MARKET PULSE: KSH Holdings, Biosensors, Olam Int'l, SIA, StarHub, LMIRT (8 Feb 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.62

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: OCBC

Price Call: BUY

Target Price: 1.63

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.50

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.85

Stock Name: StarHub
Company Name: STARHUB LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.00

MARKET PULSE: KSH Holdings, Biosensors, Olam Int'l, SIA, StarHub, LMIRT

8 Feb 2013

KEY IDEA KSH Holdings: Another quarter of strong growth KSH reported 3Q FY13 PATMI of S$8.1m, which surged 179% YoY mostly due to contributions from its property development segment as the group recognized earnings from The Boutiq, Cityscape@Farrer Park and Rezi 26. 9M FY13 earnings now cumulate to S$22.3m, up 108.3% YoY and forming 73% of our FY13 forecast. The group has sold a significant portion of launched projects, and we expect progress billings from already sold projects to underpin earnings growth ahead. Maintain BUY with an increased fair value estimate of S$0.62, versus S$0.50 previously, as we lower the RNAV discount for its property segment from 50% to 40% to reflect a lower risk profile given a larger percentage of projects sold, and raise our PE multiple for its construction segment from 3.0x to 4.0x - a level closer in line with that of its peers. (Eli Lee) MORE REPORTS Biosensors International Group: Revenue guidance lowered Biosensors International Group (BIG) reported a disappointing set of 3QFY13 results which missed our below-consensus estimates. Revenue fell 4.0% YoY to US$81.3m, dragged down by weak licensing and royalties revenue (-37.8% YoY), and was 11.2% below our forecast. Core PATMI declined 9.2% YoY to US$24.3m, falling short of our forecast by 20.3%. BIG also lowered its revenue growth guidance for FY13 from 20-30% to 15-20% due to weaker-than-expected licensing and royalty revenue from Japan. However, product revenue growth is expected to remain robust. We pare our FCFE-based fair value estimate from S$1.69 to S$1.63 as we incorporate lower core PATMI projections and BIG's recent fixed notes issuance in our model. We believe that proceeds for the latter would be used for earnings accretive acquisitions. Maintain BUY. (Wong Teck Ching Andy) Olam Int'l: 1HFY13 results slightly ahead Olam International (Olam) reported 1HFY13 results which were slightly ahead of our forecast. Revenue grew 24.3% to S$9589.5m, meeting 48.1% of our FY13 projection; while estimated core net profit came in around S$147.6m, also meeting around 48.4% of our FY13 estimate. However, its net gearing increased from 1.95x in 1HFY12 to 2.21x in 1HFY13. Management meanwhile is in the process of recalibrating its operations after the Muddy Waters' incident. While we see the recalibration exercise as positive, we do not intend to make any changes to our forecasts just yet. But we are pushing our 10x valuation from FY13F EPS to blended FY13F/FY14F EPS and our fair value improves from S$1.44 to S$1.50. Maintain HOLDfor now. (Carey Wong) Singapore Airlines: Premature optimism Singapore Airlines's (SIA) 3Q13 results came in below our expectations with operating profit declining 20.4% YoY to S$131.0m. Although revenue held up well during the seasonal travel peak, it came at expense of declining passenger yields (YoY basis) following increased promotional activity, which offset some savings from favourable fuel prices during the quarter. Only with gains from non-operating segments did the Group post a 5.4% YoY improvement in PATMI to S$142.5m. The operating environment remains challenging for SIA with competition heating up and jet fuel prices inching upwards. Coupled with the lack of any near-term catalysts, we temper our optimistic outlook and lower our FY13/14 forecasts accordingly. Given the short run-up in its share price, we maintain HOLDat an unchanged fair value estimate of S$10.85. (Lim Siyi) StarHub Ltd: FY12 results in-line; HOLD StarHub Ltd posted FY12 results that were mostly in line, where revenue rose 4.7% to S$2421.6m, or just 0.8% above our figure, while net profit jumped 13.9% to S$359.3m, and 2.5% above our estimate. Full-year dividend came in at S$0.20 as guided. For FY13, StarHub expects to see single-digit revenue growth, with EBITDA margin on service revenue likely to be about 31% (versus 32.3% in FY12). StarHub says it also intends to maintain its annual cash dividend of S$0.20/share, or S$0.05 per quarter. However, it raised its capex guidance to ~13% of operating revenue (versus 11% in FY12), which includes the payment of the leasehold land and the construction of its cable TV network transmission centre. Separately, StarHub announced that CEO Neil Montefiore will retire by end of Feb; COO Tan Tong Hai will step up to replace him in Mar. Biggest change to our model would be the increased capex guidance, otherwise, we are keeping our FY13 revenue and earnings largely unchanged. However, as we are pushing out DCF valuation to FY13 to FY16, our fair value improves from S$3.75 to S$4.00. But given the limited upside from here, we keep our HOLDrating. (Carey Wong) Lippo Malls Indonesia Retail Trust: 4Q12 results in line LMIRT posted 4Q12 gross rental income of S$33.0m, up 35% YoY. The increase was primarily due to the contributions from Pluit Village and Plaza Medan Fair (acquired in 4Q11) and marginal contributions from the six acquisitions made in 4Q12. Total revenue fell 11% to S$33.0m (equivalent to gross rental income in 4Q12). This is because of the absence of the service charge and utilities recovery following the outsourcing of the operational services to a third party operating company with effect from 1 May 2012. Net property income margin was at 93.4%, down 3.2 ppt QoQ. 4Q12 results were generally in line with our expectations; DPU of 0.74 S cents formed 97% of our estimate. We will speak further with management regarding these results and, in the meantime, put our FV of S$0.52 and Buy rating UNDER REVIEW. (Sarah Ong)

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NEWS HEADLINES - US stocks pulled back on Thurs after a strong start to the year. The Dow finished down 0.3% at 13,944.05. It was down as much as 1% intraday. - F&N reported 1QFY13 revenue of S$913m (+17% YoY) and PBIT of S$161m (+14% YoY). With a disposal gain of S$4.8b on Asia Pacific Breweries, PAT totaled S$4.9b. - Saizen REIT has declared a 1HFY13 distribution of 0.66 S cents per unit (+4.8% HoH), representing an annualised yield of 7.0% based on yesterday's closing price of S$0.188. - Z-Obee Holdings' 3QFY13 revenue climbed 44% YoY to US$44.5m and PAT was US$7.6m, up 390% YoY. - Raffles Education posted 2QFY13 revenue of S$33.1m, up 2% YoY. PATMI increased by 39% YoY to S$4.9m.