OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CourtsAsia
Company Name: COURTS ASIA LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 1.20

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.64

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.54

Market Compass

31 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

31 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :A man always has two reasons for doing anything: a good reason and the real reason. - J.P. MORGAN Singapore: The Day Ahead SINGAPORE DAYBOOK:SIA places US$17b order for 60 passenger planes. It commits to 30 A350-900s and 30 787-10Xs; deliveries to take place from FY2016/17 SINGAPORE] In one of the biggest aircraft orders in its history, Singapore Airlines (SIA) is committing to 30 additional Airbus A350-900s and 30 Boeing 787-10Xs worth over US$17 billion, as it fights to keep its position as an industry leader and fend off intensifying competition from rivals. Under the new deal with Europe-based Airbus, SIA's firm order for the 30 A350-900s comes with options for 20 more planes, although these can be converted into larger A350-1000s. Delivery is slated to take place from FY2016/17. This is SIA's third order for the A350-900, which can be operated on medium and long-haul routes. This takes its total order for this aircraft type to 70 planes. Prior to this, it had 40 A350-900s valued at US$11.5 billion on order. The carrier's order for the B787-10X could make it the launch customer of this longer version of Boeing's Dreamliner. However, the deal is contingent on the planemaker officially rolling out the programme. (Source: The Business Times) MARKET SCOOP WBLstays listed after UEL offer A-HTRUST to raise S$200 million TEE Land launches IPO to raise S$57.8m WE to place 80m new shares at 10.224 cts/shr Sembcorp Marine unit gets US$220.5m contract Qingjian Realty bids S$330.65 psf ppr for EC site in Sengkang 8,000 BTO, SBF flats for sale in latest launch: HDB ExxonMobil starts Singapore chemical complex after expansion (Source: The Business Times) UOB KAY HIAN says... COURTS ASIA | BUY | TP: S$1.20 We attended the FY13 analyst briefing for Courts Asia (CAL) CAL remains an attractive proxy on robust consumer demand in Singapore and Malaysia CAL is Singapore's largest and Malaysia's second-largest electrical, IT and furniture retailer in terms of 2011 total sales Under "Courts Flexi Schemes", CAL operates a proprietary credit business that allows customers to make purchases through credit accounts opened directly with CAL The company expects to open its 108,000sf Megastore in Malaysia in Aug 13; their targeted expansion plan is to have an average increase of 120,000sf a year in Malaysia CAL will also be adding two new stores in Singapore by the end of this year Biggest-ever store to be opened in Indonesia next year The company has identified Indonesia as one of its key markets, along with Malaysia, in driving its revenue in the mid to long term given the growing middle class and fragmented retail market The recent drop in proportion of credit sales/total sales (from 27% to 22% over three years) has been in line with the company's tightening credit policy to manage risk Delinquency rates have been improving over 2007-13 (especially in Malaysia where delinquency rate has fallen from 16% to 8%) We have tweaked our FY14-15F net profit by less than 1% following the release of 4QFY13 results In our view, key risks that could impede the stock from reaching our target price include: a) credit risk, in the event of rising consumer defaults affecting the company's profitability, and b) weakening consumer demand for CAL's non-essential products in the event of prolonged weak economic environment Maintain BUY with a higher target price of S$1.20 (previously S$1.14) DBS VICKERS Securities says ... BIOSENSORS INTERNATIONAL GROUP | BUY | TP:S$1.64 Revenue and earnings for FY13 came in at US$336m and US$115.4m, respectively, in line with our estimates Product revenue grew 32% y-o-y while licensing and royalties revenue fell 29% in FY13 Product revenue growth (+17% y-o-y) in 4Q13 was driven by increase in market shares in Europe and Asia, while the decline in licensing and royalties (US$12.4m, -46% y-o-y) was due to Terumo losing market share in Japan BIG has proposed a maiden dividend of 2 UScts per share for FY13, representing 30% payout ratio and 2% yield We factor in lower licensing revenue (flat growth) in our earnings estimate for FY14F/FY15F given the weak outlook This leads us to lower our FY14F/15F earnings by 11%/2% Outlook remains positive for BIG's worldwide DES business BioFreedom is targeted for release in late 2013 worldwide BIG is also rolling out several products for approvals in the next two years including peripheral products such as "DES for below the knee applications" and the "drug eluting balloon" to supplement growth Following our earnings cut, our SOTP valuation for BIG is lowered to S$1.64 This values BIG at 20x FY14F PE We maintain our BUY recommendation for the stock OCBC Securities says... MIDAS HOLDINGS | BUY | TP:S$0.54 Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched a train contract worth CNY420m This is for the supply of 56 train cars for the Shenzhen Metro Line 4 project Delivery is scheduled to take place from 2013 to 2014, and we believe this may lead to potential contract wins for Midas as it is a key supplier of NPRT We note that this is the third announced contract order of the year for NPRT, with cumulative contract wins amounting to ~CNY1.47b YTD While NPRT had been a drag on Midas' recent 1Q13 results, we believe that its contribution to Midas could improve in 2H13, given its order book schedule on hand Maintain BUY and S$0.54 fair value estimate, pegged to 1.1x FY13F P/B

Barclays keeps SingTel at Overweight; $4.00 target

Stock Name: SingTel
Company Name: SINGTEL

Research House: Barclays

Price Call: BUY

Target Price: 4.00

Barclays keeps SingTel (Z74.SG) at Overweight with a $4.00 target price after the house hosted management in meetings with institutional investors in Europe earlier this week.

One of the highlights of the meeting was that the management put the flagged $2 billion investments into the 'Digital Life' strategy in context: "a) it's a three-year plan and even at that, not a commitment to spend; (b) compares with network investments that have been guided for S$2.5 billion for a single year in FY14. Management indicated strict discipline around metrics and milestones in each case as driving further investment or exits," says the house.

It also notes that investor attention on the associates focused mainly on Bharti Airtel (532454.BY); management were positive in their outlook on the back of improving pricing climate and lower dealer commissions as competitive intensity improves. The stock is down 0.5% at $3.76.


 

 

Barclays tips accumulating S-REITs on dips

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: Barclays

Price Call: BUY

Target Price: 1.70

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: Barclays

Price Call: BUY

Target Price: 1.87

Barclays notes that markets concerns about the end of QE3 or the Fed 'tapering' with long-dated government bond yields spiking up has resulted in both high-yield credit and high-yield equities, in particular S-REITs, being sold off.

The house believes "the concern is premature and we do not expect the Fed to cut back its bond purchases until 2014 vs the market's expectation of 2H13."

With that in mind, Barclays continues to believe that S-REITs' valuations are not expensive -- still above normalised average yield spread with the office sector having bottomed.

It prefers REITs that could grow faster even when interest rates gradually move up due to sustainable growth in the US. "We would accumulate on dips," it says noting that Keppel REIT (K71U.SG) and CapitaCommercial Trust (C61U.SG), both rated Overweight with respective $1.70 and $1.87 targets, are its top picks among S-REITs.

Shares are down 1.4% at $1.42 and down 1.3% at $1.53, respectively.


