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%.