital expenditure in the industry in the next few years, and Ezra is well positioned to benefit from such trends. We think AMC will start making positive contributions this year as 50% of the subsea order book (currently in excess of US$800m) gets recognized mostly in 2H12. The offshore support business should also be supported by recovering charter rates which are expected to pick up more strongly in 2H12. Along with the recent re-rating of the sector, we increase our peg for the offshore marine and energy business from 13x to 15x, bumping our fair value estimate from S$1.36 to S$1.51. Maintain BUY. (Low Pei Han) Wilmar: Muted set of 4Q11 results Wilmar International Limited (WIL) reported a pretty muted set of 4Q11 results this morning. While revenue rose 26.7% YoY to US$11.5m, it fell 12.0% QoQ. Reported net profit jumped 56.9% YoY and 188.3% QoQ to US$500.0m; but we note that the bulk of the increases were due to biological fair value gains (US$262.7m) and non-operating items (US$71.3m). Excluding these items, core earnings would have come in around US$265.0m. For FY11, revenue climbed 47.2% to US$44.7b, or 0.8% shy of our forecast; while reported net profit rose 20.9% to US$1.6b, or around 4.4% below our estimate (also 5.1% below consensus). WIL declared a final dividend of S$0.031, bringing total dividend to S$0.061. We will have more after the analyst briefing at midday; until then, we place our Hold rating and S$4.78 fair value under review. (Carey Wong)

CapitaCommercial Trust (CCT): Acquires Twenty Anson at S$2,121 psf CapitaCommercial Trust (CCT) announced that it had acquired Twenty Anson for S$430.0m or S$2,121 psf. The acquisition would be yield accretive and funded using existing cash and bank facilities, without raising equity. In addition to the purchase price, the trust would set aside S$17.1m to be drawn upon over 3.5 year to ensure a stabilized NPI yield of 4% per annum. The property is currently 100% occupied, with major tenants BlackRock and Toyota. Current passing rents are at S$6.18 psf - below current market rentals of S$8.44 psf in the Tanjong Pagar area. Post-acquisition gearing is expected to be relatively benign at 32%. Given the reasonable price paid, we view this acquisition positively but see little accretive to RNAV at this juncture. Maintain BUY with an unchanged fair value estimate of S$1.29. (Eli Lee) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The European markets and the euro dipped as approval for a second Greek rescue package of €130b did not inspire confidence. The Stoxx Europe 600 Index lost 0.5%. - Dyna-Mac reported a 80% fall in 4Q11 revenue to S$11.8m, while net profit plunged 81% to S$0.9m. - ARA Asset Management saw revenue and net profit for 4Q11 fall to S$26.6m (-36% YoY) and S$13.3m (-48% YoY) respectively. Acquisition and performance fees had dropped 94% to S$920k, and other income rose 15% to S$2.6m. Management fees climbed 4% to S$23.1m. - NSL Ltd, formerly known as Natsteel Ltd, registered a 22% YoY increase in revenue to S$382m for FY11. Profit attributable to equity holders increased by 79% YoY to S$100m.