 

SG: MARKET PULSE: Land Transport, Swiber, SembMarine, Ezra and Ezion (31 May 2013)

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.45

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.95

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.10

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.62

MARKET PULSE: Land Transport, Swiber, SembMarine, Ezra and Ezion

31 May 2013

KEY IDEA Land Transportation sector: Possibility of new entrant? The LTA recently re-iterated the possibility of introducing competition in the bus services industry. However, as with before, we do not anticipate any changes to the operating landscape in the medium term unless the government decides how it wants to strike a balance between a free-market and government assisted model. For the near-term, the street is awaiting the recommendations from the fare review committee and has already factored in some level of increase. That said, any further delays from this committee could lead to continued losses for both PTOs and even asset impairments for SMRT. We downgrade the sector to NEUTRALin light of this possibility but do not anticipate further deterioration in the share prices for both ComfortDelgro and SMRT at this juncture. Maintain our HOLD ratings on both SMRT [HOLD; FV:S$1.45] and ComfortDelgro [HOLD; FV:S$1.95] although we favour the latter for its more attractive overseas ventures. (Lim Siyi) MORE REPORTS Swiber Holdings: Expanding into deepwater According to Upstream, Swiber Holdings is preparing to invest in its first large deep-water offshore construction vessel for its fleet. In particular, the company is understood to have expressed its intention to purchase a vessel similar to Ezra's Lewek Constellation. The capex of US$400-500m is huge, but considering that the unit is expected to take up to three years to build and the group has not announced any additional substantial capex plans, this may be a manageable purchase. Meanwhile, we would continue to monitor the group's cashflow from operations. Pending an official statement from the company, we do not see this as a surprise, as Swiber has expressed its intentions to expand its operations into deeper waters. Maintain BUY with S$0.86 fair value estimate. (Low Pei Han) Sembcorp Marine: Secures US$220.5m jack-up rig Sembcorp Marine (SMM) announced that subsidiary PPL Shipyard has secured a contract to build a jack-up drilling rig from BOT Lease Co., Ltd, a leasing company of The Bank of Tokyo-Mitsubishi UFJ which is under the umbrella of Mitsubishi UFJ Financial Group. The contract price is US$220.5m (excluding cost of BOTL's project management team and pre-operations cost), and is scheduled for delivery at end-Jan 2015. The unit is based on the proprietary Pacific Class 400 design; we note that Oro Negro had ordered a rig of similar design from SMM with a price tag of US$208.5m in Mar and Perisai Petroleum at US$208m in Feb this year. With this latest win, SMM has secured orders worth about S$2.7b YTD, accounting for 67% of our full year estimate. Maintain BUY on SMM with S$5.64 fair value estimate. (Low Pei Han) Ezra Holdings and Ezion Holdings: Ezra divests remaining shares in Ezion Ezra Holdings announced that it will divest its holding of 40m shares in Ezion Holdings via a placement that is fully underwritten by DBS Bank. This represents about 4.17% of Ezion's issued share capital, and was transacted at a price of S$2.25/share (4.9% discount to VWAP over 30 May 2013) for a total consideration of S$90m. Ezra will realize an estimated net gain of ~US$65.7m, and it intends to use the proceeds for working capital needs, lowering debt and fund growth of operations. We are not surprised by this move as Ezra had also previously sold off 60m shares in Ezion in Mar 2012. Maintain BUY on Ezion with S$2.62 fair value estimate and HOLD on Ezra with S$1.10 fair value estimate. (Low Pei Han)

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

NEWS HEADLINES - US stocks rose on Thursday, rebounding from the previous session's losses, as tepid economic data eased concerns the US Federal Reserve would begin to gradually scale back its policy of stimulating growth. - WE Holdings Ltd will place 80m new shares at S$0.10224 each to raise S$7.5m in net proceeds to repay a bank loan and for general working capital purposes. - Ascendas Hospitality Trust has launched an equity-fund exercise to raise at least S$200m to partially fund the S$300m acquisition of Park Hotel Clarke Quay. - Del Monte Pacific Ltd announced that its application for listing by way of introduction of all the company's shares on the First Board of the Philippine Stock Exchange (PSE) was approved. - Yongnam Holdings has secured a 5-year S$130m syndicated loan from CIMB Bank, DBS Bank, OCBC and Chinatrust Commercial Bank. - The HDB on Thursday launched 8,000 flats for sale under the joint Build-to-Order (BTO) and Sale of Balance Flats (SBF) exercise.

OSPL - Good Morning S'pore - Central Dealing Desk

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

Research House: DBS Vickers

Price Call: BUY

Target Price: 1.80

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: Nomura

Price Call: BUY

Target Price: 5.20

Market Compass

30 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

30 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :The more you trust your intuition, the more empowered you become, the stronger you become, and the happier you become. - GISELE BUNDCHEN Singapore: The Day Ahead SINGAPORE DAYBOOK:Olam rolls up its sleeves to unlock value. Deal in US and tie-up in Nigeria kick-start its new asset-light strategy [SINGAPORE] Olam International is hard at work, seeking to reinvent itself. In his first media interview since the firm released the results of its strategic review on April 25, chief executive Sunny Verghese told The Business Times that Olam is now in "active discussions" with investors on possible sale- and-leaseback transactions to optimise its balance sheet. The firm also plans to pursue joint ventures and strategic alliances on certain platforms, to monetise the intrinsic value of the firm. "(There are) a lot of potential partners, a lot of discussions underway," said Mr Verghese. He was visibly more relaxed than six months ago, when the firm came under attack from short-seller Muddy Waters, which accused Olam of being a "fiscal black box". (Source: The Business Times) MARKET SCOOP Metro'searnings plunge without disposal gain; cuts special dividends Chasen clinches 7 new projects worth S$19.3m United Envirotech's FY13 net profit up on higher sales DBS launches dim sum bonds in Singapore Mapletree awarded HK site for logistics development Willas-Array FY profit rises 3% despite fall in revenue Scorpio East rejects major shareholder's alternative fundraising plan Carlyle said to eye bids for SingTel Australia arm Oxley makes Malaysian acquisition (Source: The Business Times) OCBC Securities says... UNITED ENVIROTECH | BUY | TP: S$0.90 United Envirotech Ltd (UEL) reported its FY13 results last night, with revenue jumping 117% to S$185.0m, or just 2% above our forecast, aided by higher engineering Net profit surged 182% to S$29.5m, and was about 1.6% ahead of our estimate business (+132%) and also the 77% jump in water treatment business UEL also declared a final dividend of S$0.005/share Going forward, management continues to see growing demand for membrane-based eater and waste-water treatment services, especially in China; this mainly driven by stricter discharge limits imposed by the Chinese government and the shortage of water supply in various parts of the mainland We will be speaking to management shortly to get greater clarity on its plans Meanwhile, we are placing our Buy rating and S$0.90 fair value under review DBS VICKERS Securities says ... TAT HONG HOLDINGS | BUY | TP:S$1.80 FY13 revenue of S$837m and earnings of S$70m were in line with our forecasts Revenue grew 16%, driven by stronger tower and mobile crane rental segments which rose 27% and 37% respectively, through better utilisation and rental rates TAT declared final DPS of 2.5 Scts, bringing full year DPS to 4 Scts This was a surprise as we had expected total DPS of 2.5 Scts, similar to last year Infrastructure developments regionally continue to be robust In Singapore, the construction of the Thomson MRT Line will commence from 2H13 and there are other rail projects in ASEAN such as Malaysia and Thailand We expect TAT to be actively supplying its cranes for these projects We expect both rental rates and utilisation rates to remain strong given buoyant demand for cranes in regional infrastructure projects We are leaving our earnings estimates and TP intact Valuations remain compelling with the stock trading at an attractive 10x FY14F earnings currently Our S$1.80 TP is based on 12x FY14F earnings NOMURA Securities says... SEMBCORP MARINE | BUY | TP:S$5.20 Sembcorp Marine's Jurong shipyard today reported a new ultrahigh specification JU order win of USD 596mn from Noble Corporation with an option for an additional unit The rig will be delivered in 1Q16 and deployed for work in the North Sea The rig, which will be based on Gusto MSC CJ-70 design, is an enhanced version of Statoil's "Cat J" specifications With the new order secured today, SMM's new order wins for the year now stand at ~SGD 2.4bn New order win testament to SMM's established offshore reputation All eight such orders placed since 2001 (excluding today's order) have been secured by Singapore yards (six by Keppel and two by SMM) With brent oil prices continuing to trend above USD100/bbl and a rising oil demand outlook in the medium to long term, momentum for offshore drilling continues to be strong Additionally, recent announcements by Brazil, Australia and Indonesia to award offshore licenses for hydrocarbon exploration are likely to further boost demand for rigs SMM has had a strong start to 2013 with new order wins of ~SGD2.4bn YTD SMM's net orderbook stood at SGD13.6bn at the release of its 1Q13 results While semi-sub orders have been elusive for a while now and drillship orders have dried up in anticipation of a strong delivery pipeline, JU orders have witnessed a resurgence in the past six months It is currently trading at FY13F and FY14F P/E of 17.8x and 15.8x, respectively vs its historical P/E band of 8-28x Our target price of SGD5.20 is based on our sum-of-the-parts (SOTP) valuation, comprising a DCF valuation (WACC 7%, 1% terminal growth over a 15-year period)of the group's shipyard businesses, which includes its three Singapore yards, including Cosco Shipyard group and its remaining 4.8% stake in listed Cosco Corp

