MARKET PULSE: Osim, Viz Branz, Marco Polo, Cache, SIAEC (8 May 2012)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.61

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.52

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.43

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.11

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

Research House: OCBC

Price Call: BUY

Target Price: 3.88

MARKET PULSE: Osim, Viz Branz, Marco Polo, Cache, SIAEC

8 May 2012

KEY IDEA OSIM International: Bright start underpinned by strong execution OSIM International Ltd (OSIM) reported 1Q12 PATMI of S$22.2m (+10.3% YoY, +30.2% QoQ), strongly exceeding our estimates by 19.4%. Sales was flat YoY at S$150.1m (+5.2% QoQ), due largely to a high base effect in 1Q11 and tracked closely with our forecast of S$149.2m. An interim dividend of 1 S cent was declared (payable on 13 Jun 2012), similar to 1Q11. We opine that management has executed well on its initiatives, as exemplified by continued productivity gains and the launch of innovative products which helped to boost its net margin by 1.3ppt YoY to 14.8% in 1Q12. We raise our FY12 and FY13 EPS forecasts by 7.5% and 4.9%, respectively, and also ascribe a higher valuation peg of 14.3x (previously 12.9x) to our projected FY12F EPS. This raises our fair value estimate from S$1.35 to S$1.61. Upgrade OSIM from Hold to BUY. (Wong Teck Ching Andy) MORE REPORTS Viz Branz Limited: Stellar set of 3Q12 results Viz Branz (VB) reported another set of impressive results yesterday. Although 3Q12 revenue fell marginally by S$0.2m (-0.4% YoY) to S$43.0m, its gross profit margin improved by 2.3 percentage points to 34% while operating profit rose S$1.9m (+38.3% YoY) on the back of a sharp reduction in operating expenses, which caused its 3Q12 net profit to jump 50.9% YoY to S$4.6m. Going forward, we expect a continued reduction in VB's operating expenses as the benefits from economies of scale and scope in its operations become more apparent. Coupled with the persistence of weak raw material prices (i.e. coffee and sugar), we are anticipating a record net profit year for VB in FY12. With this encouraging set of results and adjustment to its cost structure and potential growth market in Myanmar, we adjust our FY12 and FY13 cost estimates for VB accordingly, which resulted in an increase to our discounted cash-flow-to-equity valuation to S$0.52 from S$0.37 previously. Maintain HOLD. (Lim Siyi) Marco Polo Marine: In-line 2QFY12 results Marco Polo Marine (MPM) reported a 40% YoY rise in revenue to S$31.0m but saw a 22% fall in net profit to S$4.2m in 2QFY12, such that 1HFY12 net profit accounted for 49% and 44% of ours and the street's full year estimates, respectively. Revenue was boosted by the group's shipyard operations, but a drop in other operating income, higher admin expenses and share of loss of associated companies led to a lower bottom-line. Going forward, MPM expects the shipyard operations to continue to drive the group's overall revenue for 2HFY12, mainly from the ship repair side. Meanwhile, MPM will set up a JV with Marine Tankers Holdings Pte Ltd to own and manage bunkering vessels. Maintain HOLD with unchanged S$0.43 fair value estimate on the stock. (Low Pei Han) Cache Logistic Trust: Acquisition of Pandan Logistics Hub Cache announced that it would acquire Pandan Logistics Hub (PLH) for S$66m via a sale and leaseback arrangement with CWT Limited. PLH, a five-storey ramp-up logistics warehouse, has a GFA of 329,109 sq ft and is presently fully-occupied. The contracted average lease term is 4.3 years and NPI yield is 7.6%. The acquisition is expected to be wholly funded by debt, which we view favorably and expect accretion to the REIT's DPU yield upon completion. We maintain our BUY rating on the REIT and put our fair value estimate of S$1.11 unchanged for now, pending further details of the debt financing and completion of the acquisition. (Kevin Tan) SIA Engineering: Good 4Q12 earnings SIA Engineering Co Ltd (SIAEC) last night reported its 4QFY12 financial results. Revenue grew 16% YoY and 4% QoQ to S$316.5m, while PATMI gained 9% YoY and 4% QoQ to S$66.3m. For FY12, revenue and PATMI came in respectively at 6% and 4% higher than our estimates and 3% and 1% higher than consensus estimates. SIAEC also announced a final dividend of S$0.15/share, after an interim dividend of S$0.06/share post 1HFY12. We put our fair value estimate of S$3.88/share and BUY rating on SIAEC UNDER REVIEW, pending a briefing with management later today. (Eric Teo)

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NEWS HEADLINES - US stock indexes closed mostly flat after opening lower due to concerns that elections in France and Greece could hinder the resolution of Eurozone debt crisis. - The SGX said yesterday that it is out of the running in the bid for the London Metal Exchange (LME). - Sembcorp Industries has made its first-ever investment in wind power in a US$85.5m deal to acquire NYSE-listed AES Corporation's power assets in China. - Hutchison Port Holdings posted 1Q12 PATMI of HK$462.8m (S$74.3m), up 1% from the projection in its IPO prospectus. Revenue and other income, however, fell 6% short of projections. - Commodities Logistics company CWT Ltd saw 1Q12 net profit jump 213% YoY to S$26.4m as it enjoyed revenue from a business stake it acquired in Jul 2011. - FJ Benjamin Holdings registered 3Q12 PATMI of S$3.5m, up 8% YoY on the back of the best 3Q revenue in five years. Revenue rose 7% YoY to S$95.8m.