SG: MARKET PULSE: Swiber, SingTel, Petra Foods, Comfort, CSE, Midas, KSE (15 Aug 2013)

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: HOLD

Target Price: 3.81

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.95

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.95

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.96

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.54

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.50

MARKET PULSE: Swiber, SingTel, Petra Foods, Comfort, CSE, Midas, KSE

15 Aug 2013

KEY IDEA Swiber Holdings: Softer 2Q13 but still executing well Swiber Holdings (Swiber) reported a 5.4% YoY rise in revenue to US$242.1m and a 13.7% increase in gross profit to US$37.1m in 2Q13. However, higher admin, finance and other operating expenses contributed to a 72.5% fall in net profit to US$4.2m in the quarter. Stripping out one-off items, core net profit was US$3.7m in the quarter, such that 1H13 recurring income accounted for 45% of our full year estimate. Gross margins remained healthy at 15.3% in 2Q13. Swiber's order book stood at US$1.2b as at 14 Aug 2013. Looking ahead, more orders are expected to be awarded by the end of this year. Its net gearing remains high at 0.92x, but the group is now executing well compared to its peers, and has improved substantially since its relatively difficult period in 4Q08-4Q09. Maintain BUY with S$0.86 fair value estimate. (Low Pei Han) MORE REPORTS SingTel: Decent FY14 start; but outlook muted Summary: SingTel posted 1QFY14 revenue of S$4293.3m, down 5.3% YoY and 4.2% QoQ, meeting about 24% of our full-year forecast; this largely weighed by lower revenue in Australia and the weaker AUD. Reported net profit though climbed 7.0% YoY and 16.4% QoQ to S$1011.0m, boosted by stronger EBITDA margins and higher associate contributions. Core net profit (excluding exceptional items) rose 5.5% YoY (but fell 10.4%) to S$897m, also meeting 24% of FY14 forecast. But going forward, the group's outlook remains somewhat muted, as SingTel expects lower overall revenue (mainly from Group Consumer), with likely EBITDA compression as well. In view of the latest guidance, we pare our FY14F revenue forecast by 5% and core earnings by 1.3%. Also accounting for weaker AUD forecast, our SOTP-based fair value slips from S$3.82 to S$3.81. Maintain HOLD. (Carey Wong) Petra Foods: A mixed 2Q13 Losses from Petra Foods' discontinued cocoa ingredients division in 2Q13 were smaller than expected, and PATM came in at US$4.8m with management declaring an improved interim dividend of 2.36 US cents (vs. 2.11 US cents in 2Q12). However, sales growth for the quarter was a bit disappointing and that leaves us concerned over a possible slowdown in consumption growth in Petra's core markets for 2H13. As a result, we maintain HOLD on Petra on account of the limited upside at this juncture. Our fair value estimate increases to S$3.95 (based on 28x FY14F PE) from S$3.88 previously following the much smaller cocoa losses. (Lim Siyi) ComfortDelGro: Fairly valued at this point ComfortDelGro's (CDG) 2Q13 results were in-line with expectations. Revenue grew 2.7% YoY to S$908.4m while operating profit improved 6.0% YoY to S$112.6m. An interim dividend of 3 S cents (vs. 2.9 S cents for 1H12) was announced. For 2H13, we expect a similar growth trend: continued top-line growth across most segments and manageable operating expenses. However, we view the lack of a SG fare increase in FY13 and anticipation of lower operating margins for Aussie bus operations as dampeners for upside potential at this juncture. Keeping our FY13 forecasts intact given the in-line results, we downgrade CDG to HOLD on valuation grounds but maintain our fair value estimate at S$1.95. (Lim Siyi) CSE Global: Simplifying CSE CSE Global Limited reported 2Q13 results that were generally in-line with ours and the street's estimate. 2Q core net profit increased 12% YoY to S$12m, mainly due to (i) the lower level of zero-margin revenue in the Middle East and (ii) higher level of more profitable offshore work in the Americas. Separately, the group disclosed that it intends to divest 100% of its ownership in its UK subsidiary through a separate listing on the London Stock Exchange. We are positive on the move. Besides unlocking value, we believe the spin-off would simplify and improve oversight of CSE's different businesses. Maintain BUY with an unchanged S$0.96 FV. (Chia Jiunyang) Midas Holdings: 2Q13 results above expectations Midas Holdings' 2Q13 results came in above our expectations, with revenue and PATMI soaring 29.2% and 834.1% YoY to CNY284.0m and CNY14.9m, respectively. This was due largely to a reversal of a hefty share of loss of CNY14.1m from its associated company, Nanjing SR Puzhen Rail Transport (NPRT) in 2Q12 to a share of profit of CNY3.1m in 2Q13. While we note that profit from operations actually fell 15.2% YoY to CNY35.9m, it was still ahead of our forecast. For 1H13, revenue grew 8.0% to CNY486.4m, while PATMI fell 40.8% to CNY10.0m due to a net loss in 1Q13. This constituted 53.4% and 28.6% of our FY13 projections, respectively. We are expecting 2H13 PATMI to improve significantly on a HoH basis. An interim DPS of 0.25 S cents was declared, similar to 1H12 and our forecast. We will provide more updates after the analyst conference call. For now we have a BUY rating on Midas. We will likely raise our 1.1x P/B target peg and S$0.54 fair value estimate given the improved sentiment within China's rail transport sector, with expectations that the high-speed train tenders may be resumed soon. (Wong Teck Ching Andy) KS Energy: S$1.6m net profit in 2Q13 KS Energy (KSE) reported a 29.4% YoY rise in revenue to S$196.2m and a net profit of S$1.6m in 2Q13 vs S$0.7m in 2Q12, such that 1H13 revenue and net profit accounted for 54% and 42% of our full year estimates, respectively. Gross profit margin was 22.8% in 2Q13 compared to 27.5% in 2Q12 and 23.3% in 1Q13, while operating profit was S$9.7m vs a loss in 1Q13. The group mentioned that it continues to experience "improving demand" from the oil and gas industry in Asia and believes that it is well positioned to tap into new opportunities in the oil and gas market. Pending more details from management, we maintain our HOLD rating but put our S$0.50 fair value estimate under review. (Low Pei Han)

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