SG: MARKET PULSE: Biosensors, United Envirotech, Midas (30 May 2013)

Stock Name: Biosensors
Company Name: BIOSENSORS INT'L GROUP, LTD.

Research House: OCBC

Price Call: BUY

Target Price: 1.60

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.03

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.54

MARKET PULSE: Biosensors, United Envirotech, Midas

30 May 2013

KEY IDEA Biosensors International Group: Strong product pipeline Biosensors International Group's (BIG) 4QFY13 revenue growth of 0.7% YoY to US$88.8m closely matched our US$88.5m forecast. PATMI excluding exceptional items came in at US$29.8m, a 4.1% increase YoY and exceeded our projection by 6.5%, thanks to an income tax benefit of US$5.9m due largely to a tax refund received. For FY13, revenue and core PATMI jumped 15.1% and 10.5% to US$336.2m and US$111.6m, respectively. Surprisingly, BIG declared its first ever dividend since listing. Declared DPS of US$0.02 translates into a yield of ~2.1%. Looking ahead, we expect BIG to maintain its technological superiority with its new product launches. Management has guided for revenue growth of ~15% for FY14, in line with our expectations. We leave our estimates unchanged, and maintain our fair value estimate of S$1.60. Reiterate BUY as BIG's recent share price weakness represents a good entry point, in our view. (Wong Teck Ching Andy) MORE REPORTS United Envirotech: Long-term prospects still sparkling United Envirotech Ltd (UEL) reported its FY13 results, with revenue jumping 117% to S$185.0m, or just 2% above our forecast, while net profit surged 182% to S$29.5m, and was about 1.6% ahead of our estimate. UEL also declared a final dividend of S$0.005/share. Going forward, management intends to further expand its recurring water treatment revenue by acquiring or investing in more water treatment plants. We believe UEL has the financial means to achieve its goal after its recent fund raising exercises. We are also positive on the company's long-term prospects. Maintain BUY with a higher S$1.03 fair value (versus S$0.90 previously), still based on 13x FY14F EPS. (Carey Wong) Midas Holdings: JV NPRT clinches CNY420m train contract Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched a train contract worth CNY420m. This is for the supply of 56 train cars for the Shenzhen Metro Line 4 project. Delivery is scheduled to take place from 2013 to 2014, and we believe this may lead to potential contract wins for Midas as it is a key supplier of NPRT. We note that this is the third announced contract order of the year for NPRT, with cumulative contract wins amounting to ~CNY1.47b YTD. While NPRT had been a drag on Midas' recent 1Q13 results, we believe that its contribution to Midas could improve in 2H13, given its order book schedule on hand. Maintain BUY and S$0.54 fair value estimate, pegged to 1.1x FY13F P/B. (Wong Teck Ching Andy)

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

NEWS HEADLINES - Silverlake Axis has proposed a placement of up to 150m shares - comprising 100m new shares and 50m vendor shares - at SS$0.75 each. - GSH Corp plans to fund its China property expansion with net proceeds of S$246.8m raised through its renounceable non-underwritten one-for-one rights issue. - Freight Links Express Holdings said its S$100m tranche of four-year fixed rate note issue was 13x subscribed, garnering S$1.3b in orders. - Chasen Holdings has clinched seven new projects worth S$19.3m. - A consortium of Yongnam Holdings, Changi Airport Planners and Engineers and JGC Corporation, has submitted a proposal to design, construct, operate and maintain Myanmar's Hanthawaddy International Airport for a 30-year concession. - Asian Pay Television Trust failed to shine in its trading debut yesterday, with the stock falling 5.2% from its IPO price of S$0.97. - Mapletree Investments has been awarded a 226,000 sqft prime site in Hong Kong to develop a logistics facility for HK$1.69b (S$275.9m).

