OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: DMG

Price Call: BUY

Target Price: 1.08

Stock Name: CACHE
Company Name: CACHE LOGISTICS TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.30

Stock Name: Rowsley
Company Name: ROWSLEY LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.85

Market Compass

20 August 2013~ Good Morning Singapore!

Singapore Idea Snippets:

20 Aug 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day : At his best, man is the noblest of all animals; separated from law and justice he is the worst. - ARISTOTLE Singapore: The Day Ahead SINGAPORE DAYBOOK : With spending set to rise, will taxes follow? Analysts feel the wealthy may have to pay more taxes [SINGAPORE] All good things have to be paid for, Prime Minister Lee Hsien Loong said in his National Day Rally on Sunday night, raising the possibility of higher taxes. Observers BT spoke to yesterday think that taxes may be raised in the next couple of years - with more falling on the wealthier - to ensure that the long-term healthcare, housing and infrastructure initiatives announced by the Prime Minister can be paid for. In addition, a higher portion of investment returns on Singapore's reserves is likely to be channelled into the government's spending wallet, instead of being squirrelled away as reserves. And, the policy of locking proceeds from government land sales away as reserves may also be reviewed some time down the road, they said. "For now, we can afford these measures from existing revenues," Mr Lee said on Sunday. (Source: The Business Times) MARKET SCOOP China Mining International to become pure mining firm through RTO SGX aims to reduce board lot size to 100 units CDL sells 76% of Lush Acres EC Cedar Strategic plans 1-for-2 rights issue for up to 3b new shares CMA's unit in MOU with Changi to jointly develop Project Jewel Changi Airport reveals concept plans for 'Project Jewel' (Source: The Business Times) DMG OSK Securities says... KINGSMEN CREATIVES | BUY | TP: S$1.08 KMEN's 2QFY13 PATAMI grew 4.3% y-o-y to SGD5.4m, on the back of a 12.7% increase in revenue Revenue for the interiors division saw a robust 33.8% y-o-y growth but this was partially offset by a 25.7% y-o-y decline in revenue from the exhibitions & museums division, as fewer major exhibitions are held during the odd years KMEN's orderbook stands at SGD294m, of which SGD232m is expected to be recognised in FY13 These projects include works for a few regional theme parks, the five-year F1 Singapore Grand Prix and interior fit-outs for a number of international brands We expect its orderbook to grow further as demand for its services remains strong, which would boost 2H13's performance KMEN has a net cash balance of SGD54.4m (or SGD0.28 per share) and it declared an interim dividend of SGD0.015 per share Maintain BUY for stable dividends with a TP of SGD1.08, based on 8x FY13 P/E (ex-cash) OCBC Securities says ... CACHE LOGISTICS TRUST | BUY | TP: S$1.30 After staying quiet for over four months following the completion of the Precise Two acquisition on 1 Apr, we believe Cache Logistics Trust (CACHE) may now be close to striking another acquisition deal in the near term On last Friday evening, CACHE announced the incorporation of four wholly owned subsidiaries, including a 100% stake in Cache Polar Logistics Warehouse (Shanghai) Co., Ltd While no further details were given regarding the purpose of these entities except they are either investment holding or warehousing and logistics service companies, we are of the view that CACHE may be looking to acquire a warehouse facility in Shanghai, China from a third party vendor, possibly logistics solutions provider Polar Logistics Group We note that CACHE's financial position is one of the strongest among the S-REITs space As at 30 Jun, CACHE's aggregate leverage stood steady at 29.2%, giving it a sizeable debt headroom of circa S$100m before reaching the 35% gearing level While we do not rule out any equity funding for potential investment opportunities (including our acquisition belief above), CACHE clearly has the financial resources and flexibility to take on attractive acquisitions as they arise, in our opinion To recap, CACHE turned in a firm set of 2Q13 results, with DPU growing by 8.4% YoY to 2.147 S cents notwithstanding an enlarged unit base post private placement in Mar This was chiefly driven by rental escalations from its existing portfolio assets and full-quarter contribution from Precise Two We remain positive that CACHE will meet our FY13-14 forecasts, if it continues to be successful in its search for earnings-accretive targets We are keeping our forecasts unchanged for now, but as we transition our RNAV valuation method to the dividend discount model, our fair value is trimmed to S$1.30 from S$1.40 We maintain our BUY rating on CACHE OCBC Securities says... ROWSLEY LIMITED | BUY | TP: S$0.67 TO S$0.85 Last Thursday, Rowsley received the approval in-principle from SGX for its proposed acquisitions of RSP Group and the Vantage Bay site in Iskandar, and a 2-for-1 bonus issue of warrants Management reports that it would dispatch a circular and convene an EGM to seek shareholder approval in due course We note that, on 2 Aug 2013, management announced that "barring unforeseen circumstances, the deal should complete in the second half of 2013 after regulatory and shareholders' approval." In our research piece, we carry out an analysis of Rowsley's value under a successful RTO scenario, and also under a failed RTO scenario If Rowsley's proposed deal fails, we value each existing Rowsley share at approximately S$0.034 - its book value per share as at end Jun 2013 However, if the deal succeeds, we calculate from our analysis a value of S$0.67 to S$0.85 for each existing Rowsley share (before the 2-for-1 warrant issue ex-date)

