MARKET PULSE: Goodpack, United Envirotech (31 May 2012)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.70

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.40

MARKET PULSE: Goodpack, United Envirotech

31 May 2012

KEY IDEA United Envirotech: BUY with S$0.40 FV United Envirotech Limited (UEL) reported FY12 revenue rose 9.4% to S$85.3m, or 4.1% below our forecast, while net profit slipped 34.6% to S$10.5m; but stripping off exceptional items, core net profit would have fallen 15.0% to S$12.5m, or just 1.6% shy of our forecast. UEL also declared a final dividend of 0.3 S cents per share, unchanged from last year. Going forward, management continues to remain upbeat about its prospects in the waste-water treatment industry in China, driven by the stricter discharge limit imposed by the Chinese government and the shortage of water supply in various parts of the country. And in view of the growing contribution from its Treatment business, we are bumping up our FY13F earnings estimate by 5.4%; we are also looking for a potential growth of 12.5% top-line and 12.9% bottom-line in FY14. Meanwhile, we are switching from a DCF-based valuation to the PER one. Ascribing a market-neutral PE of 12.8x to FY13F EPS, we derive a new fair value of S$0.40. Maintain BUY. (Carey Wong) MORE REPORTS Goodpack Limited: Slowly inching higher Since our last report on 14 May, Goodpack has edged higher by 0.9% as compared to a decline of 3.5% for the FTSE STI Index. Given Goodpack's decent set of 3Q12 results and its reliance on the automotive industry, we are not surprised by this outperformance. Automotive sales - including tyre manufacturers like Goodyear - have reported encouraging results for the first quarter of the year, and automotive sales in Asia for April saw YoY increases in the large markets of China, Korea, India, Taiwan and Indonesia. We reiterate our expectations for Goodpack to close out FY12 well given the revenue support from the automotive industry, and improving operating margins from management's effective cost control initiatives. Leaving our projections and corresponding fair value estimate of S$1.70 unchanged, we maintain our HOLD rating. (Lim Siyi)

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

NEWS HEADLINES - US stocks retreated as bond yields in Italy and Spain surged; and Greek polls added to uncertainty about whether it would remain in the euro-zone. The S&P 500 Index and the DJIA fell 1.4% and 1.3% respectively. - Crude oil futures closed below US$88 for the first time since Oct on the back of concerns over Spain and the scaled-back expectations for a stimulus plan for China. - Yeo Hiap Seng plans to take its Bursa-listed subsidiary, Yeo Hiap Seng (Malaysia) Bhd private. Entitled YHS (Malaysia) shareholders will receive a total capital repayment of MYR3.60 per share, a premium of 14% over the close on May 28. - Cache Logistics Trust is seeking to redeem S$35m 3.50% fixed rate notes due 2016, which were issued under its S$500m multicurrency medium term note programme. - Old Chang Kee posted a net profit of S$4.5m for the 15 months ended in Mar. Revenue was S$76.5m. - Engineering management service provider Asiatic Group registered a FY12 net loss of S$73k, better than the S$558k loss a year ago. Revenue had climbed 5% to S$51m.

OIR BITES: High court decision regarding PPL Holdings unfavourable to Sembcorp Marine

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OIR BITES

Price Call: HOLD

Target Price: 5.12

OIR BITES: High court decision regarding PPL Holdings unfavourable to Sembcorp Marine 31 May 2012

Dear TRs, Recall that SMM commenced proceedings in the High Court against PPL Holdings and its wholly owned subsidiary, E-Interface Holdings in May 2010. Amongst other things, SMM had asked the High Court to direct PPL Holdings and E-Interface to transfer the 15% stake in PPL Shipyard (which SMM does not own) to SMM for a sum of S$59.4m. Over lunch time, Sembcorp Marine (SMM) announced that the High Court has released its judgement together with the Grounds of Decision on SMM's claims against PPL Holdings Pte Ltd and the decision is not favourable to SMM. SMM is obtaining legal advice with a view of appealing the decision and will make an appropriate announcement in due course. We currently have a HOLD rating on SMM with a fair value estimate of S$5.12.

Warm regards,

Company Registration No: 198301152E

Maybank Kim Eng cuts Midas target price

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: Kim Eng

Price Call: HOLD

Target Price: 0.32

Maybank Kim Eng lowered its target price on Singapore-listed Midas Holdings to $0.32 from $0.41 and kept its hold rating on the stock, citing concerns about its book value.

Shares of Midas fell 1.6% to $0.30 and have lost 9% so far this year, compared to a 0.2% drop for the FT ST China Index.

The company, which supplies aluminum components to trains in China, posted a 75% fall in its first-quarter net profit to 15.3 million yuan ($3.1 million). Current book value is 49 cents a share, and is trading at 0.6 times the its price-to-book ratio.

“We believe there is no longer any earnings visibility for Midas,” said Maybank in a report.

The broker expects Midas to post poor earnings as a slowdown in the supply chain casts uncertainty on the delivery schedule for its order book worth about 650 million yuan.

However, Midas’ cash position of 671 million yuan should tide it till next year, even if no further bank credit is given, said Maybank.

CIMB cuts Yangzijiang target price

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: CIMB

Price Call: BUY

Target Price: 1.30

CIMB Research cut its target price for China’s Yangzijiang Shipbuilding (Holdings) shares to $1.30 from $1.43 and kept its outperform rating, citing increased risk aversion triggered by the euro zone’s debt woes.

Yangzijiang shares were 1.4% lower at $1.025, and have gained about 12% so far this year, compared with the FT ST China Index’s 0.3% gain in the same period.

CIMB said that the 13.6% plunge in Yangzijiang in May was unwarranted and the shares are oversold, trading at 1.2 times price-to-book value.

“With no news of order cancellations, we foresee a rapid recovery in its share price if and when euro zone concerns dissipate,” CIMB said in a report.

Yangzijiang’s entry into rig building could be easier than that of other Chinese shipbuilders such as Cosco Corp Singapore and JES International Holdings, due to its strong track record, the broker said.


 

Biosensors up after earnings

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

Research House: OCBC

Price Call: BUY

Target Price: 1.88

Shares of medical device maker Biosensors International Group rose as much as 2.7% after it posted better-than-expected fourth-quarter earnings.

Biosensors said net profit for the quarter rose 49.5% to US$27.2 million ($34.8 million), helped by a surge in sales and revenue from licensing and royalties.

“(The) results exceed management’s guidance. After investors’ initial overreaction to price-reduction fears in China, bargain valuations have emerged,” said CIMB Research, which has an outperform rating on the stock.

However, it cut its target price on Biosensors stock to $1.82 from $1.98, citing lower margin assumptions due to weaker average selling prices.

Biosensors shares were up 0.4% at $1.29, outperforming the FT ST Mid Cap index’s 0.4% fall. The stock has fallen nearly 10% since the start of the year, against the index’s 10% gain.

OCBC also lowered its target price for Biosensors to $1.88 from $1.92, but kept its buy rating.

OCBC cuts Olam target price

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.86

OCBC Investment Research lowered its target price on commodity company Olam International to $1.86 from $2.24, saying growing uncertainty in Europe may continue to cause increased volatility in commodity stocks.

Shares of Olam were down 0.9% at $1.68. They have fallen about 21% so far this year, underperforming the Straits Times Index’s gain of 5% in the same period.

Olam said on Tuesday it would invest US$240 million ($307 million) in its first sugar milling asset in Brazil, Usina Acucareira Passos S.A.

OCBC, which maintained its hold rating on the stock, said Olam’s management believed the latest acquisition was part of its plan to boost its milling assets in large sugar-producing countries that have a cost advantage.

However, the broker also noted that Olam expects sugar prices to continue to fall into the fourth quarter of the year, driven by the sugar surplus, but that prices should eventually bottom out before the mill reaches a steady state of production in fiscal 2016.

JP Morgan cuts Wilmar to neutral

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: JP Morgan Chase

Price Call: HOLD

Target Price: 4.30

JP Morgan Securities downgraded Wilmar International to neutral from overweight as the recovery in oilseeds crush margin in April appears short-lived.

Shares of the world’s largest listed palm oil firm were flat at $3.76, compared with the Straits Times Index’s 0.4% gain. Wilmar has plunged nearly 25% since the start of the year.

The brokerage also cut its target price on the stock to $4.30 from $5.20.

“The strong recovery in China’s soybean crush margin was short-lived, with downtrend continuing through May. We now see little likelihood of the oilseeds and grains segment reversing its losses in the first quarter,” JP Morgan said in a report.

Wilmar may see flat to weaker earnings in the second quarter compared with previous quarter, and consensus earnings estimates may have further downside of about 20 to 30% if crush margins remain under pressure, the broker said.

Citi raises Tat Hong to buy

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: Citigroup

Price Call: BUY

Target Price: 1.40

Citigroup upgraded Tat Hong Holdings to “buy” from “sell” and raised its target price to $1.40 from $0.64, citing a recovery in equipment sales and rising utilisation levels for the firm’s crawler crane division across the region.

By 10:43 a.m., Tat Hong shares were up 0.5% at $1.03, slightly outperforming the FT ST Small Cap Index which was 0.1% higher. The stock has gained 16.5% so far this year.

