MARKET PULSE: Oil and Gas, Fortune REIT (30 Mar 2012)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.27

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.05

MARKET PULSE: Oil and Gas, Fortune REIT

30 Mar 2012

KEY IDEA Oil and Gas sector: Requires more than a release of strategic oil reserves Newswires such as Bloomberg and Reuters have reported that France is in talks with the US and Britain on a possible release of strategic oil reserves to push fuel prices lower. Of note is the fact that 2012 will be an election year for both the US and France, and politicians may have to placate voters' concerns about rising fuel prices. However, a coordinated international effort is required to have an impact on the oil markets, and even if this is achieved, we only expect a temporary downward pressure on oil prices unless a more fundamental driver (e.g. low fuel demand due to poor economic health in major consuming countries) emerges. Meanwhile, we maintain our Overweight rating on the broader sector, with Keppel Corporation [BUY, FV: S$12.27], STX OSV [BUY, FV: S$2.25] and Ezion Holdings [BUY, FV: S$1.05] as our preferred picks. (Low Pei Han) MORE REPORTS Fortune Real Estate Investment Trust: HK retail sales up for Jan, Feb 2012 For the first two months of 2012, HK retail sales climbed by 15.2% YoY to HK$77.0b. Jan sales had been up 14.9% YoY while Feb sales were even more bullish with an increase of 15.7% YoY despite Chinese New Year falling in Jan instead of Feb this year. The continuing growth in sales, coming on the back of a 25% jump in 2011 vs. 2010, should continue to support an increase in average retail rents. We believe that rents will grow given that the economies of HK and mainland China continue to expand. China is also currently maintaining its tariffs on luxury imports into the mainland, thus helping to support prime retail rents in HK and the cascade effect on suburban retail mall owners like Fortune. We maintain our BUY rating and HK$4.88 fair value. (Sarah Ong)

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

NEWS HEADLINES - US stocks dipped as mixed local economic data and overseas concerns weighed on the market. S&P said that Greece may need to restructure its debt again. The S&P 500 Index closed 0.3% down at 1,400.78. - Cordlife, which began trading yesterday after its IPO, jumped more than 60% to an intraday high of 79.5 cents from its IPO pricing of 49.5 cents. It ended at 68 cents, 37% higher than the subscription price. - Elektromotive has proposed a rights issue to raise net proceeds of S$5.2m. The issue comes with free warrants which will bring gross proceeds to S$16m if fully exercised. - Nera Telecommunications has received orders totalling ~S$30.9m. - F&N announced yesterday that its subsidiary, HK-listed Frasers Property (China) Ltd., will be privatized. The company will be privatized by wholly-owned subsidiaries of F&N and Ascendas Land International Pte Ltd. - United Envirotech has signed an agreement to acquire a water supply plant and a wastewater treatment plant in Changyi City, Shandong Province, China. The total investment by the company is approximately RMB165m (~S$33m).

UOB reiterates sell call on SIA Engineering

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: UOB KayHian

Price Call: SELL

Target Price: 3.80

UOB Kay Hian reiterated its sell recommendation on SIA Engineering and said investors looking for dividend yield should instead buy shares of Singapore Technologies Engineering (ST Engineering).

SIA Engineering gets two-thirds of its revenue from parent Singapore Airlines, which has been cutting capacity at its cargo unit.

“The market has not priced in risk of capacity cuts. Maintenance revenue is typically based on flight cycles and as airlines cut capacity due to weak demand, revenue would be impacted,” UOB Kay Hian said in a research note.

The brokerage maintained its sell recommendation on SIA Engineering but raised the target price to $3.80 from $3.30 a share.

It also said that the orderbook of rival aircraft maintenance firm ST Engineering is backward loaded and less vulnerable to a cyclical slowdown.

Singapore Airlines said last month it was cutting its cargo capacity by 20% as global economic slowdown led to persistent weakness in demand and high jet fuel prices piled pressure on its profitability.

SIA Engineering’s shares had risen by around 20% so far this year, outperforming the 13% gain in the broader Singapore market.

 

CSE Global upgraded to 'outperform' by CIMB

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.90

CIMB in a Mar 26 research report says: "CSE has underperformed the FSSTI by 20% since our last downgrade. Our downgrade on 10 Jan appeared to have been timely. A month later, CSE issued a profit guidance for its 4Q11 results.

"Its current trading price offers a decent entry point. On a 12-month rolling forward core P/E basis, it is trading at 7x vs. a 5-year mean of 11x, peak of 24x and trough of 4x. Based on CY13 earnings, it is trading at 6x, which is cheaper than the average for Singapore small-mid-cap industrials of 8x.

"The stock offers an attractive dividend yield of 7%. Further, there could be scope for a special dividend ($0.01) should the sale of its 29.2%-owned associate Ebworx Berhad (EBWX MK) materialise. We expect CSE to post steady 1Q12 results of $14 million, up 11% y-o-y. Target price of 90 cents. UPGRADE TO OUTPERFORM."

Swiber Holdings rated 'neutral' by DMG

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: DMG

Price Call: HOLD

Target Price: 0.66

DMG & Partners Research in a Mar 27 research report says: "Swiber announced that it has secured another sizeable EPIC contract from an oil major in Gulf of Mexico through a local collaboration with Dragados Offshore, totaling approximately US$273 million for offshore construction work.

"The latest contract win came as no surprise to us as we expected the group to win a total amount of US$850 million worth of contracts for 2012. Swiber had won a US$525 million thus far and we expect them to win another US$325 million before year end. Though we are positive on the latest deal, execution may be a potential concern given its inexperience in that area.

"In addition, margins will continue to be weighed down by operating leases expenses, unless the group has enough equity funding to buy back vessels. Unchanged target price of 66 cents. MAINTAIN NEUTRAL."

Starhub rated 'buy' by Maybank Kim Eng

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: Kim Eng

Price Call: BUY

Target Price: 3.33

Maybank Kim Eng Research in a Mar 27 research report says: "StarHub has outperformed its two peers, up 5% since early this year. However, it is still a good story for 2012, with potential catalysts from lower subscriber acquisition costs as Android devices appear to be gaining ground.

"In addition, we expect the new Vodafone roaming alliance to boost ARPUs. For the 2011 mandate year, StarHub repurchased 2.1 million shares, above 2010’s 2 million shares, although average cost was 10% higher at $2.87 (up to $2.91). Since the share buyback is another way to enhance shareholder value, other than paying good dividends, the higher average cost is a firm endorsement of the stock’s value despite the outperformance.

"Target price raised to $3.33, based on target yield of 6% (pegged to the average yield of the top 15 dividend stocks with market cap over $1 billion under our coverage). MAINTAIN BUY."

Singapore Land rated 'neutral' by CIMB

Stock Name: Sp Land
Company Name: SINGAPORE LAND LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 6.12

CIMB in a Mar 27 research report says: "2012 is likely to see further negative rental reversion for 25-30% of office leases up for renewal. This is offset by strong occupancies of >97% following relocation of tenants from the redevelopment of UIC Building (office completion in 2015).

"Management expressed more optimism on the retail and hospitality segments as rents, RevPARs and occupancies remain strong, buffering recurring income growth in FY2010/2011. We expect these two segments (23% of GAV) to continue to offset weaker office contributions.

"We raise our FY2013 EPS by 12% and trim FY2014 by 2% on development recognition and higher Chengdu ASPs. Factoring in narrower cap rates for office assets raises RNAV and target price of $6.12 (still at 45% discount to RNAV). MAINTAIN NEUTRAL."

