SG: MARKET PULSE: UE E&C, Global Palm (26 Mar 2013)

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.82

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.17

MARKET PULSE: UE E&C, Global Palm

26 Mar 2013

KEY IDEA UE E&C: Healthy pipeline of projects We met the management of UE E&C last week for an update. Despite the labour crunch in the construction industry and the cooling measures introduced by the government, management remains upbeat. The group has implemented productivity enhancement measures and adopted new technologies to facilitate work processes to help mitigate the tighter manpower constraints and rising costs. Meanwhile, the group has an estimated order-book of S$600-800m, anchored by four key residential developments: Austville EC, Watercolours EC, Prince Charles Crescent and the new Punggol EC. We now roll forward our estimate to FY13F and incorporate projections for the new Punggol EC project. This increases our SOTP fair value to S$0.82 (previously S$0.68). Upgrade to BUY. (Chia Jiunyang) MORE REPORTS Global Palm: HOLD with lower S$0.17 FV Global Palm Resources (GPR) continues to see a rise in its inventory of CPO (crude palm oil), this time more than doubling to 7.7k tonnes from 3.4k tonnes at end 3Q12 (also up 19% YoY). And with the continued high production of CPO (which is likely to continue into Mar as company expects FFB production to increase some 11% this year), GPR may see its stock pile inching even higher going into 2Q13. Meanwhile, new planting has been slow - GPR only added 331k ha last year - and plans to plan 300-400ha this year, citing tough negotiations with the local population. Recent FY12 results were slightly disappointing - GPR reported a net loss of IDR39.8b; but if we strip out the bio-asset fair value losses, core earnings would have come in at IDR51.5b, or 10% below our forecast. In view of the still muted outlook for CPO, we cut our FY14 forecast for revenue by 13% and core earnings by 12%; this also brings our fair value down from S$0.19 to S$0.17, still based on 10x FY13F EPS. Maintain HOLD. (Carey Wong)

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

NEWS HEADLINES - US stocks declined on Monday, erasing gains that briefly had the S&P 500 index less than one point from its record close, as Wall Street worried about Europe's troubles. - Share placements are gaining favour again among Singapore-listed companies as improving sentiment makes it easier to tap equity capital markets, observers say. - Singapore's CPI rose a faster than expected 4.9% in Feb from a year ago. Economists polled by Reuters were expecting an inflation rate of 4.1%, up from 3.6% in Jan. - About S$30m has been set aside by the Singapore government to run SME Centres over three years, from Apr 2013 to Mar 2016. - Lian Beng Group announced that it has won a S$220m contract to construct Bartley Ridge, a development comprising nine residential blocks along Mount Vernon Road. - Marine service provider Swissco Holdings Limited has diversified its business model to move higher up the value chain and into the oil rig sector.