OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 13.70

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 8.05

Market Compass

06 June 2013~ Good Morning Singapore!

Singapore Idea Snippets:

06 June 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 Singapore: The Day Ahead SINGAPORE DAYBOOK:SGX widens iron ore product offering to catch winds of change [SINGAPORE] The Singapore Exchange (SGX) may be holding pole position with its iron ore swaps, but it is not resting on its laurels. The exchange has expanded its suite of products for iron ore and is creating a "broad runway", in order not to be caught out by impending regulatory changes unfolding in the United States and Europe. "Regulatory change has not come from just one direction; it seems to have come from here and there, with reversals and flip-flops," said SGX head of derivatives Michael Syn. "We don't know how the market will develop or evolve, but we want to provide as broad a runway as possible, especially when there's so much crosswind or regulatory flip-flopping." (Source: The Business Times) CREDIT SUISSE Securities says... KEPPEL CORPORATION | OUTPERFORM | TP: S$13.70 Keppel has been awarded a contract worth US$800 mn from Caspian Drilling Company for the construction of a semisubmersible rig The rig is based on Keppel's proprietary DSS 38M design, and is scheduled for delivery in 4Q16 Excluding owner-furnished equipment, we estimate the yard price to be about US$600 mn Work will be carried out at Caspian Shipyard Company (45% stake), Baku Shipyard (10% stake) and Keppel FELS (100% stake Hence, we expect the effective value of the contract to Keppel to be about US$255 mn Keppel has secured about S$3.2 bn of contracts year-to-date, representing 53% of our 2013 forecast of S$6 bn (versus consensus expectation of S$5.0-5.5 bn) We expect further orders for semisubmersible rigs, driven by tightening supply and improving dayrates We believe this contract reflects how its near-market, near-customer strategy differentiates it from growing competition from emerging yards At the same time, we expect scope for earnings to surprise positively in the coming quarters, driven by (1) recovery in O&M margins, (2) contribution from Reflections and Corals at Keppel Bay, and (3) a potential turnaround in the Infrastructure division We maintain our OUTPERFORM rating on Keppel, which is our top pick within the Singapore offshore and marine sector OCBC Securities says ... GOODPACK LIMITED | BUY | TP: S$1.80 Lanxess, the world's biggest manufacturer of synthetic rubber (SR) - and a significant client of Goodpack's - officially opened its new butyl rubber plant on Jurong Island yesterday The facility is designed for a capacity of 100K metric tonnes/year, and is the company's largest investment in five years Goodpack had already secured contracts with Lanxess back in 2QFY13 but there were originally concerns over a potential delay in production However, with this official opening, and through enquires with Lanxess, we can expect production to commence in 1QFY14 With the additional intermediate bulk containers (IBCs) that it had procured earlier, Goodpack will be able hit the ground running together with the plant Furthermore, the plant will only reach full capacity utilization by 2015, so that means Goodpack will be able to enjoy incremental earnings until the plant reaches a steady state of production Lanxess aside, Goodpack has another deal in the coming quarters with a SR plant by Asahi Kasei Production at this plant (and use of its IBCs) should come in by 2QFY14, although we await official word on this development Goodpack's share price fell as much as 4.4% since our last update in the aftermath of its 3Q13 results release That said, this price correction presents an opportunity for investors to gain exposure to an important player in the IBC market, and indirect beneficiary of the growing middle class in China and India Upgrade Goodpack to BUY with an unchanged fair value estimate of S$1.80 UOB KAY HIAN says... VENTURE CORPORATION | BUY | TP: S$8.05 Venture experienced a mild pick-up in 2Q13 Revenue mix was relatively unchanged, which led to stable margins Customers' forecast for 2H13 has improved slightly although management remains cautious as macro headwinds could reappear Run-rate for production of Oclaro's fibre optics components has improved in 2Q13 The second phase of product transfer from Oclaro's Shenzhen plant to Venture's Penang plant started in May and will be completed in November Venture has designed a new point-of-sale system for MICROS to be used by restaurants, hotels and retailers operating in a mobile environment mStation is a mobile stand connected to a wide range of peripherals and network infrastructure This ODM project provides better margins Venture will embark on a new project involving Radio Frequency (RF) receivers in 2H13 Venture has expanded the scope of work for liquid chromatography from modules to complete box build Production for new products is scheduled for 3Q13 and 4Q13 Revenue growth and margins are expected to be better in 2H13 due to contribution from new products and improvement in product mix We have reduced our net profit forecast for 2013 by 3.5% due to lacklustre demand in 1H13 We have lowered our target price for Venture to S$8.05, based on 2013F PE of 16x (Benchmark Electronics: 17.8x, Plexus Corporation: 13.8x), justified by its average forward PE of 16.5x over the past 10 years Venture provides an attractive dividend yield of 6.8% The stock corrected 14.9% after reporting 1Q13 results that were slightly below our expectations and valuation has become more attractive