SG: MARKET PULSE: Golden Agri, ASL Marine, Swiber (10 Jun 2013)

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.63

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: Golden Agri, ASL Marine, Swiber

10 Jun 2013

KEY IDEA Golden Agri-Resources: Modestly firmer CPO boost Summary: Golden Agri-Resources (GAR), being one of the largest palm oil plantation owners in the world, should benefit from the recent rebound in CPO (crude palm oil) prices to MYR2450/ton; we note that there is a strong historical correlation of nearly 0.7 between CPO prices and GAR share price. While the general outlook for commodities is still uncertain (as China's economic growth continues to sputter along), we believe that headwinds appear to be dissipating. Furthermore, management remains fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Maintain BUY with an unchanged S$0.63 fair value (based on 12.5x FY13F EPS). (Carey Wong) MORE REPORTS ASL Marine: Ceasing coverage Summary: Among the various offshore and marine stocks, ASL Marine (ASL) is one of the counters with a more diversified business model. Its shipbuilding operations accounted for 46% of gross profit in 9MFY13, ship-repair and conversion accounted for 22%, while ship-chartering contributed 32%. The group expects the outlook of the offshore and marine industry for this year to be "good", but margins may be impacted by stiffer competition from Chinese shipyards. The long-term future of ASL looks bright, but more time would likely be needed for significant earnings growth and a re-rating of the stock. In particular, the liquidity of the stock is relatively low, partly due to the free float of ~37.8%. We last rated ASL a Buy with a fair value estimate of S$0.86. Due to a re-allocation of internal resources, we are ceasing coverage on this counter. (Low Pei Han) Swiber Holdings: More work coming up? Summary: According to Upstream, PEMEX is preparing to begin a bid process that aims to offer a contract to deliver and install four Ayatsil platforms. The group is in the pre-qualification phase for the contract, and heavy-lift contractors such as Saipem, Heerema and Swiber Holdings are said to be interested. The entire package is estimated to be worth ~US$300m. Swiber recently saw its share price run up about 23% from 14 May (pre-1Q13 results announcement) to its close on Friday, after we upgraded our rating from Hold to Buy. However we still see an upside potential of about 12% over a one-year time frame. Maintain BUYwith S$0.86 fair value estimate. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Sembcorp Industries Ltd. reports solid waste management unit getting a S$299m contract from NEA to provide refuse collection and recycling services to the City-Punggol sector of Singapore. - British automaker Rolls-Royce has won a contract to supply engines and support 50 of Singapore Airlines' Boeing Dreamliner jets in a deal worth US$4b at list prices. - Asian Pay Television says asset manager Thornburg Investment to raise stake in the company; buying 73.8m shares for S$53.6m. - Halcyon Agri Corp. (HACL SP) reports listing of 40m new shares at S$0.5175 each. - Armarda Group (AMDA SP) names Chu Yin Ling Karen as CFO. Chu Yin Ling was previously the Financial Controller of Armarda Group Ltd since July 2009.

SG: MARKET PULSE: Wilmar, ASL Marine, FEH Trust, Breadtalk, Ezion (9 May 2013)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.90