Keppel Corporation rated 'buy' by DBS

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 12.34

DBS Vickers Securities in a Mar 28 research report says: "Keppel has signed an LOI with a repeat customer, Floatel International Ltd (Floatel), to build a new generation harsh environment accommodation semi submersible worth US$315mn for delivery in July 2014.

"The contract price of US$315 million is higher than the previous 3 units at US$305 million, US$206 million and US$260 million respectively for Floatel. Our FY2012 order wins assumption for KEP is $6 billion; YTD, it has secured $194 million of orders.

"The LOI, once confirmed as contract, will bring YTD win to $591 million, forming c.10% of our order win assumption. We believe Keppel stands a good chance to secure this contract from Floatel. The stock is trading at PE of 12x(FY12F) and 11.6x(FY13F) and offers an FY12F dividend yield of 4.1%. Target price of $12.34. MAINTAIN BUY."

Eu Yan Sang International rated 'buy' by DMG

Stock Name: EuYanSang
Company Name: EU YAN SANG INTERNATIONAL LTD

Research House: DMG

Price Call: BUY

Target Price: 0.94

DMG & Partners Research in a Mar 27 research report says: "Eu Yan Sang has managed to overcome a major hurdle in China. It has clinched a key license to open a pharmacy in China which will allow it to sell its prescriptions drugs and Chinese herbal medicine.

"Previously, the Company was only retailing food products and its proprietary Lingzhi cracked spores capsules in China. Its flagship products such as Bak Foong pills are considered “medicine”, and hence could only be distributed via hospitals.

"The first pharmacy will open in Dongguan later this year, and a second one is being planned. The pharmacy license is awarded on a store by store basis. EYS has just opened its 16th store in the country and targets 20 by year end. Target price of 94 cents. MAINTAIN BUY."

Mermaid Maritime rated 'outperform' by CIMB

Stock Name: Mermaid
Company Name: MERMAID MARITIME PUBLIC CO LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.44

CIMB in a Mar 27 research report says: "Positive feedback from large offshore construction companies spells brighter prospects for Mermaid’s subsea arm. Strengthened by anew management team,we expect Mermaid to be back in the black, following two years of losses.

"Earnings risks are on the upside, as we have conservatively projected a 68% utilisation rate for FY12 –comparable to the 69% in FY11. We recommend investors buy ahead of a strong 2H. Downside risks are limited with the stock trading at 0.5x CY12 P/BV – the RNAV of its subsea fleet could be even higher than the trading price.

"In addition, CY12 EV/EBITDA of 3x highlights its strong operating cash flow generation and implies a cash payback of three years. No changes to our EPS estimates. Target price of 44 cents. MAINTAIN OUTPERFORM."

LionGold Corporation rated 'invest' by SIAS

Stock Name: LionGold
Company Name: LIONGOLD CORP LTD

Research House: SIAS

Price Call: BUY

Target Price: 1.215

SIAS Research in a Mar 29 research report says: "Over the last two weeks, LIGO proposed the placement of 12m shares for $12.4 million and the issue of convertible bonds for up to US$30 million. We view the proposed fund raising activities in a positive light.

"Upfront, we are looking at a potential expansion of LIGO’s share capital by up to only 7%. More importantly, LIGO will gain some $50 million of funds to accelerate Signature’s expansion and to bank roll other acquisitions that it is reviewing. As at end December 2011, LIGO had $27.8 million of borrowings.

"As such, the total amount of funds raised will also be sufficient to help refinance LIGO’s debt. Moreover, the increase in LIGO’s stake in Signature to 76.22% at the close of the takeover offer has allowed more value from the Konongo project to accrue to the company. Intrinsic value of $1.215. MAINTAIN INVEST."

QAF Limited - So good, you can even buy it on its own

Stock Name: QAF
Company Name: QAF LTD

Research House: CIMB

Price Call: BUY

Target Price: 1.24

QAF can easily enhance value by ploughing into the bakery business any capital freed up by jettisoning non-core assets. Conditions are also ripe for QAF to be taken private. In the meantime, investors can continue milking QAF for dividends. QAF may have purged itself of its loss-making operations in China. Its below-peer valuations also cushion the stock against downside risks. If it rerates to its historical valuation of 2x P/BV, it could fetch S$1.24.

Source: CIMB Daybreak - 29 March 2012, Full PDF Report

MARKET PULSE: STX OSV, OSIM and Hengyang (29 March 2012)

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.25

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.35

MARKET PULSE: STX OSV, OSIM and Hengyang

29 Mar 2012

KEY IDEA STX OSV: Well-positioned to ride an upcycle Last week, STX OSV announced that it has secured two contracts worth a total of NOK1.2bn (USD200m). As these contracts already form part of our total contract win projections for FY12F (NOK13bn), we are not making changes to our forward estimates. Of noteworthy was the contract win for an Offshore Subsea Construction Vessel for DOF, which features an innovative moon pool design developed by STX OSV. We think this is further testament to the group's ability to stay ahead of the curve for product development and garner customers' orders. Meanwhile, we are optimistic on the OSV market given the improving industry fundamentals. Maintain BUY with fair value estimate of S$2.25. (Chia Jiunyang) MORE REPORTS OSIM International: Macro risks the main concern We believe that further downside risks have emerged for OSIM International (OSIM) since our last update on 8 Feb 2012. This stems from increasing signs of easing growth in OSIM's key addressable markets, including China, Malaysia and Taiwan. In our opinion, lower economic growth could manifest into softer demand for OSIM's high-end products, which are largely discretionary in nature. To mitigate this, management would continue its innovation drive to introduce novel products with fresh concepts and better functionality, while focusing on improving its productivity per store and man. We maintain our HOLD rating and S$1.35 fair value estimate given limited upside potential. (Wong Teck Ching Andy) Hengyang Petrochemical Logistics: Coveted locations We visited Hengyang Petrochemical Logistics' port and storage facilities at Deqiao and Jiangyin along the Yangtze River in China. We anticipate that revenue could increase by ~38% in 2012 with a full-year contribution from the Deqiao facility, which came into operation in Nov 2011. In addition, the company has won coveted logistics sites at Chongqing and Wuhan. In 2012, it expects to complete the first phases of these sites and a site in Yueyang. Hengyang will need to raise additional funding for these sites. We have NO RATING on Hengyang. Although it does not currently offer dividends, it is trading at a historical P/E of 13x, which is lower than its peer group's average of 22x. According to Bloomberg, there is no target price available for this stock. (Sarah Ong)

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

NEWS HEADLINES - US stocks fell, led by commodity producers, as oil slid on an increase in crude supplies and growth in orders for durable-goods missed estimates. The S&P 500 Index dipped 0.5% to 1,405.54. Oil dropped 1.8% to US$105.41 a barrel - Hiap Seng Engineering has established a strategic alliance with PetroVietnam Energy Technology Corp. This move gives Hiap Seng first priority consideration as a preferred partner for JV, consortium or subcontracting works. - AVIC International Investments announced last night that it has secured contracts worth US$60m for three tugboats, one driver boat and a bunkering tanker. - Nam Cheong announced today that it has secured US$36.8m (~S$46.3m) worth of contracts for three Anchor Handling Tower Supply vessels. - Lafe Corporation announced that its wholly-owned subsidiary has entered an agreement to sell its entire stake in Lafe Computer Components Ltd. The disposal is consistent with the group's decision to discontinue its manufacturing activities.

