MARKET PULSE: Noble, Valuetronics, A-REIT, Tee and CSE Global (07 Feb 2012)

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.46

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.31

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.30

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.31

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.06

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MARKET PULSE: Noble, Valuetronics, A-REIT, Tee and CSE Global

7 Feb 2012

KEY IDEA Noble Group Ltd: Upgrade to HOLD with S$1.46 fair value Summary: Noble Group (Noble) unveiled its new CEO - Mr Yusuf Alireza - who will start his appointment on 16 Apr. Mr Alireza, formerly of Goldman Sachs, has been one of the fore-runners for the post and the appointment does not come as a total surprise. Meanwhile, the current price recovery (up 27% YTD) seems to have factored in most of the positives, including the appointment of a new CEO. Hence, we are only upgrading our call to HOLD, albeit with an improved S$1.46 fair value. We would be buyers closer to S$1.30. (Carey Wong) MORE REPORTS Valuetronics Holdings: Revenue boost from major customer Summary: Valuetronics Holdings Limited (VHL) reported 3QFY12 earnings which exceeded our expectations. Revenue rose 17.7% YoY to HK$617.2m, while net profit was flat at HK$31.5m. Adjusting for forex and one-off items, we estimate we estimate that core net profit for 3QFY12 would instead have declined 13.8% YoY and increased 24.1% QoQ, but still higher than our expectations. This was driven by strong revenue contribution from its largest OEM customer, which more than buffered the slowdown in demand from some of its other major OEM customers and ODM segment. Looking ahead, management remains cautious on the uncertain macroeconomic landscape and rising cost pressures. But we expect strong contribution from its largest customer to continue, and believe that VDL can cope with rising cost pressures via constant efforts to improve its production efficiencies. We finetune our assumptions and derive a higher fair value estimate of S$0.31 (previously S$0.29) after rolling forward our valuation to 5x FY13F EPS. Maintain BUY given attractive valuations. (Wong Teck Ching Andy) Ascendas REIT: Acquires three Science Park properties Summary: Ascendas REIT (A-REIT) yesterday proposed to acquire three properties (Cintech I, Cintech II, Cintech III and Cintech IV) at Science Park Drive from Ascendas Land for a purchase consideration of S$183.0m. According to management guidance, the properties are expected to generate an NPI yield of 7.3% and add another 0.16 S cent to DPU (assuming 50% of the purchase consideration is satisfied by new unit issue). We are positive on this development as 1) the acquisitions are expected to be yield accretive; 2) further strengthen A-REIT's presence in the Science Park segment; and 3) provide further income diversification. Occupancy rates for the properties, we note, are also healthy at 90.9-100%. A-REIT proposed to fulfill the acquisitions by making partial payment via issue of new units to Ascendas Land amounting to not more than 50% of the purchase price, or S$91.5m. As the investment and unit issue constitute an interested party transaction and a placement to a substantial unitholder respectively, unitholders' approval had to be obtained at the EGM to be convened in due course. We are holding off adjusting our fair value of S$2.30 pending the outcome of EGM. For now, maintain BUY. (Kevin Tan) TEE International: New contracts awarded Summary: TEE International (TEE) announced that it has secured five new contracts, worth a total of approximately S$12.7m, and this brings their outstanding total order book to S$292.3m. The largest contract of the five new additions is worth S$10.1m and it was awarded by CapitaLand Retail Project Management for alteration and additional works on the existing building Bishan Junction 8. Three of the five new contract wins relate to overseas projects and this lends support to our optimism that TEE has a strong record, enabling them to compete regionally. We keep our BUY rating on the stock and put our fair value estimate of S$0.31 under review, pending a management briefing. (Benjamin Lim) CSE Global: Profit warning for 4Q11 Summary: CSE Global warned that its 4Q2011's profit after tax will be around 75% of what is achieved during 3Q2011. This is in contrast to its earlier guidance (on Nov 2011 Results Announcement) which stated that 4Q2011 performance "will be better than 3Q2011 and 4Q2010". The group explained that several of its customers were late in providing approval to their engineering designs during the quarter, resulting in a lower-than-expected revenue and profit contribution from these contracts. We will seek further clarification from the management. In the meantime, we put our Buy estimate and $1.06 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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NEWS HEADLINES - Greece is prolonging bailout talks as its political leaders are unwilling to accept unpopular reforms failed to strike a deal over the €130b bailout. US and European stocks fell modestly, and the euro declined by 0.8% to US$1.3057. - The International Monetary Fund warns that if Europe's debt crisis worsens, China's economic expansion could be cut by as much as 4% from its current projection of 8.2% for this year. - Eu Yan Sang reported a net loss of S$2.78m for the quarter ended Dec 2011, versus a net profit of S$4.08m a year ago, chiefly due to a S$8.8m in impairment charges related to its investment in failed Australian retailer Healthzone - Memstar Technology, a manufacturer and supplier of PVDF hollow fibre membrane and related systems, achieved a net attributable profit of RMB18.0m for the second quarter ended Dec 2011, a 504% YoY increase. Revenue increased by 70.4% YoY to RMB43.4m. - GuocoLeisure has posted a net profit of US$12.7m for the second quarter ended Dec 2011, a 33.5% YoY decline. Revenue dropped 5.1% YoY to US$92.9m, mainly due to lower contributions from its UK gaming segment.