SG: MARKET PULSE: KSH, CWT, BreadTalk, Global Palm, Nam Cheong (13 Aug 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.73

Stock Name: CWT
Company Name: CWT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.68

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.77

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.17

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.35

MARKET PULSE: KSH, CWT, BreadTalk, Global Palm, Nam Cheong

13 Aug 2013

KEY IDEA KSH Holdings: 1QFY14 PATMI up 165% to S$11.4m KSH's 1QFY14 PATMI increased 165% YoY to S$11.4m due to stronger contributions from both the property development and construction business segments. 1QFY14 PATMI now constitutes 24% of our full year forecast and, this being so, we judge this set of results to be in line with expectations. The group's order book stands at S$402.0m as at end Jun 2013 which we view to be a relatively healthy level. We continue to look forward to KSH's 45% Beijing condo project beginning sales this year which could be significant for KSH's earnings profile into FY15. In Singapore, new launches at NeWest and KAP Residences have shown firm performances to date; 85 out of a total of 136 units at NeWest have been sold at a median price of S$1,399 psf and at KAP Residences, 140 out of 142 units sold for a median price of S$1,789 psf. Maintain BUY with an unchanged fair value estimate of S$0.73. (Eli Lee) MORE REPORTS CWT Ltd: 2Q13 in line with expectations CWT reported a decent set of 2Q13 results that were in-line with our expectations. Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity business. However, the group incurred higher administrative expenses and higher financing costs. Consequently, net profit eased 6% YoY to S$18.1m for 2Q13. The group also announced a new leadership team - headed by Adam Slater and Alan Kuek - at its Commodity business, replacing former employees who have left the team. We still like CWT, but lowered our valuation peg for its Commodity business to a conservative 9x (previously 12x) after its recent management reshuffle. This in turn lowered our SOTP valuation to S$1.68 (previously S$2.08). Maintain BUY. (Chia Jiunyang) BreadTalk Group: Improvement in 2H13 unlikely BreadTalk's 2Q13 results disappointed despite double-digit revenue growth to S$126.5m as operating profit fell by more than expected (15.1% YoY to S$3.8m) and operating profit and PATMI margins remained low at 3.0% and 2.4% respectively. In the coming months, we expect this trend to persist in light of its ongoing store expansion and the two non-performing restaurant brands (Ramen Play and Carl's Jr), which will remain a drag on overall performance. With a FY13F dividend yield of 1.1%, the investment proposition is unattractive in our view and the counter remains expensive at current valuations, especially given the low-single digit margins. We maintain SELL on BreadTalk with an unchanged fair value estimate of S$0.77. (Lim Siyi) Global Palm: Terrible season continues Global Palm Resources (GPR) posted 2Q13 revenue of IDR84.1b, down 21% YoY (but +26% QoQ), hit by softer CPO (crude palm oil) prices as well as lower volume sold. Reported net profit tumbled 70% YoY and 27% QoQ to IDR6.1b; excluding forex, core net profit still fell 69% YoY and 19% QoQ to IDR9.4b. For 1H13, revenue fell 26% to IDR150.9b, meeting 45% of our full-year forecast, while net profit slipped 57% to IDR14.4b, or just 27% of our FY13 estimate. We will be speaking with management shortly; but in the meantime, we place our Hold rating and S$0.17 fair value under review. (Carey Wong) Nam Cheong Ltd: 2Q net profit jumped 81% YoY Nam Cheong Limited's 2Q13 revenue and net profit jumped by 84% and 81% YoY to RM275m and RM41m respectively, driven by increase in shipbuilding activity. 1H net profit was RM76m and formed 50% and 46% of ours and the street's FY13F estimates. We will provide further updates after its briefing later. In the meantime, we keep our BUY rating and S$0.35 FV estimate unchanged. (Chia Jiunyang)

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NEWS HEADLINES - US stocks closed a low-volume, light-news session with slight losses on Mon, though the technology-dominated Nasdaq Composite managed a gain. - A KPMG study in Singapore last week says 82% of assets on companies' balance sheets these days are based on estimates. - Kingsmen Creative has won the dismissal of a lawsuit brought against it and its subsidiary, Kingsmen Exhibits Pte Ltd (KE), in the US. - Super Group reported a net profit of S$36.5m for its 2Q13, up 108% YoY from S$17.5m. - QAF posts 64% plunge in 2Q13 net profit as higher costs and expenses took a toll despite a rise in revenue for the maker of Gardenia bread. - Del Monte Pacific Limited's earnings grew 2% YoY in 2Q13, despite a higher rise in revenue, as one-off dual listing expenses and unrealised foreign exchange loss affected the bottom line.