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: UOB KayHian

Price Call: HOLD

Target Price: 4.50

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 4.70

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 13.70

Market Compass

29 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

29 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :Don't limit a child to your own learning, for he was born in another time. - RABINDRANATH TAGORE Singapore: The Day Ahead SINGAPORE DAYBOOK:All eyes on how SPH will deploy proposed Reit proceeds SHARES in Singapore Press Holdings (SPH) rose 8 cents yesterday as the media and property group moved a step closer to listing its mall assets, but questions remained about how the company will deploy an expected $757 million in cash following the deal. "Ultimately it will depend on what they do with the proceeds," DMG & Partners analyst Joshua Low said. The stock of SPH gained 1.8 per cent to close at $4.47 after the company announced that it planned to pay out 18 cents per share in a special dividend after spinning off its malls into a listed real estate investment trust (Reit). The Reit is targeted to be launched through an expected $540 million initial public offering in July. SPH, which could retain a 70 per cent stake in the Reit and collect fees as the manager, expects to receive about $1 billion in net cash proceeds, of which about $291 million will be paid out through the special dividend. That would leave $757 million for working capital and reinvestment in "growth strategies. (Source: The Business Times) MARKET SCOOP China Animal makes cash exit offer of 30 cts/shr as part of delisting plan MAS opens representative office in Beijing Tat Hong Q4 profit up 66% to S$18.6m Bukit Sembawang Q4 net profit up 19.4% IPOS inks MOU with China's IPO office Trading of Pertama's shares to remain suspended Stats ChipPAC expands facilities and staff strength (Source: The Business Times) UOB KAY HIAN Securities says... SINGAPORE PRESS HOLDINGS | HOLD | TP: S$4.50 After two months of deliberation, SPH has decided to go ahead with the listing of SPH REIT, subject to shareholder approval at an EGM on 18 June SPH REIT will focus on retail mall assets in Singapore and across Asia-Pacific with an ability to finance itself independently Pursuant to the listing, SPH will inject Paragon and Clementi Mall into SPH REIT at S$3.07b This is at a 3.5% discount to the malls' aggregate market value of S$3.18b Post listing, SPH is expected to hold approximately 70% of SPH REIT. SPH REIT will pay for Paragon and Clementi Mall in units and cash With the cash proceeds from the injection of Paragon and Clementi Mall into SPH REIT, SPH is to pay a cash special DPS of 18 cents SPH's net group gearing will fall from 40.6% to 9.3% before the payment of the special dividend Its NAV will increase by >63% from S$1.39 to S$2.27/share The special dividend is to compensate for a reduction in SPH's earnings and dividend yield post listing of SPH REIT We estimate SPH's earnings would be reduced by 2% with 2014-15 dividend yield reduced from 4.6% to 4.5% In return, SPH's shareholders are given a special dividend sweetener No material impact on our sum-of-the-parts (SOTP) valuation of S$5.28/share as it has already incorporated SPH's property assets at market values Our target price remains unchanged at S$4.50, which is set at 15% discount to our SOTP valuation DBS VICKERS Securities says ... SEMBCORP MARINE | HOLD | TP:S$4.70 Sembcorp Marine (SMM)'s subsidiary, Jurong Shipyard, has secured a US$596m contract for a newbuild ultra-high specification jack-up rig for deployment in the United Kingdom sector of the North Sea from Noble Corporation It comes with an option for an additional unit The rig will be built based on the Gusto MSC CJ70 design and is in line with an enhanced version of Statoil's "Cat J" specifications. Scheduled for delivery in 1Q16, it will have an air gap of 69 metres and will be capable of operating in water depths of up to 150 metres (492 feet) in harsh environment conditions, with a maximum total drilling depth capacity of 10,000 metres (approx. 33,000 feet) More significantly, SMM won this contract against another finalist, South Korea's Daewoo Shipbuilding & Marine Engineering This win demonstrates Singapore rigbuilders' competitive strength in the jack up segment In addition to this latest rig order, Jurong Shipyard is currently constructing six F&GJU3000N class jack-up rigs worth a total of US$1.3 bn (secured in 2010 and 2011) for Noble The yard has also successfully delivered two units of Bingo 9000 ultra-deepwater semisubmersibles the Noble Danny Adkins and Noble Jim Day, in 2009 and 2010 respectively The latest order brings SMM's YTD wins to S$2.43bn, forming 49% of our full year expectation of S$5bn While this sizeable contract win is encouraging, we would like to see a faster ramp up of new orders that will boost earnings visibility in 2014, strong pick up in repair sales in 2H13, and continued improvement in margins before revisiting our HOLD recommendation and TP of S$4.70 CREDIT SUISSE Securities says... KEPPEL CORPORATION | OUTPERFORM | TP:S$13.70 We visited the show gallery of Corals at Keppel Bay, a 366-unit 99-year leasehold condominium newly launched by Keppel last weekend More than 100 units of the project have been sold, close to all the units launched in the initial phase Prices for one- and two-bedroom units were at about S$2,160-2,310 psf This represents a 7-14% premium to the average 2013 transacted price of Reflections, and a 34-43% premium to the average 2013 transacted price of Caribbean We attribute the good sales to its waterfront location and proximity to the Harbourfront MRT station Demand was the strongest for the one-bedroom units due to limited supply in the vicinity We understand that buyers were an even mix between Singaporeans and foreigners We maintain our OUTPERFORM rating on Keppel and target price of S$13.70, with the property business representing 19% of our SOTP valuation This is based on Credit Suisse's target price for Keppel Land (NEUTRAL, TP S$4.10) and our Keppel Bay RNAV estimate of S$0.13 per share

SG: MARKET PULSE: Tat Hong, United Envirotech (29 May 2013)

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.90

MARKET PULSE: Tat Hong, United Envirotech

29 May 2013

KEY IDEA Tat Hong Holdings: Taking a healthy pause Tat Hong reported revenue and net profit to shareholders of S$837m (+16%) and S$70m (+67%) respectively for FY13. The results were in line with ours and the street's estimates. Gross profit margin improved to 37.6% for FY13 (FY12: 36.5%) due to greater contribution from the higher-margin Crane Rental and Tower Crane businesses. Although the outlook for its key markets remains positive, management believes it is time to slow down its fleet expansion, after a 79% surge in fleet tonnage in the past 5 years. It will now focus on raising its crane productivity, and reducing operating costs through the use of its new yard in Iskandar. Although this may mean more a modest PATMI growth rate of about 10%, the improving cashflow would also bring its gearing level to a more sustainable level. Maintain BUY with unchanged S$1.75 fair value estimate. (Chia Jiunyang) MORE REPORTS United Envirotech: FY13 results almost spot-on United Envirotech Ltd (UEL) reported its FY13 results last night, with revenue jumping 117% to S$185.0m, or just 2% above our forecast, aided by higher engineering business (+132%) and also the 77% jump in water treatment business. Net profit surged 182% to S$29.5m, and was about 1.6% ahead of our estimate. UEL also declared a final dividend of S$0.005/share. Going forward, management continues to see growing demand for membrane-based eater and waste-water treatment services, especially in China; this mainly driven by stricter discharge limits imposed by the Chinese government and the shortage of water supply in various parts of the mainland. We will be speaking to management shortly to get greater clarity on its plans. Meanwhile, we are placing our Buy rating and S$0.90 fair value under review. (Carey Wong)

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

NEWS HEADLINES - Bukit Sembawang's FY13 revenue declined 9.2% to $354.7m while net earnings slipped 37.3% to $114.6m. - Courts Asia's 4Q net profit fell 19% YoY to $12.6m due to lower other income/other gains and higher finance expenses. - United Fiber System posted a net profit of US$15.6m for 1Q13, on the back of a US$16.9m gain on the deconsolidation of unit Poh Lian Construction. - Boustead Singapore has secured a contract from Brunei's national power producer Berakas for the delivery of a waste heat recovery system, bringing the group's order backlog to S$390m. - Global Yellow Pages cited restructuring and impairment costs for a net loss attributable to equity-holders of S$124.3m for FY13. - In a sign that the Singapore electronics sector may be on its way to recovery, Stats ChipPac announced that it would be hiring 300 engineers this year and investing US$500m over three years.

