MARKET PULSE: Tat Hong, SingTel, Starhill Global, STX OSV (15 Feb 2013)

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: BUY

Target Price: 3.68

Stock Name: Starhill Gbl
Company Name: STARHILL GLOBAL REIT

Research House: OCBC

Price Call: BUY

Target Price: 0.95

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

MARKET PULSE: Tat Hong, SingTel, Starhill Global, STX OSV

15 Feb 2013

KEY IDEA Tat Hong Holdings: Another strong quarter Summary: Tat Hong Holdings (Tat Hong) reported a fairly strong set of 3Q13 results with net profit attributable to shareholders surging by 37% YoY to S$17.8m. Gross margin increased slightly to 35.9% (3Q12: 34.4%) due to higher contribution from Crane Rental and Tower Rental segments which yielded higher margins compared to Distribution. Looking ahead, the crane divisions are expected to continue their strong momentums with the roll-out of infrastructure projects across the region. However, Distribution and General Equipment Rental may slow due to weaker demand in Australia. Overall, we are still positive on Tat Hong and raise our fair value estimate to S$1.75 (previously S$1.70) as we roll forward our projections to FY13/14F. Maintain BUY. (Chia Jiunyang) MORE REPORTS SingTel: Stable 3QFY13 results Summary: SingTel saw its 3QFY13 group revenue dipping 4.8% YoY to S$4597m, and while EBITDA rose 0.5% to S$1262m, net profit fell 8.3% to S$827m (mainly due to exceptional loss of S$67m). However, excluding exceptional items, underlying net profit was down 2.3% at S$874m. 9MFY13 revenue fell 2.4% to S$13702m, meeting 73% of our FY13 forecast, while net profit slipped 2.2% to S$2640m; core earnings was down 1.6% at S$2610m, or 69% of full-year estimate. SingTel has kept its guidance for FY13, which we have already captured in our forecast. As such, we would not be making any changes. However, in line of the recent recovery in the price of its listed associates, our SOTP-based fair value improves from S$3.53 to S$3.68. We also maintain our BUY rating on the stock. (Carey Wong) Starhill Global REIT: 10% rent increase for Toshin master lease Summary: Starhill Global REIT (SGREIT) has secured a 10.0% increase in base rent for Toshin master lease at Ngee Ann City, following the completion of the rent review process yesterday. The new rate was based on the average of three market rental valuations undertaken by independent licensed valuers, in accordance with the Court of Appeal's directions, and will be retrospectively applied for the term commencing 8 Jun 2011. Assuming the accumulated rental arrears owing as a result of the rental increase from 8 Jun 2011 to 31 Dec 2012 were paid in FY12 (after deducting expenses), management estimates an increase of 0.19 S cents (+4.3%) in its FY12 DPU. SGREIT intends to distribute substantially the net arrears received (~S$3.8m) from Toshin in 1Q13. This will be on top of the regular distributable income generated for the quarter. We expect the market to react favourably to this news. Maintain BUY on SGREIT but place our fair value of S$0.95 under review as we incorporate the rental and DPU increase in our forecasts. (Kevin Tan) STX OSV: Three new OSCV contracts worth US$350-500m Summary: STX OSV announced that it has secured contracts for three Offshore Subsea Construction Vessels (OSCVs). We estimate the total value to be around NOK 2b to 2.8b (or US$350-500m). The three vessels are for Solstad Offshore, Farstad Shipping and DOF Subsea Group. They will be built in Norway and scheduled for deliveries in 2014 and 2015. As the group is expected to report its 4Q12 results soon, we put off adjusting our estimates and maintain our BUY rating with S$1.52 fair value estimate. (Chia Jiunyang)

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

NEWS HEADLINES - US stocks finished mostly higher on Thurs after another day of tight trading, but blue chips turned in their second day of losses, as investors mulled mixed economic data on a banner day for mergers and acquisitions. - China Minzhong Food Corporation posted a 23.6% YoY increase in profit to CNY215.8m in 2QFY13. - Cordlife Group Limited's 2QFY13 net profit soared 192.7% YoY to S$5.6m, as revenue climbed 23.9% to S$8.8m. - SMRT CEO Desmond Kuek has unveiled a strategic blueprint for the public transport operator, focusing on operational performance and putting commuters first. - Economists say more foreign worker curbs may be announced as soon as this month when the government presents its Budget for the new fiscal year on Feb 25.