SG: MARKET PULSE: KSH Holdings, Nam Cheong Ltd (1 Apr 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.62

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

MARKET PULSE: KSH Holdings, Nam Cheong Ltd

1 Apr 2013

KEY IDEA KSH Holdings: Acquiring stake in 160 Changi Road redevelopment Summary: KSH would acquire a 30% stake in 160 Changi Rd, located at the corner of Changi Rd and Lorong 105 Changi, for S$20.4m. Assuming a 50:50 retail and office breakdown and selling prices of S$2.8k and S$1.8k for retail and office, respectively, we estimate a 1.5 S-cents accretion to KSH's RNAV. We like that KSH has re-deployed capital expendiently into new projects after raising S$13.9m in mid-Mar 2013, and believe this points to a well thought-out plan for capital management and growth. Maintain BUY with an increased fair value estimate of S$0.62 versus S$0.61 previously. Our SOTP methodology conservatively values KSH's construction segment at 4x FY13E earnings and its property segment at a 40% RNAV discount. This being so, its fair value estimate could re-rate signficantly if construction order book replenishment continues unabated and/or upcoming launches perform well. (Eli Lee) MORE REPORTS Nam Cheong Ltd: US$72m contract for six vessels Summary: Nam Cheong Ltd announced that it has sold six vessels worth a total of US$72.1m to two of its existing customers. Two 5,150 bhps Anchor Handing Towing Supply (AHTS) vessels were sold to Icon Offshore Berhad, one of Malaysia's largest OSV group, while four Emergency Response and Rescue Vessels (ERRVs) were sold to a Singapore-based company that provides ship management and chartering services. The six vessels will be built in one of its sub-contracted yards in China with expected deliveries between 2Q13 and 4Q14. We continue to like Nam Cheong for its exposure to the buoyant offshore market in Malaysia and its close ties with Petronas-licensed companies. Its build-to-stock shipbuilding programme enables it to capture the strong domestic vessel demand, while its build-to-order business model helps lower its overall risk profile. Maintain BUY with unchanged fair value estimate of S$0.30. (Chia Jiunyang)

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

NEWS HEADLINES - US equities ended 1Q on a positive note with both the S&P 500 and the Dow at new highs. - Keppel REIT has completed the acquisition of a 50% interest in Mirvac (Old Treasury) Trust, which has entered into a development agreement with the State of Western Australia to deliver a new office tower to be built in Perth. - Banyan Tree Holdings has acquired the remaining 6.57% interest in its subsidiary, Maldives Bay Pvt Ltd for a consideration of US$2.6m, funded by internal resources. - Loyz Energy completed the divestment of its sanitary ware operations on 31 Mar for S$9m. - Armarda's associate CMSCG and China Telecom Satellite jointly begin marketing activities mobile satellite handsets and mobile satellite airtime services for 20 key Chinese distributors. - China Great Land Holdings' subsidiary has entered into a binding MOU for a proposed joint venture with Sanya Wan Jia, a Chinese property developer.