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.77

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.35

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

Research House: OCBC

Price Call: HOLD

Target Price: 1.01

MARKET PULSE: Wilmar, ASL Marine, FEH Trust, Breadtalk, Ezion

9 May 2013

KEY IDEA Wilmar: Decent 1Q13 showing - maintain BUY Summary: Wilmar International Limited (WIL) posted a pretty decent start to the year, with revenue of US$10.2b and core earnings of US$313.7m meeting 20.5% and 23.6% of our full-year forecast, respectively. Going forward, management remains confident that WIL will be able to overcome the difficult environment expected for the rest of 2013. While lower palm oil prices will continue to weigh on its Plantation business, cheaper feedstock would boost its downstream businesses, especially Consumer Products. WIL notes that the bird flu in China will affect meal consumption in the short term but it does not expect to have a long-term effect. As such, WIL remains optimistic about China's long-term prospects. Maintain BUY with S$3.90 fair value (based on 15x FY13F EPS). Over the longer term, we are also cautiously positive on the company's expansion in Africa and potentially Myanmar. (Carey Wong) MORE REPORTS ASL Marine: Still positive on its outlook Summary: ASL Marine (ASL) reported a 26.6% YoY rise in revenue to S$144.0m and a 21.0% increase in net profit to S$9.6m in 3QFY13, such that 9MFY13 net profit accounted for about 71% of our full year estimates, within our expectations. Gross margin dropped from 14.0% in 3QFY12 to 13.0% in 3QFY13, and this was mainly due to lower shipbuilding margins and the inclusion of the Vosta LMG business. Looking ahead, the group expects the outlook of the offshore and marine industry for this year to be "good", although competition seems to be increasing. We like ASL for its prudent management, healthy order books, diversified business model and growth potential from Vosta over the longer term. Maintain BUY with S$0.86 fair value estimate, based on 10x blended FY13/14F core earnings. (Low Pei Han) Far East Hospitality Trust: 1Q13 in line Summary: Far East Hospitality Trust (FEHT) reported 1Q13 results that were in line with ours and the street's expectations. Compared to forecast numbers in its prospectus, 1Q13 gross revenue at S$28.1m was 4.2% lower. DPU of 1.38 S cents is 3.0% higher than the 1.34 S cents forecasted, chiefly due to lower finance costs and other trust expenses. 1Q13 hotel RevPAR at S$161 was comparable to 1Q12 (S$162), and reasonably good given the soft 1Q13 for the industry, which saw RevPAR fall 3%. Adjusting our FY13F revenue assumptions downwards slightly, our RNAV-based fair value falls from S$1.05 to S$1.01 and we maintain a HOLD rating on FEHT. We estimate a FY13 yield of 5.4%. (Sarah Ong) BreadTalk Group: Still pricey for now Summary: BreadTalk's 1Q results came in within our expectations with revenue growing 13.4% YoY to S$120.3m on the back of broad segment increases while operating and PATMI increased by 45.6% and 46.0% to S$3.5m and S$2.1m respectively. Although BreadTalk's move to its new headquarters next month will bring about improvements to its production efficiency and operating expenses, we do not expect cost savings to materialize in the immediate quarters due to the incurrence of transitional expenses. As such, we leave our FY13 projections unchanged. In terms of its share price, we remain cautious at this juncture as current valuations are still too expensive in our view. Coupled with an unattractive dividend yield of 1.0%, we maintain our SELL rating with an unchanged fair value of S$0.77. We will look to re-evaluate the counter once speculative interest arising from the MINT acquisition wanes. (Lim Siyi) Ezion Holdings: 1Q13 results in line Summary: Ezion Holdings (Ezion) reported a 79.3% YoY rise in revenue to US$54.8m and a 227.8% increase in net profit to US$46.2m in 1Q13. Excluding one-off items such as US$17.8m worth of disposal gains, recurring net profit is estimated to be about US$28.4m, accounting for 20% of our full year estimate. This is within our expectations as we are expecting stronger quarters ahead as more assets are deployed, and additional contributions from the APLNG and GLNG projects. Gross profit margin remained healthy at 44.9% vs 44.4% in 1Q12. Pending an analysts' briefing later in the morning, we maintain our BUYrating but place our fair value estimate of S$2.35 under review. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Sembcorp Industries recorded 1Q13 net profit of S$176.9m, little changed from a year earlier. - WBL Corporation reported a loss of S$11.4m for 2Q13, compared to net profit of S$20m for the corresponding period a year ago. - ARA Asset Management's 1Q13 net profit fell 16% YoY to S$16.8m, mainly due to lower acquisition, divestment, and performance fees. - Pacific Andes Resources Development has reported a 3% drop in 2QFY13 net profit to HK$322.2m (S$51m). - Sing Holdings Ltd's 1Q13 net profit more than doubled to S$15.8m on higher revenue recognition from its freehold development project - The Laurels, at Cairnhill Road. - Tiong Woon Corporation returned to the black with a net profit of S$3.92m for 3QFY13, compared with a net loss of $373,000 a year earlier. - Investors have overwhelmingly backed the listing of Croesus Retail Trust, with the total placement tranche and public offer 22.4x subscribed. - Oxley Holdings' S$150m bond issue has been oversubscribed some 17x by investors.