JPMorgan raises First Resources target price

Stock Name: FirstRes
Company Name: FIRST RESOURCES LIMITED

Research House: JP Morgan Chase

Price Call: BUY

Target Price: 2.20

JPMorgan has raised its share price target for Singapore palm oil firm First Resources to $2.20 from $2.10 and kept its overweight rating, citing strong production growth and expansion into the refining business.
By 3:00 p.m., shares of First Resources were 0.3% higher at $1.925. They have gained 27.5% so far this year.

The broker also raised its 2012 and 2013 earnings estimates for First Resources by 16 and 24% respectively, adding that the company remains one of its top picks for the sector.

  

Citi downgrades Wilmar to hold

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: Citigroup

Price Call: HOLD

Target Price: 5.30

Citigroup reduced its rating on Singapore palm oil firm Wilmar International to hold from buy and cut its target price to $5.30 from $6.10.

Wilmar shares were down 1% at $4.97. The shares are flat so far this year, underperforming a 14 percent rise in the broader market.

Citigroup said the company’s second half of 2011 was a disappointment as it had weak margin trends at both its oilseeds and palm merchandizing units due to heightened volatility.

While market normalization will help Wilmar’s margins recover in these two segments in 2012 fiscal year, the pace of recovery this year will be muted as Wilmar did not record sharply reduced inventory and receivables in the second half of 2011, Citi said in a report.

“While execution on expansion plans in Indonesia may be slow for new entrants, there is now potential that more competitors (both existing and new) may be encouraged to set up facilities.”

CIMB raises price target for Genting

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: CIMB

Price Call: BUY

Target Price: 2.00

CIMB Research increased its price target for Singapore-listed Genting Singapore to $2.00 from $1.85 and kept its outperform rating on the casino operator.

Genting’s shares were down 0.9% at $1.72.

CIMB said the launch of Resort’s World Sentosa’s Equarius Hotel and beach villas were timely to capture the potential stream of VIP players from the two new junket operators.

Last week, the Casino Regulatory Authority approved the licenses of two junket operators.

The partial opening of 100 rooms at the Equarius Hotel and 17 of the beach villas have seen rooms “running at close to full occupancy” while marketing activities are expected to begin in the second half of the year, CIMB said.

CIMB said junket operations can help alleviate concerns of RWS’s bad debt provisions and declining VIP volumes.

Singapore Land - Caution prevails

Stock Name: Sp Land
Company Name: SINGAPORE LAND LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 6.12

Target S$6.12

Management is still cautious on office and residential segments, following our recent meeting. Despite negative rental reversions, occupancies have strengthened at office assets. We sense the intention for site acquisitions, but persistently high bids remain a setback. We raise our FY13 EPS by 12% and trim FY14 by 2% on development recognition and higher Chengdu ASPs. Factoring in narrower cap rates for office assets raises RNAV and target price (still at 45% discount to RNAV). Maintain Neutral; strong office data points as rerating catalysts.

Source: CIMB Daybreak - 27 March 2012, Full PDF Report

Citi ups target prices for rigbuilders

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Citigroup

Price Call: BUY

Target Price: 12.80

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: Citigroup

Price Call: BUY

Target Price: 6.10

Besides's orders from Brazil's Petrobras, Singapore rigbuilders such as Keppel Corp and Sembcorp Marine will benefit from oil prices at current levels, as more exploration and production activity underpins the sector, Citigroup said.

The broker raised its target price for Keppel to $12.80 from $12.00 and for Sembcorp Marine to $6.10 from $5.90, but said Sembcorp is better positioned to secure more than six rig orders from Petrobras, due to economies of scale.

Citi also noted that crude oil prices at US$125 ($157) a barrel are at a sweet spot and should encourage more exploration and production spending, and may further tighten rig availability.

Citi raised its target price for Sembcorp Industries  to $6.00 from $5.83, and kept its buy rating on all three companies.

Shares of Keppel Corp, the largest rigbuilder, were up 1.2% at $10.89, while smaller rival Sembcorp Marine's shares were up 0.8% at $5.27. Sembcorp Industries rose 0.6% to $5.18.

Sembcorp Marine and Sembcorp Industries have outperformed a 24% rise in the FT ST Oil&Gas index so far this year, while Keppel has underperformed.

 

Credit Suisse rates NOL as outperform

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 1.85

Credit Suisse set an outperform rating on Singapore container shipping firm Neptune Orient Lines and raised its target price to $1.85 from $1.20.

NOL’s shares were up 2.2% at $1.405 and have gained 25% so far this year.

Credit Suisse said with 71% of NOL’s revenues and 53% of volumes generated from long-haul markets, the company has significant exposure to rising freight rates.

It said if NOL hits its target of realising US$500 million ($629 million) in cost savings this year, there will be an additional US$180 million of potential net profit after tax for the company.

“Not only will rising earnings and per share metrics drive NOL’s stock price higher, in our opinion, but so too will swelling valuation multiples,” Credit Suisse said.

On average, analysts have upgraded NOL’s earnings per share estimates by 5.1% for this year over the past 30 days, Reuters data shows.

 

MARKET PULSE: Starhub, MLT, World Precision, Swiber, Tiger Airways, Lian Beng & NOL (27 Mar 2012)

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: MapletreeLog
Company Name: MAPLETREE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.20

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.61

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.60

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

Research House: OCBC

Price Call: BUY

Target Price: 0.51

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.38

MARKET PULSE: Starhub, MLT, World Precision, Swiber, Tiger Airways, Lian Beng & NOL

27 Mar 2012

KEY IDEA StarHub: Announces Euro 2012 pricing StarHub has announced the pricing for the UEFA Euro 2012 football tournament which will start from 8 Jun to 2 Jul; all viewers (regardless of whether they are from StarHub or SingTel) will be able to purchase the Pay-Per-View pack, with an early bird discounted price of S$58.85 before 30 Apr, instead of S$69.55. The Euro 2012 event is also the first test of the new cross-carriage mandate of exclusive content. But with the steeper pricing, we believe that StarHub is likely to just break even at best. And following the recent run-up since its 4Q11 results announcement, there is limited upside from here to our unchanged S$3.10 fair value. Hence from a valuation ground, we downgrade it to HOLD. (Carey Wong) MORE REPORTS Mapletree Logistics Trust: Acquires two warehouses in South Korea Mapletree Logistics Trust (MLT) announced last Friday evening that it had entered into separate Sale and Purchase agreements to acquire two cold storage warehouses in South Korea for an aggregate purchase price of KRW63.5b (~S$71.3m). We note that both acquisitions are expected to be DPU-accretive, with initial NPI yields of 9.5-9.9%. Funding for the investments is expected to come from the proceeds raised from the recent issuance of its S$350m perpetual securities. In addition, MLT's aggregate leverage post all acquisitions announced to date is likely to reach ~39%. We now factor in the two acquisitions into our forecasts. This raises our FY13-14F revenue and distributable income by 2.4-3.9%. Our RNAV-based fair value, however, remains at S$1.20. Maintain BUYon MLT. (Kevin Tan) World Precision Machinery: Good growth prospects We visited World Precision Machinery's operations in Danyang City, Jiangsu Province last week. World Precision is China's third largest metal stamping machine player by market share. With Phase 1 of its factory in Shanyang scheduled for completion in 2H12, the company will continue the shift its product mix towards high-performance machines. The company will be beneficiary of China's 12th Five Year Plan (2012-2017), under which the high-end machinery and equipment industry is one of seven strategic industries identified. Management is optimistic about its long-term prospects. We DO NOT have a rating on World Precision Machinery. (Sarah Ong) Swiber Holdings: Consortium wins US$273m contract Swiber Holdings (Swiber) announced that it has secured a US$273m contract through a local collaboration with ACS subsidiary Dragados Offshore for offshore construction work in the Gulf of Mexico. The undisclosed customer is likely to be PEMEX, and work entails the procurement, transportation and installation of pipeline. However, as the project will be executed through a consortium group with Dragados and Swiber, we will obtain more details regarding Swiber's work scope and the group's portion of the entire US$273m contract. Meanwhile, work will commence immediately and will carry on into 2013. Swiber's stock may see a positive knee jerk reaction with this development, and pending more details from management, we put our Hold rating and fair value estimate of S$0.61 under review. (Low Pei Han)