OCBC keeps Tat Hong at Buy; $1.75 fair value

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

Research House: OCBC

Price Call: BUY

Target Price: 1.75

OCBC keeps Tat Hong Holdings (T03.SG) at Buy with unchanged $1.75 fair value estimate after the company reported revenue and net profit of $837 million (up 16%) and $70 million (up 67%) respectively for FY13.

The house notes that Tat Hong's gross profit margin improved to 37.6% for FY13 vs 36.5% in FY12 due to greater contribution from the higher margin crane rental and tower crane businesses.

"The outlook for its key markets remains positive, underpinned by a number of infrastructure projects. However, management believes it is time to slow down its fleet expansion, after a 79% surge in fleet tonnage in the past 5 years," OCBC says.

Looking ahead, the house expects the company to focus on raising its crane productivity, and reducing operating costs through the use of its new yard in Iskandar. The stock is recently +0.7% at $1.52.

CIMB keeps Tat Hong at Outperform, trims target

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

Research House: CIMB

Price Call: BUY

Target Price: 1.83

CIMB maintains Tat Hong's (T03.SG) Outperform rating, citing strong Asian and Australian operations.

The company posted another year of strong revenue (FY 2013 rising 16% on-year), while 4Q and FY2013 core profits came in-line with its and consensus expectations, forming 20%/98% of its full-year forecast. It however, trims the target to S$1.83 from S$1.90 after lowering FY2014-2016 core profit estimates due to expense-related items.

The company has proposed a final dividend of 2.5 cents per share for a total of 4 cents/share in FY2013 vs 2.5 cents/share in FY2012, which is "consistent with previous payout ratios of 30%-35%," CIMB says; "(Tat Hong's) business has a lot of positive operating leverage that can be unlocked via better working-capital management," while "its high utilisation rate in the Asia-Pacific Rim guarantees decent cash flow."

The house notes the share price outperformance over the past year should persist on earnings sustainability and potential M&As. Tat Hong is up 0.3% at $1.515.

Yoma Strategic jumps on brokerage upgrades

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.87

Shares in Yoma Strategic Holdings jumped as much as 6% to a three-month high of $0.88 on Tuesday, after brokerages upgraded the property developer on upbeat business prospects in Myanmar.

"The booming property sector, accelerated construction and Landmark’s progress lead us to raise FY14/15F earnings by 60%/40%," said DBS Vickers Securities in a note. It said its target price on Yoma to $0.92 from $0.80.

Yoma reported a net profit of $11.5 million for the quarter ended March 31, up from $2.1 million a year earlier, boosted by an increase in sales of residences and land development rights in Myanmar.

Yoma’s involvement in Myanmar’s telecommunication and agriculture industries could propel its share prices higher, analysts also said. The shares have risen nearly 22% so far this year, beating a 6.7% gain in the sector index.

OCBC Investment Research upgraded its call on the stock to “hold” from “sell”, and increased the fair value estimate to $0.87 from $0.71.

Yoma, in partnership with Digicel and Quantum Strategic Partners, is bidding for one of the two telecommunication licenses that Myanmar is expected to be awarded later this year.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: GLP
Company Name: GLOBAL LOGISTIC PROP LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 3.15

Market Compass

28 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

28 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :The final test of a gentleman is his respect for those who can be of no possible service to him. - WILLIAM LYON PHELPS CREDIT SUISSE Securities says... GLOBAL LOGISTIC PROPERTIES | OUTPERFORM | TP: S$3.15 FY13 core net profit of S$350 mn (+11% YoY) was in line Growth was driven by Brazil, strong development momentum, rental growth in China, but partly offset by depreciation JPY and loss of income from divestment of 33 properties into GLP J-REIT Rents and lease ratios maintained stable across the portfolio and development starts beat expectations slightly in JP and CH in FY13 In FY14, management is targeting 2.5 mn sq m development starts in CH, 0.4 mn sq m in JP and 0.31 mn sq m in BR Total estimated project cost is ~US$2 bn With US$1.96 bn cash pile and 8.2% net debt/asset, GLP has the flexibility to finance capex No change in cap rates yet although sentiment is pointing towards rents and prices eventually improving in JP GLP continues to acquire land banks, acquiring 4.2 mn sq m in CH with 10.5 mn sq m reserves We raise FY14-15E core profit estimates slightly, by 0.2-1.3% and have incorporated 2.5 mn sq m development starts in FY14 Our new TP and RNAV is S$3.15 (from S$3.00) driven by accelerated development starts We continue to like GLP due to its logistics exposure, with a growth kicker from its development completions DBS VICKERS Securities says ... IHH HEALTHCARE | HOLD | TP:S$1.55 1Q core net profit (excl. exceptional items) of RM133.5m was 17% higher than a year earlier, accounting for c.18% of our FY13F earnings Revenue and EBITDA grew by 29% and 24% to RM1.6bn and RM347.6m respectively, partly driven by a full quarter of Acibadem's consolidation in 1Q13, compared to only two months a year earlier In addition, the Group also saw revenue growth from existing operations and contribution from new hospitals EBITDA margins (excl PREIT) weakened marginally by 0.8ppts to 21.7% (1Q12: 22.5%) as it saw continued losses from its new hospitals It also faced cost pressures from personnel and operating lease expenses, particularly its Singapore hospitals We estimate FY13F EBITDA margin to be 20.8% Novena Hospital posted a smaller EBITDA loss of RM3m (from -RM15.6m/ -RM16.4m in 1Q12/ 4Q12) This was achieved on the back of higher revenue of RM37.2m and streamlining of its operating costs Hence, it seems like management's target of achieving EBITDA breakeven by 1H13 is within reach We raised our TP to S$1.55 (RM3.73) on the back of a higher EV/EBITDA multiple of 22x (from 18x) on FY13F/14F earnings for its Singapore operations and its international operations (14x, from 13x) with the re-rating of peers We also adjust for the higher market values for its holdings in listed entities, namely PREIT and Apollo Hospitals Maintain HOLD, given its relatively rich valuations at 41x/35x on FY13F/14F earnings OCBC Securities says... DYNA-MAC HOLDINGS | HOLD | TP:S$0.44 Dyna-Mac Holdings reported 1Q13 results that were slightly below our expectations 1Q13 revenue fell by 19% QoQ to S$60.1m, while net profit fell 24% QoQ to S$6.7m; as there is little or no seasonality involved in Dyna-Mac's business, we believe a QoQ comparison better illustrates the changes in the group's performance Gross margin was 24.4% in 1Q13 (4Q12: 23.1%), within the typical range of 20-30% The group also suffered a fair value loss on financial instruments of S$1.2m in 1Q13 due to unfavourable movements on the contracted USD forward rates against spot rates As of 14 May-13, its order-book fell to S$113m (27 Feb-13: S$134m), providing cover for under two quarters We also understand that Dyna-Mac is tendering for a number of large projects and expects to rebuild its order-book significantly in 2H13 While we are positive over Dyna-Mac's medium- to long-term outlook given the large backlog of floater orders across the industry, we are also mindful that its low order-book may pose a risk to near-term earnings In addition, the group's expansion into Malaysia and Guangzhou remains a work-in-progress, and bottom-line earnings growth may only be evident in FY14-15F After adjusting our model to incorporate the 1Q13 results, our fair value estimate declined to S$0.44 (previously S$0.50).

