SG: MARKET PULSE: Osim, STE, Wilmar (8 May 2013)

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.19

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.36

MARKET PULSE: Osim, STE, Wilmar

8 May 2013

KEY IDEA OSIM International: 1Q13 results within expectations OSIM International (OSIM) reported a 13.2% YoY jump in its 1Q13 PATMI to S$25.1m despite a mild 0.4% increase in revenue to S$150.6m. This formed 25.9% and 22.7% of our FY13 forecasts, respectively. Results were within our expectations as we foresee further contribution from its recently launched uAngel Sofa-Tranzformer and upcoming new high-end massage chair launch (around Jul period). We expect OSIM to continue its strategic drive of launching new innovative products with different price points to cater to a broader group of target consumers. OSIM also declared an interim dividend of 1 S cent/share in 1Q13, similar to 1Q12. We make some minor adjustments after incorporating this latest set of results in our model. Our fair value estimate is raised marginally from S$2.19 to S$2.21, still pegged to 16.4x FY13F EPS. Maintain BUY. (Wong Teck Ching Andy) MORE REPORTS ST Engineering: All-time high order book of S$13.0b Singapore Technologies Engineering (STE) reported 1Q13 results that were generally in line with ours and consensus expectations. Revenue grew 0.2% YoY to S$1.54b, and PATMI fell 0.3% YoY to S$134m. Highlights include: 1) lack of the biennial Singapore Airshow in 1Q13, which contributed to a S$6.1m drop in share of results of associates and jointly controlled entities, 2) growth in administrative expenses by S$7.9m (7% YoY) due to increased headcount from new Aerospace subsidiaries. STE's order book reached a new high of S$13.0b as of end-Mar 2013 (4Q12: S$12.1b), of which S$3.6b is expected to be delivered in the remainder of 2013. We forecast FY13F EPS of 19.8 S cents. Raising our P/E peg to 22x from 20.7x, given the increased visibility from the record order book, we raise our fair value to S$4.36 from S$4.12. We maintain a HOLDrating on STE and estimate a FY13F dividend yield of 4.1%. (Sarah Ong) Wilmar: Decent start to FY13 Wilmar International Limited (WIL) posted revenue of US$10.2b, down 2.6% YoY and 12.2% QoQ, meeting 20.5% of our FY13 forecast; this mainly due to significantly lower selling prices for palm and sugar products. Nevertheless, reported net profit rose 23.3% YoY (but fell 33.9% QoQ) to US$315.4m; excluding non-operating items, core net profit jumped 52.6% to US$313.7m, although down 21.8% QoQ, it still met 23.6% of our full-year forecast. According to management, the improvement came largely from a sharp recovery in its Oilseeds & Grains business; Consumer Products also benefited from volume growth. Going forward, management remains confident that WIL will overcome the difficult environment expected for the rest of 2013. While WIL notes that the bird flu in China will affect meal consumption in the short term, it does not expect to have long-term effect. We will be speaking with management later for more insights; but as results were largely in line, we keep our BUY rating and S$3.90 fair value (still based on 15x FY13F EPS). (Carey Wong)

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

NEWS HEADLINES - HI-P International Ltd's 1Q13 net profit jump 4x to S$6.9m versus the S$1.5m it earned a year ago, aided by better product mix and improved productivity. - FJ Benjamin Holdings posted a net profit of S$417,000 for 3QFY13, down from S$3.48m a year ago, on the back of softer spending in South-east Asia and weaker demand in North Asia. - Oxley Holdings has set up a S$300m multicurrency medium-term note (MTN) programme to possibly raise capital for general purposes, the property developer announced yesterday. - Eu Yan Sang International posted a 54% YoY increase in net profit to S$8.4m for 3QFY13. - Food Junction reported a loss of S$540,000 for 1Q13 versus a net profit of S$64,000 a year ago, mainly due to higher total operating expenses. - The manager of Cambridge Industrial Trust (CIT) said yesterday that claims in a lawsuit brought upon it and CIT's trustee by two tenants of a CIT-owned industrial property are "unmeritorious", and that it will defend itself "vigorously".