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