Tat Hong’s fourth-quarter net profit nearly tripled to $11.2 million compared with the year-ago period, outperforming consensus estimate, helped by growth across its business segments and higher gross margins, Citi said. The company reported quarterly results on Monday.

DBS Vickers raised its target price on Tat Hong stock to $1.13 from $1.08, but maintained its “hold” rating, citing limited upside at current levels.

“The group remains well-positioned to ride on the robust construction activities in Asia-Pac, which is relatively insulated from the economic slowdown in Europe or US,” DBS wrote in a note to clients.

MARKET PULSE: Tat Hong, Valuetronics, Bumi Armada (29 May 2012)

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.21

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.315

Stock Name: Armarda
Company Name: ARMARDA GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.57

MARKET PULSE: Tat Hong, Valuetronics, Bumi Armada

29 May 2012

KEY IDEA Tat Hong Holdings: Recovery gaining pace Tat Hong Holdings (TAT) reported a good set of 4Q12 and FY12 results that were above consensus' estimates but within our expectations. FY12 revenue grew by 23% to S$720m (FY11: S$584m), while net profit attributable to shareholders jumped by 63% to S$42m (FY11: S$32m). Gross margins improved to 36.5% (FY11: 35.7%) due to better rental rates and higher utilizations of its cranes. With improved outlook, we raised our valuation peg to 10x (previously 9x) and fair value estimate to S$1.21 (previously S$1.09). Maintain BUY. (Chia Jiunyang) MORE REPORTS Valuetronics Holdings: Good results, attractive dividends Valuetronics Holdings Limited (VHL) ended FY12 with a reported net profit of HK$130.3m (+7.5%) on the back of a 20.7% growth in revenue to HK$2.38b. Net profit exceeded our forecasts by 8.7% but revenue tracked closely to our estimates. A 17 HK cents dividend (including a special dividend of 1 HK cent) was declared, its highest ever since its IPO. This translates into an attractive yield of 11.0%. Looking ahead, we expect momentum from its largest customer to continue, although we are also expecting sluggishness from its major ODM customers. As the macroeconomic outlook remains uncertain, we opine that VHL's focus to effectively manage its working capital and increase its operating cashflows is a prudent move. We raise our FY13 net profit estimates by 2.1%, and our fair value inches up accordingly from S$0.31 to S$0.315. Maintain BUY. (Wong Teck Ching Andy) Bumi Armada: 1Q net profits of M$335m Bumi Armada Berhad (BAB) reported its 1Q12 results that were generally below our's and the consensus' expectations. 1Q12 revenue decreased by 11% YoY to M$335m (1Q11: M$376m), but net profit attributable to shareholders increased by 9% YoY to M$90m (1Q11: M$82m). We lowered our FY12F earnings by 18% to account for the 1Q results and the lack of new FPSO contracts secured year-to-date. In line with the recent market de-rating, we also adjusted our valuation peg to 20x (previous 25x) and cut our fair value estimate to M$3.57 (previously M$4.75). Maintain HOLD. (Chia Jiunyang)

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

NEWS HEADLINES - The euro rose 0.2% to US$1.2538 at 4 p.m. New York time, rebounding from a four-day losing streak, as polls indicated that Greece's pro-bailout parties were gaining support. The Stoxx Europe 600 Index closed down 0.1%. - China has unveiled detailed rules regarding subsidies for purchases of energy-efficient TV and aircons. The Ministry of Finance projects that the subsidies will increase consumption by ~US$21.3b. - Boustead Singapore reported a S$32.4m net profit for 4Q12, versus a net loss of S$1.0m a year ago. The previous loss was because of provisions made for a contract in Libya which was suspended last year due to civil unrest. - Sembcorp Industries has completed the acceptance test for its US$1b independent water and power plant in Oman. With the third and final phase complete, the plant will commence full operations. - Yongmao Holding posted a 4Q12 loss of RMB39.9m, despite revenue climbing 31% YoY to RMB142.6m.

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: 0.49

CIMB in a May 25 research report says: "We think Sheng Siong is behind the recent price war among supermarkets in a bid to turn the screws on its competitors and strengthen its competitive position.

"Sheng Siong should emerge from this bout of competitive pressure stronger than its rivals, regardless of who is the aggressor. Sheng Siong may be sacrificing margins to strengthen its market position. As such, FY2012 margins may not return to FY2011’s lofty 22% levels.

"Management has confirmed that it will be distributing gains from the sale of its old warehouse as dividends. It also intends to stick to its 90% dividend policy beyond FY13. We believe margin pressure from the price war is likely to ease up in 2Q. Target price of 49 cents (18x CY13 P/E, 20% disc. to Dairy Farm) and estimates. MAINTAIN OUTPERFORM."

Bukit Sembawang Estates rated 'outperform' by CIMB

Stock Name: BukitSem
Company Name: BUKIT SEMBAWANG ESTATES LTD

Research House: CIMB

Price Call: BUY

Target Price: 5.72

CIMB in a May 24 research report says: "FY2012 core profit came in below at 89% of our full year and consensus on lower profit recognitions. FY2013 earnings will continue to be propped up by pre-sales on completion of Luxus Hills phase 2 and Verdure later in the year.

"The company’s balance sheet continued to strengthen, ending FY2012 with a $23 million net cash position (3Q11: 0.01x net gearing). FY2012 dividends of 18 cents exceeded expectations at 26% of NPAT (vs. 18% in prior years), and 4% yield on current share price. We introduce FY2015 and adjust FY2013-2014 on recognition timing.

"Our RNAV/target price of $5.72 (40% discount to RNAV) dips on higher operating costs factored in. At 0.9x P/BV, the stock trades below its 10-year historical average of 2.0x despite landed landbank booked at >$1 billion below estimated development value. MAINTAIN OUTPERFORM."

Stamford Land rated 'buy' by Phillip Securities

Stock Name: StamfordLd
Company Name: STAMFORD LAND CORPORATION LTD

Research House: Phillip Securities

Price Call: BUY

Target Price: 0.795

Phillip Securities Research in a May 25 research report says: "Stamford land owns and operates 8 superiorly-located hotels in Aus/NZ, totalling 2,053 rooms. We are of the opinion that the hotel & property economics are favourable now. Weaker commodities until say 2014, as compared to the last 10 years, would make conditions challenging.

"Although forex is basically a random ‘child’, we believe that weaker commodities would likely soften the AUD somewhat that could prove positive for tourism, to which Stamford might diversify its current effort that is more geared toward the business segment. The higher yielding AUD would likely avert the damage arising from weakness in commodities.

"We believe management would maintain its track-record of a high payout ratio. The FY12 result has just proved this consistency with a 4 cents payout. Target price of 79.5 cents (43% upside). BUY (initiating coverage)."

SIA Engineering rated 'hold' by Maybank Kim Eng

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

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 4.00

Maybank Kim Eng Research in a May 25 research report says: "SIA Engineering (SIE) reported FY2012 NPATMI of $269 million, representing a 4% increase y-o-y that was in line with estimates.

"A substantial 18% y-o-y increase (+$12.4 million) in associate contributions helped to offset a 4% dip in core operating profits. Operating margins have dipped to 11.1% in FY2012 (from 12.3% in FY2011), mainly due to the return of Line Maintenance margins to pre-FY2011 levels of approximately 21%.

"An attractive final dividend of 15 cents per share was declared, bringing the total dividend yield (including the interim dividend of 6 cents) for the year to 5.3%. We now peg our valuation to SIE’s historical P/E mean of 15.4x to factor in its stable earnings and upgrade our target to $4.00. MAINTAIN HOLD."

Bumitama Agri rated 'buy' by DBS

Stock Name: Bumitama
Company Name: BUMITAMA AGRI LTD.

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.35

DBS Vickers Securities in a May 24 research report says: "Bumitama Agri (Bumitama) has been aggressively planting/acquiring estates since 2004. Among Indonesian planters in our coverage, the group’s FY2012F own planted area of 98,581 ha is the fourth largest – 48% of which is immature.

"It is poised to deliver 29.4% FFB output and 29% earnings CAGR between FY2011 and FY2014F. Following conversion of shareholder loan and strong earnings growth this year, ROE is projected to be 28.4-23.8% in CY12F-14F, translating to ROE-WACC spread of 14.1-9.5% over the same period.

"We peg Bumitama’s target price at $1.35 per share, based on DCF valuation. This implies FY2012F and FY2013F PE of 15.7x and 12.3x, respectively. Compared to its 3-year earnings CAGR of 29%, Bumitama’s FY12F PEG ratio is estimated to be only 0.54x. BUY."

Ascott Residence Trust rated 'buy' by OCBC

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.14

OCBC Investment Research in a May 24 research report says: "Despite ongoing uncertainty in Europe, we believe that income from ART’s European assets would be underpinned by master leases arrangements in the 17 properties in France and two in Germany, which contributed a total of 26% of gross profit for 1Q12.

"In addition, management contracts with minimum guaranteed income are in place for seven properties in Belgium, Spain and the UK, which contributed 12% of 1Q12 gross profit. The balance sheet remains healthy with gearing at 41.6% of as end Mar 12.