SG: MARKET PULSE: KSH, Yoma, Valuetronics, Sembcorp Marine, SIA (28 May 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.73

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

Stock Name: Valuetronics
Company Name: VALUETRONICS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.64

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: SELL

Target Price: 10.00

MARKET PULSE: KSH, Yoma, Valuetronics, Sembcorp Marine, SIA

28 May 2013

KEY IDEA KSH Holdings: A strong year of performance Summary: KSH reported 4QFY13 PATMI of S$14.0m, up 85% YoY mostly due to an increase in profit contributions from development projects held by its associates and JVs. On a full year basis, FY13 PATMI is S$36.3m which increased a strong 98%. We judge this to be somewhat above our expectations (our FY13 PATMI forecast is S$30.7m) as the pace of revenue recognition at JV development projects came in faster than anticipated. Management proposed a final dividend of 1.15 S-cents per share. Likely catalysts ahead includes major pipeline launches at Hong Leong Garden (NeWest), King Albert Park and Seletar Garden which would all likely take place this year. In China, KSH's 45% Beijing condo project could also begin sales this year. We view a potential firm performance at this project to be significant for KSH's earnings profile which could sustain earnings growth into FY15 by contributing an estimated S$23m net earnings upon TOP. Maintain BUY with an unchanged fair value estimate of S$0.73. (Eli Lee) MORE REPORTS Yoma Strategic Holdings: Catalysts ahead - upgrade to HOLD Summary: Yoma reported 4QFY13 PATMI of S$11.5m, up 452% YoY mostly due to a S$9.1m one-time gain. FY13 PATMI cumulates to S$14.4m and, excluding one-time gains, is judged to be generally in line with our forecast. We see the completion of the Landmark Project acquisition as a key catalyst for the share price ahead but note that management has raised the possibility of another deadline extension. That said, the signing of a Heads of Agreement with the Hong Kong and Shanghai Hotels Group and other preparations by Yoma for site development points to a good level of confidence that they would acquire the site eventually, in our view. Sales at launched projects remain firm, with 491 out of total 528 units sold in buildings 3 and 4 at Star City. In addition, management showed a strong deal-making record in FY13 and is in the midst of acquiring more land sites and establishing businesses in tourism, retail, agriculture and automobiles. Upgrade to HOLD with an increased fair value estimate of S$0.87 (20% premium to RNAV), versus S$0.71 previously, as we incorporate firmer valuations for the Landmark Project and Yoma's existing land bank into our model. (Eli Lee) Valuetronics Holdings: Starting on a fresh page Summary: Valuetronics Holdings Limited's (VHL) FY13 results were within our expectations. Revenue from continuing operations fell 3.4% to HK$2,210.2m, or just 0.6% shy of our forecast. Net profit from continuing operations fell 26.1% to HK$118.4m, while net losses from its now discontinued Licensing division widened by 32.7% to HK$39.8m, resulting in overall PATMI decline of 39.6% to HK$78.7m. Excluding exceptional items, we estimate that core PATMI for FY13 fell 14.7% to HK$103.7m (1.1% above our estimate). VHL also slashed its FY13 DPS from HK$0.17 to HK$0.08. This was below our HK$0.11/share forecast but still translates into a decent yield of ~6.0%. We foresee an improvement in VHL's bottomline and DPS in FY14 as it does not expect to incur any further expenses for its Licensing business. We maintain our HOLD rating but raise our fair value estimate slightly from S$0.19 to S$0.195 due to a marginal 2.7% increase in our FY14 core PATMI forecast. (Wong Teck Ching Andy) Sembcorp Marine: Secures US$596m jack-up rig order from Noble Summary: Sembcorp Marine (SMM) announced that subsidiary Jurong Shipyard has secured a US$596m contract for a newbuild ultra-high spec jack-up rig for use in the United Kingdom sector in the North Sea from Noble Corporation. There is also an option for an additional unit. Calling it the "most advanced and versatile of its kind in the industry", this rig will be constructed based on the Gusto MSC CJ70 design, and is in line with an enhanced version of Statoil's "Cat J" specifications. Indeed, we note that the last Gusto MSC CJ70 order secured by SMM had a price tag of US$450m in Mar 2011. With this latest win (scheduled for delivery in 1Q16), SMM has secured orders about US$2.4b YTD, accounting for around 60% of our full-year estimate. Maintain BUY with S$5.64 fair value estimate. (Low Pei Han) Singapore Airlines - Grounds another cargo plane Summary: Singapore Airlines (SIA) announced that it will park another cargo freight plane until May 2014 in an effort to cut its cargo capacity further. This will be the second freighter taken out of service with the first pulled out in Dec 2012. As a recap, in its recent FY13 results, SIA Cargo experienced an operating loss for its second straight year. While the move is a welcomed one in light of the weak air cargo market, particularly in Asia-Pacific, we still expect operating losses for the division in FY14 and assert that a turnaround is unlikely even with capacity cuts as cargo yields remain depressed. Overall, SIA as a group continues to face competitive pressures from other premium carriers, and management has yet to take any concrete steps to invigorate its business prospects. Therefore, we maintain our SELL rating on SIA with an unchanged fair value estimate of S$10.00. (Lim Siyi)

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

NEWS HEADLINES - Healthway Medical Corp will issue up to 97.5m new shares to raise as much as S$10m to fund its expansion plans in China and its obligations in an associate company that is eyeing a listing. - Soilbuild Construction Group enjoyed a strong debut yesterday, with shares closing up 44% at 36cts. - Technics Oil and Gas Limited has been awarded contracts worth a total of S$10.6m for the supply of Air Spread Systems from Singapore. - Hiap Seng Engineering has reported a net loss of S$4.5m for 4Q13, a widening from the S$2.2m for the same period last year. - Fragrance Group has signed a mandate letter for a S$1b multicurrency medium term note programme. - Business receipts for the services industry in Singapore rose 6.3% YoY in 1Q13, said Singapore's Department of Statistics yesterday.

Sembcorp Marine may win more rig orders: Barclays

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: Barclays

Price Call: HOLD

Target Price: 4.41

Barclays says Sembcorp Marine's (S51.SG) US$596 million ($753 million) contract win from Noble Corp. (NE) is a big positive following a quiet 2Q thus far.

The house notes that this contract brings Sembcorp Marine's year-to-date order wins to $2.4 billion and it expects the company to win further orders.

Maersk Drilling and Statoil may look for further ultra-high-spec jack-ups, and Sembcorp Marine and Keppel Corp (BN4.SG) are the only yards with recent experience in this category of rigs, Barclays says.

"Hence we see this contract award emphasizing the importance the industry still places on operational and delivery track records. We remain positive on the outlook for a sustained rig-order cycle and expect Singapore yards to continue to benefit from the strong demand for offshore drilling rigs."

The house rates the stock Equal Weight with a $4.41 price target. The stock is recently up 0.9% at $4.45.