OSPL - Good Morning S'pore - Central Dealing Desk

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

Research House: CIMB

Price Call: BUY

Target Price: 1.75

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

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.82

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: OSK

Price Call: BUY

Target Price: 1.08

Market Compass

10 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

10 July 2013~ Good Morning Singapore! Central Execution Team - The Excellence of Execution This product is made available by your Central Execution Team, for you as TRs of OCBC Securities to help you with your business and therefore it is confidential and only for internal circulation. It is not intended for onward circulation to non-OSPL TRs, clients or any other third party in this or any other version. Neither is this intended to be relied upon as a sole basis for any recommendation. TRs must also consider their clients' investment objectives, financial position and needs when intending to make or making any recommendation. For the front desk, by the front desk. All feedback to make this a better product is welcome. Global Flash: While You Were Sleeping Source: Marketwatch Quote for the day :Tell me and I forget. Teach me and I remember. Involve me and I learn. - BENJAMIN FRANKLIN Singapore: The Day Ahead SINGAPORE DAYBOOK:Why banks here weren't fined for rigging rates [SINGAPORE] The Monetary Authority of Singapore (MAS) did not impose fines on the banks whose traders tried to rig financial benchmark rates because rate- setting today is not a regulated activity, Lawrence Wong, Acting Minister for Culture, Community and Youth, told Parliament yesterday. An MAS board member himself, Mr Wong was responding on behalf of Deputy Prime Minister and MAS chairman Tharman Shanmugaratnam to a question raised by Member of Parliament Ang Wei Neng, who had asked whether MAS had been too lenient in its response to findings that there were clear attempts to manipulate rates. Referring to the US$610 million fine imposed on Royal Bank of Scotland (RBS) by UK and US regulators for its traders' rigging of the London interbank offered rate (Libor), Mr Ang said the punishment meted by MAS here was "a light tap on the hand". Mr Wong replied: "MAS is unable to impose a specific fine because . . . we do not regulate rate-setting activities today. Neither do many other jurisdictions." (Source: The Business Times) MARKET SCOOP Europtronic in MOU to sell Singapore unit to WE SPH Reit to be priced at 85-90 Singapore cents per unit JTC awards tender for 3 industrial sites at Tuas South St 6 SIA unveils next generation cabins In Iskandar, SMEs face same old labour crunch Former top China Sky execs no-show at trial China slowing; US, Japan perking up: IMF MAS facilitates availability of RMB to banks (Source: The Business Times) CIMB Securities says... TAT HONG HOLDINGS | OUTPERFORM | TP: S$1.75 The broader market has pulled back from its May high and TAT has not been spared, retreating20% in the last one month As there have been no operational hiccups at the company, market sentiment and the overhang from AIF's voluntary conversion could be the culprits, n our opinion The slight negative aspect of its operations, if any, is currency-related via translation effects Yet, we believe the dent on FY14-15 numbers will only be 2.5-4%,at the most, after speaking with management This is not surprising, as in recent quarters, higher revenue contributions had been flowing in from Singapore and other ASEAN markets, at the expense of Australia Contributions from Australia have been generally affected by weaker demand in the mining sector this year We are sticking to our view that near-term earnings will increasingly be spurred by Singapore and other ASEAN markets (Thomson Line construction in Singapore in 2H13, rail projects in Malaysia and Thailand) and Hong Kong We conservatively lower our FY14-16EPS by 2-4% for lower Australian contributions from A$ weakness Accordingly, we lower our target price, still at11x CY14 P/E (its 5-year average forward P/E) Reiterate Outperform with strong Asian operations still its main catalyst while potential M&As could provide icing on the cake DBS VICKERS Securities says ... HUTCHISON PORT HOLDINGS TRUST | BUY | TP: US$0.82 Volume growth at the Trust's HIT terminals in HK has been below par so far in FY13, with the port workers' strike in April adding to the woes HIT volumes could be down more than 10% y-o-y in 2Q13, with the high base in H12 - arising from higher transhipment activities between newly formed liner alliance partners - further skewing the comparison Yantian Port volumes though remain on course for mid-single digit growth as expected, but overall volumes in FY13 could be flattish, despite contribution from newly acquired ACT terminals in HK But the worst should be over and even though Europe trade remains weak, US volumes show relatively positive signs and upcoming peak season should provide more visibility for investors This was the key message that HPHT communicated during our Pulse of Asia investor conference in Singapore recently US payrolls data came in better than expected recently, and while unemployment rate didn't fall, consumer sentiment is improving and US inventory to sales ratio has maintained its upward momentum, giving us some confidence that trade flows in 2H13 will improve In line with lower volume estimates, we moderate our FY13/14 DPU expectations by about 7%/ 6% to 5.3UScts/ 5.9UScts Our TP is adjusted down to US$0.82 HPHT share price has corrected significantly in line with market sentiment, and we believe it has more than priced in lower DPU expectations Maintain BUY in light of healthy yield promise amid the uncertain macro environment. A trade recovery by 2H13 could provide an additional cyclical leverage boost to the stock price DMG OSK Securities says... KINGSMEN CREATIVES | BUY | TP: S$1.08 Kingsmen Creatives is in a dispute with Premier Inc (Premier) over a purported breach of intellectual property in relation to the work done for the Titanic Exhibition in The Venetian Macau The case is still on-going, but management expects no major impact to its financials. At this juncture, Venetian has only held back SGD0.4m Business fundamentals remain healthy for Kingsmen, with a good pipeline of projects Its success in thematic and scenic construction puts it in a favourable position to secure other theme park projects On top of that, it has a net cash balance of SGD49.3m (SGD0.26 per share) as at end 1Q13 Maintain BUY with TP of SGD1.08

