SG: MARKET PULSE: ComfortDelgro, Tat Hong, SingTel, KS Energy, Dyna-Mac (14 Nov 2013)

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.20

Stock Name: Tat Hong
Company Name: TAT HONG HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.90

Stock Name: SingTel
Company Name: SINGTEL

Research House: OCBC

Price Call: HOLD

Target Price: 3.81

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.50

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: HOLD

Target Price: 0.44

MARKET PULSE: ComfortDelgro, Tat Hong, SingTel, KS Energy, Dyna-Mac

14 Nov 2013

KEY IDEA ComfortDelGro: Excellent set of 3Q13 results ComfortDelGro's (CDG) 3Q13 results exceeded our expectations with revenue increasing 8.6% YoY to S$978.4m while operating profit and PATMI grew 4.8% YoY to S$122.4m and 5.4% YoY to S$76.7m, respectively. The newly acquired Metroline West bus service in UK was the main contributor to the improved results although the group also enjoyed a better showing by SBS Transit. We expect ComfortDelgro to end FY13 with another record PATMI figure as continued strong performances from its taxi, bus and vehicle inspection operations should offset any weakness in the other segments such as rail (due to the DTL start-up costs) and driving centre operations. Based on our higher adjusted FY13/14 earnings, our fair value estimate increases to S$2.20 (S$1.95 previously). Maintain BUY. (Lim Siyi) MORE REPORTS Tat Hong Holdings: No surprises in 2QFY14 results Tat Hong's 2QFY14 results remained weak as expected. Revenue fell 14.2% YoY to S$185.3m while operating profit declined by 33.9% to S$18.6m. Despite the poorer showing, management declared an interim dividend of 1 S cent vs. 1.5 S cents last year. Entering 2HFY14, we expect Tat Hong's performance to stay weak. Its Australian operations are unlikely to produce any turnaround until early FY15 (at its earliest) as sentiment remains poor. Nonetheless, some positives from stability in Singapore, Hong Kong and China operations should help to cushion some of the declines. As the street had factored in expectations for a weakened performance, we should not see sustained selling pressure on the counter. Adjusting our forecasts downwards slightly, our fair value falls to S$0.90 (S$0.96 previously). Maintain HOLD. (Lim Siyi) SingTel: In-line 1HFY14, no change to outlook Summary: SingTel posted 2QFY14 revenue of S$4163.1m, down 9% YoY and 3% QoQ, again weighed by weaker regional currencies (AUD, IDR and INR depreciated 10% YoY against SGD). Reported net profit was flat YoY and down 14% QoQ at S$870.4m; excluding exceptional items, core earnings was flat YoY and +1.4% QoQ at S$884.0m. 1HFY14 revenue slipped 7% to S$8456.4m, meeting 50% of our FY14 forecast, while reported net profit gained 4% to S$1881.4m; core earnings rose 3% to S$1781.0m, or 48% of full-year forecast. SingTel declared an interim dividend of 6.8 S cents, same as 1HFY13, representing a payout ratio of 61%. Meanwhile, SingTel has kept its FY14 guidance unchanged - it expects consolidated group revenue to decline by mid-single digit level and EBITDA to decline by low single digit level; EBIT will also fall by mid-single digit level. We will have more after the analyst teleconference later. For now, we maintain our HOLD rating but place our S$3.81 fair value (based on SOTP) under review. (Carey Wong) KS Energy: Business as usual KS Energy (KSE) reported a 7.4% YoY rise in revenue to S$173.3m and a net profit of S$320k in 3Q13 vs. S$14k in 3Q12, such that 9M13 revenue and net profit accounted for 81% and 47% of our full year estimates, respectively. The lower-than-expected net profit was mainly due to a higher-than-expected share of minority interest. However, we would not read too much into this, as small changes in items above the line can bring about huge swings in PATMI given the relatively small quantum of net profit; our fair value is also based on P/NTA instead of P/E valuation. Gross profit margin was similar at 25.7% in 3Q13 compared to a year ago. Pending more details from management, we maintain our HOLD rating but put our fair value estimate of S$0.50 under review. (Low Pei Han) Dyna-Mac Holdings: 3Q13 PATMI below expectations Dyna-Mac Holdings announced 3Q13 PATMI of S$5.3m, which was a decline of 47.9% YoY and also below our expectations. This was despite revenue growing 11.7% YoY to S$66.8m. The miss was largely attributed to a larger-than-estimated increase in administrative expenses, which jumped 36.0% YoY to S$10.1m. For 9M13, revenue rose 44.2% to S$203.5m but PATMI was relatively flat (-0.2%), coming in at S$19.6m. Total YTD new order wins for Dyna-Mac was S$318m, and this has already surpassed that for FY12. Net order book stood at a healthy S$346m as at 13 Nov 2013 (versus S$215m as at 8 Nov 2012). We will meet up with management later for more details. Due to a change in analyst coverage, our previous Hold rating and S$0.44 fair value estimate is under review. (Wong Teck Ching Andy)

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