MARKET PULSE: Global Premium Hotels, UE E&C, Dyna-Mac (24 Sep 2012)

Stock Name: GP Hotels
Company Name: GLOBAL PREMIUM HOTELS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.29

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

Research House: OCBC

Price Call: BUY

Target Price: 0.71

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

Research House: OCBC

Price Call: BUY

Target Price: 0.62

MARKET PULSE: Global Premium Hotels, UE E&C, Dyna-Mac

24 Sep 2012

KEY IDEA Global Premium Hotels: Dominant player with track record of growth Summary: Global Premium Hotels (GPH) develops, owns and operates Economy-tier and Mid-tier hotels, and is the second largest operator of Economy-tier hotels in Singapore. GPH currently operates 23 hotels in Singapore with a total of 1,738 rooms under the well-known "Fragrance" (Economy-tier - 22 hotels) and the "Parc Sovereign" brands (Mid-tier - 1 hotel). Out of the 23 hotels, 22 are wholly owned by the group, and 19 of them are on freehold land. From 2006 to 2011, GPH grew its portfolio of rooms by an impressive CAGR of 10.9% p.a. from 1,034 rooms to 1,738 rooms. GPH will continue its expansion with the development of a ~260-room Parc Sovereign hotel at the Tyrwhitt Road site which it has recently acquired from its parent, Fragrance Group. The hotel will expand the total room count under GPH's management by ~15% and based on third party valuers' and management's estimates, could potentially result in a S$42m accretion. We initiate with a BUY and a fair value of S$0.29. (Sarah Ong) MORE REPORTS UE E&C: Top bid for Prince Charles Crescent Summary: A consortium comprising Wing Tai's Wingstar Investment, Metro Australia Holdings and UE E&C's Maxdin put in a top bid of S$516.3m, or S$960 psf ppr, for a 99-year leasehold residential site at Prince Charles Crescent, beating the next closest bid by a mere 1.45%. Based on our estimates, the break-even price for the new development would be around S$1,450 psf ppr and the selling price S$1,650 psf ppr. We also expect UE E&C to provide construction services (worth an estimated S$150-200m) for the new development. We expect URA to announce the winning bid in the coming weeks. In the meantime, we are keeping our projections and S$0.71 fair value estimate unchanged. Maintain BUY. (Chia Jiunyang) Dyna-Mac: US$42m of fabrication orders Summary: Dyna-Mac Holdings has secured three fabrication orders worth a provisional sum of US$42m from SBM Offshore, Subsea 7 and Keppel Offshore and Marine. The orders were for the fabrication and assembly of topside modules, metering skids, subsea spools and other accessories. After deducting work done in the current quarter and new orders received from customers, we estimate Dyna-Mac's current order-book to be around S$200m and would last to 4Q12 or 1Q13. We currently have a BUYrating with S$0.62 fair value estimate. (Chia Jiunyang)

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NEWS HEADLINES - US stocks edged lower Friday, with the Dow registering its first weekly loss in three weeks after a late-afternoon selloff. The Dow fell 0.1% to 13,579.47. The S&P 500 Index slipped less than 0.1% to 1,460.15. - First REIT is to acquire an integrated hospital and hotel in Manado and a hospital in Makassar, Indonesia for a total of S$143m, which will raise its total asset size to S$782m. - Gul Technologies Singapore has received a formal proposal from Greenwich Pacific Pte. Ltd. seeking the voluntary delisting of the company from SGX-ST. - Perennial China Retail Trust has issued S$130.0m in principal amount of 6.375% fixed rate notes due 2015 under its S$500m Multicurrency MTN programme. - TA Corporation announced that ~90% of the units were snapped up at the preview of its latest development, Gambir Ridge.