Tiger Airways: Mandala returns to the skies Tiger Airways (TGR) this morning announced that its 33%-owned associated company PT Mandala Airlines (Mandala) of Indonesia will be starting sales of tickets today. For the start, Mandala will offer flights from Jakarta to Medan and Jakarta to Kuala Lumpur for all-in fares starting from IDR519,900 (~S$71) and IDR329,900 (~S$45), respectively. The restructured Mandala is also scheduled to make its maiden flight on 5 Apr 2012. While there is clear progress in Mandala's return to operations, we maintain our SELL rating and fair value estimate of S$0.60/share on TGR due to the less than encouraging recent operating statistics and persistently high jet fuel prices. (Eric Teo) Lian Beng Group: Purchasing vessels Lian Beng Group (LBG) last night announced it has 1) agreed to buy a flat top deck cargo barge for S$900k from Hathaway Marine Pte. Ltd.; 2) been awarded contracts to build two flat top deck cargo barges worth a total of $2.92m for a subsidiary of ASL Marine Holdings Ltd.; and 3) agreed to acquire three tug boats for a total consideration of S$2.94 million from Kemudi Santun Sdn Bhd. LBG said these vessel purchases are to meet its own logistics requirements for the transportation of raw materials, such as sand and granite, into Singapore. These transactions are not expected to have a material impact to the group's financial performance for the financial year ending 31 May 2012. We maintain our BUY rating and fair value estimate of LBG at S$0.51/share. (Eric Teo) Neptune Orient Lines: Issues perpetuals Neptune Orient Lines (NOL) this morning announced it has mandated DBS Bank as the global coordinator and DBS Bank, The Hongkong and Shanghai Banking Corporation, Oversea-Chinese Banking Corporation and Standard Chartered Bank as joint lead managers in the issuance of S$-denominated perpetual capital securities. Subject to market conditions, this proposed transaction is expected to be launched after investor meetings in Singapore commencing today. NOL said proceeds from this issuance will be used for general corporate funding purposes and investments. We will provide more updates after NOL's briefing on this issue later today. We currently have a HOLD rating and a fair value estimate of S$1.38/share on NOL. (Eric Teo) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks rose sharply after Fed Chairman Bernanke indicated that low interest rates are required to help support the labour market. The Dow Jones Industrial Average climbed 1.23% to close at 13,241.63. - CapitaMalls Asia has been included as constituent stock of the Hang Seng Global Composite Index and the Hang Seng Foreign Companies Composite Index. - Fragrance Group has announced that it has lodged a preliminary prospectus with the MAS regarding a proposed restructuring and listing of its hotel ownership and management business. - Progen Holdings announced that it has signed a non-confidentiality and non-disclosure agreement with a European-based leading manufacturer of innovative materials for heating and cooling systems. The companies will evaluate possibilities of cooperation. - Singapore Press Holdings is enlarging its stake in Blu Inc. (Holdings) Malaysia Sdn. Bhd. from 50% to 71.4%.

Nomura starts STX OSV as reduce

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: Nomura

Price Call: SELL

Target Price: 1.68

Nomura initiates coverage of Singapore-listed offshore vessel builder STX OSV Holdings with a reduce rating and a target price of $1.68.

STX OSV’s shares have risen 53% so far this year to close at $1.78 on Monday.

“Although the outlook for the company and the offshore support industry remains relatively positive, order book replenishment remains a concern,” Nomura said in a report.

The broker said new contracts secured so far this year only accounts for 10% of Nomura’s order win assumptions.

It said STX OSV’s valuations also look lofty, as it is trading at 8.7 times its 2012 forward price-to-earnings ratio, the high end of its historical PE band of 4-9 times.

Out of 12 brokers tracking the stock, 11 have a buy or strong buy and one has a hold rating.

 

Mermaid Maritime - Renewed hopes

Stock Name: Mermaid
Company Name: MERMAID MARITIME PUBLIC CO LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.44

Target S$0.44

Positive feedback from large offshore construction companies spells brighter prospects for Mermaid's subsea arm. Strengthened by a new management team, we expect Mermaid to be back in the black, following two years of losses. Maintain Outperform. No changes to our EPS estimates or target price, still at 0.7x CY12 P/BV (3-year mean). Contract awards of its jack-ups and a stronger 2H could catalyse its share price, we believe.

Source: CIMB Daybreak - 26 March 2012, Full PDF Report

CSE Global - Opportunity strikes

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.90

Target S$0.90

CSE's erratic share price has opened up favourable trading opportunities. We deem that the current trading price provides a good entry point to this quality company. We upgrade CSE from Neutral to Outperform on the back of its recent underperformance. We maintain our EPS estimates and target price, still at 7x CY13 P/E, one SD below its 5-year mean.

Source: CIMB Daybreak - 26 March 2012, Full PDF Report

UE E&C rises to record on strong volume

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.81

Shares of UE E&C jumped as much as 5% to a record high, on expectations the construction and engineering firm will pay attractive dividends and its expansion into property development will help boost margins.

UE E&C was up 3.5% at $0.74 with more than 4.6 million shares traded versus average daily volume of 4.1 million over the past 30 days. The stock rose 22% last week.

On Friday, OCBC Investment Research upgraded UE E&C to buy from hold and raised its target price to $0.81 from $0.65. 

  
 

Wheelock Properties (S) rated 'neutral' by CIMB

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

Research House: CIMB

Price Call: HOLD

Target Price: 1.79

CIMB in a Mar 20 research report says: "During its recent analysts’ briefing, we sense status quo, as the group remains cautious on acquisitions and retains its Singapore-residential focus. Deploying capital in China remains viable.

"Privatisation is also possible, though less compelling at current valuations. Wheelock’s cash hoard provides it with the financial muscle to stomach large acquisitions, we believe. As such, it faces no lack of options, though finding the right targets may prove difficult.

"We raise FY2012-2014 EPS and RNAV on lower cap rates and less-bearish ASPs for residential developments. A higher target price of $1.79 (still at 30% discount to RNAV) following our RNAV upgrade. MAINTAIN NEUTRAL."

STX OSV Holdings rated 'buy' by DMG

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: DMG

Price Call: BUY

Target Price: 2.00

DMG & Partners Research in a Mar 20 research report says: "STX OSV secured their first major order of the year with a contract from Island Offshore to build an advanced subsea support vessel valued at more than NOK500 million (US$87 million). Island Offshore is a repeat customer for STX OSV.

"We estimate that the new win lifted backlog order book to around NOK17.2 billion vs. its annual revenue capacity of NOK12 billion. We maintain our FY2012-2013F EPS estimates as we have factored in NOK12 billion new order win in FY2012.

"STX OSV is now trading at 10.5x FY12 P/E, 30% discount to average P/E of Singapore rig builders. We expect the tight supply and higher day rates for high-end offshore support vessels (OSV) to drive further new orders. Target price of $2.00. MAINTAIN BUY.

