SG: MARKET PULSE: UOL, Venture, FEHT, United Envirotech (11 Nov 2013)

Stock Name: UOL
Company Name: UOL GROUP LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 7.16

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 8.50

Stock Name: Far East HTrust
Company Name: FAR EAST HOSPITALITY TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 0.92

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.975

MARKET PULSE: UOL, Venture, FEHT, United Envirotech

11 Nov 2013

KEY IDEA UOL Group: Two residential launches ahead in 1H14 Summary: 3Q13 PATMI increased 6% YoY to S$93.5m with higher contributions from ParkRoyal on Pickering and Pan Pacific Serviced Suites Beach Road (which opened in 1Q13 and 2Q13, respectively) and profits from JV companies. We judge these results to be mostly within expectations, and YTD core PATMI, adjusted for one-time items, now cumulates to 70% of our FY13 forecast. UOL is looking to launch both remaining domestic land bank sites (Sengkang West Way and St. Patrick's Garden) as early as 1Q14 after a fairly successful launch at Thomson Three, which is now ~76% sold with ASPs just shy of S$1.4k psf. In addition, the group reports that it has now launched all four blocks of the Esplanade in Tianjin China, achieving a ~90% take-up rate, and its Jalan Conley project in Kuala Lumpur continues to be on target for its launch in 4Q13. Upgrade to BUY on valuation grounds with an unchanged fair value estimate of S$7.16 (20% RNAV disc.). (Eli Lee) MORE REPORTS Venture Corp: Navigating the uncertain environment Summary: Venture Corp's (VMS) 3Q13 revenue fell 3.4% YoY to S$588.5m but PATMI rose 7.7% to S$35.1m. Results were within our expectations, with 9M13 revenue of S$1,706.7m (-4.9%) and PATMI of S$93.1m (-8.4%) constituting 74.2% and 69.1% of our FY13 forecasts, respectively. We are expecting further sequential improvement in its financial performance in 4Q13. While VMS's Printing & Imaging division was its weakest performer on a YoY basis with revenue falling 28%, we believe the situation is stabilising. Meanwhile, management remains focused on growing its market share with existing customers and penetrating new businesses with exciting growth prospects in light of the current uncertain macroeconomic environment. We roll forward our valuations on VMS to 15x FY14F EPS, and derive a higher fair value estimate of S$8.50 (previously S$7.94). Coupled with an attractive prospective dividend yield of 6.4%, we reiterate our BUY rating on VMS. (Wong Teck Ching Andy) Far East Hospitality Trust: 3Q13 results in line Summary: Far East Hospitality Trust (FEHT) announced 3Q13 results that were in line with ours and the street's expectations. 9M13 distribution per stapled security of 4.22 S cents formed 74% of ours and 73% of the street's prior FY13 forecasts. Gross revenue for was S$31.5m or 9.4% lower than management's forecast (based on IPO prospectus and the circular for the acquisition of Rendezvous). RevPAR for the hotels, excluding the Rendezvous property (which was acquired on 1 Aug), was S$167.1, down 2.7% YoY mostly due to price competition in the sector. Net property income was 9.4% below forecast at S$28.5m. Income available for distribution was S$24.2m or 7.4% below forecast. 3Q13 distribution per stapled security was 1.41 S cents or 7.8% lower than forecast. However, we emphasize that the results were within expectations for the market. We maintain our FV of S$0.92 and HOLD rating on FEHT. (Sarah Ong) United Envirotech: 1HFY14 earnings below forecast Summary: United Envirotech Ltd (UEL) reported 2QFY14 revenue of S$52.0m, down 3.6% YoY but up 17.9% QoQ, driven by higher recurring water treatment revenue (+56.6% YoY, +20.1% QoQ) to S$15.5m. While net profit was down 11.7% YoY to S$7.1m, it was up 24.4% QoQ. For 1HFY14, revenue climbed 11.7% to S$96.0m, or 45.9% of our FY14 forecast, while net profit slipped 7.9% to S$12.9m, meeting 28.9% of our full-year estimate, mainly due to higher-than-expected operating and interest expenses. We will be speaking with management shortly for more updates. In the meantime, we place our Hold rating and S$0.975 fair value UNDER REVIEW. (Carey Wong)

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NEWS HEADLINES - US stocks rose on Fri after a stronger-than-expected Oct jobs report, leading to a record close for the Dow and a fifth straight weekly gain for both the Dow and the S&P 500. - The residential resale property market softened in Oct, with prices falling for both private and public homes, according to a report by the Singapore Real Estate Exchange. - Cosco Corporation (Singapore) has secured a letter of intent for two potential contracts, each worth more than US$200m. - LionGold said the group is expecting to report a loss before tax for 1HFY14. - Chasen Holdings will be raising more than S$13m through a renounceable non-underwritten rights issue of up to 112m warrants. - Sapphire Corporation saw its 3Q13 net loss widen to S$52.3m, compared to a S$3.6m loss last year, due mainly to impairment costs of S$46.4m.