MARKET PULSE: High Yield Plays, STX OSV (20 Jun 2012)

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

MARKET PULSE: High Yield Plays, STX OSV

20 Jun 2012

KEY IDEA Strategy: High dividend yield picks Summary: The win of the pro-bailout parties in Greece has been overshadowed by concerns about Spain and Italy. Despite the EUR100b bank bailout, Spain's 10-year bonds reached record highs on Monday, rising above 7%. Investors are still cautious and a risk-off environment is likely to persist. We believe that high yield stocks like REITs and Telcos will continue to outperform as they have so far this quarter. In particular, stocks with strong financial positions and high earnings quality will be better positioned. We have ranked all the stocks under our coverage by expected FY1 dividend yield. Our high dividend yield plays are Cache, CDLHT, CMT, M1 and SingPost. (Sarah Ong & Research Team) MORE REPORTS STX OSV: Torrent of contract wins Summary: Following our report "Market Rumours - Caveat Lector" issued last week, in which we argued that the market has overreacted to market rumours involving a supposed Fincantieri/Carlyle deal, STX OSV has announced three contracts worth an estimated NOK2.5b. This underscores the buoyancy of the offshore market and validates our investment thesis that investors should take the opportunity to gain exposure into the premium offshore builder at a reasonable valuation. Year-to-date, we estimate STX OSV has secured about NOK6.7b of contracts. This forms about 60% of our FY12F estimate (NOK11b). As such, we are keeping our forward estimates unchanged. Maintain BUY with S$2.00 fair value estimate. (Chia Jiunyang)

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NEWS HEADLINES - Speculation that the US Fed is set to announce additional stimulus measures lifted the S&P 500 Index for the fourth session in a row. The S&P 500 Index rose 1% while the Dow rose 0.8%. - Olam International and Bloomer Chocolate Company, the largest cocoa processor and ingredient chocolate supplier in North America, have formed a 50:50 JV headquartered in the US. - Yangzijiang Shipbuilding's wholly-owned subsidiary will dispose of its entire 31.5% equity stake in the share capital of Wuxi Runyuan Technology Microfinance Co. for RMB104m. - Addvalue Technologies has jointly developed Thuraya Telecommunications Company's new maritime satellite voice terminal, which was unveiled yesterday. - AsiaMedic has signed two agreements with an unrelated third party to set up a post-natal confinement centre and a medical centre in Shanghai, China. - Yuexiu Property Company has acquired a parcel of land located at the Guangzhou, Guangdong Province at an open tender through its 95%-owned subsidiary for RMB164.3m.