DBS Group rated 'outperform' by CIMB

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: CIMB

Price Call: BUY

Target Price: 15.10

CIMB in a Mar 20 research report says: "DBS hosted a briefing session to share its insights into the Global Transaction Services (GTS) business, DBS’s niche position in this space and what it was doing to drive the business further. We think this is an interesting annuity business that will solidify DBS’s position in Asia.

"GTS contributed 14.2% of 2011 group revenue (2010: 10.5%) and 15.2% of PPOP (2010: 9.6%). The change started in 2010 when management realigned its sales focus, workflows and processes; recruited talent and deployed new technology.

"The benefits were reaped in 2011 as new products were launched, though importantly, the environment also allowed for rapid growth as foreign banks pulled out. Our earnings and target price of $15.10 (based on 1.2x CY12 P/BV, GGM) are unchanged. OUTPERFORM."

Hiap Hoe rated 'buy' by DMG

Stock Name: Hiap Hoe
Company Name: HIAP HOE LIMITED

Research House: DMG

Price Call: BUY

Target Price: 0.61

DMG & Partners Research in a Mar 20 research report says: "Hiap Hoe reported another consecutive year of record earnings for FY2011, with net profit of $47.4 million (+37% y-o-y).

"Over the next two years, earnings will be underpinned by progressive profit recognition from its substantially pre-sold projects, Waterscape at Cavenagh and Skyline 360°. At Zhongshan Park (Balestier Road), its hotel-cum-commercial development is progressing ahead of schedule and will provide a source of recurring income when completed in 2013/2014.

"We continue to like the stock for its earnings visibility, disciplined management and undemanding valuation. Our target price of 61 cents is based on 50% discount to its RNAV. MAINTAIN BUY."

Citi cuts Hyflux earnings, sees slow orders

Stock Name: Hyflux
Company Name: HYFLUX LTD

Research House: Citigroup

Price Call: BUY

Target Price: 1.86

Citigroup downgraded its 2012 estimates on Singapore water treatment firm Hyflux  by 32%, citing slow order book wins in the second half of last year.

It cut its target price to $1.86 from S$2.15. Shares in Hyflux were up 1.3% to $1.50.

Citi said it still likes the long-term nature of Hyflux’s environmental business, and its recent project win in India will benefit the company.

 

Hyflux said on Thursday its unit and its Japanese partners, Hitachi Ltd and Itochu Corp, had agreed to develop Asia’s largest seawater desalination plant in Gujarat, India. The total cost of the project is estimated to be around US$600 million (657 million), Hyflux said.

Citi estimates the Indian project will raise Hyflux’s order book by about 12% to $2.4 billion.

Seven out of 11 analysts have cut their earnings per share estimates on Hyflux over the past month, with average revisions of 7.2% for this year.

Ho Bee Investment rated 'hold' by Maybank-Kim Eng

Stock Name: Ho Bee
Company Name: HO BEE INVESTMENT LIMITED

Research House: Kim Eng

Price Call: HOLD

Target Price: 1.27

Maybank-Kim Eng Research in a Mar 21 research report says: "Home curbs are spawning an office boom. Office units at Robinson Square, Paya Lebar Square and PS100 have sold like hotcakes. It makes sense for Ho Bee to consider selling its office space at The Metropolis. We estimate it would make $300 million from a 50% sale.

"Ho Bee is exempted from the two-year deadline to sell all residential units after completion, as most of its projects are located in Sentosa Cove where this exception applies. However, sales are still severely lacking. Ho Bee is trading at a discount of 57% to RNAV and 41% to book.

"We remain neutral in view of near-term headwinds, locally and in China, where its exposure is now over 40% of RNAV. Target price of $1.27, pegged at a 60% discount to its RNAV of $3.18. MAINTAIN HOLD."

Roxy-Pacific Holdings upgraded to 'buy' by OCBC

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.62

OCBC Investment Research in a Mar 20 research report says: "From the recent URA sales figures for February 2012, we saw that Roxy had a strong month of sales. Their newly launched project at Telok Kurau, Treescape, is now 78% sold at a median price of $1.4K psf.

"Also, sales at Nottinghill Suites, which was previously subdued, picked up with an additional 16% sold in February 2012, and the project is now 60% sold. Moreover, we now believe that Roxy would launch subsequent projects expediently in 1H12, Eon Shenton (70 Shenton Way), Millage (55 Changi Rd) and Natura@Hillview (Hillview Terrace), and would likely achieve positive results.

"We raise our fair value estimate to 62 cents (previously 45 cents) using a lowered RNAV discount of 30%. UPGRADE TO BUY."

Kim Eng bullish on Starhill Global

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: Kim Eng

Price Call: BUY

Target Price: 0.80

Maybank Kim Eng is recommending Singapore’s Starhill Global REIT, saying it is a prime retail play trading at a sharp discount to its book value.

The brokerage kept its buy rating and price target for the company, whose key assets are in the prime Orchard Road area, unchanged at $0.80. The REIT’s units were flat at $0.63.

Following last year’s influx of international retailers such as Abercrombie & Fitch and Michael Kors into Singapore’s main shopping belt, Kim Eng expects demand for prime retail space to increase as more foreign retailers enter the market.

Genting Hong Kong - Swift cruising

Stock Name: Genting HK US$
Company Name: GENTING HONG KONG LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 0.54

Target US$0.54

Solid topline growth at Star Cruises and a higher-than-expected share of profits from jointly controlled entities (JCE) enabled Genting HK to beat earnings expectations. As its cruise and gaming businesses continue to deliver, fundamentals appear to be improving. FY11 core net profit is 28% above our forecast and 16% above consensus. We raise our FY12-14 EPS by 7-19% on adjustments for Star Cruises' revenue and JCE contributions assumptions. Maintain Outperform and blended 9x CY13 EV/EBITDA target price.

Source: CIMB Daybreak - 23 March 2012, Full PDF Report

UOBKH - SP: GENS - Baby steps on junket licensing

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.89

---

Good morning,

CRA has awarded 2 licenses to two Malaysian-based junket operators who have been authorised to organise junket activities at RWS. This fulfills our expectations that junket licenses would be approved and awarded in 1H12 and Asean-based operators would be first to receive the licenses.

The award of junket licenses would have moderately positive impact on GENS' VIP GGR and will see market share expansion.

Maintaining our BUY call on GENS with a target price of S$1.89. This new development should provide modest upside to share price.

For follow up questions, please contact myself or Vincent.

Regards,


Genting Singapore (GENS SP) BUY

Baby steps on junket licensing
Price / Tgt: S$1.63/1.89 Mkt Cap (US$b): 15.7 3-mth Avg Daily Vol (US$m):88.1 1-Yr Hi/Lo: S$2.24/1.42

What's New

· CRA awarded junket licences! The Casino Regulatory Authority (CRA) announced it has awarded licences to two International Market Agents (IMAs) (refer to table on overleaf for more information) late yesterday evening. The two 1-year licences or better known as junket licenses have been awarded to two Malaysian-based operators - Huang Yu Kiung and Low Chong Aun. Both junket operators are authorised to organise, promote or conduct junket activities at Resorts World Sentosa (RWS).

· This new development fulfills our expectation that junket licences would be awarded in 1H12 and Asean-based operators would be first to receive the licences. This gives hopes that CRA would be awarding more junket licences.