DMG ups target price for Kingsmen

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: DMG

Price Call: BUY

Target Price: 0.83

DMG & Partners raised its target price for Kingsmen Creatives to $0.83 from $0.76 and kept its 'buy' rating, citing a healthy pipeline of contracts and strong net cash position.

By 11:26 a.m., Kingsmen shares were up 1.4% at $0.73, and have gained 27% so far this year, compared to the FT ST Fledgling Index's  15.3% rise.

 Kingsmen posted a 15% rise in its second quarter net profit to $5.2 million, due to an increase in theme park and MICE (meetings, incentives, conventions, exhibitions) contracts.
 
“We remain positive on Kingsmen, given its pipeline of contracts, supported by relatively strong consumerism in Asia, Singapore as one of the top MICE destinations in Asia and healthy growth of Asia’s amusement industry,” said DMG.

Kingsmen Creatives rated 'buy' by AmFraser

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: AmFraser

Price Call: BUY

Target Price: 0.78

AmFraser Research in a May 2 research report says: "Kingsmen has been able to maintain net margins of over 6.0% in the past 5 years including the year of the global financial crisis, through improving cost efficiencies and being selective on jobs they take on.

"We like such focused growth strategies that do not comprise on margins. This is partly why we expect similar margins in the future (5.8-6.0%). We expect an EPS CAGR of 7.75% (till FY2014), suggesting a PEG ratio of 0.95 (an indication of undervaluation). Stock has run up 13% in the past two months but there is still room to go.

"Our fair value of 78 cents based on 8.5x FY12 EPS of 91.6 cents and a 6.1% dividend yield represents a total upside of 21.7%. Kingsmen’s orderbook as at Feb 24, 2012 is $106 million, up 26% from Feb 21, 2011—suggesting a far better start to 2012. It currently trades at only 7.4x forward PER. MAINTAIN BUY."

Kingsmen Creatives rated 'buy' by DMG

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: DMG

Price Call: BUY

Target Price: 0.76

DMG & Partners Research in a Mar 6 research report says: "Kingsmen's 4Q12 PATMI grew 6.7% y-o-y to $6.0 million, on the back of a 48.4% y-o-y surge in revenue to $81.1 million. The results were in line with our estimates. Revenue growth was largely driven by its Interiors business.

"Its order book stands at $106 million, vs $84 million a year ago. This reflects the confidence its customers have in its capabilities in spite of the ongoing global economic uncertainty. We remain positive on Kingsmen's prospects, supported by the trend of (1) more retailers turning towards Asia for growth and (2) more theme parks sprouting up in Asia.

