MARKET PULSE: Technology Sector, Ascott Residence, Viz Branz, SGX (4 Sep 2012)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 8.72

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.34

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.74

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 6.80

MARKET PULSE: Technology Sector, Ascott Residence, Viz Branz, SGX

4 Sep 2012

KEY IDEA Technology Sector: Outlook remains muted Singapore-listed tech companies reported lacklustre results in general during the recently concluded 2QCY12 reporting season. Under our sector coverage, only Micro-Mechanics (MMH) exceeded our forecast; while earnings for the rest missed due largely to lower-than-expected margins. A bright spot during the quarter came from decent dividends declared by some tech companies. Nevertheless, given the still uncertain macroeconomic environment, the guidance we obtained from various companies largely pointed to caution amongst key customers and thus weak orders visibility. This is despite the expected launch of new programmes and products in 2H12. Maintain NEUTRAL on the tech sector. We retain Venture Corp [BUY; FV: S$8.72] as our top pick but remove VHL following our downgrade to HOLD after its disappointing 1QFY13 results. (Wong Teck Ching Andy) MORE REPORTS Ascott Residence Trust: Holding its own According to CBRE, the potential supply of serviced residence units in Singapore is set to grow at 5.1% p.a. to 5,765 units by 2014. While this is higher than the rate at which hotel room supply is expected to grow over the same period (4.6% p.a., see our CDLHT report dated 120827), we note that occupancy rates for serviced residences is Singapore are stronger than for hotels in general. Serviced residences clocked average occupancy of 91.8% for 2011 (CBRE), versus an average of 86% for hotels (STB). We believe that ART's Singapore properties will hold their own against upcoming serviced residence supply given their high quality, branding and good locations. We maintain a BUY rating and fair value estimate of S$1.34. (Sarah Ong) Viz Branz Limited: Bonus issue on hold In an update to its share sale announcement back in July, Viz Branz (VB) announced yesterday that its substantial shareholder and one of the potential interest parties had entered into a non-binding indicative preliminary letter of indication of interest (LOII) to facilitate the advancement of further discussions. Following this update, VB will put its proposed one-for-one bonus issue on hold to prevent any complications should the share sale eventually materialize. While the LOII is non-definitive and is generally non-binding, we view the update as a positive development in a potential share sale. As VB's share price increased 4% since our last report on 28 August (+113% on a year-to-date basis), we downgrade our rating to HOLD with an unchanged fair value estimate of S$0.74. In addition, we reiterate our view that should the share sale take place and an eventual takeover materializes, we are only anticipating a small premium of 2% (based on analysis of previous acquisitions/takeovers). (Lim Siyi) SGX: ASEAN Trading Link to start on 18 Sep Singapore Exchange (SGX), together with Bursa Malaysia, has announced that the ASEAN Trading Link will commence on 18 Sep 2012. These are the first two markets to be connected on the ASEAN Trading Link with the Stock Exchange of Thailand slated to be next. Meantime, the SGX also announced rule changes to facilitate the introduction of the ASEAN Trading Link. While this is a favourable development, it is likely to have already been reflected in its share price as plans for the ASEAN Trading Link have been underway for a while. We are not making any adjustments to our earnings estimates for now. We have a HOLD on the stock with a fair value estimate of S$6.80. (Carmen Lee)

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NEWS HEADLINES - Gold prices continued last week's rise to a five-month high on Monday as expectations increased that the Fed would launch another round of quantitative easing. Floor trading was closed for the US Labor Day holiday. - Nam Cheong has secured two contracts worth a total of US$59m for two Accommodation Work Barges. With these contracts, Nam Cheong's YTD order book has hit a high of MYR1.06b in contract value, surpassing last year's figure of MYR757m. - Chip Eng Seng Corporation has clinched a S$210m contract from the HDB. The group's order book has grown to S$711m from the S$364m announced in its 2Q statement. - TEE International, KSH Holdings and Heeton Holdings will enter into a joint venture to redevelop existing properties situated at Unit Nos. 48-60 Lorong 32 Geylang Road. TEE, KSH and Heeton will be holding 45%, 45% and 10% of the project respectively. - LionGold Corp has acquired over 97% of the issued and paid up capital of ASX-listed Castlemaine Goldfields Ltd at the close of the proposed takeover on 31 Aug.