MARKET PULSE: Oil & Gas Sector, Tiger Airways (6 Mar 2013)

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.33

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.84

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.86

MARKET PULSE: Oil & Gas Sector, Tiger Airways

6 Mar 2013

KEY IDEA Oil and Gas sector: Valuations still not stretched Similar to 3Q12, companies in the sector presented investors with 4Q12 earnings that were mostly in line, save for a few such as Ezra Holdings (below) and STX OSV (below). Stocks in the oil and gas sector have performed well YTD, especially the small to mid cap firms. However, we note that many are still trading at or slightly above mid-cycle valuations, suggesting that multiples are not overly stretched as long as the economic recovery remains intact. Recovering earnings, sustainable earnings growth and continued contract wins for a select few are expected to be the main drivers ahead. Though we have an OVERWEIGHT rating on the oil and gas sector, investors are advised to be selective. We favour companies with earnings growth or sustainability backed by a strong order book and a positive outlook for their industry sub-segment. As such, our preferred picks are Ezion Holdings [BUY, FV: S$2.33], ASL Marine [BUY, FV: S$0.86], Keppel Corporation [BUY, FV: S$12.68] and Sembcorp Marine [BUY, FV: S$5.84]. (Low Pei Han) MORE REPORTS Tiger Airways: Positioning for growth Tiger Airways (TGR) announced yesterday that it plans to raise S$297m through a renounceable one-for-five rights issue and a non-renounceable one-for-four preferential offering of perpetual convertible securities. Although this is nearly twice the amount raised in 2011, it is necessary for the group to maintain its operational push towards its goals and was not unexpected by the street. Looking beyond the short-term jitters in terms of its share price, we wish to highlight that TGR is still on track to close out the year on a positive note, and this revitalisation of its balance sheet will give it the flexibility it needs to nurture its existing ventures. With the weak macro-environment continuing to favour budget airlines such as TGR, we leave our forecasts unchanged. Reiterate BUY at an unchanged fair value estimate of S$0.86. (Lim Siyi)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The Dow Jones rose 0.9% to clock a new high on Tuesday, surpassing levels reached more than five years ago, on indications of an improving US economy. - The Singapore government said it wants to raise the capabilities of Singaporeans as well as to calibrate the existing work pass framework. - Members of parliament said the Wage Credit Scheme may benefit larger multinational companies and government-linked firms more than the SMEs. - TTJ Holdings Limited said it had secured multiple projects totalling S$20m for the supply of structural steelworks and civil defence shelter doors in Singapore. - STATS ChipPAC said it will issue US$255m of 4.5% senior notes due 2018 in a private placement. - WE Holdings Ltd said it has received the nod from the SGX on 1 Mar to list and quote its S$6.2m placement shares on the Catalist board.

MARKET PULSE: ASL, Goodpack, CMA, Viz Branz, Karin, PEC, Midas (7 Feb 2013)

