SG: MARKET PULSE: Biosensors, NOL, Noble, UOL, Wilmar, YZJ, FEHT, CWT, Vard, Yoma, Singapore GDP (12 Aug 2013)

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.96

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.95

Stock Name: Noble Grp
Company Name: NOBLE GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.76

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 7.16

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.10

Stock Name: Yangzijiang
Company Name: YANGZIJIANG SHIPBLDG HLDGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.99

Stock Name: Far East HTrust
Company Name: FAR EAST HOSPITALITY TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.92

Stock Name: CWT
Company Name: CWT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.08

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.80

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.87

MARKET PULSE: Biosensors, NOL, Noble, UOL, Wilmar, YZJ, FEHT, CWT, Vard, Yoma, Singapore GDP

12 Aug 2013

KEY IDEA Biosensors International Group: A quarter to forget Summary: Biosensors International Group (BIG) reported 1QFY14 earnings which were significantly below ours and the street's expectations. Core PATMI plunged 57.3% YoY to US$12.1m on the back of a 11.2% decline in revenue to US$76.7m, forming 10.1% and 20.0% of our original FY14 forecasts, respectively. This was due to another lacklustre quarter of contribution from licensing and royalties revenue and an inventory drawdown in its distributor sales channels in China in anticipation of new stent tenders. Our revised FY14 revenue forecast implies a 10.4% growth and comes in below management's ~15% growth guidance. We also see mounting cost pressures for BIG and slash our FY14 and FY15 core PATMI projections by 34.4% and 29.9%, respectively. Our FCFE-derived fair value estimate falls from S$1.60 to S$0.96. We expect some near-term selling pressure on the stock and downgrade BIG from Buy to HOLD. (Wong Teck Ching Andy) MORE REPORTS Neptune Orient Lines - Lacklustre 2H ahead Summary: With a disappointing set of 2Q13 results, we downgrade Neptune Orient Lines's (NOL) to SELL. Despite the onset of the 3Q13 peak season, freight rates according to the Shanghai Containerised Freight Index remain weak across the board and traditional rate hikes have yet to make up ground lost in 2Q13. In addition, volume demand should remain weak given the tepid market conditions, and supply overhang continues to render industry action moot. With this downward outlook likely to extend into the medium term, we lower our FY13/14 forecasts accordingly and reduce our P/B peg to 0.9x from 1.1x previously. As a result, our fair value estimate falls to S$0.95 (S$1.38 previously). (Lim Siyi) Noble Group Ltd: Downgrade to SELL with S$0.76 FV Summary: Noble Group (Noble) reported a poor set of 1H13 results last Wed, marred by losses in its Agricultural segment in 2Q13, such that reported earnings only met 20% of our full-year forecast. No doubt the second half tends to be seasonally stronger; but we suspect that its Agriculture segment could continue to be a drag on its overall profitability. As such, we see the need to sharply reduce our FY13 earnings forecast by as much as 43% (FY14 by 18%); the group's targeted cost savings will probably have a more meaningful impact in FY14. Even as we roll forward our 10x valuation to blended FY13/FY14F EPS, our fair value will drop sharply from S$1.09 to S$0.76. Downgrade our call from Hold to SELL. (Carey Wong) UOL Group: Boost from fair value gains Summary: UOL reported 2Q13 PATMI of S$431.4m which increased 151% YoY mostly due to fair value gains at Novena Square, United Square and Odeon Towers where valuation cap rates have compressed some 25 to 50 bps. Excluding fair value and other one-time gains, 1H13 attributable profit is an estimated S$164.4m which is broadly in line with our expectations - constituting 45% of OIR's FY13 forecast of S$368.3m - but somewhat below the street's view (41% of FY13 consensus of S$391.8m). For UOL's residential strategy ahead, we see management remaining cautious and more likely to replenish land at the rate of sales or below, and capital deployment is likely to be focused on growing recurring income in investment and hospitality assets. To recap, UOL had made a cash offer of S$2.55 per share to delist PPHG and we understand that the exit offer is now unconditional with a closing date of 13 Aug 2013. Maintain HOLD with an unchanged fair value estimate of S$7.16 (20% RNAV disc.). (Eli Lee) Wilmar: 2H13 outlook still challenging Summary: Wilmar International Limited (WIL) reported 1H13 revenue slipping 4.0% to US$20626.8m, meeting 41.5% of our full-year forecast; net profit climbed 43.1% to US$533.9m, or about 40.1% of our FY13 forecast. WIL declared an interim dividend of S$0.025/share, versus S$0.02 in 1H12. Going forward, WIL notes that the overall environment remains "challenging", but it remains cautiously upbeat that it can continue to see a seasonally stronger second half performance. As 1H13 results were slightly below forecast, we pare our FY13F earnings by 6.7% (FY14F by 3.6%). But as we roll forward our unchanged 12.5x peg to blended FY13/FY14F EPS, our fair value inches up slightly from S$3.25 to S$3.33. In view of the still difficult operating environment and the credit crunch in China, we maintain HOLD and would be buyers at S$3.10 or better. (Carey Wong) Yangzijiang Shipbuilding: Still a steady ship Summary: Yangzijiang Shipbuilding (YZJ) reported a 12% YoY rise in revenue to RMB4.4b and a 8% decrease in net profit to RMB811.7m in 2Q13, such that 1H13 net profit accounted for about half of our full year estimates, within expectations. Gross margin in the shipbuilding related segment dropped from 24.2% in 2Q12 and 25.9% in 1Q13 to 20.6% in 2Q13, while gross margin in the group's investment division remained high. Despite stiff competition in the shipbuilding industry, YZJ secured 27 effective shipbuilding contracts worth about S$1.01b in 1H13, but likely at single digit gross margins. Meanwhile, the group continues to grow its financing business, which we now forecast greater revenue contributions. We increase our FY13/14F earnings by 3-4%, and with the more favorable RMB/SGD exchange rate, our fair value estimate increases from S$0.95 to S$0.99 (based on 8x FY13/14F core earnings). Maintain HOLD. (Low Pei Han) Far East Hospitality Trust: 2Q13 below expectations Summary: 2Q13 results for Far East Hospitality Trust (FEHT) were below our expectations and the street's. Gross revenue was S$29.3m or 7.9% lower than the IPO prospectus forecast, affected by the hotels' performance. Net property income and income available for distribution came in at S$26.9m and S$23.2m, which were 6.8% and 4.1% below the IPO forecasts, respectively. 2Q13 DPS was 1.43 S cents; 1H13 DPS of 2.81 S cents tracked below our expectations, corresponding to 47% of our prior FY13 estimate of 6.0 S cents, which we now lower to 5.7 S cents. We have transitioned to a DDM-based model, from a RNAV model previously. Adjusting our FY13F revenue assumptions downwards, our FV falls to S$0.92 from S$1.01. We maintain a HOLD rating on FEHT and estimate a FY13 yield of 6.2%. (Sarah Ong) CWT Ltd: 2Q13 within expectations Summary: CWT reported a decent set of 2Q13 results that were roughly in-line with our expectations. Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity SCM business. However, the group incurred (i) higher administrative expenses (S$43.7m, +17% YoY) from management and restructuring costs, and (ii) higher financing costs (S$8.5m, +8% YoY) due to higher borrowing and trade volume. The declines were partially offset by improved contribution from its joint-ventures and tax saving, resulting in net profit easing 6% YoY to S$18.1m for 2Q13. For 1H13, revenue and net profit formed 50% and 46% of our FY13F estimates respectively. We will speak to management to obtain more colour. In the meantime, we keep our BUY rating and S$2.08 fair value estimate unchanged. (Chia Jiunyang) VARD Holdings: Secures USD1.1b contract Summary: Vard Holdings Limited has secured contracts for the design and construction of four Pipe Lay Support Vessels (PLSVs), worth about USD1.1b (NOK 6.5b). The contracts were from joint ventures of DOF Subsea and Technip. Two of the PLSVs will be built in Romania in 2Q-3Q16, while the remaining two will be delivered from Brazil in 4Q16-2Q17. We are in the process of adjusting our models. In the meanwhile, we put our Sell rating and S$0.80 fair value UNDER REVIEW. (Chia Jiunyang)