SPH upside from REIT announcement likely limited: Citi

Stock Name: SPH
Company Name: SINGAPORE PRESS HLDGS LTD

Research House: Citigroup

Price Call: SELL

Target Price: 3.80

Singapore Press Holdings (T39.SG), is up 2.5% at $4.50 after announcing Monday that it has received approval from the Singapore stock exchange to list two of its shopping malls through a real-estate investment trust, in a deal that could raise about $1 billion.

Citigroup sees limited upside from the news as it believes "the market has already priced in prospects of this asset recycling exercise positively."

It says, "We do not think there is a significant change in the fundamental outlook since the core media business will continue to face strong headwinds. Of interest to investors in the longer term would be the pipeline of growth initiatives (eg. M&A) management could possibly embark with the $757 million balance in cash proceeds."

The house has a Sell rating with a $3.80 target on the stock.

SG: MARKET PULSE: Dyna-Mac, CDLHT (27 May 2013)

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.44

Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS

Research House: OCBC

Price Call: HOLD

Target Price: 2.05

MARKET PULSE: Dyna-Mac, CDLHT

27 May 2013

KEY IDEA Dyna-Mac Holdings: Stay cautious Summary: Dyna-Mac Holdings reported 1Q13 results that were slightly below our expectations. 1Q13 revenue fell by 19% QoQ to S$60.1m, while net profit fell 24% QoQ to S$6.7m. The group's order-book continued to fall to S$113m (27 Feb-13: $134m), providing cover for under two quarters. To be fair, delays in the award of contracts is quite common in the industry and Dyna-Mac is currently tendering for a number of large projects. Nonetheless, the low order-book still makes Dyna-Mac vulnerable to potential yard under-utilization should contracts be further delayed. After adjusting our model to incorporate the 1Q13 results, our fair value estimate declined to S$0.44 (previously S$0.50). Maintain HOLD. (Chia Jiunyang) MORE REPORTS CDL Hospitality Trusts: AEI for Orchard Hotel Shopping Arcade Summary: CDLHT has announced asset enhancement plans for Orchard Hotel Shopping Arcade (OHSA). The AEI will comprise an overhaul of the property facade and existing amenities to enhance its user-friendliness. Scheduled to commence in late 2013, the AEI is expected to complete in 12 months, during which the mall will be closed. A soft opening of the revamped mall is expected by end 2014. The AEI is expected to cost approximately S$25.0m, including construction cost which will be fully funded by debt, estimated disruption costs to the adjoined Orchard Hotel, and the loss of rental income during the period of mall closure. Upon completion of the AEI, OHSA will boast an increased NLA of ~10k sq ft. Incremental rental income of OHSA is expected to be more than S$2.0m on an annualised basis, translating into an estimated gross ROI of more than 8.0%. For now, we maintain our HOLD rating and fair value of S$2.05 on CDLHT. (Sarah Ong)

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

NEWS HEADLINES - US stocks fell for the first week in five as the prospects of the Federal Reserve starting to reduce its bond-buying stimulus rattled a market trading at historic highs. - Singapore reported a surprise expansion in its economy in the first quarter, helped by a surge in financial services as trading in stocks and foreign exchange soared. - The government's cooling measures for motor vehicles sales in Singapore has helped moderate inflation, which eased to 1.5% in Apr from 3.5% in Mar. - Security, cloud solutions, analytics and agile software are the four thrusts behind the Singapore government's plans to call for S$1.2b in new infocomm tenders in fiscal 2013. - Global Logistic Properties reported 4QFY13 profit of US$224m, +43% YoY, driven by revaluation and foreign exchange gains. - Stamford Land posted a net profit of S$31.7m for FY13, down 40.6%, as revenue fell 45.1% to S$266.7m.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.19

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 2.32

Market Compass

27 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

27 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :Wisdom is the reward you get for a lifetime of listening when you'd have preferred to talk. - DOUG LARSON - Singapore: The Day Ahead SINGAPORE DAYBOOK:S'pore yuan clearing to set cat among pigeons. It will raise yuan deposit rate rivalry involving HK, Taiwan [HONG KONG] The launch of yuan clearing services in Singapore today by Industrial and Commercial Bank of China (ICBC) is likely to intensify the yuan deposit rate competition among lenders in the Lion City, Hong Kong and Taiwan, an analyst said. As Singapore is very proactive in developing its bond market, it has strong potential to become a key yuan-denominated offshore bond centre in the region and lure some yuan deposits that are currently parked in Hong Kong and Taiwan, said Frances Cheung, senior fixed-income strategist at Credit Agricole CIB. If that happens, it will put more pressure on banks based in Hong Kong and Taiwan to raise their deposit rates for yuan savers, Ms Cheung said. Although it is hard to predict at the moment just how much Singapore can build for its yuan savings pool, it is almost certain that the growth will be robust, she said. ICBC's Singapore branch will launch clearing bank services for participating lenders from today. The move comes after authorities in early February picked the lender to be the city-state's yuan clearing bank. (Source: The Business Times) MARKET SCOOP Yoma's Q4, full-year earnings jump on higher real estate sales (Source: The Business Times) DBS Securities says... COMFORTDELGRO | BUY | TP: S$2.19 According to media reports, Singapore Labour Foundation (SLF) has sold a stake in ComfortDelGro to raise S$329.8m at S$1.94/share The total number of shares sold of about 170m, equates to 8% of CD shares SLF held an 11.93% stake in CD prior to the sale, and we estimate its residual stake will decline to c.3.93% Established in 1977, SLF is a statutory board of the Ministry of Manpower and it aims to improve the welfare of union members and further the trade development of trade union movement in Singapore We understand that the marketed price range was S$1.94 to S$2.03 The reason for selling such a huge stake, at the lower end of range and at an c.11% discount from last traded price is not known Over the years, CD evolved and expanded outside of Singapore with overseas revenues accounting for almost 50% of the Group's revenue This may be seen as less of a strategic fit to the overall labour union movement We thought another possible reason is that SLF could be relooking at its portfolio to release funds We see two possible reasons: Firstly, a total of 170m shares (8%) is not small and SLF may adopt the view to dispose of it in a block rather than in tranches Secondly, CD has appreciated by 22% YTD and 14% in the past 1 month, outpacing STI's 8.6% and 3.9% gain, respectively Fundamentally, we do not see any changes in the operations with the change in ownership In fact, CD just reported a reasonable set of 1Q results with net profit up by 8% y-o-y, despite cost challenges In addition, it is also pursuing inorganic growth via bite-sized acquisitions leveraging on its strong balance sheet Our TP of S$2.19 and BUY recommendation is retained UOB KAY HIAN says ... COMFORTDELGRO | BUY | TP:S$2.32 Singapore Labour Foundation (SLF) yesterday sold S$332m of ComfortDelGro (CD) shares at about S$1.94-2.02, a 7-11% discount to the last traded price of S$2.18 SLF sold 170m shares, which accounted for about 2/3 of its total holdings and about 8.1% of CD's total shares We believe that the sell-down is unwarranted and this represents a good opportunity to buy CD at attractive levels Maintain BUY and DCF-derived target price of S$2.32 (cost of equity 6.5% terminal growth 2%) We like CD for its consistent ability to balance the challenging domestic public transport segment with contributions from overseas operations Upcoming catalysts could come from value accretive acquisitions and divestments, and the roll-out of the DTL in 4Q13 MAYBANK KIM ENG Securities says... SATS | BUY | TP:S$3.90 We see a multi-year re-rating of SATS as we believe that the company is likely to structurally increase their dividend distribution to shareholders SATS announced special dividends in the last 3 years and we expect this to be the new normal Even after factoring in progressive increments in dividends over the next 3 years, we forecast a net cash position of more than SGD400mn by the end of FY16E This implies that SATS would have a sizeable war chest of c.SGD900mn, should they achieve a capital structure with net debt to equity of 0.3X by the end of FY16E The latest results from SATS suggest that TFK had turned a corner with FY13 EBIT contribution of SGD12.1mn (FY12: SGD0.3mn) While the weaker JPY would lead to lower contributions upon translation to SGD, we believe that the positive economic impact of a weaker JPY (eg. tourism, business travel) should result in a net positive effect on air travel demand and TFK Either way, we expect TFK to continue leveraging on SATS's existing business relationships with various airlines to clinch more contracts We are 8% above street view for our FY14-16E estimates, as we believe that consensus numbers may not have factored in incremental contributions from new contracts and our expectations of margin expansion as they scale up their operations We believe that a DCF (WACC: 8.0%, terminal g: 1.0%) based valuation would best reflect the strong cash-generative nature of the company Upgrade to BUY with TP of SGD3.90/shr

