MARKET PULSE: Healthcare, CDLHT, STX OSV (15 Jun 2012)

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: BUY

Target Price: 2.04

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

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

Research House: OCBC

Price Call: BUY

Target Price: 1.88

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.58

MARKET PULSE: Healthcare, CDLHT, STX OSV

15 Jun 2012

KEY IDEA Healthcare Sector: Still positive on general outlook Under our Healthcare sector coverage, both Raffles Medical Group (RMG) and Biosensors International Group (BIG) continued to deliver healthy revenue and earnings growth during the recent 1QCY12 results period, although the former's PATMI was slightly below our expectations. We expect BIG to continue its growth trajectory moving forward, despite price cuts of drug-eluting stents in some countries which would dampen BIG's gross margins. While competitive and wage pressures are on the rise for RMG, we expect the group to continue to benefit from thriving industry fundamentals and see room for RMG to raise its ASPs given its competitive pricing vis-à-vis its peers. Maintain OVERWEIGHT on the Healthcare sector, with BIG [BUY; FV: S$1.88] remaining as our preferred pick. We believe its recent share price sell down is overdone, and current valuations compare favourably against its peers. We also reiterate our BUYrating and S$2.58 fair value estimate on RMG. (Wong Teck Ching Andy) MORE REPORTS CDL Hospitality Trusts: Slower growth for Singapore hotels in 2Q The weak global macroeconomic conditions have begun to take a toll on the short-term performance of the local hotel industry. Apr figures released by the Singapore Tourism Board show that visitor arrivals grew 9% YoY, much less than the 14.6% YoY growth for 1Q12. Average RevPAR for April grew 10.3% YoY versus the 14.7% for 1Q12. Speaking to a hotel rooms wholesaler, we understand that May and June to-date have been relatively quiet. We estimate that occupancy growth for May was two-thirds of what was seen for January-April. The long-term growth prospects for the hospitality sector are still positive and we believe our 7.5% YoY RevPAR growth estimate for CDLHT is achievable. We maintain a BUY rating on CDLHT and our fair value of S$2.04. (Sarah Ong) STX OSV: Secures contract for one OSCV and signs Letter-of-Intent for one PSV STX OSV has secured a contract worth NOK1.4b (USD 230m) for the design and construction of a large Offshore Subsea Construction Vessel (OSCV) for Ocean Installer and Solstad Offshore. The contract is subject to approval from the Norwegian Guarantee Institute for Export Credits (GIEK), which is expected to be received on or around 20 June 2012. Separately, the group has also signed a letter of intent with Troms Offshore Supply for the design and construction of one Platform Supply Vessel (PSV) for an undisclosed amount. The actual contract is expected to be signed by end of June 2012. The vessel, of STX OSV's own PSV 07 design, will be one of the largest PSVs in the market with deadweight of 5,700 tons. As the contract win and letter-of-intent already form part of our FY12F projections (NOK 11b), we are keeping our forward estimates unchanged. Maintain BUYwith S$2.00 fair value estimate. (Chia Jiunyang)

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NEWS HEADLINES - US stocks climbed after media reports indicated possible action by G-20 central bankers and the release of poor US economic data increased speculation that the Fed will engage in monetary easing. - Khong Guan's PATMI fell 58% to S$1.94m for FY12; profit was hit by its Malaysian associate, United Malayan Flour, which eroded trading margins by offering generous sales rebates to capture market share. - Lifebrandz sunk deeper into the red for 3QFY12 with a net loss of S$2.11m, vs a net loss of S$947k a year ago. Revenue declined due to ceased operations of two cafes and fewer operating outlets in its Clarke Quay premises. - Midas Holdings' subsidiary has signed a new master agreement with Siemens. The subsidiary will continue to be engaged by Siemens as a preferred supplier of aluminium profiles. - Catalist-listed Chasen Holdings, which engages in specialist relocation solutions, technical and engineering services and third-party logistics, has secured contracts worth about S$4.2m.