OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.79

Stock Name: EuYanSang
Company Name: EU YAN SANG INTERNATIONAL LTD

Research House: OSK

Price Call: BUY

Target Price: 0.88

Market Compass

21 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

21 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 : When written in Chinese, the word 'crisis' is composed of two characters. One represents danger and the other represents opportunity. - JOHN F. KENNEDY Singapore: The Day Ahead SINGAPORE DAYBOOK:Law alone won't stop discrimination: Chuan-Jin. Moral suasion, measured response needed in review of employing foreigners [SINGAPORE] Anti-discrimination laws for workplaces remain a possibility, but will not be that "silver bullet that solves all problems". Acting Manpower Minister Tan Chuan-Jin yesterday reiterated that the government believes the current tripartite approach of tackling workplace discrimination along gender, age or nationality lines via "moral suasion" to be more effective and sustainable. Speaking to 500 business leaders and human resource practitioners at a conference on fair employment practices, Mr Tan said other countries' experiences with anti-discrimination laws show that legislation alone is not enough to alter mindsets. "Companies can fulfil the letter of the law, but not the spirit of it ... So legislation may cure and in fact may mask some of these symptoms, but it does not guarantee that we deal with the underlying problem," he said. (Source: The Business Times) MARKET SCOOP WE Holdings jumps on Myanmar business plan XMH jumps to 5-yr high on Koh Boon Hwee effect, speculation of major acquisition ahead SIA, SilkAir, Shenzhen Airlines in codeshare deal Ascott wins its first serviced residence deal in Riyadh Optus aims 4G coverage to reach 70% Australia's metro population by mid-2014 K-Green Trust gets new CFO Singapore's domestic wholesale trade falls 7.3% yoy in Q1 (Source: The Business Times) OCBC Securities says... TIGER AIRWAYS HOLDINGS | BUY | TP: S$0.79 Tiger Airways (TGR) reported a decent set of 4Q13 results with revenue increasing 49.4% YoY to S$240.6m - partly due to the lower base from TGR AU last year - and core operating profit was positive for the second straight quarter at S$12.7m (4Q12: -US$17.2m) Although losses from its associates caused an overall net loss of S$15.4m for the quarter, it was still an improvement over the same period a year ago (-S$16.4m) For FY13, TGR saw an overall core operating profit of S$7.3m (FY12: -S$83.4m) and its net loss narrowed to S$45.4m from S$104.3m a year ago In the coming quarters, TGR SG will increase its capacity by 25% following the addition of five new aircraft While this increase is substantial, we are comforted by its performance in FY13, and believe that growth in passenger traffic will be able to absorb this increase As a recap, TGR SG registered a 20.5% YoY increase in passenger traffic for 4Q13, which outpaced capacity growth of 14.3% YoY TGR's two associate airlines, Mandala and SEAir, experienced widening losses in 4Q13, and such losses could extend into FY14 Although it was not unexpected given their infancy stages - and we have already made concessions for a pickup only in FY15 - the magnitude of the losses requires us to be a little more conservative in our projections Despite the risk of a drag from its associates, we continue to like TGR for its growth prospects and anticipate a much improved core net profit performance for FY14 Maintain BUY rating on TGR with an unchanged fair value estimate of S$0.79 OSK DMG Securities says ... EU YAN SANG | BUY | TP:S$0.88 Eu Yan Sang said it has formed a 50:50 JV with Sichuan Neautus to set up a traditional Chinese medicine (TCM) decoction pieces (processed herbs) plant in China We view the move positively as it will give the Group better control of its supply chain This will ensure there is a stable supply of herbs and ingredients for EY's products The JV will invest CNY40m (SGD8m) capex in Phase One, which will involve the setting up of a Good Manufacturing Practice (GMP) standard TCM decoction pieces (processed herbs) plant in Chengdu Hi-Tech Zone in Sichuan province As construction of the plant is expected to take about a year, EY will not see any earnings contribution until 2015 Sichuan Neautus Traditional Chinese Medicine Co, founded in 2001, is the first GMP-certified pharmaceutical producer of herbal slices in China The company's chairman, Mr Jiang Yun, is also chairman of the Herbal Slice Chapter of the China Association of Traditional Chinese Medicine The Group recently reported a robust 54% surge in 3Q13 earnings to SGD8.4m, boosted by a faster-than-expected turnaround at its Australian operation This prompted us to upgrade the stock from Neutral to Buy As the share price has risen close to SGD0.80 TP, we are now raising our valuation multiple from 18x to 19x FY14F, to derive a new SGD0.88 TP DBS VICKERS Securities says... CSE GLOBAL | BUY | TP:S$0.97 1Q13 net profit of S$12.7m (flat y-o-y) was in line but new order win of S$95m (up 11% y-o-y) was below our S$110m estimate Free cash flow of S$13.6m resulted in its net gearing declining to 12% from 19% in 4Q12 Revenue declined 11% y-o-y due to lower onshore activity in North America and lower zero-margin revenue in the Middle East However its gross margin improved to 31.5% versus 27.9% in 1Q12 due to higher-margin offshore projects and less zero-margin revenue We trim FY13F/14F order win forecast to S$500m/ S$550m from S$550m/S$580m earlier leading to a 5%/4% cut in FY13F/14F earnings CSE has achieved 25% and 19% of our revised full-year earnings and order win forecasts There was no big order win in 1Q13, however, we expect CSE to secure two to three big order wins in 2H13F (S$100m in aggregate) on top of its smaller order wins of S$400m in FY13F These wins could come from LNG projects in Australia and Africa in 2H13F CSE has room to borrow S$40m to fund any potential acquisition which could accelerate earnings growth Our revised TP of S$0.97 is based on 9.6x FY13F PE The stock is a bargain versus STI at 16x FY13F PE (STI's hist. avg 13.9x) With 45% of the business recurring in nature, CSE has a resilient business model supporting a 40% payout ratio