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.