· However, a long wait for junket to gain significance? We understand there are 12 junket applicants who were not successful, with most of them being the significantly bigger Macau-based and other Asean-based operators. This suggests that CRA would continue to be very circumspect in issuing licences in the intermediate term, ie issuing more licences to relatively small and non-Macau operators. This controlled issuance is probably a deliberate way to ensure CRA's enforcement of tight conditions and procedures.

Stock Impact

· Moderate impact on RCV. Junket licensing would probably expand the gaming industry 2012's VIP rolling chip volume (RCV) by less than 5%, given that only smallish operators are expected to be licensed for the time being (which suggests limited financing capabilities), and given CRA's tight conditions/procedures.
· Moderately positive. Given that both licences have been awarded to two junkets that have been authorised to operate at RWS, we reckon this could have a moderate positive impact on RCV which could help expand market share in the VIP segment.

Valuation/Recommendation
· Maintain BUY and target price of S$1.89, pegged at 12x 2012F EV/EBITDA. Share price is now trading at the lower end of its historical range of between S$1.60 and S$1.80. The stock is currently trading at 10.2x 2012F EV/EBITDA, much lower than its Macau peers. This new development can only provide a modest upside to the shares. Improving quarterly EBITDA trends following the increase in VIP hotel room capacity since Feb 12 will be the other catalyst to lift stock price.

DBS raises F&N target price, trims estimates

Stock Name: F & N
Company Name: FRASER AND NEAVE, LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 7.70

DBS Vickers increased its target price for Singapore’s property and food and beverage conglomerate Fraser and Neave to $7.70 from $7.20 and kept its buy rating, citing a higher market value of its listed entities.

The broker said F&N is also a good proxy to its unit Asia Pacific Breweries, which has a strong geographical presence in Southeast Asia but whose shares have limited liquidity.

Although DBS trimmed its earnings forecast for F&N by 12 and 6% in 2012 and 2013 respectively to reflect the recognition of earnings on the completion of its overseas projects, its property sales remain robust, it said.

By 11:06 a.m., F&N shares were up 0.9% at $6.88, and have gained 11% since the start of the year.

   
 

MARKET PULSE: NOL & Global Palm (22 Mar 2012)

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.38

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

MARKET PULSE: NOL & Global Palm

22 Mar 2012

KEY IDEA Neptune Orient Lines: Transpacific provides boost The Shanghai (Export) Containerised Freight Index (SCFI) climbed 5% higher WoW in the week ended 16 Mar 2012. The increase in SCFI was driven by shipping liners' success in getting most of the previously announced US$300/FEU hike in transpacific shipping rates. However, bunker fuel prices have averaged 8% higher QoQ thus far in 2012. Furthermore, since new deliveries of vessels are expected to increase shipping capacity this year, shipping liners' collective discipline in managing the oversupply is key to the profitability of the entire container shipping industry. We pared Neptune Orient Lines' (NOL) FY12 net loss estimate to US$136m, from the previous US$281m, after the latest hike in transpacific shipping rates. But we maintain our fair value estimate of S$1.38/share and HOLDrating on NOL. (Eric Teo) MORE REPORTS Global Palm: Eyes higher cost in FY12 We spoke recently with management of Global Palm Resources (GPR) to get an update after ending FY11 on a pretty weak note. Going forward, GPR expects to increase new plantings to 1.0k ha, after planting 951 ha in FY11. It adds that it is on the lookout for M&A opportunities, where it has an ample net cash balance of IDR215.8b as of end FY11. But higher cost of production could crimp margins, even though CPO prices have generally remained fairly resilient thus far this year. As such, we have adjusted our margin assumptions accordingly, lowering our FY12 revenue estimate by 3.8% and earnings by 9.9%. In line with the revision, our fair value eases from S$0.195 to S$0.19, still based on 10x FY12F EPS. But as the stock is currently trading at just 0.7x its FY11 NTA, we believe that further downside is likely limited. As such, we maintain our HOLD rating. (Carey Wong)

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

NEWS HEADLINES - Malaysia's central bank has projected its economy to grow at a slower-than-expected rate of 4-5% this year, due to a more challenging external environment. - Cordlife Group said that it will raise about S$26.3m in net proceeds from its Singapore IPO to facilitate its Singapore and Hong Kong expansion and acquisitions overseas. - F1 chief Bernie Ecclestone has recommended Singapore as the best location for the IPO of the motor racing business. - Singapore Airlines' new budget carrier Scoot has officially started to accept bookings on its website. - MAS said that two Lehman Brother entities have been placed under voluntary liquidation, although minibond investors here cannot launch claims against them as creditors.

SIA Engineering - Steady take-off

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: CIMB

Price Call: BUY

Target Price: 4.56

Target S$4.56

SIA Engineering has all the ingredients of a quality stock: stable earnings growth, high ROEs, net cash, attractive dividend yields and undemanding valuations against peers. We peg a higher P/E of 15x (5-year mean) in our blended valuation (previously 10x on recession trading band) following a more positive MRO outlook. We refine our EPS as we update some assumptions. Maintain Outperform with catalysts anticipated from strong earnings growth.

Source: CIMB Day Break 22 March 2012, Full PDF Report

DBS starts Sheng Siong at hold

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

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.49

DBS Group Research has initiated coverage of Singapore supermarket operator Sheng Siong Group with a hold rating and a share price target of $0.49.

Sheng Siong shares were up 1 percent at $0.49 in morning trade.

DBS said Sheng Siong is a niche player in a defensive sector, with a 90% dividend payout ratio, free cashflow of 3 to 4 cents per share going forward and higher dividend yields than its peers.

Its compound annual growth rate for core earnings in the 2011-2013 fiscal years is projected at 20%, driven by store expansions and operating efficiencies from a new warehouse, DBS said.   

It said the current share price looks fairly valued.

 

OCBC downgrades CapitaCommercial Trust

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.14

OCBC Investment Research has downgraded Singapore’s CapitaCommercial Trust  to hold from buy and lowered its share price target to $1.14 from $1.29.

CCT shares were up 1.2% at $1.235 in early trade.

OCBC forecast office rentals in Singapore would fall 10-15 percent in the 2012 fiscal year due to macroeconomic uncertainties and an ample office pipeline. It added that office capital values could come under pressure.

“For CCT’s share price, we see key risks stemming from fair value write-downs as the domestic office sector softens further,” OCBC said.

But it said any price downside is likely to be capped by a currently undemanding valuation of 0.7 times price-to-book ratio and a fairly attractive yield of 5.7% for high quality Grade A office exposure.

   
 

Sakari Resources - On the cusp of a transformation

Stock Name: Sakari
Company Name: SAKARI RESOURCES LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 2.73

Target S$2.73

4Q11 revealed the power of Sebuku's operating leverage. This was just the start of is structural transformation. Margins will be elevated as the group ramps up  production at the Northern Leases. Ongoing reviews at Jembayan will further boost long-term profitability. Recent changes to Indonesia's mining rules do not affect SAR. We adjust our FY12-14 EPS (-19% to +7%) on revised volume assumptions and lift our target price on higher forex assumptions, still based on 9.6x FY13 P/E (FY08-09 downturn mean). Maintain Outperform.

Source: CIMB Daybreak - 21 March 2012, Full PDF Report

DBS Group - An attractive annuity business

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: CIMB

Price Call: BUY

Target Price: 15.10

Target S$15.10

DBS hosted a briefing session to share its insights into the Global Transaction Services (GTS) business, DBS's niche position in this space and what it was doing to drive the business further. We think this is an interesting annuity business that will solidify DBS's position in Asia. Driven by group CEO Piyush Gupta, the GTS business (14-15% of group revenues and profit) saw revenue surging 46% while PPOP ballooned 66% in 2011. Our earnings and target price (based on 1.2x CY12 P/BV, GGM) are unchanged, as is our Outperform rating.

