MARKET PULSE: Sheng Shiong, Global Premium Hotels, Marco Polo Marine, Wilmar (5 Dec 2012)

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.55

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

Research House: OCBC

Price Call: BUY

Target Price: 0.29

Stock Name: Marco Polo
Company Name: MARCO POLO MARINE LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.56

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.52

MARKET PULSE: Sheng Shiong, Global Premium Hotels, Marco Polo Marine, Wilmar

5 Dec 2012

KEY IDEA Sheng Siong Group: Strong growth ahead We upgrade Sheng Siong Group's (SSG) FY13/14 revenue growth to 10% (previously 5% and 3% respectively) on the back of full-year contributions from the eight new stores opened in FY12. The absence of further price competition amongst the Big 3 supermarket chains and lingering doubts over the macro-environment will also provide support for this defensive counter. In addition, we anticipate a continuation of the 90% net profit dividend payout policy, which will further enhance its attractiveness in FY13 and beyond. As we roll our projections forward, our discounted cash flow to equity valuation increases to S$0.55 from S$0.49 previously. Maintain BUY. (Lim Siyi) MORE REPORTS Global Premium Hotels: Growing economy hotel supply The economy-tier segment of the Singapore hotel industry is seeing increasing levels of competition given the hotel room supply for this category is set to grow at 7.2% p.a. over 2012-2014, faster than the other three hotel tiers. Among the economy-tier hotels, Fragrance hotels under Global Premium Hotels (GPH) should perform relatively well, given GPH's operational experience and market share. We have a cautious outlook for the near-term performance of the Singapore hospitality sector as a whole in 1Q13, but remain optimistic for the longer term. We maintain our fair value of S$0.29 (using a 10% discount to RNAV) and BUYrating on GPH. GPH intends to distribute at least 80% of net profit after tax for FY12; we estimate an attractive FY12F dividend yield of 5.7%. (Sarah Ong) Marco Polo Marine: Starts book building process for BBR listing Marco Polo Marine (MPM) announced this morning that its 49%-owned associate, PT Pelayaran Nasional Bina Buana Raya Tbk (BBR), has obtained the pre-effective letter of BBR's IPO registration statement from the capital market supervisory agency, Bapepam-LK. This letter instructs BBR to publish its abridged prospectus and start the book building for the IPO. As mentioned in our earlier report (28 Nov 2012), we think there is a possibility of BBR listing on the Jakarta Stock Exchange in the coming months. As BBR's offshore vessel fleet grows, it may be able to brand itself as an entity for investors to gain exposure to Indonesia's offshore sector. There are currently relatively few of such companies listed in Indonesia. Maintain BUY with S$0.56 fair value estimate. (Low Pei Han) Wilmar: Two fined for insider trading The Monetary Authority of Singapore (MAS) has fined two executives from Wilmar for insider trading where both men were involved in the company's due diligence exercise on Kencana Agri's plantations. Goh Ing Sing - Head of the company's Plantation Division and Keu Haw Gee - Plantation Director for Kalimantan and Sumatra were fined S$110k and S$50k respectively. Wilmar said it takes a serious view of the matter and regrets that it has happened. However, it has decided to retain the services of both men in their respective present capacities, noting that both of them are based in Indonesia and the scope of responsibilities lies in the daily operations of the company's plantations. Nevertheless, Wilmar said it will review, reinforce and strengthen the company's internal controls relating to the handling of non-public material information. The news is likely to have some negative knee-jerk reaction on the company's share price, but we do not expect it to have any lasting impact. Maintain BUY with S$3.52 fair value. (Carey Wong)

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

NEWS HEADLINES - US stocks ended lower on Tue, as politicians traded more barbs and proposals to avoid the fiscal cliff but made little progress. The Dow fell 0.1%, while the S&P 500 Index and Nasdaq each ended 0.2% lower. - Singapore's manufacturing activity shrank in Nov for a fifth straight month, with the PMI coming in at 48.8, but up slightly from Oct's 48.3. - Cambridge Industrial Trust plans to buy an industrial property at Jurong Port Road for S$43m. The current owner HG Metal Manufacturing has agreed to lease back the property for seven years. - Sapphire Corp has agreed to sell three plots of vacant land in Malacca for a total of MYR14.2m, as part of its strategy to liquidate its non-core assets. The proceeds from the sale will be used for the group's working capital. - Novo Group expects a loss for the six months ended 31 Oct, mainly due to the decline in its trading business caused by fluctuating raw material prices, stagnating global market conditions and the heightened economic uncertainty.