MARKET PULSE: LMIRT, Tat Hong, PEC, Dyna-Mac, ECS (12 Nov 2012)

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.52

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

Research House: OCBC

Price Call: BUY

Target Price: 1.70

Stock Name: PEC
Company Name: PEC LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.84

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

Research House: OCBC

Price Call: BUY

Target Price: 0.57

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.52

MARKET PULSE: LMIRT, Tat Hong, PEC, Dyna-Mac, ECS

12 Nov 2012

KEY IDEA Lippo Malls Indonesia Retail Trust: 3Q12 results above expectations Summary: With effect from 1 May 2012, LMIRT engaged a third party operating company to co-manage its individual retail malls. The operating company is responsible for all costs directly related to the maintenance and operation of the individual retail malls, as well as pay for the rental of office and use of equipment. The operating company also has the right to collect a service charge and statutory income from the tenants. The adjustments for 2Q12 were reflected in the 3Q12 results. 3Q12 results were better than what we expected, partly due to the above arrangements. Total return for the period after tax rose 34.4% YoY to S$21.2m. 9M12 total return for the period before tax and revaluation of S$78.5m equaled 82% of our prior FY12F estimate, which we now raise to S$103m. Rolling forward our model, we raise our fair value from S$0.47 to S$0.52 and upgrade LMIRT from Hold to BUY. (Sarah Ong) MORE REPORTS Tat Hong Holdings: Steadily climbing higher Summary: Tat Hong Holdings (Tat Hong) reported a good set of 2Q13 results that were in line with ours and the street's expectations. 2Q revenue and PATMI increased by 18% and 37% YoY to S$216m and S$17.3m respectively, driven mainly by strong performances from its Crane Rental and Tower Crane segments. On a half year basis, Tat Hong's 1H12 PATMI surged by 88% to S$34.0m, making a strong comeback after three years of weak profitability (FY10-12). Looking ahead, we expect the group to utilize its placement proceeds to purchase more crane assets for deployment to the various projects in the region. This should deepen its presence and provide the next leg of growth for FY13F-14F. Given its strong growth momentum, we increased our valuation peg to 14x (previously 12x) and our fair value to S$1.70 (previously S$1.42). Maintain BUY. (Chia Jiunyang) PEC Ltd: 1Q net profit up 32% to S$3.3m Summary: PEC Ltd (PEC) reported its 1Q13 results last Friday evening. Revenue increased by 9% YoY to S$120m and net profit to shareholders by 32% to S$3.3m. Gross margin increased to 21% in 1Q13 (1Q12: 18%), due to settlement of certain variation orders. However, the gains were partially offset by higher administrative expenses (S$8.1m, +17% YoY) and other operating expenses (S$13.8m, +58% YoY). We will speak with management later and will provide further details later. We currently have a BUY rating with S$0.84 fair value estimate on its shares. (Chia Jiunyang) Dyna-Mac: 3Q12 net profit up 250% Summary: Dyna-Mac Holding Ltd (DMH) reported a strong set of 3Q12 results that were in line with our expectations. 3Q12 revenue and net profit increased by 157% and 250% YoY to S$59.8m and S$10.2m respectively, mainly due to more on-going projects and recognition of certain variation orders. We will provide further details after its briefing later today. We currently have a BUY rating with S$0.57 fair value estimate. (Chia Jiunyang) ECS Holdings: 3Q12 core earnings above expectations Summary: In line with the general weakness in the PC industry, ECS Holdings (ECS) reported a 9.5% YoY fall in its 3Q12 revenue to S$897.3m, although this was partially offset by higher demand from mobility devices (smartphones and tablets). Correspondingly, PATMI declined 8.6% to S$8.3m. Adjusting for exceptional items, we estimate core PATMI of S$8.7m, an increase of 8.3% YoY. Topline came in within our expectations but core PAMTI exceeded thanks largely to lower-than-expected operating expenses and finance costs. For 9M12, revenue slipped 2.2% to S$2,622.5m, or 72.5% of our full-year estimates. Reported PATMI decreased by 25.3% to S$22.6m, while estimated core PATMI fell 19.0% to S$22.7m, which formed 75.5% of our FY12 forecast. Looking ahead, global economic uncertainties have increased headwinds for the overall global IT industry, especially on PCs and notebooks. We expect mobility devices to form an increasing proportion of ECS' revenue, given their still robust demand. Focus would also be placed on its Enterprise Systems segment which includes developing its own cloud-based solutions and products. We will provide more details after speaking with management. We maintain our BUYrating but our S$0.52 fair value estimate is under review. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks edged slightly higher on Friday, boosted by a report showing improved consumer sentiment. The Dow rose 0.03% to end at 12,815.39, while the S&P 500 Index gained 0.2% to 1,379.85 and the Nasdaq ended 0.3% higher at 2,904.87. - Private-equity group Everstone Capital has offered to buy Harry's Holdings at S$0.23/share in cash, a 53% premium over Harry's closing price of S$0.15 last Friday. - Nam Cheong's 3Q12 PATMI fell 33% YoY to MYR31.6m as revenue slid 44% to MYR142m, caused by a sharp drop in turnover at its main shipbuilding segment due to the timing of revenue recognition on vessels sold. Separately, the firm said it had sold four vessels worth a total of US$45.1m, taking its order book to RM1.3b.