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.95

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.74

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.295

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.60

MARKET PULSE: ASL, Goodpack, CMA, Viz Branz, Karin, PEC, Midas

7 Feb 2013

KEY IDEA ASL Marine: Can afford to be selective of new orders ASL Marine (ASL) reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that results were in line with our expectations. Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments. Given ASL's busy yards and healthy order book (S$528m as at 31 Dec 2012), we understand that the group will aim to start securing orders only after Jun this year. Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI's 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY. (Low Pei Han) MORE REPORTS Goodpack Limited: Promising prospects Goodpack's 2Q13 revenue increased by 6.4% YoY to US$46.4m following continued growth from its Synthetic Rubber (SR) segment. Operating profit rose by a corresponding 15.4% to US$16.2m - despite operating expenses rising by 7.1% YoY to US$31.8m - and PATMI gained 4.0% YoY to US$11.1m. We raise our FY13 and FY14 outlook on sustained improvements within the SR space as tyre demand holds up and new SR plants open in Singapore. Aided by two recent key contract wins, Goodpack stands in good stead to benefit once production from these SR plants ramp up in the middle of CY2013. As a result, we upgrade Goodpack to BUY and our fair value estimate increases to S$1.95 from S$1.85 previously. (Lim Siyi) CapitaMalls Asia: Good round-off to FY12 CapitaMalls Asia (CMA) reported 4Q12 PATMI of S$184.8m - decreasing 10% YoY mostly due to lower fair value gains from its properties in China and Singapore. This brings FY12 PATMI to S$546.0m, up 19.7%. Excluding revaluation gains and portfolio gains, FY12 PATMI adjusts to a core figure of S$175.7m, which we judge to be mostly in-line and only 3.2% below our FY12 forecast of S$181.5m. We continue to view CMA favorably and see its share price likely benefitting from dual tailwinds ahead: 1) increasing operational traction, as a larger component of CMA's portfolio becomes operational, and 2) relatively firm retail outlooks in China and Singapore. Maintain BUY with an unchanged fair value estimate of S$2.55. (Eli Lee) Viz Branz Limited: Continued margin improvement Ongoing competitive pressures in Myanmar caused Viz Branz (VB) to report a 5.6% YoY decline in 1H13 revenue to S$86.1m. However, favourable raw material costs and a reduction in administrative expenses saw operating profit and PATMI rise by 6.7% YoY to S$13.6m and 4.0% YoY to S$10.1m respectively. VB's management also declared an interim dividend of 1 S cents, which was similar to last year's interim payout. With the performance coming in within our expectations, our 2H13 forecasts remains unchanged, and we retain our fair value estimate of S$0.74. While the lack of progress on a GO will disappoint investors, we reiterate our view that a deal is likely to materialize. Maintain BUY. (Lim Siyi) Karin Technology: Leveraging on smartphones for growth Karin Technology's (Karin) 1HFY13 revenue surged 39.7% YoY to HK$2,123.3m, exceeding our expectations (54.4% of our FY13 forecast). However, estimated core PATMI of HK$26.8m (+5.1% YoY) was in line due to lower-than-expected gross margin, forming 50.1% of our full-year projection. Karin's strong revenue growth was driven largely by its Consumer Electronics Products and Components Distribution segments, which have significant exposure to the growing smartphone market. An interim dividend of 7.2 HK cents/share was declared. Our forecasted FY13F dividend yield stands at an attractive 7.7%. We retain our core PATMI projections, but raise our PE multiple peg from 6x to 7x in light of the improved market sentiment and Karin's stronger financial position. We also roll forward our valuations to blended FY13/14F EPS and our fair value estimate increases from S$0.25 to S$0.295, partially offset by a lower HKD-SGD assumption. Maintain HOLD.(Wong Teck Ching Andy) PEC Ltd: Ceasing coverage PEC Ltd reported another quarter of lackluster result with 2Q13 PATMI falling 15% YoY to S$2.6m despite revenue increasing by 11% to S$144m. Gross margin declined to 14% (2Q12: 20%) due to competitive pricing and cost pressures in both the project work and maintenance sectors. Other operating expenses also jumped 55% YoY to S$12.4m from cost increases associated with higher headcount (i.e. accommodation, transport expenses, etc). Besides the tight labour market, PEC's earnings growth is also limited by slower pace of petrochemical investments due to a change in EDB's energy policy. Meanwhile, we note that its share price has risen by almost 11% since our last report. We now see limited upside ahead and think that its earnings are likely to remain sluggish. Therefore, we CEASE COVERAGEon the stock due to the lack of medium-term price drivers and muted earnings outlook. (Chia Jiunyang) Midas Holdings: JV clinches CNY710m metro contract Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched a metro contract worth CNY710m. This encompasses the supply of 24 train sets, or 104 train cars for the Ningtian Intercity Line Phase 1 project. Delivery is scheduled to take place only from 2014 to 2015, but this could lead to potential contract wins for Midas as it is a supplier of NPRT. We note that this is NPRT's second announced contract order of the year. Total contract wins amount to ~CNY1.05b for NPRT YTD. While NPRT has been a drag on Midas' earnings in FY12, we believe that its fortune would likely reverse from FY13 given its order book schedule on hand. Midas' share price is likely to react positively as a result of this announcement. Maintain BUY and S$0.60 fair value estimate, pegged to 1.2x FY13F P/B. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks eked out modest gains on Wed after earnings from Time Warner Inc and others reinforced a theme of steady improvement for consumer companies. The Dow ended a choppy trading day up 7.22 points, or 0.1%, at 13,986.52. - Further foreign labour curbs could jeopardise Singapore's position as a business hub for the Asia-Pacific region, according to the Singapore International Chamber of Commerce. - Nielsen's latest survey showed that Singapore could see a potential slowdown in consumer spending in 2013. - Global Logistic Properties' PATMI grew 30.7% YoY to US$112.8m in 3QFY13, boosted by fair value gains in investment properties and higher rents in China. - Pacific Andes Resources Development Limited posted a 42.5% YoY increase in 1QFY13 PATMI to HK$199.0m despite a 3.0% slip in revenue.