"Currency exposure is also balanced – with 26%, 32% and 29% of total debt is denominated in SGD, EURO and the JPY, respectively, with the remainder in the Sterling Pound, USD and AUD. With an attractive yield of 7.9%, we continue to see value in the share price. Fair value estimate of $1.14. MAINTAIN BUY."

Sarin Technologies rated 'buy' by Maybank Kim Eng

Stock Name: Sarin
Company Name: SARIN TECHNOLOGIES LTD

Research House: Maybank Kim Eng

Price Call: BUY

Target Price: 1.82

Maybank Kim Eng Research in a May 24 research report says: "Sarin announced a proposed 1-for-4 bonus share issue on 6 May 2012. The proposed issue received in-principle approval from the Singapore Exchange on 14 May 2012.

"Further to this, Sarin also announced the books closure date for the bonus share issue to be on 24 May 2012. The existing share capital of the company comprised of 271,656,904 shares (including 1,689,000 treasury shares). Up to 67,914,226 new bonus shares will be issued which will increase the total number of shares to 339,571,130.

"We adjust our target price accordingly for the bonus shares. Based on the enlarged number of shares, our target price would now be $1.82, still pegged to 16x FY12F PER. We also made adjustments to the per share figures. MAINTAIN BUY

Shares slip by midday; GLP rises

Stock Name: GLP
Company Name: GLOBAL LOGISTIC PROP LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 2.37

Singapore shares slipped by midday, extending losses for a third straight session, as worries over Greece’s future in the euro zone continued to sap risk appetite.

The benchmark Straits Times Index fell 0.4% to 2,768.06, reversing its earlier gains as Asian shares fell to their lowest levels of the year.

“We’re seeing outflows from Asia. Nobody really wants to hold equities going into the weekend, because they’re worried about some political event that could happen,” said Markus Rosgen, head of Asia Pacific equity strategy at Citigroup.

Global Logistic Properties bucked the overall trend and was the strongest gainer on the STI, risng as much as 1.8% after it said its fourth-quarter net profit tripled from a year earlier.

CIMB said it expects GLP’s net asset value and earnings to continue growing, helped by the completion of its developments in China and Japan. It has an outperform rating on the stock with a target price of $2.37.


 

CIMB prefers Noble to Olam

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 1.42

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 2.61

CIMB Research said it prefers commodity trading firm Noble Group to its peer Olam International due to its favourable earnings outlook.

Noble earlier this month posted a 46% fall in its first quarter net profit to US$110.1 million ($141 million).

Olam shares were up 0.9% to $1.70 on Friday, but have dropped 20% since the start of the year. Noble gained 1.4% to S$1.075, but has lost 4.4% in 2012.

The benchmark Straits Times Index gained 5% in the same period.

CIMB expects Noble's earnings to continue improving for the rest of the year, buoyed by its newly expanded sugar mills, which will contribute US$200 million more in annual earnings at full capacity.

Noble's earnings from its sugar business will also grow at a faster pace in the second to fourth quarter as the harvest season begins, CIMB said.

It has an outperform rating on Noble with a target price of $1.42, and an outperform on Olam and a target price of $2.61.

CIMB estimates Noble's core earnings per share to grow 81.8% for this year, compared to 14.5% for Olam.

Maybank ups SIA Engineering target price

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

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 4.00

Maybank Kim Eng raised its target price on airline maintenance and servicing company SIA Engineering Co. to $4.00 from $3.60 and kept its “hold” rating, citing its healthy full-year earnings and attractive dividends.

Shares of SIA Engineering were nearly flat at $3.99 and have gained about 16% so far this year.

Maybank said SIA’s earnings growth should be steady, supported by healthy airline capacity growth forecasts and an increase in commercial aircraft traffic at Singapore’s Changi Airport.

SIA Engineering reported a net profit of $269 million for its fiscal year ended March 2012, a 4% increase from the previous year and was in line with Kim Eng’s expectations.

MARKET PULSE: Telco Sector, SATS (25 May 2012)

Stock Name: SATS
Company Name: SATS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 2.55

MARKET PULSE: Telco Sector, SATS

25 May 2012

KEY IDEA Telcos: 1QCY12 Review - OVERWEIGHT All three telcos recently reported 1QCY12 results which were in line with our forecasts. Going forward, all the three telcos expect their Singapore operations to remain stable or show modest growth, buoyed by the increasing mobile data usage and also the NBN roll-out which is nearing completion. However, EBITDA margin outlook continues to remain fairly muted; and any boost from LTE is not likely to materialize substantially in 2012. Nevertheless, thanks to their strong cashflow-generative businesses, the telcos have kept their dividend payout guidance, thus keeping their yields attractive. With the exception of StarHub (+11% YTD), the other two stocks have underperformed (M1 -1.6%, SingTel -0.6%) versus the STI's 5.2% gain. But with markets likely to remain volatile, we believe that the telcos' defensive earnings and attractive yields offer a safe harbour for the less risk-adverse investors. Maintain OVERWEIGHT. Our pick in the sector is M1. (Carey Wong) MORE REPORTS SATS Ltd: A reasonable start to FY13 Changi Airport Group's recently announced that passenger movements at the airport increased 13% YoY to 4.2m in Apr 2012, on the back of a 9% YoY climb in aircraft movements to 26,410. However, air freight volume fell 5% YoY to 148,243 tonnes. The strong passenger and aircraft numbers bode well for SATS Ltd (SATS) going into the first month of FY13. Separately, lower freight volume in Apr 2012 at Hong Kong International Airport indicates that SATS' share of associates' profit is likely to remain depressed. Also, the Marina Bay Cruise Centre Singapore (MBCCS) will welcome its first cruise ship on 26 May 2012. The Royal Caribbean International's Oasis-class Voyager of the Seas can only dock at MBCCS in Singapore due to its size. However, MBCCS is unlikely to see meaningful contribution to SATS' financials in the foreseeable future. We maintain our fair value estimate of S$2.55/share and HOLD rating on SATS. (Eric Teo)

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

NEWS HEADLINES - US stocks closed mostly higher after comments from the Italian Premier increased confidence that Greece would stay in the euro-zone. The S&P 500 Index and the DJIA climbed 0.1% and 0.3% respectively. - The Hour Glass posted a record FY12 PATMI of S$54.7m, a 29% jump. Revenue increased 17% to S$607m. - PSL Holdings has secured two foundation engineering contracts worth almost S$24m; one at the Yale-NUS College, and the other for the expansion of an oil plant in Jurong Island. - A wholly-owned subsidiary of Fragrance Group has acquired freehold property Novena Ville for S$131.5m via a tender bid. The property is zoned for residential with commercial at the first storey. - Global Premium Hotels is purchasing Fragrance Heritage Pte Ltd (FHPL) from Fragrance Group Ltd for S$25.1m. FHPL's assets comprise a development site at Tyrwitt Road and bank deposits. - Sky China Petroleum Services, along with its partners, is acquiring Hisaka Holdings Ltd in a reverse takeover deal valued at S$192.5m. Both are Singapore-listed companies.

CIMB cuts Bukit Sembawang target price

CIMB Research has cut its target price for property developer Bukit Sembawang Estates to $5.72 from $5.80 but kept its outperform rating, citing lower than expected full year earnings.

Shares of Bukit Sembawang were 1.8% higher at $4.48 and have gained 14.3% since the start of the year, versus the benchmark Straits Times Index’s 5.4% rise.

Bukit Sembawang said its net profit for the fourth quarter fell 18.3% to $21.5 million from a year earlier. Its core profit for the fiscal year ended in March came in below CIMB's expectations, as the company saw lower recognitions from its projects.

But its balance sheet remained strong, CIMB said, allowing it to pay shareholders a higher-than-expected dividend of 18 cents, compared to 12 cents in 2011.

For the next fiscal year, CIMB expects Bukit Sembawang's earnings to be supported by pre-sales of Singapore residential developments Luxus Hills and Verdure.

Maybank cuts Sarin target price

Stock Name: Sarin
Company Name: SARIN TECHNOLOGIES LTD

Research House: Maybank Kim Eng

Price Call: BUY

Target Price: 1.82

Maybank Kim Eng lowered its target price for Sarin Technologies, an Israeli company that sells diamond scanners, to $1.82 from $2.28 and kept its buy rating, to account for a proposed bonus share issue.

Shares of Sarin were up 4.6% at $1.15, and have surged 89% since the start of the year, outperforming the key Straits Times Index’s 5% gain.

Sarin has proposed a 1-for-4 bonus share issue, which would increase existing share capital to 339.6 million shares from 271.7 million shares, said Maybank.

Sarin plans to expand into a new growth market, the polished diamond segment, by launching its light performance technology product D-Light in a few weeks, the broker said.

Maybank estimates it could potentially contribute annual revenue of about US$40 million ($51 million) and net profit of US$29 million.


