MARKET PULSE: SPH and STE (16 Apr 2012)

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 4.05

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

Research House: OCBC

Price Call: BUY

Target Price: 3.50

MARKET PULSE: SPH and STE

16 Apr 2012

KEY IDEA Singapore Press Holdings: 2QFY12 results mostly in line Summary: Singapore Press Holdings' (SPH) 2QFY12 PATMI came in at S$83.9m, or 5 S-cents per share, which was 16% higher YoY. 1HFY12 PATMI now make up 46% of our full year forecast, falling short mainly due to lower investment income. 2QFY12 topline was S$298.5m - in-line with our expectations - and making up 50% of our full year forecast. An interim dividend of 7 S-cents was declared. We continue to view SPH favorably as it continues to ramp up on its retail mall strategy - a stable counterweight to its print business going forward. Group investible funds currently stand at S$0.9bn, which points to sufficient capacity for further allocation into its retail strategy ahead. Maintain BUY with a higher fair value estimate of S$4.05 (versus S$3.99 previously) mostly due to stronger assumptions for Clementi Mall. (Eli Lee) MORE REPORTS ST Engineering: Higher S$3.50 fair value on strong contract wins Summary: ST Engineering (STE) announced that its aerospace arm has secured a total of ~$540m worth of contracts in 1Q12. Together with its recent announcements, STE has announced a total of ~S$1.5b worth of new orders in 1Q12, including ~S$100m of new contracts secured by its electronics segment and a ~S$880m contract to build four patrol vessels for the Royal Navy of Oman. With the contract wins in 1Q12, STE's robust S$12.3b order book at end-FY11 has likely grown further by end-1Q12. Also, the contract with the Royal Navy of Oman should restore investors' confidence in STE's defence sales. STE's recent strong flow of new orders should improve sentiments on its shares. Thus, we maintain our BUY rating on STE with a new fair value of S$3.50/share, from S$3.32/share previously. (Eric Teo)

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NEWS HEADLINES - US stocks fell sharply on Friday, with major indexes recording this year's biggest weekly declines, after disappointing China growth data and rising borrowing costs in Spain dampened sentiment. - Memtech International expects a loss for 1Q12 ended Mar 2012, mainly due to significantly lower demand for mobile phone keypads. - Miyoshi Precision recorded revenue of S$31.4m, up 6.2% YoY, for 2Q12 ended Feb 2012. PATMI dipped further in the red to a loss of S$4.6m (up 28.5% YoY). - CPH Ltd. expects to report a loss for the FY12 ended Mar 2012, due to weak performance of its printed circuit board operations and initial operating loss on a newly incorporated subsidiary. - Pan Asian Holdings' 60%-owned subsidiary, PVT Engineering Sdn. Bhd., has been awarded contracts worth MYR12m by the Dept. of Irrigation and Drainage in Malaysia. - STX OSV has secured contracts for two offshore subsea construction vessels for an undisclosed amount for Siem Offshore in Norway. The vessels are scheduled to be delivered in 3Q and 4Q 2013.