MARKET PULSE: Noble, ComfortDelgro, Tat Hong, SingTel, CDL, STX OSV, CSE Global, KSH

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.28

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.53

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.39

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.68

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 11.53

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.00

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.80

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

MARKET PULSE: Noble, ComfortDelgro, Tat Hong, SingTel, CDL, STX OSV, CSE Global, KSH

14 Aug 2012

KEY IDEA Noble Group Ltd: Upgrade to BUY with new S$1.28 FV Noble Group (Noble) reported 1H12 revenue of US$47,069.0m, meeting 54.4% of our original FY12 forecast; core earnings came in around US$230.3m, or 40% of our full-year forecast. On its financial position, Noble notes that it currently has about US$6.2b worth of liquidity headroom, which management believes "eliminates any refinancing risk in the short and medium term". It adds that it expects to receive some US$800m in 2H12 from the Gloucester-Yancoal merger and sale of a tank farm asset in Brazil. Noble further expects the market stress to provide it the opportunity to attract talent and invest in attractive assets to support its franchise. To account for the 1H12 performance, we are raising our FY12 revenue forecast by 7.9% but paring our core earnings by 2.8% on weaker margin assumptions. As we are also pushing out our valuations from FY12F EPS to blended FY12/13F EPS (still based on 10.5x), our fair value improves from S$1.21 to S$1.28. We also upgrade our call from Hold to BUY. (Carey Wong) MORE REPORTS ComfortDelgro: Stable 1H12 results ComfortDelgro announced a 5.7% YoY increase in revenue to S$1.7b on the back of broad-based growth across all but one segment and better overseas performance. We do not anticipate any surprises for CD in 2H12 and expect revenue to continue its broad-based growth across its various segments. In addition, any corresponding increases in operating expenses will be controlled i.e. through fuel hedges and effective management. As for CD's current price valuation, we deem the recent strength and resilience is a reflection of the market's desire for safe and stable yields given uncertain global economic climate. We stand by our conservative payout assumption of 50% of PATMI for our dividend-discount model as CD has consistently paid dividends of around 50-53% of its PATMI over the past four years. Leaving our earnings estimates unchanged, we maintain HOLD at S$1.53. (Lim Siyi) Tat Hong: Recovery back in full swing Tat Hong Holdings (Tat Hong)'s 1Q13 net profit attributable to shareholders tripled to S$16.7m (1Q12: S$5.5m) such that the quarter earnings formed 24% and 31% of ours and the street's full year estimates. Revenue jumped by 36% YoY to S$215.3m and overall gross margin increased by nearly four percentage points to 39.2% on better pricing and higher utilization rates. Unlike a year ago when the group faced a cyclical weakness in construction activities, business disruptions from the Queensland floods and management issues with its China operations, Tat Hong is now making a strong comeback on the prospect of continued growth (from increased infrastructure spending) across the region. We maintain our BUY rating and further raise our fair value estimate to S$1.39 (previously S$1.21) on the improved earnings outlook. (Chia Jiunyang) SingTel: Soft start to FY13 SingTel reported its 1QFY13 results this morning, with revenue falling 1.6% YoY to S$4533.0m, meeting around 24% of our full-year forecast; impacted by the 3% depreciation in the AUD against the SGD. Core net profit (excluding exceptional items) slipped 2.6% to around S$850.0m, or 22.9% of our FY13 estimate. One of the key reasons for the fall was due to lower Associates' contribution, which fell 14.7%, mainly due to the weakening of the regional currencies (especially INR and IDR against the SGD). Meanwhile, SingTel has affirmed its previous guidance for FY13, where consolidated revenue should grow at low single-digit level and EBITDA to remain stable; also estimates free cash flow to be around S$2.6b, after spending around S$950m capex in Singapore and A$1.1b in Australia; also expects ordinary dividends from regional mobile associates to grow. We will have more after the analyst teleconference. Until then, we place our Buy rating and S$3.68 fair value under review. (Carey Wong) City Developments Limited: First take on 2Q12 results City Developments (CDL) reported 2Q12 PATMI of S$137.7m, which was down 38% YoY mostly due to the absence of gains from the Corporate Building disposal and sale and leaseback of Studio M in 2Q11. 2Q12 revenues came in S$787.8m, down 20% YoY. We view these results to be broadly in line with consensus and our expectations. We continue to see healthy take-up rates at launched projects with 1,299 units sold in 1H12 (1H11: 809) and the group expects to launch two projects in 2H12, which are 508-unit and 912-unit condominiums projects at Alexandra Rd and Pasir Ris Grove respectively. The hotel subsidiary, Millennium & Copthorne, reported 1H12 PATMI of GBP58.4m, down 6% though RevPar was up 4.6% for a like-for-like basis. We would be speaking with management later regarding 2Q12 results and in the meantime, put our Buy rating with fair value estimate of S$11.53 (20% RNAV discount) under review. (Eli Lee) STX OSV: 2Q12 results in line STX OSV's 2Q12 revenue increased by 21.6% YoY to NOK3.3b and net profit remained flattish at NOK279m (+2.6% YoY), such that 1H12 net profit formed 44% of our full year estimates. 2Q order intake was nearly NOK 5.0b, bringing its order-book to NOK18.3b. The group also announced a special interim dividend of 13 S cts (versus last year's interim dividend of 5 cents) - a more than doubling in dividend payout from the previous year. Pending a teleconference later, we keep our Buy rating but put our S$2.00 fair value estimate under review. (Chia Jiunyang) CSE Global: 2Q net profit of S$22m CSE Global reported a decent set of 2Q12 results, with net profit attributable to shareholders reverting to S$21.1m from a loss of S$7m in the year-ago period. The results were in line with ours and the street's expectations. 2Q net orders were S$115m, bringing the outstanding orders to S$370m as of end of June 2012. We will meet up with the management later for more updates. In the meantime, we keep our Buy rating and put our S$0.80 fair value estimate under review. (Chia Jiunyang)

KSH Holdings: 1QFY13 numbers broadly within expectation KSH reported 1QFY13 PATMI of S$4.3m, up 66% YoY mostly due to higher profits from the construction business and a disposal gain from the sale of an investment property in China. We judge this result to be within expectation as 1QFY13 PATMI now makes up 30% of our FY13 forecast - tracking marginally above due to the disposal gains. 1QFY13 topline of S$55.2m increased 35.3% YoY again due to increased revenues from the construction business and the investment property disposal. The construction order book stands of ~S$416m as of end Jun 12, which we view as relatively healthy. We would speak further with management regarding these results later today and, in the meantime, put our Hold rating with a $0.25 fair value estimate under review. (Eli Lee) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks dropped following a poor reading on Japan's economic growth. The Dow fell 0.3% to 13,169.43. The S&P 500 dropped 0.1% to 1,404.11. - Wheelock Properties reported a 31% YoY increase in 2Q12 PATMI to S$48.5m. Revenue had jumped 72% YoY to S$116.6m. - Boustead Singapore posted 1Q13 PATMI of S$12.2m, up 43% YoY. Revenue rose 25% YoY to S$113.35m. - Bukit Sembawang saw 1Q13 PATMI fall 40% YoY to S$27.7m. Revenue had declined 13% YoY to S$105m. - Metro Holdings registered 1Q13 PATMI of S$14.8m, versus S$3m a year ago. Revenue climbed 3.7% YoY to S$44.2m. - Tiong Seng posted 2Q12 PATMI of S$9.7m, up 6% YoY. Revenue soared 55% YoY to S$130m.