 

MARKET PULSE: Oil & Gas, Ascott Residence Trust (24 May 2012)

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.38

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.13

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.14

MARKET PULSE: Oil & Gas, Ascott Residence Trust

24 May 2012

KEY IDEA Oil & Gas sector: 1Q12 recap and outlook During the recent results season, companies under our sector coverage reported earnings that were mostly in line with our expectations, with the exception of Keppel Corporation and ASL Marine (above) and Sembcorp Marine, PEC and Rotary Engineering (below). Companies in focus included STX OSV and Keppel Corp; the former for a possible stake sale by its parent company and the latter for clinching a contract for five semi-sub units from Sete Brasil. Though oil prices have corrected with renewed Eurozone concerns, we opine that at current levels (WTI: US$91/bbl, Brent: US$108/bbl), oil prices are still high. In general, the industry has a positive outlook as elevated oil prices mean that capital expenditure in the sector will continue. Maintain Overweight with Keppel Corp [BUY, FV: S$13.38] and Ezion Holdings [BUY, FV: S$1.13] as our preferred picks. (Low Pei Han, Chia Jiunyang) MORE REPORTS Ascott Residence Trust: European master leases to underpin stability Despite ongoing uncertainty in Europe, we believe that income from ART's European assets would be underpinned by master leases arrangements in the 17 properties in France and two in Germany, which contributed a total of 26% of gross profit for 1Q12. In addition, management contracts with min. guaranteed income contributed an additional 12% of 1Q12 gross profit. In terms of asset values, 40% is in Europe of which the bulk is spilt between France (21%) and the UK (15%). We note about half of total French exposure fall in prime regions of core Paris. Similarly, in the UK, all four properties are in prime London locations. This being so, we believe their book values would be relatively resilient and unlikely to suffer long term capital value deterioration. With a strong yield of 7.9%, we continue to see value in the share price. Also, an undemanding P/B ratio of 0.8x would translate to a reasonable margin of safety for bear case write-downs. We maintain our BUY rating with an S$1.14 fair value estimate. (Eli Lee)

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

NEWS HEADLINES - US stocks closed flat on Wednesday while European stocks and the euro dropped to 2012 lows amid growing concern that Greece may exit the euro-zone. - UOB, acting through its HK branch, has established a HK$30b (S$4.9b) certificate of deposit programme. Net proceeds will be used for general funding requirements. - Bukit Sembawang Estates reported a 4% increase in FY12 net profit to S$183m. Revenue was down 24% to S$391m. - Singapore Shipping Corp. posted a 44% YoY jump in 4Q12 net profit to US$2.1m. Revenue had climbed 20% to US$5.0m. - Homegrown civil engineering firm Swee Hong closed at 27.5 S-cents, 22% above its IPO price yesterday, its first day of trading. - Combine Will International Holdings intends to expand its ODM and OEM operations by setting up new facilities in Wuzhou, Guangxi, China.

OCBC starts hold on ComfortDelGro

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.53

OCBC Investment Research initiated a hold rating and a target price of $1.53 on Singapore transport operator ComfortDelGro Corp, whose main operating segments are buses and taxis.

Its shares eased 0.7% to $1.47, faring slightly better than the benchmark Straits Times Index, which lost 1.2%. The stock has gained nearly 4% so far this year.

For the 2003-2011 fiscal years, ComfortDelGro's revenue grew at a "decent" compound annual growth rate of 8%, and its recent first-quarter results showed broad-based increases across most operating segments, OCBC said.

OCBC projected ComfortDelGro's revenue to continue its upward trajectory, although at a slower pace, on the back of rising ridership levels on its bus and rail operations, greater fleet utilisation and more cashless transactions in its Singapore taxi business.

But OCBC said the company's operating margins may face some pressure from regulations and public sentiment that could make it harder to raise fares, and higher operating expenses and expansion costs related to the upcoming Downtown Line in Singapore.

MARKET PULSE: Wilmar, Tiger Airways (22 May 2012)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.87

MARKET PULSE: Wilmar, Tiger Airways

22 May 2012

KEY IDEA Wilmar: Paring FV to S$3.87 Wilmar International Limited's (WIL) stock price took a big hit after posting a dismal set of 1Q12 results on 10 May. From the previous day close of S$4.70, the stock closed 9% lower on the day after its 1Q12 results announcement. And since then, the stock has fallen by another 13% to hit a recent low of S$3.71. We note that the stock has also fallen 37% from its 52-week high of S$5.99. At its current price, we note that WIL is trading around 12.2x consensus FY12 EPS, or around one standard deviation below its 5-year mean. During the previous subprime financial crisis, WIL's PER fell to a low of 9.7x, or about -1.5x SD below its historical mean. Given that the market is still adopting a more risk adverse approach, we lower our fair value estimate from S$4.30 to S$3.87 (based on 13.5x PER versus 15x previously). Maintain HOLD as valuations are not demanding. (Carey Wong) MORE REPORTS Tiger Airways: Recovering; upgrade to HOLD FY12 was a difficult year for Tiger Airways' (TGR) after the Australian aviation authorities imposed restrictions on its Australian operations and further aggravated by high jet fuel prices. However, TGR is now on the road to recovery. TGR is scheduled to begin operations in Sydney from Jul 2012, allowing it to ramp up its operations and optimise the utilisation of its aircraft. Its regional JVs are also taking shape, which should allow Tiger Singapore to return to gradual capacity expansion. However, if Mandala and SEAir fail to take on the earmarked aircraft, TGR's core operations will again be saddled with having too many aircraft. We increase our fair value estimate of TGR from S$0.60/share to S$0.67/share, so as to reflect its improving operations, and upgrade it to HOLD. (Eric Teo)

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

NEWS HEADLINES - US stocks bounced with hopes about government efforts to boost the Chinese economy and political progress regarding Greece. The S&P 500 Index and the DJIA climbed 1.6% and 1.1% respectively. - Newly listed Facebook saw its stock price declined 11% on Monday, closing at US$34.03. The IPO price was US$38. - Elite KSB Holdings has entered an agreement to dispose of the entire issued and paid-up shares in four of its wholly-owned subsidiaries. The net gain on disposal is approximately S$37m. - Draco Water Technologies is selling its 60% stake in its wholly-owned subsidiary Draco Environmental Pte Ltd for RMB95.8m. There will be a gain of approximately S$12.5m. - Pollux Properties expects to report a pre-tax loss for the financial year ended Mar 2012. This is chiefly due to the group's disposal of the home furnishing division and building materials division last year, and the delay in launching three property development projects.

Tiger Air upgraded to hold by OCBC, with target price of 67 cents

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.67

OCBC Investment Research upgraded Tiger Airways Holdings to hold from sell and raised its price target to $0.67 from $0.60 on Tuesday, citing the budget carrier’s improving operations and joint venture plans.

Tiger shares were up 0.8% at $0.645, bringing their gains to 1.6% so far this year. The FT ST Small Cap Index was up 0.6%.

Tiger is on track to begin operations in Sydney as its second base from July this year, OCBC said, adding that the carrier will then be able to ramp up its operations to 64 sectors per day and optimise the utilisation of its 10 aircraft.

OCBC also said Tiger’s strategy of forming regional joint ventures, which can absorb some aircraft deliveries, is taking shape. But OCBC warned that execution risks are still a concern.


 

UOB Kay Hian starts Bumitama Agri at 'buy'

Stock Name: Bumitama
Company Name: BUMITAMA AGRI LTD.

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.10

UOB Kay Hian initiated coverage of Bumitama Agri with a “buy” rating and a target price of $1.10, citing the palm oil firm’s production prospects and strong oil extraction rate.

Bumitama shares were up 0.6% at $0.90, about 21% higher than its initial public offering price of $0.745. Bumitama made its trading debut on the Singapore bourse on April 12.

UOB Kay Hian said it expects Bumitama’s fresh fruit bunch (FFB) production to double in three years, driven by a 15-20% increase in mature areas every year, large young areas and progressive new plantings of 13,000 hectares per year.

Bumitama also had a strong oil extraction rate (OER) of 24% in 2011, one of the highest in the industry, mainly due to newer mills and good practices of harvesting and loose fruit collection, UOB Kay Hian said.

The broker noted that a high OER is important as it refers to the total crude palm oil volume each mill can extract from each tonne of FFB.

Tiger Airways down after 4Q loss

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: UOB KayHian

Price Call: SELL

Target Price: 0.51

Shares of Tiger Airways Holdings fell nearly 4% on Monday after the budget carrier swung to a fourth-quarter net loss from a net profit a year earlier and warned of a challenging business environment.

Tiger shares dipped as much as 3.9% to $0.615, underperforming the FT ST Small Cap Index (.FTFSTS) which lost 0.1%. Tiger stock has dropped around 3% so far this year.

Tiger posted a net loss of $16.4 million for the three months ended March, compared to a net profit of $1.4 million a year ago, dragged by the grounding of its aircraft and flying restrictions in Australia as well as high fuel costs.

“The group continues to face a challenging business environment and remains exposed to high and volatile fuel prices,” the carrier said in a statement.

UOB Kay Hian lowered its price target on the stock to $0.51 from $0.64 and maintained its sell rating. It said operating losses worsened sequentially for Tiger’s Singapore operations due to low yields and for Tiger’s Australia operations because of low utilisation.

