MARKET PULSE: Oil & Gas Sector, Tiger Airways (6 Mar 2013)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.33

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.84

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: Oil & Gas Sector, Tiger Airways

6 Mar 2013

KEY IDEA Oil and Gas sector: Valuations still not stretched Similar to 3Q12, companies in the sector presented investors with 4Q12 earnings that were mostly in line, save for a few such as Ezra Holdings (below) and STX OSV (below). Stocks in the oil and gas sector have performed well YTD, especially the small to mid cap firms. However, we note that many are still trading at or slightly above mid-cycle valuations, suggesting that multiples are not overly stretched as long as the economic recovery remains intact. Recovering earnings, sustainable earnings growth and continued contract wins for a select few are expected to be the main drivers ahead. Though we have an OVERWEIGHT rating on the oil and gas sector, investors are advised to be selective. We favour companies with earnings growth or sustainability backed by a strong order book and a positive outlook for their industry sub-segment. As such, our preferred picks are Ezion Holdings [BUY, FV: S$2.33], ASL Marine [BUY, FV: S$0.86], Keppel Corporation [BUY, FV: S$12.68] and Sembcorp Marine [BUY, FV: S$5.84]. (Low Pei Han) MORE REPORTS Tiger Airways: Positioning for growth Tiger Airways (TGR) announced yesterday that it plans to raise S$297m through a renounceable one-for-five rights issue and a non-renounceable one-for-four preferential offering of perpetual convertible securities. Although this is nearly twice the amount raised in 2011, it is necessary for the group to maintain its operational push towards its goals and was not unexpected by the street. Looking beyond the short-term jitters in terms of its share price, we wish to highlight that TGR is still on track to close out the year on a positive note, and this revitalisation of its balance sheet will give it the flexibility it needs to nurture its existing ventures. With the weak macro-environment continuing to favour budget airlines such as TGR, we leave our forecasts unchanged. Reiterate BUY at an unchanged fair value estimate of S$0.86. (Lim Siyi)

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

NEWS HEADLINES - The Dow Jones rose 0.9% to clock a new high on Tuesday, surpassing levels reached more than five years ago, on indications of an improving US economy. - The Singapore government said it wants to raise the capabilities of Singaporeans as well as to calibrate the existing work pass framework. - Members of parliament said the Wage Credit Scheme may benefit larger multinational companies and government-linked firms more than the SMEs. - TTJ Holdings Limited said it had secured multiple projects totalling S$20m for the supply of structural steelworks and civil defence shelter doors in Singapore. - STATS ChipPAC said it will issue US$255m of 4.5% senior notes due 2018 in a private placement. - WE Holdings Ltd said it has received the nod from the SGX on 1 Mar to list and quote its S$6.2m placement shares on the Catalist board.