MARKET PULSE: KSH Holdings, ASL Marine (21 Sep 2012)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.50

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.82

MARKET PULSE: KSH Holdings, ASL Marine

21 Sep 2011

KEY IDEA KSH Holdings: Earnings growth at deep value - upgrade to BUY Summary: Due to a rapid sales pickup at a key project, Cityscape@Farrer Park, we now forecast for FY13 (ending Mar 13) earnings to surge 68%. Similarly, we expect FY14 earnings to increase 73%. We see sustained earnings growth as a key price catalyst ahead, particularly as continued market liquidity seeks out deep value laggards like KSH (0.6x trailing PB, 3x FY13E PE). We also note KSH has been actively buying back shares near current levels - which management views as severely undervalued - and has a mandate to purchase up to a quarter of its free float, with ample cash (S$53m) to do so. Finally, we see a major re-rating as likely imminent given KSH's transition, over the last two years, from a cash-hoarding contractor to an property player actively managing shareholders' capital - deploying capital into accretive site acquisitions and returning excess cash via dividends and share buy-backs. Upgrade KSH to BUY as our key small-cap conviction idea. Our FV increases to S$0.50, from S$0.26 previously, as we lower the RNAV discount to 50% to reflect active capital management, better-than-expected real estate execution, and a still resilient construction order book. (Eli Lee) MORE REPORTS ASL Marine: A worthy stock amidst the rising tide Summary: Announcement of QE3, while long-expected, has helped buoy sentiment across the board. However, amidst the rising tide, investors are well-advised to pick stocks that can stand the test of time. In the small-mid cap space, ASL Marine's (ASL) diversified business model means it is positioned to capitalise on the recovering newbuild market (driven by offshore support vessels), while still being supported by its healthy shiprepair and chartering operations. Management has turned more positive but more importantly, we also expect the group to double its capex to about S$115m (mainly to expand shipcharter fleet and deepen waterfront) in FY13 compared to just S$67m in FY12. With an upside potential of about 27%, we maintain our BUY rating on the stock with S$0.82 fair value estimate. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The Dow rose 0.14% to 13,596.93, posting its third consecutive gain. The S&P 500 Index fell 0.05% to 1,460.26. Stocks dropped in early Thursday trading, with weak China economic data and higher-than-expected US jobless claims. Indexes reclaimed most of the lost ground. - United Envirotech's 70%-owned subsidiary has signed a deal to acquire an industrial wastewater treatment plant in Shandong, China. The first phase of the project will cost RMB120m (S$23.2m). - Sarin Technologies has launched a new version of its best-selling rough-diamond planning software - the AdvisorTM 5.0, which can further improve the value of the polished diamonds derivable from the rough raw material. - TA Corporation will preview the group's latest residential development, Gambir Ridge, which is located close to the Bartley and Woodleigh MRT stations. - Advanced Systems Automation has agreed to acquire 45% of the issued shares of Auramas Teknologi Sdn Bhd for a consideration of MYR7.7m, to be satisfied by a MYR100k cash payment and an allotment and issue of shares for the remaining MYR7.6m. - Texchem-Pack Holdings has subscribed for an additional six million shares in Texchem Polymers Sdn Bhd for MYR6m (S$2.4m).

MARKET PULSE: Midas, ASL Marine, ECS, KS Energy, Swiber, Wilmar (16 Aug 2012)

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.41

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.82

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.52

Stock Name: KS Energy
Company Name: KS ENERGY LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.83