The broker cut its net profit forecast for Tiger’s 2013 fiscal year by $9 million to $30 million. It said major risks include continued losses in Australia, further provisions for doubtful debts and its status as the guarantor on Mandala Airlines’ leases.

Armstrong Industrial rated 'buy' by DMG

Stock Name: Armstrong
Company Name: ARMSTRONG INDUSTRIAL CORP LTD

Research House: DMG

Price Call: BUY

Target Price: 0.37

DMG & Partners Research in a May 18 research report says: "Armstrong’s 1Q PATMI came in strong at $5.1 million (+26.7% y-o-y) on the back of $52.3 million in sales (-7.1%) largely attributable to the exceptional items.

"Discounting the one-off items, the group only managed to generate $0.8 million of operating profit before tax, as both its HDD business and Consumer Electronic businesses have yet to recover from the negative effects of the Thai floods.

"Given Seagate and Western Digital (WD)’s encouraging results, we are confident that Armstrong’s HDD business will post strong performance starting from 2Q onwards. Unchanged target price of 37 cents base on 14x forward FY12 P/E (+1 SD). 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: 0.74

DMG & Partners Research in a May 18 research report says: "The Group reported a 51% y-o-y decline in 3QFY12 PATMI of $5.5 million on the back of a 10% y-o-y growth in revenue to $89.8 million.

"9MFY12 PATMI fell 72% y-o-y to $7.2 million, on the back of an 8% y-o-y growth in revenue to $220.3 million, largely due to the $8.8 million impairment loss on its Aussie investment. However earnings are still below expectations accounting for just 45% of our FY2012F.

"Going forward we have slashed our earnings by 16-25% for FY2012-2014F to take into account the lower sales contribution from Australia, higher interest expenses and tax rates. Using an unchanged 15x FY13F EPS, we derive a lower target price of 74 cents. Market has reacted negatively to the disappointing results with stock price tumbling 5.3%. At last close, our target price provides an 18% upside. MAINTAIN BUY."

M1 rated 'buy' by Maybank Kim Eng

Stock Name: M1
Company Name: M1 LIMITED

Research House: Maybank Kim Eng

Price Call: BUY

Target Price: 2.85

Maybank Kim Eng Research in a May 18 research report says: "M1 has just launched a new prepaid product in conjunction with MasterCard and EZ-Link. The M1 Prepaid MasterCard is a multipurpose debit card that allows users to top up M1’s prepaid cards, pay public transit fares, ERP and car park charges and make contactless purchases.

"We think it is an interesting product that should help M1 increase customer stickiness and reverse negative net-adds in prepaid. The main selling point is that it offers a simple way to pay for goods and services but without the complexity of owning a credit card.

"M1 has provided a stable outlook guidance for FY12, driven by its mobile data and fixed services segment. We expect this new product to drive higher quality prepaid net-adds as well. Target price of $2.85, based on 15x FY12 EPS and dividend per share of 14.5 cents. MAINTAIN BUY."

ECS Holdings rated 'buy' by OCBC

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.555

OCBC Investment Research in a May 18 research report says: "ECS reported a mixed set of 1Q12 results, with revenue meeting our expectations but PATMI came in below due largely to weaker-than-expected gross margin. Revenue increased 7.1% y-o-y to $901.6 million, forming 23.2% of our FY2012 estimates.

"PATMI slumped 41.0% to $6.2 million. Excluding forex and other exceptional items, we estimate that core earnings would have declined 36.1% to $6.6 million, or 15.2% of our full-year projections. Sequentially, revenue fell 2.5% and net profit declined 31.6%. We cut our FY2012 core PATMI forecasts by 19.9% (FY13 by 17.5%) given the weak 1Q12 results and continued uncertainties in the macroeconomic environment.

"Our fair value declines from 69 cents to 55.5 cents. The stock is trading at 5.3x FY12F EPS, or half a standard deviation below its 5-year average forward core PER. MAINTAIN BUY."

Frasers Commercial Trust rated 'buy' by DBS

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.24

DBS Vickers Securities in a May 17 research report says: "Frasers Commercial Trust ("FCOT") together with Far East Organization ("FEO") and The Great Eastern Life Assurance announced that they will be undertaking asset enhancement initiatives (AEI) to revitalise the China Square Precinct. The link way will cost an estimated $14 million which will be shared equally among the three partners.

"Separately, FEO is planning two hotel developments within Far East Square. Gearing is expected to remain unchanged at its current level of 36.1%. We continue to like FCOT for its undemanding valuation at 0.7x P/BV and attractive FY2012/2013F yields of 6.4 – 7.5%.

"We expect to see more upside in earnings when the company refinances its $500 million SGD loan due in November this year at a more attractive interest rate. Unchanged target price of $1.24. MAINTAIN BUY."

Hong Leong Asia rated 'sell' by DMG

Stock Name: HL Asia
Company Name: HONG LEONG ASIA LTD.

Research House: DMG

Price Call: SELL

Target Price: 1.43

DMG & Partners Research in a May 17 research report says: "HLA recorded 1Q12 net profit of $13.9 million, down 25% y-o-y, representing 19% of our previous FY2012 forecast.

"The weakness is due to continued losses at Xinfei and a 18% y-o-y decline in Yuchai diesel engine unit sales. However, the building materials unit performed well and offset some of the negatives. Management expects Xinfei and Yuchai to face further challenges ahead.

"We cut our FY2012 net profit forecast by 20%, and lower our target price to $1.43, derived from SOTP. We see no catalyst driving the share price up when both white-goods and diesel engines businesses are weak. At the same time, rising global economic concerns could exert further share price downside. MAINTAIN SELL."

Ramba Energy rated 'increase exposure' by SIAS

Stock Name: Ramba
Company Name: RAMBA ENERGY LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.75

SIAS Research in a May 17 research report says: "Ramba’s 1Q revenue rose 19.4% y-o-y to $16.0 million on the back of higher revenue from the O&G segment (mainly due to higher production and selling prices from Jatirarangon) and logistics segment (supported by new contracts).

"However, the bottom line was dragged by a $1.3 million provision for doubtful cash call from a joint venture partner of PT Hexindo Gemilang Jaya, a subsidiary of Ramba. There was also a dispute over the investment agreement by Verona Capital (Verona) in West Jambi and Ramba is currently evaluating its options.

"In view of the current cautious macroeconomic environment, we are lowering our profit per barrel of oil to US$10. Intrinsic value of 75 cents. MAINTAIN INCREASE EXPOSURE."

Singapore Airlines rated 'buy' by DMG

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: DMG

Price Call: BUY

Target Price: 12.13

DMG & Partners Research in a May 17 research report says: "SIA released its operating stats for the first month of FY13. Revenue passenger km (RPK) grew +9.8% y-o-y (m-o-m: -1.4%).

"SilkAir aggressively expanded its RPK at 26.2% y-o-y although demand in the freighter segment remained weak, with a recovery anticipated only by the 2H. We feel that the worst may just be over for SIA. Given its high net cash pile of $3.9 billion, the airline would be able to weather the headwinds moving forward.

"Upside potential of 18% and dividend yield of 3.8% (based on a 70% payout). Fair value of $12.13, premised on 1x PB. We remain positive on SIA’s outlook on expectations that demand will rebound on an uptick in passenger yields, although the upside would be marginal. MAINTAIN BUY."

Swing Media Technology Group rated 'buy' by DMG

Stock Name: Swing Media
Company Name: SWING MEDIA TECHNOLOGY GRP LTD

Research House: DMG

Price Call: BUY

Target Price: 0.244

DMG & Partners Research in a May 17 research report says: "Swing Media has just completed the acquisition of Shanghai Hui Yang’s solar installation business in China for a consideration of RMB6 million.

"Though we expect this to take place earlier, the fact that the share price traded below the company’s par value restricted the group from issuing new shares in order to complete this purchase until the recent capital reorganisation exercise.

"Going forward, we favour the group’s new solar installation business as China’s domestic consumption for solar energy is expected to be robust following the drastic decline in solar panel prices. A higher target price of 24.4 cents based on 0.5x (industry average) FY13 P/B. MAINTAIN BUY."

OCBC starts CapitaRetail China at buy

OCBC Investment Research has initiated coverage on CapitaRetail China Trust with a buy rating and price target of $1.44 a unit.

CRCT, which owns malls in China, was last traded at $1.265, down 0.8% from Thursday. The trust has gained about 10% so far this year.

OCBC said CRCT offers growth through both acquisition and asset enhancement.

Its mall, which are positioned as one-stop family-oriented shopping, dining and entertainment destinations for areas with large population catchment, also benefit from rising consumption.

From 2011 fiscal year figures, CRCT’s portfolio has an average property yield of 6.5% based on book valuation, which OCBC said is attractive compared to Singapore retail property yields of around 5-6%.

“Consumption is likely to overtake investment as China’s largest driver of growth in 2012 for the first time in over a decade,” OCBC said.

