MARKET PULSE: Genting, Fortune REIT, UE E&C, City Dev, Wilmar, SIA, Noble, CSE Global, Global Palm, OKP, PAH (11 May 2012)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 4.30

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.80

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.53

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

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

Research House: OCBC

Price Call: BUY

Target Price: 0.317

MARKET PULSE: Genting, Fortune REIT, UE E&C, City Dev, Wilmar, SIA, Noble, CSE Global, Global Palm, OKP, PAH

11 May 2012

KEY IDEA Genting Singapore: 1Q12 slightly below; lower S$1.97 FV Genting Singapore (GS) posted 1Q12 revenue of S$787m (-14.7% YoY), meeting 21.3% of our full-year forecast - slightly softer than expected. Net profit came in around S$211.5m (-30.9% YoY), or 20.8% of our FY estimate, as overall revenue was affected by lower win percentage and lower business volume in the premium player business. Going forward, management plans to focus on boosting its visitor numbers to its theme park and remains positive on the prospects of IMA over the longer term. Since 1Q12 results were slightly below our forecast, we opt to trim our FY12 estimates by 5-5.3% and FY13 by 2.3-2.4%, noting the impact of IMAs will likely be felt in 2013. This also eases our DCF-based fair value from S$2.02 to S$1.97. And with a sizable cash pile, we believe that an acquisition is likely on the card, although an IR in Japan has slipped down GS' priority list. Maintain BUY. (Carey Wong) MORE REPORTS Fortune Real Estate Investment Trust: Exceeding expectations 1Q12 results were above our and the street's forecasts. Net property income of HK$185m was up 15.1% YoY; 9.9ppt came from organic growth, while 5.2ppt was due to the one-and-a-half months contribution from Belvedere Square and Provident Square, which were acquired in mid Feb. DPU climbed 14% QoQ to 7.78 HK cents. With the next three quarters seeing full contribution from the two properties, we raise our FY12 DPU forecast from 29.4 HK cents to 31.7 HK cents, up 20.5% YoY from FY11 DPU. We maintain our BUY rating and raise our fair value from HK$4.88 to HK$5.22. (Sarah Ong) UE E&C: 19% fall in net profit UE E&C (UEEC) reported its 1Q12 results last evening. 1Q12 revenue and net profit fell by 35% and 19% YoY to S$56.6m and S$4.0m respectively, mainly due to lower contribution from existing projects. That said, we note that revenue recognition of construction contracts are usually lumpy in nature, and may not be an accurate reflection on the progress made on DBSS/EC projects. Looking ahead, we fear that labour costs could rise given the stricter foreign manpower quota. Therefore, we eased our gross margin assumption to 17-18% (previously: 20%). This in turn lowered our SOTP-derived fair value to S$0.71 (previously S$0.82). Maintain BUY. (Chia Jiunyang) City Developments Limited: No surprises for 1Q12 results CDL announced 1Q12 PATMI of S$156.8m, down 44.5% YoY mostly due to the lack of gains from the disposal of The Corporate Office recognized in 1Q11. We judge 1Q12 PATMI, which constitutes 20% of our FY12 forecast, to be broadly in line with consensus and our expectations. Over 1Q12, CDL launched two developments - The Rainforest and Bartley Residences, which has sold 94% and 41% respectively, and we expect at least two more launches in the year ahead. We continue to see good numbers from the hotel segment, with 1Q12 RevPar at M&C, the hotel subsidiary of the group, up 6% YoY in constant currency terms. While management continues to execute strongly, we believe that the share prices are fully priced given uncertainty in the domestic residential market - its core business segment - and the possibility of more property curbs ahead. Maintain SELLwith an unchanged fair value of S$8.92. (Eli Lee) Wilmar: HOLD with new S$4.30 FV In react to its poor 1Q12 results, Wilmar International Limited's (WIL) share price took a massive 9.1% tumble yesterday. As we had articulated in our 4Q11 results report (22 Feb), the market appears to be anticipating a much stronger recovery, but not supported by the 4Q11 results and its outlook. True enough, our view was reinforced by the 1Q12 results. In any case, we are paring our FY12 earnings forecast by 18% (FY13 by 12%). While we are keeping our valuation peg at 15x (one SD below its 3-year mean), our fair value drops to S$4.30. Maintain HOLD. We would be buyers closer to $4.00. (Carey Wong) Singapore Airlines: FY13 to remain challenging SIA's FY12 net earnings came in at S$336m, which was 25% and 17% respectively lower than the street's and our forecasts. Management said tension in the Middle East during 4QFY12 pushed fuel cost up by 15%, which caused profit margins to contract. Furthermore, SIA in 4QFY12 recorded S$79m of