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: DBS
Company Name: DBS GROUP HOLDINGS LTD

Research House: UBS

Price Call: HOLD

Target Price: 18.50

Stock Name: Kep REIT
Company Name: KEPPEL REIT

Research House: Nomura

Price Call: SELL

Target Price: 1.34

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 13.30

Market Compass

23 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

23 May 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution 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 :You can't put a limit on anything. The more you dream, the farther you get. - MICHAEL PHELPS Singapore: The Day Ahead SINGAPORE DAYBOOK:DBS reluctant to settle for a minority stake. Bank hopes central bank talks will clear way for takeover of Danamon [SINGAPORE] DBS Group Holdings may not settle for the minority stake it has been offered in Indonesia's Bank Danamon. It hopes that talks between the central banks of Indonesia and Singapore will clear the way for a majority takeover. Pending these, it may ask for an extension from seller Temasek Holdings. On Tuesday, Bank Indonesia (BI) said it will approve a maximum 40 per cent sale of Bank Danamon, the country's sixth largest bank with some 3,000 branches, and approval for a larger stake may for DBS depends on Indonesian banks getting wider access to Singapore's banking market. On April 2 last year, DBS had proposed buying over from parent Temasek Holdings its 67.4 per cent stake in Danamon, and the rest from the market - a deal worth $9.1 billion. Sources say that Temasek and DBS still want to pursue that path. DBS is "very reluctant" to buy minority stakes, chief executive officer Piyush Gupta said on May 2. (Source: The Business Times) MARKET SCOOP Chinavision to place 60m warrants at 1 HK ct each Singapore Shipping Corp Q4 profit falls 43% S'pore earnings seen improving in H2: Citi DBS-Danamon decision may temper Indonesian bank M&A: Fitch S'pore banks' rally running out of steam: Macquarie Temasek raises stake in ICBC to 7.04% Temasek buys major stake in Markit Jason Marine's FY13 net profit falls 62.8% (Source: The Business Times) UBS Securities says... DBS GROUP HOLDINGS | NEUTRAL | TP: S$18.50 According to newswires (Reuters) Indonesia's Central Bank has approved the acquisition of just a 40% stake in Danamon by DBS The group had previously wanted to take a full 99% holding via acquisition of Fullerton's 67% stake followed by a mandatory tender offer for the remaining shares This ruling clearly falls well short of that goal DBS may well be disappointed For DBS to increase its holding beyond 40% Bank Indonesia has made clear that it needs to see reciprocity from MAS allowing its 3 state banks (BRI, Bank Mandiri & BNI) to operate more freely in Singapore We assume this means full QFB licenses, the power to grant these is beyond the control of DBS management It is not clear to us that MAS would be willing to waive the significant capital usually required to support these full banking licenses for the 3 Indonesian banks DBS has previously stated that it views minority stakes in other banks as generally unattractive Other than the smaller retained economic benefit for DBS shareholders of any synergies achieved, a 40% holding would also potentially be a big drag on Basel III regulatory capital ratios Without a clear, undisputable path to control within a sensible timeframe, we think DBS may need to reconsider its options Our DCF derived TP for DBS is S$18.5 (CoE 10%, LT growth of 3.5%) NOMURA Securities says ... KEPPEL-REIT | REDUCE | TP:S$1.34 KEP announced on 21 May that it is placing out 180mn units in KREIT at SGD1.555/unit, which will further reduce its direct stake in KREIT to c.5.2% from c.29% at the start of 2013 (following the earlier placement and distribution in specie) KREIT's free float, on the other hand, will increase to c.48% from just c.24% at the start of 2013 While KEP's sale of its direct holdings in KREIT is in line with the group's strategy of concentrating the property business under KPLD, which still owns c.46.3% of KREIT, it is perhaps also true that the current share price is perceived as a good level to take profits on most of its holdings KREIT has outperformed benchmarks across the board YTD and trades at a yield spread of just 3.6pp (vs. its historical mean of 5.4pp and that of office REITs of 4.5pp) as well as P/B of 1.2x (vs. mean +1SD of 1.1x) While trading liquidity can potentially increase further if KEP were to sell its remaining direct stake in KREIT, the incremental benefit is likely to be much less significant As we approach FY14F, we believe the market will also focus on any potential acquisition (and its implication on KREIT's balance sheet) as well as a potential decline in distribution as the rental support at OFC runs out, on our numbers Our TP is raised to SGD1.34 (from SGD1.29) to reflect a higher NAV and FY14F DPU Our TP implies a potential total return of -11.2% (potential downside of -16.2% + FY13F yield of 5%) Downgrade on valuation UOB KAY HIAN says... SINGAPORE AIRLINES | BUY | TP:S$13.30 Singapore Airlines(SIA) and SilkAir announced a new codeshare agreement with Shenzhen Airlines The codeshare agreement enables it to double its frequency to two daily flights Both Shenzhen Airlines and parent Air China , along with SIA are part of Sky Team alliance and we view the latest codeshare agreement as a strategic move which will benefit both parties For SIA, this is another way of gaining additional air rights as well as over coming slot restrictions at Tier 1 and Tier 2 Chinese airports SIA's will also be able to tap into Shenzhen's domestic network and high speed rail connectivity and feed traffic towards South East Asia and Australia This latest codeshare will complement its codeshare Virgin Australia with Singapore serving as a hub between the two nations The codeshare agreement also underscores SIA's focus towards North Asia, South East Asia and Australia where it faces less competitive pressures compared to the Middle East and Europe These codeshare formations clearly show a concise strategy for long term growth and SIA's core airline operations does not deserve to be valued at 0.7x book value At current levels, the market is ascribing 1x P/B for the SIA group, with no value attached to SIA Engineering For Shenzhen airlines, the focus on codeshare growth reduces the risk of yield erosion and substantial capital investment and contrasts with China Southern's focus on direct capacity expansion