MARKET PULSE: CapitaRetail China Trust, ECS Holdings (18 May 2012)

Stock Name: CapitaRChina
Company Name: CAPITARETAIL CHINA TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.44

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.555

MARKET PULSE: CapitaRetail China Trust, ECS Holdings

18 May 2012

KEY IDEA CapitaRetail China Trust: Growing with the Chinese consumer Located in mainland China, CRCT's retail malls are positioned as one-stop family-oriented shopping, dining and entertainment destinations for areas with large population catchment. Based on FY11 figures, CRCT's portfolio has an average property yield of 6.5% (based on book valuation), which is attractive compared to Singapore retail property yields of around 5-6%. Increasing urbanization and the continued growth in household disposable income serve as powerful long-term drivers for retail sales, which should grow faster than the GDP for at least the next few years. With some 28% of its leases by gross rental income due for renewal this year, CRCT could see significant positive rental reversions. We initiate with a BUY rating and S$1.44 fair value based on a dividend discount model analysis. (Sarah Ong) MORE REPORTS ECS Holdings: Margins under pressure ECS Holdings (ECS) reported 1Q12 revenue of S$901.6m (+7.1% YoY) which met our expectations. PATMI slumped 41.0% YoY to $6.2m. Excluding forex and other exceptional items, we estimate that core earnings would have declined 36.1% YoY to S$6.6m, forming 15.2% of our full-year projections. This was below our expectations, due to weaker-than-expected gross margin. Looking ahead, while we expect ECS's performance to pick up more strongly in 2H12, ongoing macroeconomic uncertainties would continue to form a major risk to its operations, in our view. Coupled with the weak 1Q12 results, we cut our FY12 core PATMI forecasts by 19.9% (FY13 by 17.5%). But even with a lower fair value of S$0.555 (previously S$0.69), we maintain BUY as valuations remain undemanding. (Wong Teck Ching Andy)

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

NEWS HEADLINES - The S&P 500 Index dropped to a four-month low as concern grew about the health of Spanish banks and a US gauge of manufacturing missed projections. - Oil slipped to a six-month low, while gold climbed the most since Oct 2011. - Facebook Inc. raised US$16b in the biggest IPO by a technology company in history, pricing the shares at the top end of an increased range. - Sembcorp Marine has secured an FSO upgrading project and two LNG carriers life extension projects worth S$130m. - Foundation and geotechnical engineering firm CSC Holdings registered FY12 PATMI of S$10.1m, up 51% YoY. Revenue had risen 34% to S$438m. - IPC Corporation has entered into an agreement to purchase land to build a 75-unit condominium in Oiso, located to the SW of Tokyo, Japan.

PEC downgraded to 'hold' by AmFraser

Stock Name: PEC
Company Name: PEC LTD.

Research House: AmFraser

Price Call: HOLD

Target Price: 0.73

AmFraser Research in a May 15 research report says: "Revenues down 18% q-o-q (+22% y-o-y) to $106.7 million. While we estimate a consistent $30 million in maintenance revenue, we note that project works revenue probably fell to $76 million.

"Gross profit down 33% q-o-q (-36% y-o-y) to $17.4 million. Net profit down 57% q-o-q (-86% y-o-y) to $1.3 million as a result of the fall at the gross profit level going through the moderately high fixed costs. Pricing competition, cost pressures unlikely to go away in the near future, which clouds the outlook for the company.

"We reduce our margin forecast for the project works segment from 20% to 16.5% in 2013F and 18% in 2014F. We do not see the share price recovering much beyond 0.9x of the blended FY2012F/2013F book value of 81 cents, leading to our fair value of 73 cents. DOWNGRADE TO HOLD."

Ying Li Int'l Real Estate rated 'buy' by DBS

Stock Name: Ying Li
Company Name: YING LI INTL REAL ESTATE LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.51

DBS Vickers Securities in a May 15 research report says: "Revenue increased four-fold to Rmb121 million. This was largely due to recognition of IFC office sales and 25% y-o-y increase in rental income IFC rental income started to flow in.

"Due to a 220% increase in gross profit to Rmb50.5 million on higher revenue, Ying Li turned from a loss in 1Q11 to a profit of Rmb5.5 million in 1Q12. Excluding a one-off nonrecurring administrative expense, net profit would have been Rmb12.5 million. Ying Li is also executing well on the pre-sales of the residential portion of the Daping project, with more launches to come.

"Ying Li is currently trading at 68% discount to its RNAV, which we see as an attractive entry level. Target price of 51 cents (40% discount to RNAV). MAINTAIN BUY."

SATS rated 'buy' by Phillip Securities

Stock Name: SATS
Company Name: SATS LTD.

Research House: Phillip Securities

Price Call: BUY

Target Price: 2.80

Phillip Securities Research in a May 15 research report says: "SATS announced a 10.7% decline in net income for the year, mainly due to the lack of contributions from Daniels Group that was divested in the year. After adjusting for the effects of one off items, underlying profits from continuing operations declined by 4.3%.

"EBITDA margin declined by 2.3ppt as a result of slight margin compression at its core business in Singapore and lower profitability at TFK Corp SATS announced special dividend of 15.0cents and final dividend of 6.0cents, taking full year payout to 26.0 cents per share.

"We revised our target price to $2.80 as we roll forward our valuation basis and account for the special dividend payout. At the current price, SATS offers a yield of >10% over the next 12 months. MAINTAIN BUY."

Q&M Dental Group (S) rated 'increase exposure' by SIAS

Stock Name: Q&MDental
Company Name: Q & M DENTAL GROUP (S) LIMITED

Research House: SIAS

Price Call: BUY

Target Price: 0.50

SIAS Research in a May 15 research report says: "Q&M’s expansion plans in Singapore and Malaysia have started to bear fruit for the company. Revenue increased by 18.6% y-o-y to $12.5 million as Q&M operates more dental clinics in 1Q FY12, compared to the previous corresponding period.

"Despite higher employee benefits expenses, PATMI still grew 5.7% y-o-y to $1.07 million, only $62k below our estimates. We expect the newly-opened & underutilized clinics to contribute more to the bottom line going forward as business ramps up.

"We maintain our forecast as 1Q results were generally in line with our expectation. However, we adjust our intrinsic value to 50 cents per share as a result of 2-for-1 share split. MAINTAIN INCREASE EXPOSURE."

Pacific Andes Resources Developments rated 'buy' by OCBC

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD

Research House: OCBC

Price Call: BUY

Target Price: 0.178

OCBC Investment Research in a May 14 research report says: "Revenue grew 35% to HK$3,320.5 million. Net earnings improved 23% y-o-y to HK$333.0 million and also higher than our estimates. This gives 1H net earnings of HK$472.6 million, or 65% of our full year estimates.

"The group attributed the better performance to both its core businesses of frozen fish SCM as well as better high revenue from its fishery and fish supply business. The key markets are China (accounting for 69% of sales), Africa (13%), East Asia (9%) and Europe (8%).

"We have adjusted our earnings for a better than expected 2Q, raising our FY2012 earnings from HK$731 million to HK$791 million. Using the same 6.5x earnings peg and adjusting for the rights issue, our fair value estimate for the stock is 17.8 cents. MAINTAIN BUY."

Midas Holdings rated 'hold' by OCBC

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.33

OCBC Investment Research in a May 15 research report says: "In line with its profit guidance issued on 8 May, Midas reported a poor set of 1Q12 results, with revenue and net profit plummeting 22.3% and 74.7% y-o-y, respectively. Sequentially, revenue rose 9.2% while net profit dipped 58.3%.

"This was below our expectations even though we had already factored in a significant y-o-y decline in its financial performance. 1Q12 topline formed 20.6% of our full-year projections (21.1% of consensus), while bottomline made up just 7.5% (8.2% of consensus) of our FY2012 estimates.

"Outstanding order book stands at ~RMB650 million as at March 31, versus RMB800 million in the preceding quarter. We slash our FY2012 earnings estimates by 34.3% (FY2013 by 12.0%) given Midas’ weak 1Q12 results. Fair value estimate of 33 cents (previously 37.5 cents). MAINTAIN HOLD."

Wheelock Properties rated 'hold' by AmFraser

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

Research House: AmFraser

Price Call: HOLD

Target Price: 1.78

AmFraser Research in a May 15 research report say: "Wheelock reported net profit slumped 75% to $13 million for 1QFY12. Results were below expectations meeting 9% of consensus estimates and 7% of our FY2012F forecast. It was attributable to both lower unit sales and completion of Scott’s Square in 3QFY11.

"Partially negating the above was a 4% y-o-y improvement in gross margin to 69%. Wheelock ends 1QFY12 with a net cash position of $780 million. Cash holding would have been higher if not for the S$113mil debt drawdown for acquisition of five sites in Fuyang City, China and construction progress of Ardmore Three.

"We have revised our RNAV estimates 6% lower at $1.78 per share factoring in a slower sales rate for Wheelock’s high-end projects. Our fair value stands at parity to our RNAV estimates. MAINTAIN HOLD."

Yamada Green Resources rated 'buy' by DMG

Stock Name: Yamada
Company Name: YAMADA GREEN RESOURCES LIMITED

Research House: DMG

Price Call: BUY

Target Price: 0.30

DMG & Partners Research in a May 15 research report says: "3QFY12 net profit of RMB82 million (+27% y-o-y; +11% q-o-q) was below our projected RMB97 million due to wet weather that affected mushroom yield, as well as higher costs of production.

