MARKET PULSE: Healthcare Sector, STE, Ezion and Tiger (07 Feb 2012)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.95

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

Research House: OCBC

Price Call: BUY

Target Price: 3.32

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.18

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.60

MARKET PULSE: Healthcare Sector, STE, Ezion and Tiger

07 Feb 2012

KEY IDEA Healthcare Sector: Back in the limelight? Summary: During the recently concluded 4QCY11 results period, Raffles Medical Group reported results which were in line with our expectations, while Biosensors International Group's (BIG) core earnings came in slightly below our estimates. Nevertheless, both healthcare companies continued to showcase healthy growth trends. During 2010, the Healthcare sector created substantial investor fervour after the privatisation of Parkway Holdings and Thomson Medical Centre at rich valuations. Looking ahead, we believe that the Healthcare sector could return to the limelight again should the high-profile IPOs of Khazanah's Integrated Healthcare Holdings and Fortis Healthcare's business trust materialise. This could result in a re-rating of the sector, of which RMG would be the biggest beneficiary, in our opinion. We reiterate our OVERWEIGHTrating on the Healthcare sector, underpinned by robust fundamentals. Meanwhile, BIG [BUY; FV: S$1.95] remains our top pick in the sector. (Wong Teck Ching Andy) MORE REPORTS ST Engineering: Kinetics blacklisted in India Summary: According to an Aviation Week story dated 5 Mar 2012, the Indian Ministry of Defence (MoD) has blacklisted six defence firms, including ST Engineering's (STE) subsidiary ST Kinetics (STK), from doing business in India over the next 10 years. STE put out an announcement in response to the bribery scandal. In the announcement, STE maintains it is a law-abiding group and will now seek legal advice so as to clear its name of any shenanigan. Furthermore, despite media reports of the blacklisting, STK has not received any official notification from the Indian authorities on this matter. According to STE, STK has never won any defence contract or exported defence sales to India. STE also has not included any expected sales to India's MoD in its FY12 guidance and expects this blacklisting to have no financial impact on the group's financial performance. Thus, we maintain our BUY rating and fair value estimate of S$3.32/share on STE. (Eric Teo) Ezion Holdings: Secures US$65.7m liftboat contract for work in China Summary: Ezion Holdings (Ezion) announced this morning that it has secured a charter contract worth about US$65.7m over a four-year period to provide a liftboat that will be used by a state-linked power generation enterprise in China. China's offshore wind industry is gaining momentum and we think Ezion's liftboat is likely to be used for installation work at an offshore wind farm. From our understanding, the top five power companies in China are China Huaneng, China Guodian, China Datang, China Huadian and China Power Investment Corp. The liftboat is expected to work in the Yellow Sea in 3Q13 upon completion, and this project is expected to have a positive material impact on the group's earnings in FY13. Pending an analyst briefing later, we maintain our BUYrating but place our fair value estimate of S$1.18 under review. (Low Pei Han) Tiger Airways: Second Australian base in Sydney Summary: Tiger Airways (TGR) this morning announced that its Australian operations have selected Sydney to be its second base in Australia. Tiger Australia will begin operations in Sydney starting from early Jul 2012. Tiger Australia is currently utilising seven aircraft out of Melbourne and has three aircraft in cold storage. With the expected lifting of flying restrictions in Australia later this year, the second base in Sydney should help Tiger Australia to ramp up its utilisation of aircraft. However, with the aviation sector currently facing strong headwinds due to high jet fuel prices and uncertain global economy, we maintain our SELL rating and fair value estimate of S$0.60/share on TGR. (Eric Teo)

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

NEWS HEADLINES - The US stock market had its worst day of 2012 due to concerns about the whether Greece will complete a key debt swap with bondholders. Data also showed the Europe's GDP contracted 0.3% in 4Q. The Dow fell 1.6% to 12,759 and the S&P 500 shed 1.5% to 1343.36. - Temasek Holdings's sale of a 3% stake in Sembcorp Marine sent the stock tumbling 6.3% yesterday. Temasek still has an effective stake of 30% held through Sembcorp Industries. - Pacific Andes Resources Development Ltd is proposing a renounceable 1 for 2 rights issue. The issue price per rights share is S$0.14 and represents a discount of ~39.13% to the closing price of S$0.23 on 6 Mar. - Apparel maker Ocean Sky International has proposed a placement of ~S$3.4m of new shares to fund working capital and possible strategic investments.