SG: MARKET PULSE: Midas, HPHT, FCT, China Environment (22 Oct 2013)

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.65

Stock Name: HPH Trust US$
Company Name: HUTCHISON PORT HOLDINGS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.84

Stock Name: FrasersCT
Company Name: FRASERS CENTREPOINT TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 1.96

MARKET PULSE: Midas, HPHT, FCT, China Environment

22 Oct 2013

KEY IDEA Midas Holdings: Awaken the sleeping giant Following last week's CNY221.8m international train and China metro contract wins, Midas Holdings (Midas) announced last evening that it has secured contracts to supply aluminium alloy extrusion profiles and certain fabricated parts for the manufacture of high-speed trains in China. These contracts are worth CNY167.5m in total, with delivery expected from 2013 to 2014. Total YTD order wins for Midas has now hit ~CNY812.6m (FY12: CNY324.9m). We view Midas' latest high-speed train contract success as a strong re-rating catalyst for its share price given that its last high-speed contract win came in Feb 2011. We believe this may also set the momentum for further such contract wins to come, given China's ambition to develop its rail transport sector. Maintain BUY and S$0.65 fair value estimate on Midas, based on 1.3x blended FY13/14F P/B. (Wong Teck Ching Andy) MORE REPORTS Hutchison Port Holdings Trust: 3Q13 missed expectations Hutchison Port Holdings Trust (HPHT) reported 3Q13 results that were lower than ours and the street's expectations. Revenue climbed 1% YoY to HK$3.36b. Total operating expenses increased by 1.3% to HK$2.17b. Profit after tax fell 2.2% to HK$966m. Profit attributable to HPHT unitholders fell 8.4% to HK$539m. We lower our forecasts to -1% and 0% YoY change in 2013 throughput for HPHT's ports in Kwai Tsing, HK and Yantian, Shenzhen respectively. Our previous forecasts were 0% and 2% growth. Our revenue forecast for FY13 thus falls to HK$12.4b from HK$12.6b. Shipping lines' formation of alliances, e.g. P3, G6 and CKYH, should continue to put pressure on transshipment volumes, especially in HK. We trim our FV for HPHT to US$0.74 from US$0.84 and downgrade HPHT from Buy to HOLDon valuation grounds. HPHT is currently trading at a FY13F dividend yield of 6.8%. (Sarah Ong) Frasers Centrepoint Trust: Repeating its success Frasers Centrepoint Trust (FCT) released its 4QFY13 results last evening. NPI fell 5.0% to S$27.3m due mainly to higher property taxes and maintenance costs. However, distributable income was up 2.7% to S$21.7m as FCT benefited from lower borrowing costs and higher distribution from Hektar REIT. In addition, S$2.9m of cash (0.35 S cents/unit) retained in 1HFY13 was distributed during the quarter. As a result, DPU jumped 10.0% to 2.98 S cents. For FY13, DPU came in at 10.93 S cents, up 9.2%. This is spot on with our DPU projection. We note that operational performance remained robust over the quarter, with portfolio occupancy maintained at a high 98.4%, while positive rental reversion of 10.8% was achieved. Noteworthy was the S$195.7m revaluation gain of its portfolio properties, which led to a 14.9% QoQ improvement in its NAV to S$1.77 and 2.8ppt drop in its gearing level to 27.6%. We will be attending FCT's analyst briefing later in the morning to get more colour on its outlook. Given the recent weakness in FCT's unit price performance, we are placing our S$1.96 fair value and Hold rating under review. (Kevin Tan) China Environment: Gearing up for higher demand China Environment Ltd (CEL) is a provider of industrial waste gas treatment solutions in China, which is likely to benefit from the Chinese government's increased focus on cleaning up the environment in China. At the invitation of CEL, we visited their new facility in Bengbu, Anhui Province, China, which houses 12 production buildings. We also visited one of its customers - Shanghai-listed Nanjing Iron & Steel Co (NIS) - to have a look at four dust elimination machines currently deployed in one of its facilities. CEL has built up to 15 such machines for NIS since 2004; but we understand that all these machines are due for upgrades to meet the increasingly higher discharge standards over the next few years. Currently, CEL has an order book of RMB241m as of Sep 2013, up from RMB66.8m as of end-Jun, which it expects to deliver over the next few months. Coupled with some RMB80m raised via a share placement recently, CEL adds that it has sufficient working capacity to take on bigger jobs. We currently do not have a rating on the stock. (Carey Wong)

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NEWS HEADLINES - US stocks finished little changed on Mon, with the S&P 500 adding a fraction to its record close and the Nasdaq Composite extending gains into a fourth session. - Share prices of Asiasons Capital, Blumont Group and LionGold Corp almost doubled in yesterday's trading after trading curbs were lifted. - PT Indofood Sukses Makmur plans to keep China Minzhong listed on the Mainboard of the Singapore Exchange, despite the public float falling to 4.4%. - ValueMax Group, Singapore's biggest pawnbroking chain by revenue, is seeking about S$70.4m in an IPO to expand its business. - TTJ Holdings has clinched new contracts worth S$41m for Downtown Line 2 jobs. - Civmec Ltd announced it had won S$210m worth of new contracts since its last announcement in end-Jul, boosting its order book to S$330m.