"Revenue was up 48% to RMB243 million (our estimate: RMB273m) from a larger cultivation area of 5,614mu (2QFY11: 2,614), while GPM dipped ~6ppt to 39% on an imperfect pass-through of higher raw material costs for fresh fungus segment.

"We factor in a weaker than expected 3QFY12 performance, and reduce our FY2012-2013 earnings estimates by -11% and -12% to RMB162 million and RMB176 million respectively. Target price is cut to 30 cents (previously 32 cents), pegged to 3.5x FYEJun13F earnings estimates. MAINTAIN BUY."

MARKET PULSE: Singapore Economy, SMRT, Hoe Leong (17 May 2012)

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.71

Stock Name: Hoe Leong
Company Name: HOE LEONG CORPORATION LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.20

MARKET PULSE: Singapore Economy, SMRT, Hoe Leong

17 May 2012

KEY IDEA SMRT Corporation: Holding firm despite new developments Following a directive issued by LTA, SMRT will begin replacing, with immediate effect, the power supplying third rail at locations where hairline cracks on some parts of the third rail joints are more visible. The cost for this replacements have not been accounted for by management's estimates this year, and we expect to see a slight uptick in this year's capital expenditure with the increase coming from an acceleration of costs from later years. Despite the latest development and ongoing COI hearings, SMRT's share price has managed to hold steady and even outperformed against a backdrop of broad-market declines. At this juncture, we deem the possibility of further sharp sell-offs to be remote as SMRT services and its operational cash flows remain in demand and resilient. Maintain HOLD with a fair value estimate of S$1.71. (Lim Siyi) MORE REPORTS Singapore Economy: Keeping 2012 growth at 1-3% Singapore's Gross Domestic Product (GDP) rose an annualised 10% QoQ in the first quarter according to the Ministry of Trade and Industry (MTI) this morning versus the initial estimate of 9.9% earlier and slightly below the median of 10.6% of economists as polled by Bloomberg. On a year-on-year basis, GDP grew 1.6% versus 3.6% in the previous quarter and the median forecast of 1.8% from the same Bloomberg survey. In the statement, the MTI also highlighted that the "recovery in the global economy remains fragile and vulnerable to downside risks". In Asia, it cautioned that "growth will be curtailed by lacklustre export performances amidst the external headwinds". In view of the uncertainty, the MTI has also kept the full year forecast at 1-3%. (Carmen Lee) Hoe Leong Corp: Steep losses from Malaysian associate Hoe Leong Corp (HOE) reported 1Q12 revenue and gross profit of S$20.6m (+32% YoY) and S$5.3m (+23% YoY) respectively, and these were generally in line with our estimates. However, a steep and unexpected loss of S$3.3m from share of results from associates and JVs (Semua: S$4.2m losses, Aries: S$0.9m profit) led to an overall 1Q net loss of S$0.9m (1Q11: S$1.7m net profit). While we are fairly comfortable about HOE's core business, we remain cautious on its Semua stake. There is also a possibility that Semua's financials could be consolidated in HOE. Given the lack of clarity, we lowered our fair value to S$0.20, based on 0.7x P/B. Maintain HOLD. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks were generally flat on Wednesday, having pared gains on worries regarding Greece. The S&P 500 Index moved down 0.1% and the DJIA climbed 0.1%. - Frasers Commercial Trust, Great Eastern and Far East Organization have unveiled a revitalisation plan for the China Square precinct. The first phase will involve a link way costing S$14m which will be equally shared among the three partners. - Frenken Group has made a pre-conditional offer to buy Juken Technology for 18 S-cents a share, or about S$58.2m in total, including payment for outstanding warrants and options. - SP AusNet will raise A$434m in a share offer to existing investors to help fund expansion, according to Bloomberg. - Otto Marine has won two ship chartering contracts worth US$16.6m for two anchor handling tug supply vessels, improving its position in African waters.

DMG cuts target on Yamada

Stock Name: Yamada
Company Name: YAMADA GREEN RESOURCES LIMITED

Research House: DMG

Price Call: BUY

Target Price: 0.30

DMG & Partners Securities cut its price target on mushroom grower Yamada Green Resources to $0.30 from $0.32 and maintained its buy rating.

Yamada shares have risen around 8% so far this year

Yamada’s third-quarter net profit of 82 million yuan ($16.5 million), below DMG’s projected 97 million yuan, was due to wet weather that affected mushroom yield, as well as higher costs of production.

DMG reduced its earnings estimates by 11% for Yamada’s 2012 fiscal year to 162 million yuan and by 12% for 2013 to 176 million yuan.

MARKET PULSE: STX OSV, Residential Property, Olam, KS Energy, Biosensors, SIA (16 May 2012)

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 2.24

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.85

MARKET PULSE: STX OSV, Residential Property, Olam, KS Energy, Biosensors, SIA

16 May 2012

KEY IDEA STX OSV: Results in line STX OSV reported 1Q12 results that were broadly in line with our and the street's estimates. 1Q revenue decreased by 12% YoY to NOK2.8b (1Q11: NOK3.2b), while net profit attributable to shareholders fell by 13% YoY to NOK269m (1Q11: NOK310m). Operating margin was unchanged at 12.9%. Order-book fell slightly to NOK16.0b (end-FY11: NOK16.7b). To account for the increasing uncertainty over the eurozone bloc, we tweaked our valuation peg to 9x (previously 9.7x). Maintain BUYwith lower fair value estimate of S$2.00 (previously S$2.25). (Chia Jiunyang) MORE REPORTS Singapore Residential Property: Signs of life in high-end/mid-tier segments URA data yesterday showed 2,660 new private residential homes (including 173 EC units) sold in Apr 12 - down 12% MoM. Excluding EC and landed-units, new home sales were up 4% MoM and 40% YoY to 2,449 units - a 33-month high since Jul 09. The take-up rate continued to be exuberant at 103%. While Apr sales in the mass-market segment (OCR) came down 18% MoM, we saw a 53% increase in mid-tier sales (RCR) to 779 units mostly due to a sell-out launch at the 244-unit Katong Regency. Interestingly, we also saw high-end sales (CCR) come up 247% to 191 units, boosted by the launch of Eon Shenton and healthy sales at older projects, such as Marina Bay Suites and Scotts Tower. Maintain NEUTRAL weight on the sector given potential property measures and residual uncertainty in Europe. Our top property picks are CapitaMalls Asia [BUY, FV: S$1.76] and CapitaLand [BUY, FV: S$3.21]. Within the small-cap space, we favor Roxy-Pacific [BUY, FV: S$0.45]. We have a SELL rating on City Developments (FV: S$8.92). (Eli Lee) Olam Int'l: HOLD but expect near-term weakness Olam International Limited (Olam) reported 9MFY12 revenue of S$11,947.7m and estimated core net profit of S$215.3m, meeting 63.2% and 60.5% of our FY12 estimates respectively. Going forward, Olam seems to be a tad more optimistic about its Food business; and more muted towards its Industrial Raw Materials segment. While we are keeping our FY12 and FY13 estimates intact, we note that the market is adopting a more "risk off" approach in light of the renewed global economic uncertainties. In response, we lower our fair value to S$2.24 from S$2.63, based on 15x blended FY12/FY13F EPS (vs. 18x FY12F previously). We maintain our HOLDrating in anticipation of more near-term weakness among commodity plays. (Carey Wong) KS Energy: Preparing funds for CB redemption? KS Energy (KSE) reported a 5.6% fall in revenue to S$120.2m and a net loss of S$193k in 1Q12 vs. a net loss of S$7.9m in 1Q11. Revenue was within our expectations, accounting for 22.3% of our full year estimates. We estimate core net loss of S$10.5m in the quarter, close to our full year net loss forecast of S$11.3m. The group's convertible bonds may be redeemed by bondholders in Mar 2013, but KSE has proven adept at raising funds from investors and partners. Hence we would not be surprised if there are news of further tie-ups in the near future. In line with recent weakness in market sentiment which has impacted valuations of the broader industry, we lower our peg from 1.5x to 1.4x FY12F NTA, such that our fair value estimate slips to S$0.85 (prev. S$0.91). Maintain HOLD. (Low Pei Han) Biosensors International Group: Announces large-scale clinical trial and study Biosensors International Group (BIG) made two announcements regarding its products. The first involves the selection of its flagship BioMatrix Flex™ drug-eluting stent (DES) and proprietary Biolimus A9™-drug technology platform for GLOBAL LEADERS, the largest ever randomised and independent clinical trial involving a DES. This is expected to enrol ~16,000 patients. The second includes a first large-scale study for its BioFreedom™ polymer-free drug-coated stent (DCS), which is BIG's next-generation stent. BioFreedom™ is currently awaiting CE Mark approval. We are positive on these two developments as clinical trial results is one of the most important factors impacting a physician's decision to adopt a DES for use. Hence any positive outcomes reported would enable BIG to further drive its penetration rates, in our view. In addition, we do not see much justification in BIG's recent share price slide. While there are concerns over stent price cuts in Japan and China as well as rising competitive pressures, we opine that these concerns are not new to the market and we had previously highlighted them in our report. BIG is slated to release its FY12 results on Tue 29 May 2012. We expect the group to meet our revenue and core PATMI estimates of US$291.4m (+86.1%) and US$102.4m (+94.6%), respectively. Maintain BUY and fair value estimate of S$1.92. (Wong Teck Ching Andy) Singapore Airlines: Passenger load factor up for 3rd month Singapore Airlines (SIA) released its Apr 2012 operating statistics and the parent airline's passenger load factor (PLF) gained YoY for the third month in a row. SIA's PLF rose significantly to 79.7%, from 74.6% in Apr 2011. SIA said flights to all regions recorded higher PLFs after promotional fares boosted passenger traffic. The move to increase promotional activities is in line with management's guidance post the announcement of FY12 earnings that passenger yields will likely come under further pressure. Elsewhere, SilkAir's PLF gained 2.5ppt higher to 77.2%. SIA Cargo cut its freight capacity by 4.6% YoY but its freight traffic contracted 8.8% YoY, resulting in its freight load factor falling to 62.6% from 65.5% a year ago. We maintain our fair value estimate of S$10.85/share and HOLD rating on SIA. (Eric Teo)

