SG: MARKET PULSE: SembCorp, Fortune REIT, Goodpack, Nam Cheong (12 Nov 2013)

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.67

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 6.95

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.87

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.35

MARKET PULSE: SembCorp, Fortune REIT, Goodpack, Nam Cheong

12 Nov 2013

KEY IDEA Sembcorp Industries: Overall steady Summary: Sembcorp Industries (SCI) reported a 30.8% YoY rise in revenue to S$2.97b and a 40.4% increase in net profit to S$254.4m in 3Q13, such that 9M13 revenue and net profit accounted for about 74% and 78% of our full year estimates, respectively. Stripping out one-off items, we estimate core net profit in 9M13 to be S$528.3m, accounting for about 71% of our full year estimate. The utilities business remained generally stable, but the UK side saw an impairment, mainly for power and steam assets. Meanwhile, with the deconsolidation of Sembcorp Salalah, SCI has turned from a net debt to a net cash position. We roll forward our valuation to FY14F earnings for the utilities business, and tweak our SOTP-based valuation to account for Salalah's listing on the Muscat stock exchange, resulting in an increase in our fair value estimate to S$6.67 (prev. S$6.48). Maintain BUY. (Low Pei Han) MORE REPORTS Fortune REIT: 3Q13 is line; counter is oversold Summary: FRT reported 3Q13 results that were generally in line with ours and the street's expectations. Revenue rose 10.7% YoY to HK$315.7m. Income available for distribution climbed 10.6% YoY to HK$153.3m, however, DPU increased by only 1.5% to 8.28 HK cents because of the placement units (representing an increase of 8.4% over the number of prior units) issued on 6 Aug. Income from Fortune Kingswood started contribution from 9 Oct. FRT's unit price has fallen 11% since 29 Jul (closing price of HK$7.14), the day before it announced the MOU for Kingswood. We believe the counter has been oversold. We tweak our FV slightly to HK$7.01 from HK$6.95. On valuation grounds, we upgrade FRT to a BUY from Hold. We believe that the reflection of the maiden contribution by Fortune Kingswood in the 4Q13 results will be a significant positive catalyst; we forecast 4Q13 DPU of 10.0 HK cents. (Sarah Ong) Goodpack Limited: 1QFY14 results in-line Summary: Goodpack's 1QFY14 results came in within expectations with revenue increasing 7.7% YoY to US$52.1m following greater demand by customers in the rubber industry. The company also managed to keep operating margins relatively stable despite incurring higher depreciation and financing costs from having a larger IBC fleet. As a result, operating profit and PATMI grew by 11.8% YoY to US$19.3m and 7.2% to US$13.9m, respectively. For the remaining quarters, we expect top-line growth to sustain as its key clients' synthetic rubber (SR) operations in Singapore ramp up operations. In terms of margins, we had previously factored in some margin deterioration but the decent 1QFY14 performance gives us some cause for optimism for the rest of year. Nonetheless, we leave our conservative FY14F projections intact but incorporate a slower pace of debt repayments. This causes our DCF-derived fair value to rise to S$1.87 (S$1.69 previously). However, Goodpack's share price has risen by more than 23% since late-Aug, we believe that much of the upside has been priced in at this point. Downgrade to HOLD. (Lim Siyi)

Nam Cheong: 3Q13 bottomline above expectations Summary: Nam Cheong Limited reported a solid set of 3Q13 results this morning, with revenue surging 140.4% YoY to MYR341.2m and PATMI jumping 86.0% to MYR58.7m. Revenue was in-line with our expectations but PATMI exceeded, with 9M13 revenue of MYR851.3m (+71.1%) and PATMI of MYR135.2m (+54.9%) forming 72.4% and 83.4% of our FY13 forecasts, respectively. This strong set of results was driven by both its Shipbuilding and Vessel Chartering divisions. The former saw a 141.9% YoY increase in revenue to MYR319.7m for 3Q13, while the latter's revenue jumped almost threefold to MYR21.5m. But due to a change in analyst coverage and pending an analyst briefing later, we place our Buy rating and S$0.35 fair value estimate on Nam Cheong under review. (Wong Teck Ching Andy) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks crept higher on Mon, giving the Dow Jones Industrial Average its 35th record close this year. - Real estate and business trust offerings may be a harder sell in the coming months, as the market shifts towards expectations of higher interest rates. - Despite a jump in revenue, Yongnam Holdings reported a 3Q13 net loss of S$3.4m, compared with a net profit of S$10.3m a year ago. - Vicom's 3Q13 net profit rose 6.1% YoY to S$6.78m, with revenue rising 6.9% to S$26.09m as business volume grew. - Super Group posted a 17% fall in 3Q13 net profit to S$18.7m, from S$22.6m a year ago. - QAF Limited saw 3Q13 net profit slide 11% YoY to S$3.8m, hit by weaker margins for an Australian pork producing.