Source: CIMB Daybreak - 20 March 2012, Full PDF Report

M1 Limited - Muted tone

Stock Name: M1
Company Name: M1 LIMITED

Research House: CIMB

Price Call: HOLD

Target Price: 2.50

Target S$2.50

Our recent visit to M1 left our views unchanged. Any re-rating catalysts will depend on improvements relating to LTE and NGNBN, we feel. Take-up of fibre remains slow owing to issues at OpenNet. The regulator has stepped in to resolve issues such as bureaucracy and installation capacity at OpenNet. Lacking re-rating catalysts, we remain Neutral and keep our DCF target price (WACC 7.9%). Switch to StarHub which has capital- management potential, in our view.

Source: CIMB Daybreak - 20 March 2012, Full PDF Report

Olam International - Bouncing upstream

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 3.17

Target S$3.17

Olam is investing in greenfield rubber plantations in Gabon. This investment is not earnings accretive in the near term, but should boost upstream margins to enhance longer-term profitability. This long-dated investment should reach steady state in FY25. We see room for operational synergies with its supply chain businesses. Our Outperform rating, EPS estimates and 15x CY13 P/E target are intact. Catalysts are expected from earnings resilience vs. its peers.

Source: CIMB Daybreak - 20 March 2012, Full PDF Report

Wheelock Properties (S) - Status quo?

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

Research House: CIMB

Price Call: BUY

Target Price: 1.79

Target S$1.79

During its recent analysts' briefing, we sense status quo, as the group remains cautious on acquisitions and retains its Singapore-residential focus. Deploying capital in China remains viable. Privatisation is also possible, though less compelling at current valuations. We raise FY12-14 EPS and RNAV on lower cap rates and less-bearish ASPs for residential developments. Maintain Neutral with a higher target price (still at 30% discount to RNAV) following our RNAV upgrade.

Source: CIMB Daybreak - 20 March 2012, Full PDF Report

OCBC upgrades Singapore's Roxy Pacific to buy

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.62

OCBC Investment Research raised its rating on Singapore property firm Roxy Pacific Holdings to buy from hold, citing the company’s strong sales last month. 

It raised its price target on Roxy $0.62 from $0.45.

“At the current juncture, we judge that Roxy now warrants a lower restated net asset value discount at 30%, versus 40% previously, due to its more favorable risk profile,” the brokerage said.

Roxy’s shares were up 0.9% at a record $0.56. The stock has gained 42% so far this year.

STX OSV rises on order wins

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: DMG

Price Call: BUY

Target Price: 2.00

STX OSV Holdings rose as much as 2.8% after it won two contracts worth about 1.15 billion Norwegian Crown ($253 million) to build subsea vessels.

“We believe orders could gush back in the second half when positive oil & gas dynamics pips credit concerns,” brokerage CIMB said in a report, adding that STX OSV’s order pipeline had become more diversified.

STX OSV’s orders so far this year only accounted for 9.5% of broker DMG & Partners’ full year forecast, but it expects “the tight availability of high-end vessels in the market will continue to drive more orders”.

DMG & Partners has a buy rating on STX OSV and a target price of $2.00.

STX OSV is favoured by markets as reflected by Thomson Reuters’ StarMine giving it a%ile ranking of 98 out of 100 for analysts’ upgrades in earnings estimates and changes in their recommendations.

STX OSV was up 2% at $1.79 after hitting a record S$1.81 on Monday. The shares have surged 60% this year.

 

CDL Hospitality to gain from strong tourism - OCBC

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.00

CDL Hospitality Trusts (CDLT.SI), which owns hotels, is well positioned to benefit from growing tourism in Singapore as well as stronger revenue for high-end hotels, OCBC Investment Research said.

It maintained its buy rating and a target price of $2.00 for CDL Hospitality. Shares in the units were up 1.4% at $1.785, and have gained 15.5% this year.

“Many of the visitors from developing countries are not budget travelers,” said OCBC, highlighting that the revenue per available room (RevPAR) for high-end hotels in Singapore outperformed budget hotels in January.

Overall, RevPAR for Singapore hotels rose 11.7% in January from a year ago, while visitor arrivals grew 13.4 percent, data from the Singapore Tourism Board shows.

“With the majority of its revenue coming from high-end Singapore hotels, CDL Hospitality Trusts will continue to be a beneficiary of the blossoming tourism industry,” OCBC said.

Ryobi Kiso Holdings rated 'increase exposure' by SIAS

Stock Name: Ryobi Kiso
Company Name: RYOBI KISO HOLDINGS LTD.

Research House: SIAS

Price Call: BUY

Target Price: 0.215

SIAS Research in a March 16 research report says: "Ryobi announced the acquisition of 70% stake in two Australian piling and geotechnical services companies, Compile Australia Pty Ltd and Compile-Ryobi Australia Pty Ltd, for a total consideration of approximately A$2.8 million ($3.68 million).

"These strategic acquisitions will allow Ryobi to enter the Western Australia market and help achieve its regionalization plan. For now, we see these acquisitions as footholds in a new market.

"We maintain our forecasts and valuation on Ryobi pending further developments from these companies. Intrinsic value of 21.5 cents. MAINTAIN INCREASE EXPOSURE."

Cambridge Industrial Trust rated 'buy' by DBS

Stock Name: Cambridge
Company Name: CAMBRIDGE INDUSTRIAL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.58

DBS Vickers Securities in a Mar 15 research report says: "The manager of Cambridge REIT (CREIT) announced that it is proposing to acquire 16 Tai Seng Street for $59.3 million.

"Based on the estimated initial $5.0 million increase to net property income (NPI) or an initial yield of close to 8.0%, we estimate net rent to be $2.37 psf pm for the property, which is at the higher end of rental transactions that we have tracked in that micro-location in recent months.

"Acquisition is expected to be accretive to earnings and will be partly funded by its recent issue of $50 million fixed rated MTN notes (cost of 4.75%). Gearing is expected to increase slightly to 35%.

"Stock remains attractive with FY2012-2013F yields of close 9.1-9.6%. Target price of 58 cents. BUY."

Viz Branz rated 'hold' by OCBC

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.37

OCBC Investment Research in a Mar 15 research report says: "Yesterday’s market action saw the share price of Viz Branz (VB) rose more than 14% to as high as 53.5 cents before correcting down to close at 43 cents at the end of the day.

"It was a continuation from Tuesday's strong rally of 16.7%, which saw VB hit a then all-time high of 45.5 cents. In light of VB’s relatively light daily trading volume, the sharp gains on both days on unusually high volumes, came as a huge surprise to the market.

"However, management communicated to us that there were no changes to daily company operations, and also denied any knowledge of any developments regarding VB’s existing share ownership structure.

"Unchanged fair value of 37 cents as we continue to like the counter for its promising 2H12 outlook and growth potential. MAINTAIN HOLD."

JES In'l Holdings rated 'hold' by DBS

Stock Name: JES
Company Name: JES INTERNATIONAL HOLDINGS LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.20

DBS Vickers Securities in a Mar 16 research report says: "JES’s FY2011 net profit tripled y-o-y to RMB203 million on 31% revenue growth and 4.1ppt gross margin expansion to 11.8%. However, it missed our expectation by 10%, largely due to provision for potential vessel delays that amounted to RMB36.7 million in 4Q.