Yoma Strategic Holdings: JV successful in Mandalay airport tender Summary: Yoma reported that it has a 5% stake in a consortium, with Mitsubishi Corp. and JALUX Inc., that has successfully tendered for the upgrade and operation of the Mandalay International Airport. The consortium is expected to be awarded the tender upon negotiation, finalization and agreement of the final contract with relevant authorities. While this is a positive development, we see the financial impact on Yoma to be likely capped given that it has only a 5% stake and that the initial equity contribution by all the parties are estimated at around US$3.38m. Yoma also noted that the investment is not expected to have any material financial impact on the consolidated net tangible assets and earnings per share for the current year ending Mar 2014. Maintain HOLD with an unchanged fair value estimate of S$0.87. (Eli Lee) Singapore Economy: 2013 GDP growth forecast upgraded to 2.5-3.5% Summary: According to the MTI, the Singapore economy grew by 3.8% YoY in 2Q13, better than the street's expectations of 3.5% growth, and also better than the 0.2% growth seen in 1Q13. On a seasonally adjusted, annualised basis, the economy expanded by 15.5% QoQ, and was significantly higher than the 1.7% expansion in 1Q13. This was mainly driven by manufacturing, which grew by 32.1% QoQ, reversing the 12.1% contraction in 1Q13, largely due to higher output in the biomedical manufacturing and electronics clusters. Construction grew by 11.2%, compared to 1Q13's 10.3% growth. Finally, services expanded by 11.5% after 1Q13's 7.8% rise, driven mainly by the wholesale & retail trade and the transportation & storage sectors. As global macroeconomic conditions are expected to pick up in 2H13, the MTI has upgraded Singapore's 2013 GDP growth forecast from 1.0-3.0% to 2.5-3.5%. (Low Pei Han) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stock indexes declined on Fri, with the Dow Jones Industrial Average halting its longest weekly winning streak since Aug of last year. - Singapore-Listed companies have posted a lower aggregate 2Q13 net profit of S$7.04b, down by 2.8% YoY. - Raw material prices won support last week from upbeat Chinese economic data, while cocoa futures hit 11-month high points on tight supply fears, analysts said.