MARKET PULSE: Karin Tech, Global Palm, Keppel Land (23 Nov 2012)

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.49

MARKET PULSE: Karin Tech, Global Palm, Keppel Land

23 Nov 2012

KEY IDEA Karin Technology: An Apple for a Christmas cheer We expect Karin Technology (Karin) to be a key beneficiary of recent new product launches by Apple, given the latter's leadership position in the smartphones and tablets space. Karin has the license to sell the full range of Apple products through its In-Smart retail stores in Hong Kong, which includes the iPhone 5, iPad Mini and fourth-generation iPad. However, the limiting growth factors would be supply constraints and low margins on these products, in our opinion. Management would also strive to increase focus on higher margin network security products and enterprise software solutions to mitigate this. We maintain our HOLDrating and S$0.25 fair value estimate on Karin, still based on 6x FY13F core EPS. Prospective FY13F dividend yield remains attractive at 8.2%. (Wong Teck Ching Andy) MORE REPORTS Global Palm: Still no catalyst yet Global Palm Resources (GPR) has slashed its planting target by >60% to 300-400 ha for 2012 as it now faces increasing difficulties in its negotiation with the local population. Instead, management continues to be on the lookout for acquisitions to boost its plantation size; and believes that the process to be easier now with the drop in CPO (crude palm oil prices). Nevertheless, we note that rising inventory levels could remain an issue which could see stockpiles rising further in 4Q12 and even 1Q13 due to continued strong CPO production and muted demand. Unless there is a sharp recovery in CPO prices or a sizable brown-field acquisition, we do not see any catalyst in sight. Maintain HOLDwith an unchanged fair value of S$0.19 even as we roll forward our 10x peg from blended FY12/FY13 to FY13F EPS. (Carey Wong) Keppel Land: Establishes US$3bn multicurrency MTN program Keppel Land (KPLD) announced that it has established a US3bn Multicurrency Medium Term Note Program. As of end Sep 12, KPLD's net gearing is a healthy 21% and we see this program adding significant incremental financial flexibility to its balance sheet, particularly as the group continues to look into allocating capital into accretive land acquisitions. That said, we continue to see limited catalysts for the share price ahead given limited visibility for major launches and MBFC T3 divestment over the near term. Maintain HOLD with an unchanged fair value estimate of S$3.49 (35% discount to RNAV). (Eli Lee)

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NEWS HEADLINES - US consumer sentiment rose slightly in Nov to the highest since Sep 2007, boosted by rising wages and an improving jobs market, but tempered by uncertainty about the fiscal cliff. US markets were shut yesterday for Thanksgiving. - Cambridge Industrial Trust has secured from its existing lenders a S$100m bridging loan to finance the purchase of properties and a S$50m revolving credit facility to fund various asset enhancement initiatives within its portfolio. - Technics Oil and Gas's 4Q12 PATMI declined 6% YoY to S$2.4m, despite a 10% rise in revenue to S$25m. Its gross profit margin fell due to more contract engineering contracts that command relatively lower margins being recognised. - Magnus Energy Group has received an A$2.7m payment for the sale of its entire investment in Acer Energy.