MARKET PULSE: Transportation Sector (20 Dec 2012)

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.81

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.90

MARKET PULSE: Transportation Sector

20 Dec 2012

KEY IDEA Transportation sector: Trudging ahead in 2013 Although weakness in the macro-environment continued to weigh on the aviation and shipping-related industries, more than half of the counters in our coverage managed to outperform the FTSE Straits Times Index in CY2012. We are turning slightly optimistic of the overall transportation sector in CY2013 due to a favorable set of preliminary indicators and fuel outlook, though much will still hinge on an improving economic situation. In line with our view, we upgrade the entire sector to NEUTRAL. Within the various sub-sectors, we favour Tiger Airways [BUY: FV: S$0.81] as it embarks on a turnaround in 2013. As for shipping and land transportation, we like Neptune Orient Lines [BUY: FV: S$1.38] and ComfortDelgro [BUY: FV: S$1.90], the former for its positioning in a potential up-cycle, and the latter for its better management and improving operating conditions in the domestic market. (Lim Siyi)

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NEWS HEADLINES - US stocks fell back sharply on Wed, snapping a two-day rally as talks to avoid deep spending cuts and tax hikes appeared to run into difficulties. The Dow ended 0.7% lower, while the S&P 500 Index and Nasdaq slid 0.8% and 0.3%, respectively. - Singapore's 4Q12 economic performance is likely to mirror that of 3Q12, which would mean 2012 full-year growth of ~1.5%, Trade and Industry Minister Lim Hng Kiang said yesterday. - Singapore's refineries are hurting from a drop in 4Q12 refining margins due to the global economic slowdown and may be forced to trim their production soon, BT reported. - BBR Holdings has won two contracts worth S$182.9m to build 1,282 units of HDB flats. - Scorpio East Holdings has obtained a S$5m term loan facility from Maybank, repayable over 14 years, and a hire purchase facility with a s$2m limit and a tenure of up to 4 years, to fund its business expansion.