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

NEWS HEADLINES - US stocks dipped lower with concern about Greece's failure to form a coalition government and reports of stress on the Greek banking system. The S&P 500 Index and the DJIA declined 0.4% and 0.3% respectively. - First Resource's 1Q12 net profit rose 60% YoY to US$49m. Revenue climbed 82% to US$165m. - Fragrance's 1Q12 net profit climbed 55% YoY to S$22m on the back of a revenue increase of 82% to S$94m. - Hong Leong Asia posted a 25% YoY drop in 1Q12 net profit to S$13.9m. Revenue declined 12% YoY to S$1.1b. - HG Metal reported a net loss of S$1.9m for 2Q12, versus a net profit of S$3.3m a year ago despite revenue rising 44% to S$86.5m. - Nam Lee Pressed Metal Industries registered a 31% YoY increase in net profit to S$7.3m. Revenue increased 16% to S$93.4m.

MARKET PULSE: SATS, Midas, Swiber, ECS, Hoe Leong, PEC, STX OSV (15 May 2012)

Stock Name: SATS
Company Name: SATS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 2.55

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.33

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.61

Stock Name: Hoe Leong
Company Name: HOE LEONG CORPORATION LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.29

Stock Name: PEC
Company Name: PEC LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.93

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.25

MARKET PULSE: SATS, Midas, Swiber, ECS, Hoe Leong, PEC, STX OSV

15 May 2012

KEY IDEA SATS Ltd: Earnings within expectations Summary: SATS Ltd's (SATS) reported its FY12 financial results that were mostly in line with market expectations. SATS' FY12 PATMI of S$171m was 2% higher than consensus estimate, even though revenue came in 2% below the street's estimate at S$1.69b. Management proposed a final dividend of S$0.06/share and a special dividend of S$0.15/share, which translates to a full-year dividend payout ratio of 169%. By our estimation, SATS recorded organic revenue growth of 4% in FY12, driven by strong growth of 9% and 13% YoY in its Gateway services and In-flight catering segments respectively. Its Japanese subsidiary TFK also continued its post-earthquake recovery. However, share of net profit of associates slipped 12% to S$41m in FY12. We maintain its HOLD rating but increase our fair value estimate of SATS from S$2.43/share to S$2.55/share. (Eric Teo) MORE REPORTS Midas Holdings: Delayed orders hit financials Summary: Midas Holdings (Midas) reported a disappointing set of 1Q12 results which were significantly below ours and the streets' estimates. Revenue declined 22.3% YoY, forming 20.6% of our full-year projections. Net profit plunged 74.7% YoY, and met just 7.5% of our FY12 estimates. The weak performance was attributed to higher operating expenses and finance costs, as well as a RMB4.6m share of loss from its associated company NPRT. We slash our FY12 earnings estimates by 34.3%, and FY13 by 12.0%, because we expect FY12 to be a challenging year for Midas. Nevertheless, with Midas currently trading at a trough P/B of 0.6x, we believe that the market has already factored in most of the negatives. We expect Midas to post a stronger recovery in FY13, given that the mid-to-long term prospects for China's railway sector remain sound. Hence, we roll forward our valuation to 11x blended FY12/FY13F EPS to better reflect this. Maintain HOLD with a lower fair value estimate of S$0.33 (previously S$0.375). (Wong Teck Ching Andy) Swiber Holdings: 1Q12 results within expectations Summary: Swiber Holdings (Swiber) reported a 29.1% YoY rise in revenue to US$194.4m but saw a 10.6% fall in net profit to US$8.6m in 1Q12, which were within our expectations. Gross profit margin increased from 16.2% in 1Q11 to 19.8% in 1Q12, but was lower on a sequential basis (4Q11: 21.0%). Current borrowings stood at US$372.8m as at 31 Mar 2012 as there is the possibility of a convertible bond redemption later this year. Though the group is likely to secure more contracts going forward, this means more funds would be needed for working capital. Along with the refinancing needs that may come up, we think that the high net debt situation is a risk in the current volatile market. As such we lower our peg to 10x core FY12/13F earnings, resulting in a lower fair value estimate of S$0.61 (prev. S$0.75). Maintain HOLD. (Low Pei Han) ECS Holdings: 1Q12 core earnings below expectations Summary: ECS Holdings (ECS) reported a mixed set of 1Q12 results, with revenue meeting our expectations but net profit came in below due largely to weaker-than-expected gross margin. Revenue increased 7.1% YoY to S$901.6m, forming 23.2% of our FY12 estimates. PATMI slumped 41.0% YoY to S$6.2m. Excluding forex and other exceptional items, we estimate that core earnings would have declined 36.1% YoY to S$6.6m, or 15.2% of our full-year projections. Sequentially, revenue fell 2.5% and net profit declined 31.6%. ECS's YoY revenue growth was driven by a 16.3% increase in its Distribution segment. But as this segment saw a 1.1ppt YoY decline in gross margin to 2.8%, coupled with the fact that it typically commands a relatively lower margin as compared to its Enterprise Systems segment, overall gross margin slipped from 5.1% in 1Q11 to 4.0% in 1Q12. Looking ahead, management believes that the macroeconomic uncertainties and competitive industry pressures could continue to impact its performance. Pending a teleconference call with management, we place our Buy rating and S$0.69 fair estimate under review. (Wong Teck Ching Andy) Hoe Leong Corp: Steep losses from associates and JVs Summary: Hoe Leong Corp (HOE) reported 1Q12 revenue and gross profit of S$20.6m (+32% YoY) and S$5.3m (+23% YoY) respectively. The numbers were generally in line with our estimates. However, a steep and unexpected loss of S$3.3m from share of results from associates and JVs during the quarter led to an overall 1Q12 net loss of S$0.9m. HOE explained that the losses were largely due to the loss on disposal of a vessel. We will speak to management to seek clarity on this issue. In the meantime, we put our hold rating and S$0.29 fair value estimate UNDER REVIEW. (Chia Jiunyang) PEC Ltd: Sharp deterioration in 3Q12 Summary: PEC Ltd (PEC) reported a very weak set of 3Q12 results that caught us and the street by surprise. 3Q12 revenue increased by 22% YoY to S$107m, but net profit attributable to shareholders plunged 86% YoY to S$1.3m. Net margin shrank to just 1.2%, compared to the 11.0% in 3Q11. While the group still has a very strong net cash position of S$112m, or S$0.44/share, there is a possibility of PEC incurring further losses over the near-term horizon. Pending a teleconference with management later, we put our Buy rating and S$0.93 fair value estimate UNDER REVIEW. (Chia Jiunyang) STX OSV: Results in line. Summary: STX OSV reported 1Q11 results that were broadly in line with our and the street's estimates. 1Q revenue decreased by 12% YoY to NOK2.8b (1Q11: NOK3.2b), while net profit attributable to shareholders fell by 13% YoY to NOK269m (1Q11: NOK310m). Operating margin was unchanged at 12.9%. Its order-book was also flat at NOK16.0b (end-FY11: NOK16.7b). We will speak to the management through a teleconference in the afternoon. In the meantime, we keep our BUY rating but put our fair value estimate of S$2.25 under review. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks dropped with concerns about political upheaval in Europe and the possibility of a softer-than-expected Chinese economy. The S&P 500 Index and the DJIA slipped 1.1% and 1.0% respectively. - Thai Beverage reported a 46% YoY increase in 1Q12 net profit to THB4.33b (~S$174m). Revenue had climbed 31% to THB40b. - Global Premium Hotels registered a 47% YoY increase in 1Q12 net profit to S$6.4m on the back of a 29% increase in revenue to S$14.9m. - Bonvests Holdings' 1Q12 net profit was down 6.5% YoY to S$4.0m. Revenue had grown by 6.5% to S$38.7m. - Cordlife Group's net profit for 3Q12 fell 57% YoY to S$832k even though revenue rose 13% to S$6.9m. - Asiatravel.com reduced it 2Q12 loss to S$489k versus S$807k a year ago. Revenue had declined 6% to S$21.6m.