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.66

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 2.90

MARKET PULSE: Midas, ASL Marine, ECS, KS Energy, Swiber, Wilmar

16 Aug 2012

KEY IDEA Midas Holdings: Time to board the train Midas Holdings (Midas) reported a dismal set of 2Q12 results, with PATMI plunging 97.5% YoY to RMB1.6m on the back of a 30.0% dip in revenue to RMB219.8m. Results were significantly below ours and the street's expectations. Interim DPS was also lowered from 0.5 S cents in 1H11 to 0.25 S cents in 1H12. Nevertheless, there is growing optimism of a recovery in China's high-speed railway (HSR) sector. We believe that FY12 would be a non-event for Midas as it is transitioning into a recovery in FY13. We upgrade Midas from Hold to BUY as we switch our valuation matrix to 0.8x FY13F P/B. This is premised on an anticipated pick up in Midas' orders win momentum and likelihood of a resumption of HSR passenger train car contracts by China's Ministry of Railways in the near future, which would provide a catalyst for Midas' share price. Our new fair value is S$0.41 (previously S$0.30). (Wong Teck Ching Andy) MORE REPORTS ASL Marine: Progressing on all fronts ASL Marine (ASL) reported a 26.3% increase in revenue to S$117.0m and a 42.3% rise in net profit to S$8.3m in 3QFY12 such that FY12 net profit (S$32.3m) accounted for 99% and 97% of ours and the street's full year estimates, respectively. Excluding a provision made due to a customer's financial difficulties, PATMI would have been S$37m. Management shared that it will focus on securing more repair and conversion jobs for FSOs, FPSOs and oil rigs. The group has also seen increased activity in the OSV market. ASL's shipbuilding order book stood at about S$586m as at 30 Jun, and 53% of this is should be recognized in FY13, providing good earnings visibility. We adjust our estimates with the improved outlook, and our fair value estimate rises from S$0.75 to S$0.82. Maintain BUY. Meanwhile, ASL has also declared a final cash dividend of 1.75 S cents per share, up from 1.5 S cents last year. (Low Pei Han) ECS Holdings: Focusing on key initiatives ECS Holdings' (ECS) 2Q12 PATMI declined 24.2% YoY to S$8.1m on the back of a 3.0% fall in revenue to S$823.6m. We estimate that its core earnings fell 23.1% YoY to S$7.4m. Results were below our expectations. Going forward, we continue to expect a sequential improvement in its 2H12 results, given new product launches by major IT vendors and management's focus to drive its higher-margin Enterprise Systems business. Nevertheless, as the global economic backdrop remains uncertain, we pare our FY12/13F revenue and core PATMI forecasts by 7.1/8.9% and 13.8/14.9%, respectively. This is partially mitigated as we also roll forward our valuations to 5.8x blended FY12/13F core EPS, deriving a new fair value estimate of S$0.52 (previously S$0.555). Maintain BUY on cheap valuations, with the stock trading at FY13F PER of 5.0x and P/NTA of 0.51x. (Wong Teck Ching Andy) KS Energy: Slowly turning around KS Energy (KSE) reported a 23.4% fall in revenue to S$151.6m and a net profit of S$692k in 2Q12 vs. a net loss of S$5.5m in 2Q11, such that results were within our expectations. 2Q12 marks the group's first quarterly net profit after nine consecutive quarters of net losses, and results were also not boosted by any significant one-off gains, unlike 1Q12. Management is still "working on various options" to meet a possible funding requirement for its convertible bonds. Though businesses in both distribution and drilling are improving, we are conservatively forecasting a net loss of S$3.5m for now, which is a significant improvement from FY11's S$78.8m net loss. Rolling over our valuation to 1.1x blended FY12/13F NTA, our fair value estimate slips slightly from S$0.85 to S$0.83. Maintain HOLD. (Low Pei Han) Swiber Holdings: Continues to execute in 2Q12 Swiber Holdings (Swiber) reported a 27.1% YoY rise in revenue to US$229.6m and a 103.9% YoY increase in net profit to US$15.1m in 2Q12, boosted by one-off gains of about US$10m. 1H12 revenue and core net profit accounted for about 55% and 57% of our full year estimate, largely within our expectations. The group has been active in the bond market in the past few months, which is not surprising given the amount of debt obligations that are coming up. As of Aug 2012, the group's order book stood at about US$1.6b and is expected to contribute to its performance over the next two years. Looking ahead, Swiber is still bidding for more projects in the pipeline given the positive industry outlook. However, given limited upside potential, we maintain our HOLD rating on the stock with a fair value estimate of S$0.66 (prev. S$0.63). (Low Pei Han) Wilmar: HOLD with new S$2.90 fair value Wilmar International Limited (WIL) reported a very disappointing set of 2Q12 results. Although revenue grew by 4.3% YoY to US$11,019.7m, core net profit declined 55% YoY to US$172.3m. WIL has declared an interim dividend of S$0.02/share, versus S$0.03 in 1H11. Management expects near-term operating environment to remain "challenging" in China, due to excess capacity in oilseeds crushing. Its Consumer Products business could also see margin squeeze due to rising input prices (especially from soy beans), while ability to raise selling prices may need approval from the Chinese government. To reflect the dismal 1H12 performance and still-tough operating environment, we pare our FY12 earnings forecast by 30% (FY13 by 23%). Based on a more conservative 12.5x blended FY12/FY13F EPS, versus 13.5x FY12F EPS previously, our fair value drops to S$2.90 (from S$3.87 previously). Maintain HOLD as stock is already more than two standard deviations below its 3-year average P/B. (Carey Wong)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Demand for private residential homes excluding executive condominiums rebounded in Jul, with 1,943 units snapped up, 42% more than the 1,371 units sold in Jun. - Singapore retail sales for Jun slipped 0.9% YoY, dragged down by motor vehicles. Excluding motor sales, retail sales were up 2.3%. - Mr Oei Hong Leong raised his offer for a 29.9% stake in Intraco to S$0.70 per share, nudging past a rival bid by two cents. This values Intraco at about S$69m. - Cordlife Group has entered into a share purchase agreement to buy a 10% stake in China Cord Blood Corporation for US$20.8m. - Singapore Refining Company, the joint venture of oil giants PetroChina and Chevron, is set to embark very shortly on a US$500+m upgrading of its Jurong Island facility.

