OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: HL Fin
Company Name: HONG LEONG FINANCE LIMITED

Research House: UOB KayHian

Price Call: HOLD

Target Price: 2.67

Market Compass

14 March 2013~ Good Morning Singapore!

Singapore Idea Snippets:

14 March 2013~ Good Morning Singapore! Central Execution Team - Trading For A Living This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : Give me six hours to chop down a tree and I will spend the first four sharpening the axe - ABRAHAM LINCOLN Singapore: The Day Ahead SINGAPORE DAYBOOK:Spanish firm Repsol open to board seat for Temasek. It would also let the S'pore investment firm to have a say on board nominees. [SINGAPORE] Spanish oil and gas company Repsol would be open to giving Temasek Holdings say on director nominations to reflect the sovereign investment firm's enlarged stake, Repsol chairman and chief executive Antonio Brufau said. "Formally they haven't asked for that, but obviously they will be entitled," Mr Brufau told The Business Times. "They have a 6.3 per cent stake today, therefore with this stake they have the right to have a board member." Temasek gives Repsol the support of a prestigious, long-term investor as the company writes a new chapter of corporate history that emphasises diversified upstream exploration, said Mr Brufau, who was in Singapore to meet Temasek's directors. MARKET SCOOP Drastic slump in COE premiums for big cars IHH buys HK plot for S$271.07m to build hospital Datapulse Tech Q2 net profit falls 12.8% S'pore Feb bunker sales fall to 3-year low IEA cuts global oil demand forecasts UOB KAY HIAN Securities says... HONG LEONG FINANCE | HOLD | TP: S$2.67 Changes in the finance services industry with the advent of floating-rate housing loans and a low interest rate environment have resulted in lower margins Cooling measures for private residential properties and curbs on car loans create further obstacles for HLF Management intends to focus on housing loans for HDB flats and will place less emphasis on the private residential property market Adopts a selective approach for loans to residential developers, financing only those with good track record. It provides loans for the acquisition of landbank and subsequent construction phase as well Growth prospect for car loans has diminished after the curb on loan-to-value ratio and tenure of car loans was introduced in Feb 13 We value HLF at S$2.67, based on a P/B of 0.7x derived from the Gordon Growth Model (ROE: 5.5%, required return: 7.2% and constant growth: 1.5%) CIMB Securities says... MIDAS HOLDINGS | OUTPERFORM | TP: S$0.58 The five contracts totalling Rmb109.6m that Midas has just announced are small but significant wins as they reflect Midas's ability to sustain its order book with metro contracts The outlook for China's railway industry is also becoming more favourable given an increase in planned railway FAI The proposed reform of the Ministry of Railway should help alleviate financing woes in the industry The latest contracts take Midas's existing order book to Rmb509.6m, with earnings visibility of up to three years We advise investors to position early to capture potential alpha from HSR contract announcements Maintain Outperform and target price based on 17.3x CY14 EPS, a 10% discount to the 5-year average forward P/E OCBC Securities says... KEPPEL CORPORATION | BUY | TP: S$12.68 Keppel Corporation (KEP) announced that the conditional contract between Keppel FELS Ltd and Ukraine's Naftogaz to construct two semisubmersible drilling rigs will not be taking effect Though the US$1.2b worth of contract was inked in Dec last year, it was also mentioned earlier that the contract will only be effective if certain conditions were met We do not view this as a cancellation of order, and we note that the contract amount was also not part of Keppel's announced net order book of S$12.8b as at 31 Dec 2012 Though there may be a negative knee jerk reaction with this news, we maintain our BUY rating with S$12.68 fair value estimate and a forecasted dividend yield of 3.7% over a one-year time frame