one-off losses, of which S$51m was a disposal loss. For the year ahead, management guided that capacities of the parent airline, SIA Cargo and SilkAir will increase by 3%, 3% and 22% respectively. Capex in FY13 is budgeted to be ~S$1.6b. Passenger yields will likely come under further pressure though fuel prices are expected to remain high. Demand for air freight is unlikely recover before 2HFY12. We maintain our fair value estimate of S$10.85/share and HOLD rating on SIA. (Eric Teo) Noble Group Ltd: 1Q12 earnings below consensus Noble Group (Noble) reported 1Q12 revenue rising 14.1% YoY and 13.5% QoQ to US$22.8b - meeting 26.1% of our FY12 forecast. Net profit fell 45.8% YoY (down 1.3% QoQ) to US$110.1m, or 16.8% of our full-year estimate, versus the street's S$166m consensus; but if we strip out profit (loss) on supply chain assets, its recurring income was just down 9.8% YoY and up 35.2% QoQ at US$135.8m (20.7% of forecast). We are paring our FY12 revenue estimate by 1.1% and earnings by 12.1% to reflect potential economic headwinds around the globe. We are also easing back our valuation peg from 11.1x to 10.5x, which in turn reduces our fair value from S$1.46 to S$1.21. Maintain HOLD. (Carey Wong) OKP Holdings: Wins S$4.9m contract OKP Holdings (OKP) last night announced it has won a new S$4.9m contract from the PUB for the proposed lining works and removal of NEWater mains for Stamford Canal at Orchard Road. The contract starts on 15 May 2012 and is expected to be completed by 14 Jan 2013. This contract is expected to contribute positively to, but has no material impact on, OKP's financial performance for the current financial year ending 31 Dec 2012. We maintain our fair value estimate of S$0.53/share and HOLDrating on OKP. (Eric Teo) CSE Global: Results in line CSE Global (CSE)'s 1Q results came in roughly within our and the street's expectations. 1Q12 revenue increased by 31% YoY to S$134.7m (1Q11: 102.6m), while net profit was flat at S$12.6m (1Q11: 12.5m). Gross margin declined to 31.4% (1Q11: 40.9%), mainly due to (i) additional cost incurred on its telecommunication projects, (ii) higher proportion of lower-margin greenfield project and (iii) reduction in recognition of license contribution from the UK healthcare sector. Order-book decreased to S$398m as of end-1Q12 (4Q11: S$455m). On a positive note, its gearing decreased to 30.2% from 34.2% a quarter ago. Pending an analyst briefing later, we put our Hold rating and S$0.80 fair value estimate under review. (Chia Jiunyang) Global Palm: 1Q12 results mostly in line Global Palm Resources (GPR) reported its 1Q12 results last evening. Revenue grew 12.0% YoY and 24.8% QoQ to IDR98.9b, meeting 27.3% of our full-year forecast. Net profit though fell 13.1% YoY and 756.8% QoQ (which also includes biological asset gains) to IDR12.9b, or around 23.4% of our FY12 forecast. However, we note that gross margin eased from 30.5% in 1Q11 and 31.3% in 4Q11 to 25.7%; this probably due to lower ASPs. We will be speaking with management to get an update on its expansion plans. For now, we put our Hold call and S$0.19 fair value under review. (Carey Wong) Pacific Andes: Better-than-expected 2Q results Pacific Andes Resources Developments Ltd (Pacific Andes) reported a strong set of 2Q results (for the 3-month period ended 28 March 2012). Revenue grew 35% to HK$3,320.5m. Net earnings improved 23% YoY to HK$333.0m and also higher than our estimates. This gives 1H net earnings of HK$472.6m, or 65% of our full year estimates. The group attributed the better performance to both its core businesses of frozen fish SCM (53% of revenue) as well as better high revenue from its fishery and fish supply business (47%). The key markets are China (accounting for 69% of sales), Africa (13%), East Asia (9%) and Europe (8%). There is an analyst briefing later and we will update once we have more information. Meantime, we are putting both our Buy and fair value estimate of S$0.317 under review pending the outcome of the briefing. (Carmen Lee)

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NEWS HEADLINES - US stocks indexes were mainly flat. The DJIA broke a six-session losing streak as hopes for a breakthrough to Greece's political deadlock emerged. - Asia Pacific Breweries registered a 7.3% YoY drop in net profit to S$62.9m for 2Q12 mainly due to a S$29.8m provision for impairment of a China subsidiary. - Petra Foods' 1Q12 net profit rose 20.5% YoY to US$16.3m. Revenue had dropped 7% to US$403m. - WBL Corporation registered an 11% YoY drop in net profit for 2Q12 to S$20.1m. Revenue had risen 10% to S$598.5m. - Super Group announced a 21% YoY rise in its 1Q12 net profit to S$17.7m. Revenue had climbed 23% to S$122m. - Healthway Medical's 1Q12 net profit climbed 24% YoY to S$1.85m despite revenue dipping 2.3% to S$20m.