MARKET PULSE: Tat Hong, Raffles Medical, STX OSV (14 Mar 2013)

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

Research House: OCBC

Price Call: BUY

Target Price: 1.75

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 3.01

Stock Name: STXOSV
Company Name: STX OSV HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.52

MARKET PULSE: Tat Hong, Raffles Medical, STX OSV

14 Mar 2013

KEY IDEA Tat Hong Holdings: Outlook remains positive Tat Hong's PATMI grew by 63% to S$42m in FY12 (financial year ended Mar 2012) and is expected to increase by a further 65% to S$70m in FY13F. The sharp improvements were mainly due to improved crane utilization and higher charter rates. With current crane utilization at around 70% levels, we think that FY14-15F PATMI growth will moderate to around 10-30%, mainly driven by crane fleet expansion. On this point, we note that Tat Hong had completed a share placement of S$82m (in Sep-2012), half of which was earmarked for fleet expansion. We remain positive on the group's outlook over the medium term and keep our BUY rating and S$1.75 fair value estimate unchanged. Risks to our projection include (i) a sharp slowdown in its Australia business and (ii) unexpected delays in Chinese infrastructure projects. (Chia Jiunyang) MORE REPORTS Raffles Medical Group: Unsuccessful in Hong Kong land tender Raffles Medical Group (RMG) announced last evening that it was not successful in its tender for the site at Aberdeen Inland Lot No. 458 in Wong Chuk Hang, Hong Kong, for the development of a private hospital. We note from Hong Kong's Food and Health Bureau's announcement that the site was awarded to GHK Hospital Limited, a 60%-owned subsidiary of Parkway HK Holdings, which in turn is a wholly-owned indirect subsidiary of IHH Healthcare Berhad [NON-RATED]. The winning bid for the land premium was HKD1.688b (out of three bids). No details were disclosed about RMG's bid amount. Total capex for the project would be ~HKD5b (inclusive of the land cost), according to IHH. This is a second setback for RMG recently, as it had also failed to obtain regulatory approval for its first application for the change of use of its commercial podium at 30 Bideford Road for medical clinics (announced on 17 Oct 2012). However, RMG has since resubmitted a second application (around Dec 2012) and is currently awaiting a reply from the relevant authorities. It is also exploring a proposed development of an integrated international hospital in Shenzhen, China, via a non-binding Letter of Intent with a subsidiary of China Merchants Group. Maintain HOLDand S$3.01 fair value estimate on RMG, pegged to 27x FY13F EPS. (Wong Teck Ching Andy) STX OSV: Fincantieri owns 55.6% of STX OSV at close of offer At the close of its mandatory general offer yesterday, Italian shipbuilder Fincantieri received valid acceptance of only 4.9%, bringing its shareholding in STX OSV to 55.6% (previously 50.75%). This development is unsurprising to us given that the board of directors has recommended shareholders to reject the S$1.22 offer as it is not compelling. We currently have a BUY rating with a S$1.52 fair value estimate on the stock. (Chia Jiunyang)

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