MARKET PULSE: NOL, Wilmar, Yangzijiang, Bumi Armada, Raffles Med (25 Feb 2013)

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.50

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.95

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 2.68

MARKET PULSE: NOL, Wilmar, Yangzijiang, Bumi Armada, Raffles Med

25 Feb 2013

KEY IDEA Neptune Orient Lines: Is the worse over? Summary: We were disappointed by Neptune Orient Lines's (NOL) 4Q12 performance. Although there were YoY improvements, NOL still registered a net loss of US$98.1m. On a full-year basis, NOL saw revenue inch higher by 3.3% YoY to US$9,511.6m with net losses falling to US$419.4m from US$478.2m. This set of results force us to re-evaluate the timing of NOL's turnaround, and we expect 1Q13 to remain loss-making. Nonetheless, the stabilisation in overall freight rates remain encouraging and we maintain our view that NOL will return to full profitability by the onset of the peak season. Coupled with NOL's manoeuvrability in terms of capacity management, we maintain BUY on NOL with an unchanged fair value of S$1.38. (Lim Siyi) MORE REPORTS Wilmar: Downgrade to HOLD; positives priced in Summary: Wilmar International Limited (WIL) has posted a much stronger-than-expected set of FY12 results. Although reported net profit was down 21.6% at US$1255.5m, core earnings at US$1167.0m (down 23.1%) were still 14% ahead of our forecast. WIL has declared a final dividend of S$0.030/share (versus S$0.031 last year), bringing its total dividend to S$0.05 for FY12, or 18% lower than last year. Going forward, management remains "cautiously optimistic" about its long-term prospects. On growth drivers over the next two years, management believes that its fledging flour and rice business in China will continue to show strong double-digit growth; also looking to expand plantation business in Africa and Myanmar. From the 4Q operating numbers, it does appear that the operations are stabilizing. As such, we bump up our valuation from 13.5x to 15x FY13F EPS, which in turn raises our fair value from S$3.52 to S$3.90. But we suspect most of the positives may already be priced in, given that the stock has rallied by as much as 26% since we upgraded our call on 9 Nov. But in view of the limited upside, we downgrade our call to HOLD; would be buyers closer to S$3.50. (Carey Wong) Yangzijiang Shipbuilding: Results largely in line; four more contracts ceased Summary: Yangzijiang Shipbuilding (YZJ) reported a 32% YoY fall in revenue to RMB3.6b and a 22% drop in net profit to RMB807.7m in 4Q12, bringing full year revenue and net profit to RMB14.8b and RMB3.6b, respectively. Results were largely in line with our expectations, with both revenue and net profit 4% shy of our full year estimates. Four shipbuilding contracts were ceased in 4Q12, affecting the original delivery schedule. The commercial shipbuilding industry is still in its down cycle and the operating environment continues to be difficult and challenging. We still expect 2H13 to 1H14 to be the most difficult period for the group, based on its order book (US$3.4b as at 22 Feb 2013) and delivery schedules. Maintain HOLD with fair value estimate of S$0.95. (Low Pei Han) Bumi Armada: Decent FY12 results Summary: Bumi Armada Berhad's revenue and net profit increased by 7.5% and 7.3% to MYR 1.7b and MYR386m respectively for FY12 , driven by stronger contribution from its FPSO, OSV and T&I (Transport and Installation) divisions. The results were within ours and the street's expectations. FY12 PATMI margin was flat at 23.3%. The group also declared a final cash dividend of 3 MYR cents for 2012 (2011: 2.5 MYR cents). Looking ahead, management believes that the long-term outlook for the offshore oil & gas service sector remains positive and anticipates robust capital expenditure as the search for deepwater oil continues. However, we feel that current valuations - at 21x PER and 2.6x PBR - provide limited upside potential. Maintain HOLD with unchanged fair value estimate of MYR3.48. (Chia Jiunyang) Raffles Medical Group: 4Q12 results within expectations Summary: Raffles Medical Group (RMG) reported its 4Q12 results this morning which were within our expectations. Revenue rose 14.9% YoY and 5.5% QoQ to S$83.0m. PATMI jumped 22.7% YoY and 61.0% QoQ to S$20.2m. For FY12, revenue of S$311.6m represented a 14.2% increase, and just 0.1% shy of our forecast. Reported PATMI rose 12.8% to S$56.8m. However, if we exclude the fair value gain in investment properties amounting to S$3.9m, we estimate that core PATMI rose 9.7% to S$52.9m, forming 99.3% of our earnings projection. The improved performance was attributed to growth from its Hospital Services and Healthcare Services divisions, which both saw a double-digit jump in revenue (16.1% and 11.4% respectively). The former was driven by higher patient loads, a wider range of medical specialties on offer and the recruitment of more specialist consultants. A final dividend of 3.5 S cents/share was declared, bringing full-year DPS to 4.5 S cents and translates into FY12 yield of 1.4%. This is slightly higher than our 4 S cents/share forecast. We will provide more updates after the analyst briefing. Given the YTD appreciation in RMG's share price, we place our Hold rating and S$2.68 fair value estimate under review. (Wong Teck Ching Andy)

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NEWS HEADLINES - US stocks rose on Friday after better-than-expected results from H-P and a positive report on German business confidence. The Dow climbed 0.9% to 14,000.57 (up 0.1% for the week). - Aztech Group announced FY12 PATMI of S$230k, versus a loss attributable to shareholders of S$25.0m a year ago (FY11 impairment loss on vessels of S$19.4m). - VibroPower reported FY12 PATMI of S$2.2m, up 855% on the back of a 24% increase in revenue to S$39.1m. - HL Global Enterprises' net loss for FY12 attributable to owners of the company was S$2.6m, versus a loss of S$5.9m the prior year. It has recorded pre-tax losses for the three most recent consecutive financial years. - Baker Technology posted 4Q12 net profit of S$2.75m, down 3%. Revenue had declined 50% to S$16.4m. - BH Global Marine has announced that it expects to report a loss for 4Q12 due to a write-off of deposit for purchase of land in Batam, a write-off of inventory, and FX.