ASL Marine Holdings rated 'buy' by DBS

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.83

DBS Vickers Securities in an Apr 17 research report says: "ASL Marine announced that it has secured another $132.5 million worth of shipbuilding contracts for 4 tugs and 1 PSV, bringing FY2012 (FYE June) YTD order wins to $481 million, exceeding our existing order win assumption of $380 million.

"These order wins will boost ASL’s shipbuilding orderbook to close to $650 million, implying book-to-bill ratio of 2.5x. Given the latest set of contract wins, we revise up FY2013F earnings up by 6% to $45 million.

"Our revised target price of 83 cents is pegged to 7x PE on blended FY20-12/2013F earnings for its shipbuilding and chartering businesses, and 10x for shiprepair. Current valuations are undemanding, with the counter trading at 5.5x FY13 PE (FYE June) and 0.6x FY13 P/BV. MAINTAIN BUY."

ASL Marine - Bright spot among Batam's shipbuilders

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.72

Target S$0.72

ASL continues to perform admirably amid a still-mixed Asia market for OSV. Its latest orders worth S$132.5m raise its FY12 order intake to match that of booming FY07. Its backlog should easily support 3-years' earnings CAGR of 10%, even if no orders are secured in FY13-14. Factoring in the latest order wins, we lift our FY12-14 EPS by 1-4%. Our target price remains intact, still based at 0.8x CY12 P/BV. Maintain Outperform. We see catalysts from strong order wins and results.

Source: CIMB Daybreak - 17 April 2012, Full PDF Report

ASL Marine Holdings upgraded to 'buy' by OCBC

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.68

OCBC Investment Research in a Feb 13 research report says: "ASL Marine (ASL) reported a 25.0% fall in revenue to $77.4 million and a 24.3% drop in net profit to $7.6 million in 2QFY12. Excluding exceptional items comprising such as vessel disposal gains, core net profit was about $6.6 million, such that the 1HFY12 figure accounted for 49.6% of our full year estimate.

"After securing $426 million worth of new contracts in 2HCY11 (vs. $93.5 million in CY2010), ASL has continued to win new shipbuilding orders worth about $54 million recently. This brings its outstanding shipbuilding order book (from external customers) to about $553 million (39 vessels) with deliveries till 1Q14, and this is the highest level that the group has seen since 3QFY09.

"We raise our peg to 12x blended FY12/13F core earnings (prev. 10x), leading to a higher fair value estimate of 68 cents. UPGRADE TO BUY."

ASL Marine Holdings rated 'hold' by OCBC

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.54

OCBC Investment Research in an Oct 13 research report says: "ASL Marine (ASL) announced that it has secured new shipbuilding contracts worth about $267 million for the construction of five vessels.

"We estimate gross margins of 8-9% for these projects, and correspondingly tweak our overall gross profit margin for FY2012 slightly lower from 14.6% to 14.2%. New order flow has picked up for ASL Marine, with the group securing $426 million worth of new contracts in the past four months alone.

"We are encouraged by the pick up in new orders, but it is still early to conclude that the recovery is a sustainable one. With the slight adjustment in our gross profit margin assumption, our fair value estimate slides from 57 cents to 54 cents, still based on 10x FY12F core earnings. MAINTAIN HOLD."

ASL Marine Holdings rated 'hold' by DBS

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.59

DBS Vickers Securities in an Aug 18 research report says: "FY2011 recurring net profit of $31.9 million (-14% y-o-y) was within expectations. Revenue declined 22% to $363.2 million due to (1) lower shipbuilding orderbook; (2) fewer large conversion jobs; and (3) weaker demand for towing jobs.

