SG: MARKET PULSE: Consumer Sector, Telco, Bumi Armada, Global Premium (21 Aug 2013)

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.82

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.95

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.77

Stock Name: GP Hotels
Company Name: GLOBAL PREMIUM HOTELS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.33

MARKET PULSE: Consumer Sector, Telco, Bumi Armada, Global Premium

21 Aug 2013

KEY IDEA Consumer sector: Still under pressure For 2HCY13, we expect consumer-related companies under the FTSE Straits Times Consumer Services Index (FSTCS Index) to experience lower-than-expected revenue growth as sentiment turns bearish both domestically and abroad. With weaker economic data points (e.g. Indonesia's GDP and China's slowdown) re-affirming lingering economic uncertainty, consumer companies are likely to face challenges as consumers shift away from discretionary spending. As we expect sell-offs of the sector to continue in light of these headwinds, we maintain our UNDERWEIGHT rating on the sector. Within the sector, we favour counters with defensive qualities such as Sheng Siong [BUY; FV: S$0.82] over counters with high exposure to emerging Asia consumer demand like Petra Foods [HOLD; FV: S$3.95] and counters with wafer-thin operating margins like BreadTalk [SELL; FV: S$0.77]. (Lim Siyi) MORE REPORTS Telecom Sector: 2QCY13 results mostly tracking our estimates All three telcos reported 2QCY13 results that came in within our expectations. But going forward, the outlook is generally more muted, given that the key mobile market is already quite saturated (growth is likely to come from tariff hikes rather than the addition of new subscribers). As before, the spectre of rising interest rates is making the telcos' yields less attractive (currently their forecast yields are around 4.7%), although these stocks should still have a place in any portfolio for their defensive earnings. We also do not see any potential growth drivers in a pretty saturated mobile market. Hence we maintain NEUTRALon the sector. (Carey Wong) Bumi Armada Berhad: 2Q13 results within expectations Bumi Armada Berhad reported 2Q13 results which were within our expectations. Revenue grew 25.1% YoY to MYR481.2m while PATMI of MYR112.0 represented an increase of 21.8%. For 1H13, revenue and PATMI rose 34.8% and 22.0% to MYR970.0m and MYR221.6m, forming 44.9% and 45.5% of our FY13 forecasts, respectively. This was driven largely by its OSV segment, which had a larger vessel count and also recorded an improved fleet utilisation of 87% in 2Q13 (versus 2Q12: 82%). We expect 2H13 to be a stronger half for Bumi Armada. The group's order book stood at MYR7.5b as at 30 Jun 2013 (was MYR7.9b as at end 1Q13), with extension options worth MYR4.3b. Bumi Armada currently has 12 ongoing FPSO tenders, and management believes that it stands a good chance to achieve more FPSO wins in 2H13. We place our Hold rating and fair value estimate of MYR3.74 under review due to a change in analyst coverage. (Research Team) Global Premium Hotels: Established S$300m multicurrency MTN programme Further to its announcement dated 27 May 2013 in relation to the proposed establishment of a S$300m multicurrency medium term note programme, Global Premium Hotels (GPH) has announced that it has on 20 August 2013 established the programme, under which it may issue notes from time to time. Please note that OCBC Bank has been appointed by GPH as the arranger of the programme. We note that the MTN programme will increase the funding flexibility for GPH. We maintain our fair value of S$0.33 and BUY rating on GPH. (Sarah Ong)

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

NEWS HEADLINES - US stocks mostly climbed, with the S&P 500 halting its longest losing streak this year, as retailers beat estimates and as Wall Street looked to clues about future US monetary policy. - Singapore's domestic wholesale trade dipped 1.1% YoY in 2Q13. - Ellipsiz Ltd reported a 27% YoY drop in 4QFY13 net profit to S$2.8m (versus S$3.8m in 4QFY12), which came as revenue fell 31% to S$30.7m (versus S$44.4m in 4QFY12). - Keppel FELS has won a US$280m contract with Floatel International to build a fifth accommodation semi-submersible. - Keong Hong Holdings has entered into a convertible bond subscription agreement with Kori Holdings to subscribe for a S$5m convertible bond.