"Kingsmen declared a final dividend of 2.5 cents per share. Including the interim dividend of 1.5 cents per share, total dividend for FY2011 was 4.0 cents, translating into an attractive yield of 6.5%. Target price of 76 cents (pegged to 8.5x FY12F P/E). MAINTAIN BUY."

Kingsmen Creatives rated 'buy' by DMG

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: DMG

Price Call: BUY

Target Price: 0.76

DMG & Partners Research in an Aug 19 research report says: "Kingsmen achieved revenue of $57.1 million (-11.6% y-o-y) and PATMI of $4.5 million (-2.8% y-o-y) in 2Q11.

"The decline was largely attributed to the absence of major projects (in 2Q10, there weresome billings from the Shanghai World Expo and Universal Studios). This has however, led to gross margins improving to 29.5% (2Q10: 27.6%), as margins from work done for the events/shows were generally lower.

"Outlook remains healthy despite the global economic uncertainty as (1) large retail players are still coming to Asia and (2) the theme parks planned for the Asian region are progressing on track. Kingsmen declared dividends of 1.5 cents per share for 2Q11. Target price of 76 cents, pegged to 9x FY11F earnings. MAINTAIN BUY."

OCBC ups Kingsmen Creatives target to $0.71

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.71

OCBC Investment Research has raised its target price for Kingsmen Creatives to S$0.71 from $0.575 and kept its hold rating.    

Kingsmen Creatives said its second-quarter net profit fell 2.8% to $4.5 million from $4.6 million a year ago.

However, OCBC said Kingsmen Creatives’ earnings exceeded its expectations and it expects the firm to see a stronger second half performance due mainly to increased demand from its retail clients before the year-end festive season.

Kingsmen’s order book remains healthy, with total contract wins amounting to about $197 million as at Aug 10, OCBC said.

The brokerage has raised its earnings estimates for Kingsmen by 18.9% for 2011 to account for higher gross profit margins.  

At 9:31 a.m., shares of Kingsmen were 1.8% higher at $0.565, and have fallen 1.7% since the start of the year.

Kingsmen Creatives rated 'buy' by DMG

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD
Research House: DMG

DMG & Partners Securities in a May 10 research report says: "Kingsmen achieved revenue of $36.5 million (-21.9% y-o-y) and PATMI of $1.4 million (-39.7% y-o-y) in 1Q11. Included in 1Q10 was revenue from the completion of works for the Shanghai World Expo and Universal Studios.

"1Q11 gross margins improved to 29.9%, vs 1Q10's 26.3%, as margins from work done for Universal Studios (USS) were generally low. Kingsmen has a strong balance sheet with net cash position of $25.9 million. Earnings growth over the next two years is likely to be modest, at less than 5% per annum.

"At present levels, it is trading at 6.7x FY11 P/E, which is attractive compared to its peers which are trading at an average of 8.4x. Target price of 76 cents, pegged to 9x FY11F earnings. MAINTAIN BUY."

Kingsmen Creatives rated 'buy' by DMG

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD
Research House: Daiwa

DMG & Partners Securities in a Feb 25 resarch report says: "Kingsmen reported FY10 profits after tax and minority interest of $15.1 million (+1.1% y-o-y) in-line with our expectations of $15.0 million. Revenue of $235.2 million (-2.8% y-o-y) was 13% below our estimates but margins came in better than expected.

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KingsmenC - OCBC cuts Kingsmen Creatives to Hold From Buy

Stock Name: KingsmenC
Company Name: KINGSMEN CREATIVES LTD
Research House: OCBC

OCBC downgrades Kingsmen Creatives (5MZ.SG) to Hold from Buy “in view of its hazy near-term outlook.” The house cuts its fair value estimate to $0.65 from $0.82.



The house says Kingsmen has been growing exponentially since its listing, with earnings growth recording double-digit rates between 2003 and 2008; “we believe that this trend may reach a plateau in FY10-FY11, and are projecting a mild contraction in FY10 profits followed by flat earnings growth in FY11.” 

The house trims FY10 and FY11 estimates by 14% and 23%, respectively, to reflect a more cautious stance; “the group’s ambition of doubling its revenue in five years now appears stretched.” 

It cites potential headwinds as a high-base effect after record high earnings in FY09, a gap in orderbook (with the bulk of revenues from Universal Studios Singapore already recognised) and arbitration proceedings against a sub-contractor. 

However, the house adds, “beyond near-term headwinds, we remain sanguine over Kingsmen’s longer-term prospects...in addition, dividend yield is relatively attractive at around 6%.” 

Shares are untraded at $0.570.