"Net gearing inched up to 0.61x vs. 0.37x a year ago and may edge higher towards 0.68x by end FY12 as 20/80 payment terms to customers become increasingly common. A final DPS of 1.5 cents was declared, translating into a full year payout ratio of 20% or a yield of 2.9%.

"We trim our FY2012/2013F earnings by around 5% each as we adjust the recognition schedule for ASL's shipbuilding orderbook. Target price is lowered to 59 cents (from 63 cents), still pegged to 8.2x FY12 PE. MAINTAIN HOLD."

ASL Marine Holdings rated 'buy' by DnBNOR

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: DnBNOR Markets

Price Call: BUY

Target Price: 0.90

DnBNOR Markets in a July 7 research report says: "ASL Marine has secured $131 million (US$107 million) worth of shipbuilding contracts (2x emergency stand-by vessels and 9x small-size AHTS). We are encouraged by the AHTS orders, which many have regarded as a soft market.

"ASL's order flow is also comparatively higher than its peers in the region. Adding the latest $131 million orders (we regard these orders as secured in FY2011 - June end), the total orders secured would be c$232 million, meeting our new order estimates of $227 million for FY2011.

"Based on current pricing, we argue that the market implied expectations appear undemanding, with 30% discount to our NAV and attractive multiples of FY2012e P/E and EV/EBITDA of 5.8x and 3.7x respectively. Target price of 90 cents. MAINTAIN BUY."

ASL Marine Holdings rated 'neutral' by CIMB

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD
Research House: CIMB

CIMB in a May 10 research report says: "3Q11 core profit of $3.7 million (-50% y-o-y) forms 11% of our FY2011 forecast, with 9M11 core profit of $17 million forming 51% of our forecast due to lower revenue from all segments and margin compression in ship repair/ conversion.

"Net profit of $8 million (-14% y-o-y) was broadly in line with our expectation ($10 million) and consensus (9m), helped by a $4.3 million gain from vessel disposal. We lower our FY2011-2013 estimates by 12-19% to account for lower revenue and margins.

"Our target price drops to 70 cents from 81 cents, still based on 7.5x CY12 P/E (7-year trading average). ASL is one of the cheapest small-cap stocks in the sector, trading at 0.7x P/BV. Stronger-than-expected order wins from shipbuilding and ship-repair/conversion could lead to our re-rating. MAINTAIN NEUTRAL."

ASL Marine - ASL Marine Holdings rated 'hold' by OCBC

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD
Research House: OCBC

OCBC Investment Research in a Jan 5 research report says: "ASL Marine's (ASL) order book has fallen to about $303 million in 1QFY11, less than half of its order book level of $693 million in 4QFY08.

Read more...

ASL Marine - OCBC cuts ASL Marine fair value to $0.67; Hold

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD
Research House: OCBC

OCBC cuts ASL Marine (A04.SG) fair value estimate to $0.67 from $0.94 after lowering FY11-12 EPS estimates by 29% and 28.5% respectively due to the enlarged share capital after the issue of 120.58 million bonus shares. The house keeps the stock at Hold.

OCBC says ASL’s order book has fallen to about $303 million in fiscal 1Q11, less than half the $693 million level in fiscal 4Q08. 

“The order book of 50 vessels should sustain the group’s shipbuilding operations until only early 2012, and new contracts are required for adequate earnings visibility beyond this year.” 

The house sees downside risks to forecasts should the environment for new orders remain subdued. It adds, ship repair faces challenges of its own; “As more yards turn to ship repair, competition has been fierce and ASL has been facing pricing pressure for the past year.” 

Shares are off 0.7% at $0.745 in low volume.

ASL Marine - ASL Marine cut to Sell from Hold by UOB KayHian

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD
Research House: UOB KayHian

UOB KayHian has downgraded ASL Marine (A04.SG) to Sell from Hold, cuts target price to $0.84 vs $1.07 after lowering FY11-FY12 earnings estimates by 15%-35% on fewer contracts, lower margins assumption, according to Dow Jones.



UOB KayHian says provider of ship building, chartering services not out of woods as visibility for new building contracts remains murky, although repair, chartering segments appear to have bottomed out.

Broker notes: “The group cannot escape the shipbuilding cycles with shipyards typically late-cycle plays. The small shipyard segment is still facing intense competition with many shipyards chasing after same contracts.”



Stock last off 2.8% at $0.87.