"This dragged 4Q11 net profit to RMB6.8 million vs RMB47 million in 3Q11 and our expectation of RMB30 million. JES has not secured any new contract wins after clinching US$260 million for bulk carriers in January 2011. Current orderbook is estimated to be c. US$1.3 billion, implying book-to-bill ratio of 1.5x.

"We maintain our earnings forecast for now as we had assumed c.RMB40 million of potential provisions for cost overruns in our model. Our target price is maintained at 20 cents, pegged to 0.6x FY12F P/BV (in line with 0.5SD below mean). MAINTAIN HOLD."

M1 upgraded to 'buy' by Maybank-Kim Eng

Stock Name: M1
Company Name: M1 LIMITED

Research House: Kim Eng

Price Call: BUY

Target Price: 2.85

Maybank-Kim Eng in a Mar 16 research report says: "When Apple’s new iPad comes onto the market, we do not expect M1 to suffer a margin upset. The iPad tends to have a much smaller impact on subscriber acquisition costs than the iPhone.

"M1 appears to be easing up on its aggressive stance on fibre. With the new iPad out on the market, the next iPhone is not expected to be launched until October. The government has finally stepped in to force OpenNet to be more responsive to market needs.

"NGNBN take-up has been slow last year, but if the teething issues are resolved, this will be a positive catalyst for M1. Target price of $2.85 (including DPS of $0.145) for a total return of 14%. UPGRADE TO BUY."

Sheng Siong Group rated 'outperform' by CIMB

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

Research House: CIMB

Price Call: BUY

Target Price: 0.51

CIMB in a Mar 16 research report says: "The new Mandai Distribution Centre is good for Sheng Siong despite higher overheads. Sheng Siong should be more shielded from fast rising rentals as about 70% of its retail space is leased from the government or related parties, rather than private landlords.

"Look for the possibility of higher dividends from the $10.4 million sale of its old warehouse. If management decides to distribute the money, FY2012 dividend yield could increase to 5.8% (2.8 cents). If they don’t, our estimated FY2012 yield will be 4.4% (2.1 cents).

"Target price of 51 cents based on 18x CY13 P/E, with slight adjustments to FY2012-2013 EPS on housekeeping matters. We see catalysts from faster store rollout, expansion into Malaysia and strong same-store sales growth. MAINTAIN OUTPERFORM."

Singapore Airlines valuation hits bottom-DMG

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: DMG

Price Call: BUY

Target Price: 12.47

DMG & Partners kept a buy rating on Singapore Airlines (SIA) (SIAL.SI) and said it was encouraged by an improvement in passenger traffic.

“We think its valuation has hit bottom. SIA is backed by a strong balance sheet, which would enable it to whether any downturn going forward,” the broker said and retained its price target of $12.47.

SIA’s shares were down 0.55% at $10.94. Out of 23 analysts tracking the stock, 13 have a hold rating, five have a buy or strong buy and five have a sell or strong sell.

DMG said recent changes at the company including cuts in cargo capacity, voluntary separation scheme for employees and higher fuel surcharges would enhance SIA’s margins and profitability from fiscal year 2013.

SIA said the operating environment remained challenging and passenger yields were likely to come under pressure.

Sheng Siong Group - New warehouse well worth it

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

Research House: CIMB

Price Call: BUY

Target Price: 0.51

Target S$0.51

Cost savings from its new warehouse should cancel out higher overheads. Sheng Siong is relatively shielded from rising rentals as its retail space is leased from 'compassionate' landlords rather than yield-maximising private landlords. Maintain Outperform and target price based on 18x CY13 P/E, with slight adjustments to FY12-13 EPS on housekeeping matters. We see catalysts from faster store rollout, expansion into Malaysia and strong same-store sales growth.

Source: CIMB Day Break 16 March 2012, Full PDF Report

Kim Eng ups M1 to buy, raises price target

Stock Name: M1
Company Name: M1 LIMITED

Research House: Kim Eng

Price Call: BUY

Target Price: 2.85

Maybank Kim Eng upgraded Singapore telecoms firm M1 to buy from hold and increased its target price to S$2.85 from S$2.35, saying margin worries are likely to ease.

It said Singapore’s three telcos — M1, Singapore Telecommunications and StarHub — are breaking away from unlimited data caps on their new iPad plans. Tablets could help boost data average revenue per user, the broker said.

“We expect margin concerns for M1 to fade for a while as the new iPad should not cause a dent, the iPhone 5 launch is unlikely till October 2012 and the telco appears to have shed its previous aggressive stance on fibre,” Kim Eng said.

M1 shares were down 0.8%, StarHub fell 1.6%, while SingTel gained 0.3%. The stocks have underperformed the broader market so far this year.

BaML ups Yangzijiang target, sees new orders

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: BofA Merrill Lynch

Price Call: BUY

Target Price: 2.12

Bank of America Merrill Lynch (BaML) raised its target price on Singapore-listed shipbuilder Yangzijiang (YAZG.SI) to $2.12 from $2.08, citing a potential rise in orders for large containership orders from mid-2012.

It maintained its buy rating on Yangzijiang. The shares were up 1.5% at $1.385, and have soared 52% this year.

BaML said the company could see its first rig building contract wins in the second half of the year, helped by support from the Chinese government.

It also noted that shipbreaking, where ships are broken up for scrap recycling, could also see a boom amid low freight rates, as 27% of dry bulk carriers globally will be 20 year or older in the next five years.

Biosensors Int'l - Glimpse into the promised land

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: CIMB

Price Call: BUY

Target Price: 1.98

Target S$1.98

We are happily witnessing events that are shaping the destiny of this rising Medtech star. Its switch to a single CEO system coincides with possible SFDA approval for the BioMatrix in China. Recent share-price underperformance offers entry opportunities.

Source: CIMB Day Break 15 March 2012, Full PDF Report

Capitamall Trust rated 'buy' by DBS

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.05

DBS Vickers Securities in a March 13 research report says: "CMT announced an issue of US$400 million worth of fixed rates notes, which is part of the US$2 billion Euro-Medium Term Note Programme secured by CMT earlier.

"The new 6-year credit facility in SGD term, which carries a fixed interest rate of 3.29% pa payable semiannually, is part of its ongoing efforts to refinance the $783 million CMBS loan due on Oct 31, 2012.

"Recall earlier that the trust has secured $800 million committed bank facilities with maturities of up to three years. These facilities, if utilized, will help CMT diversify its sources of funding, and at the same time stagger and extend its debt lease expiry.

"JCube, a lifestyle mall in the Jurong Lake district, will open doors in 2Q12 and help lift 2H12 earnings. Target price of $2.05. MAINTAIN BUY."

CH Offshore upgraded to 'buy' by DBS

Stock Name: CH Offshore
Company Name: CH OFFSHORE LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.50

DBS Vickers Securities in a Mar 13 research report says: "We project CHO's recurring earnings to bottom out in FY2012F at US$28 million (-8% y-o-y) before recovering +22% y-o-y in FY2013F on higher fleet utilisation rate and improved margins from positive operating leverage. We introduce FY14F earnings at US$38 million (+9% y-o-y), mainly on higher day rates.

"CHO's recent interim DPS of 0.75 cents (stock now ex-div) is in line with 2Q11’s payout. Its strong net cash position of US$86.5 million/US$108.2 million (43%/53% of current market cap) by end FY2012/2013, up from US$36.4 million as of end 2Q12, is largely driven by a vessel disposal, strong operating cash flows and no major capex plans.

"We raise our target price to 50 cents (up from previous 43 cents), attractive 7.8% dividend yield and RNAV of 65 cents. UPGRADE TO BUY."