MARKET PULSE: Technology Sector, STX OSV (21 Dec 2012)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 9.22

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.69

Dear TRs,

Please note that this is our last Market Pulse report of 2012.

Have a merry Christmas and a great 2013 ahead!

Regards,
The team at OIR

MARKET PULSE: Technology Sector, STX OSV

21 Dec 2012

KEY IDEA Technology Sector: Silver lining but dark clouds remain 2012 was a challenging year for the cyclical tech sector due to weaknesses in the macroeconomic environment. The situation was exacerbated by rising cost pressures, resulting in operating deleverage and margin compression. We believe that the visibility and outlook for the tech sector will remain cloudy in the near future, although pockets of strength have emerged recently. Moving into 2013, we maintain our NEUTRALrating on the tech sector. We expect industry conditions to pick up more firmly only in 2H13, while ongoing vagaries in the macroeconomic landscape could continue to weigh on business sentiment and sector valuations in the near-term, in our view. We recommend Venture Corporation [BUY; FV: S$9.22] as our top tech sector pick for 2013, as we think it is a compelling investment, especially for investors seeking cyclical exposure and yield plays. (Wong Teck Ching Andy) MORE REPORTS STX OSV: Fincantieri acquires a 50.75% stake, announces mandatory cash offer Italian shipbuilder Fincantieri announced that it has signed an agreement to acquire a 50.75% stake in STX OSV, from its parent STX Europe, at S$1.22 per share - representing a 12.9% discount to closing price of S$1.40 on 20 Dec 2012. The closing of the acquisition will take place within the first four months of 2013, after certain conditions are satisfied. Once the conditions are satisfied, Fincantieri said that it will launch a mandatory cash offer for the remaining STX OSV shares. We are currently reviewing the terms of the offer and thus put our BUY rating and S$1.69 fair value estimate UNDER REVIEW. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks rose on Thu as Republican House Speaker John Boehner expressed optimism about reaching a budget deal with President Obama. The Dow and the the S&P 500 Index both rose 0.5%, to 13,311.72 and 1,443.69, respectively, while the Nasdaq finished 0.2% higher at 3,050.39. - Sembawang Engineers and Constructors has suspended its listing plans in Singapore due to market conditions and a change in the group's corporate positioning. - Sysma Holdings has agreed to pay S$35m for a private company that owns two plots of land in Serangoon, marking its first foray into property development. - AEM Holdings expects a loss for FY2012 due to a US$2.1m non-cash provision arising from a settlement reached with a customer over a legal dispute. - Healthway Medical Corp has agreed to sell part of its holdings in Healthway Medical Development (HMD) for S$3.5m, reducing its stake from 15% to 14%. The group plans to fully divest its HMD stake eventually, it said.