MARKET PULSE: Petra Foods, Bumi Armada, KepCorp, CMT (22 Nov 2012)

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.98

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 13.34

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.38

MARKET PULSE: Petra Foods, Bumi Armada, KepCorp, CMT

22 Nov 2012

KEY IDEA Petra Foods: Play on EM Asia consumer demand Petra Foods (PF) is one of the world's largest producers and suppliers of cocoa ingredients, and it counts a stable group of chocolate confectionery conglomerates as its key clientele. It also has a Branded Consumer division, where it is a first mover into emerging Asia consumer demand. Given its competitive advantage via an extensive distribution network and strong brand equity, PF has achieved a dominant market share of more than 50% and 10% in the growing markets of Indonesia and the Philippines respectively despite a gradual influx of well-known international players. Combined, these two divisions form a formidable "twin-engine" growth strategy for the future. We initiate coverage with a BUY rating and a fair value estimate of S$2.98, based on 24x 12-month forward PE. (Lim Siyi) MORE REPORTS Bumi Armada: Margins eroded by FX losses Bumi Armada's 3Q12 revenue and net profit increased by 14% and 3% YoY to RM462m and RM95m respectively. On a nine-month period, revenue was flat at RM1.2b, while net profit increased by 18% to RM277m. Despite the increases, the results were very much below expectations as 9MFY12 net profits formed only 68% and 60% of ours and the street's full year estimates. As the group had not secured any new FPSO contracts year-to-date, we believe it may be hard to meet the street's expectation of two FPSO contract wins (and our projection of just one win) in 2012. Looking ahead, we continue to project one FPSO contract win per year for FY13-14F and believe our estimate is conservative (versus the street's). We adjusted our model for 3Q results, but kept our FY13F estimates largely unchanged. As we roll forward our estimates for FY13F, our fair value estimate rises slightly to RM3.48 (previously RM3.36), still on 20x PER. Maintain HOLD. (Chia Jiunyang) Keppel Corporation: Two semi-sub drilling rigs from Ukraine Keppel Corporation (KEP) announced that its O&M arm has been selected by Ukraine's National Joint-Stock Company, Naftogaz, as a winner of a tender to construct two semi-submersible drilling rigs. Like the earlier two jack-ups delivered by KEP for the same customer, these rigs are likely bound for the Black Sea as well. As both parties will be entering into further contract negotiations, no details were disclosed on the price and delivery schedule. Platts, however, mentioned that the cost of the two rigs are about US$1.2b, and are scheduled to be delivered by end 2014. We also note that an Oct 29 article in the Ukrainian Journal mentioned that KEP had submitted the most attractive price bid (at US$1.226b) amongst four bidders. Assuming a final price tag of US$600m/unit, this would bring KEP's order wins to S$10b YTD, forming 98% of our full year estimate. Maintain BUY with S$13.34 fair value estimate. (Low Pei Han) CapitaMall Trust: Raised S$250m through private placement CapitaMall Trust (CMT) announced that it has raised S$250m through a private placement of 125m new units at a price of S$2.00 per unit (5.2% discount to the last closing price of S$2.11). These 125m new units make up ~3.8% of the total number of units as of end Sep 12, and management indicates that it would use the proceeds to finance capital expenditure, asset enhancements, refinancing of existing debts, and general corporate and working capital needs. Post placement, CMT's aggregate leverage would fall from 37.7% to 35.1%. Overall, we are neutral on this development; though this placement would give CMT added financial flexibility in its balance sheet, we are cognizant of the dilutive effects on current shareholders. Maintain BUY with an unchanged fair value estimate of S$2.38. (Research team)

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NEWS HEADLINES - US stocks ended higher on Wednesday ahead of tomorrow's Thanksgiving holiday, after Israel and Hamas agreed to a truce. The Dow rose 0.4% to 12,836.89, the S&P 500 Index added 0.2% to reach 1,391.03 and the Nasdaq ended 0.3% higher at 2,926.55. - CosmoSteel Holdings' 4Q12 net profit rose 47% YoY to S$2.5m, despite a 15% decline in revenue to S$27m. It declared a final dividend of 1.25 S cents, up from 1 S cent a year ago. - China Flexible Packaging Holdings expects a "significant impact" on its financial results for the full year to 31 Oct 2012 from a CNY378m impairment loss on the carrying value of its fixed assets. - Hor Kew Corp has completed the S$5.5m sale of its leasehold property at Sungei Kadut. It plans to use the cash for general working capital and to fund strategic investments. - Carriernet Global has signed a distributorship agreement with M1 to distribute and sell services on M1's mobile and fixed-line platform. The agreement started on 1 Nov and will be renewed yearly.