MARKET PULSE: Ezion, OSIM (14 Sep 2012)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.53

MARKET PULSE: Ezion, OSIM

14 Sep 2012

KEY IDEA Ezion Holdings: S$1b company and growing The stock of Ezion Holdings (Ezion) has performed very well in the past few months, rising more than 75% since early Jun. This has been due to the clinching of contracts at attractive rates of return, smooth execution of projects, and commendable earnings. In addition, Ezion may be the first O&M company in Singapore to list perpetual securities, projecting management's strong sense of confidence in the company's growth. The proposed listing of Triyards and increased frequency of LNG-related news reports and conferences may have also helped sentiment. Ezion has been our small-mid cap pick since we highlighted it in our strategy report last year, but it should henceforth be better classified as a mid-cap counter. We roll forward our valuation with an unchanged peg of 9x FY13F earnings, increasing our fair value estimate from S$1.20 to S$1.53. Maintain BUY with a one-year horizon, but be cautious of a near-term pull back given the recent run-up. (Low Pei Han) MORE REPORTS OSIM International: Strong execution to tide through uncertainties We opine that one of OSIM International's (OSIM) core strengths lies in its ability to constantly drive its product innovation. Coupled with its keen focus on improving its productivity and rationalising non-performing outlets, we believe that these would allow OSIM to buffer the macroeconomic slowdown. However, we ease our FY12/FY13 revenue estimates by 1.1/2.2% and PATMI projections by 0.9%/2.2% as we input more conservative assumptions. Since we highlighted OSIM as a possible laggard play during our 27 Jul 2012 report, its share price has outperformed the STI by 13.1ppt. We still see value in OSIM's current share price despite our reduced forecast. Maintain BUY, with a revised fair value estimate of S$1.79, versus S$1.82 previously (still based on 14.3x blended FY12/13F EPS). (Wong Teck Ching Andy)

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NEWS HEADLINES - The US Fed has launched a third round of quantitative easing, saying it will buy US$40b of MBS a month till the labour market improves. The Dow gained 1.55% to 13,539.86 and the S&P 500 Index rose 1.63% to 1,459.99. - IHH Healthcare replaces NOL in the Straits Times Index with effect from 24 Sep 2012. - Dragon Group Intl will dispose its entire shareholding interest in a wholly-owned subsidiary. The group is expected to record a net loss of ~US$4.9m from the disposal. - Freight Link's 1QFY13 net profit doubled to S$6.6m from S$3.33m a year ago. Revenue rose 18% YoY to S$44.03m. - XMH Holdings' 1QFY13 net profit rose 42% YoY to S$2.17m. Revenue rose 79% YoY to S$21.92m, mainly due to clearing of backlog orders. - A subsidiary of Lian Beng Group has disposed of its 15% stake in Emerald Land - developer of residential development 111 Emerald Hill - and a shareholder loan of S$6.48m for a sum of S$16.98m.