MARKET PULSE: Dyna-Mac, Bumi Armada, UEEC (17 Aug 2012)

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.52

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.71

MARKET PULSE: Dyna-Mac, Bumi Armada, UEEC

17 Aug 2012

KEY IDEA Dyna-Mac Holdings Ltd: Ramping up production Dyna-Mac Holdings Ltd (Dyna-Mac)'s 2Q12 results improved significantly with a 145.7% QoQ jump in revenue to S$57.8m and a 82.6% QoQ increase in net profit to S$6.1m. Management explained that the improvement was mainly due to faster revenue recognition as its projects proceeded into the middle stages. The group has an order-book of S$203m and expects most of it to be recognized by year-end. We updated our model for the 2Q12 results and as we roll forward our projections to FY13F, our fair value estimate increases to S$0.52 (previously S$0.45). Maintain BUY. (Chia Jiunyang) MORE REPORTS Bumi Armada: 2Q results below expectations Although Bumi Armada Berhad (BAB) reported a 52.6% YoY increase in 2Q net profit to MYR91.9m, the results were generally below ours and the street's expectations. 1H12 net profit attributable to shareholders was MYR182.6m and formed only 40% and 33% of ours and the street's full year estimates. With the uncertainty in the global economy, oil companies have turned more cautious and have delayed the awards of FPSO contracts. This has inevitably affected BAB (and other FPSO operators). We now cut our two FPSO wins per year assumption to just one for FY12-13F, and lowered our FY12-13 EPS by 9-16%. Accordingly, our fair value estimate decreases to MYR3.36 (previously MYR3.57). Maintain HOLD. (Chia Jiunyang) UE E&C: Construction pace picking up UE E&C's 2Q revenue and net profit increased by 51% and 62% QoQ to S$85.5m and S$6.4m respectively. The construction pace hastened in 2Q and we expect it to pick up further in 2H12F as most of its development projects (i.e. Austville) are now substantially sold. Operating margin improved to 10.5% (1Q12: 7.0%), but remains within the typical range of 7-12%. The group needs to quickly replenish its order-book (est. S$400m) as the majority of its existing construction and engineering projects are due for completion within a year (by Aug 2013). We continue to like UE E&C for its disciplined approach in project bidding and believe it is well-positioned against recession risks. Maintain BUYwith unchanged fair value estimate of S$0.71. (Chia Jiunyang)

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NEWS HEADLINES - Both Fraser and Neave and Asia Pacific Breweries have requested for a trading halt in their shares pending the release of an announcement. - The deal value of global technology M&A slipped 43% to US$33.4b in 2Q12, from US$58.3b a year ago, according to a study by Ernst & Young. - Tycoon Goh Cheng Liang is offering S$0.14 per share in cash to take Superior Multi-Packaging private, valuing the company at S$51.8m. - Moody's Investors Service downgraded the senior unsecured ratings for both SingTel and its Australian unit Optus Finance Pty Limited. - Otto Marine has clinched a US$10m time-charter contract for its maintenance and construction/ accommodation support vessel, Seasafe Supporter. - Swiber Holdings Limited will be acquiring a further 49.5% interest in Atlantis Navigation AS for US$18.3m. - Marina Bay Financial Centre has signed on new tenants at its Tower 3 office building, raising its overall commitment level to over 70% to 890,000 sq ft. - Far East Organization has priced the sale of its Far East Hospitality Trust at S$0.93 per stapled security, representing the top of the indicated S$0.86-S$0.93 range.