Showing posts with label ST Engg. Show all posts
Showing posts with label ST Engg. Show all posts

Tuesday, November 26, 2013

SG: MARKET PULSE: Wilmar, ST Engineering (26 Nov 2013)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 3.70

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.32




MARKET PULSE: Wilmar, ST Engineering
26 Nov 2013
KEY IDEA

Wilmar: Forms China corn starch JV

Summary: Wilmar International Limited (WIL) recently announced that it has formed a JV with Tereos Internacional to manufacture corn starch in China - this is its second commercial collaboration with Tereos. However, we do not see any immediate boost to earnings. Meanwhile, we note that WIL's share price has done very well (+17%) since our upgrade to Buy on 6 Sep; but as WIL looks fairly priced around current levels versus unchanged S$3.55 fair value (based on 12.5x FY14F EPS), we opt to maintain our HOLD rating. We also advocate taking profit closer to S$3.70. (Carey Wong)

MORE REPORTS

ST Engineering: US Shipyard wins US$350m contract from Crowley

Summary: Singapore Technologies Engineering Ltd (STE) has announced that its US Shipyard, VT Halter Marine, Inc has won a shipbuilding contract from Crowley Maritime Corporation (Crowley) to build two Container Roll-on/Roll-off (ConRo) vessels. The value of this contract is in the region of US$350m (~S$420m). The vessels will be built at the Pascagoula facility in the US, with construction taking place in the first half of 2014 with deliveries in mid and late 2017. While there is no material impact to near-term earnings, we still see the contract as a testament to STE's shipbuilding capabilities. We maintain our FV of S$4.32 and HOLD rating on STE. (Sarah Ong)

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


NEWS HEADLINES

- Yongnam Holdings has secured a structural steel subcontract worth S$168m for works at Marina One, a mixed-use development located at Marina South.

- City Developments has been approached by independent third parties regarding the possibility of the sale of its 52.52% interest in its Hong Kong unit, City e-Solutions Limited.

- CapitaLand's wholly-owned serviced residence business unit, The Ascott Limited, has crossed a milestone of having 10,000 apartment units in its key market of China.

- Singapore Exchange has formed a direct-listing framework with the China Securities Regulatory Commission where Chinese companies planning to list in Singapore will file applications to the SGX and the Chinese regulator.

- Rex International's jointly-controlled entity, Lime Petroleum Plc, through its subsidiary Masirah Oil Ltd, has begun drilling an exploration well in Oman.

- Freight Links Express Holdings Ltd has changed its name to Vibrant Group Ltd.


Wednesday, November 20, 2013

SG: MARKET PULSE: Golden Agri, ST Engineering (20 Nov 2013)

Stock Name: GoldenAgr
Company Name: GOLDEN AGRI-RESOURCES LTD
Research House: OCBCPrice Call: SELLTarget Price: 0.50

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.32




MARKET PULSE: Golden Agri, ST Engineering
20 Nov 2013
KEY IDEA

Golden Agri-Resources: Recent run-ahead likely overdone

Summary: Despite a disappointing set of 3Q13 results, Golden Agri-Resources' (GAR) share price has continued to do well, likely buoyed by more signs that CPO (crude palm oil) prices are stabilizing around current levels (MYR2500/ton), aided by slightly better demand and supply factors. Note that our US$830/ton (MYR2650/ton) forecast has already taken these factors into consideration. But further CPO price upside may still be capped by the expected jump in global oilseed production. And as the market appears to be taking on a more "risk on" approach, we apply a higher 13.5x peg (versus 12.5x previously) to our FY14F EPS, thus raising our fair value from S$0.465 to S$0.50. But given the potential downside risk, we maintain our SELL rating. (Carey Wong)

MORE REPORTS

ST Engineering: ST Kinetics in Myanmar

Summary: The land systems arm of Singapore Technologies Engineering (STE), ST Kinetics, has set up a wholly-owned subsidiary, Kinetics Automotive & Specialty Equipment Co., Ltd (KASE), in Yangon, Myanmar, with a paid up capital of US$423,000 (S$524,000). KASE will serve as a platform to introduce and support ST Kinetics' automotive and specialty vehicles products and services in Myanmar. The setting up of KASE is not expected to have any material impact on EPS of STE for the current financial year. We maintain our HOLD rating and S$4.32 FV on STE. (Sarah Ong)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.


NEWS HEADLINES

- US stocks pulled back on Tue, as investors showed caution after the Dow and S&P 500 failed to hold above milestone levels in the prior session.

- Singapore's growing status as a commodities trading hub has drawn global heavyweight IntercontinentalExchange Group Inc, which will fork out US$150m to acquire commodities market operator Singapore Mercantile Exchange.

- Organisation for Economic Co-operation and Development (OECD) announced yesterday a "significant" downward revision of its earlier growth forecasts for 2013 and 2014.

- The blueprint for Singapore's development over the medium term identifies new districts that will provide 14,500 homes and 100,000 jobs in Woodlands Regional Centre.

- CapitaMalls Asia Limited announced that it is acquiring a new shopping mall in Guangzhou, China - its first in the city.

- Standard & Poor's Ratings Services yesterday lowered the long-term corporate credit rating of First Ship Lease Trust to "B-" from "B".

Monday, November 11, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: CMPacific
Company Name: CHINA MERCHANTS HLDGS(PACIFIC)
Research House: DBS VickersPrice Call: BUYTarget Price: 1.07

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.32

Stock Name: BBR Hldg
Company Name: BBR HOLDINGS (S) LTD
Research House: OSK-DMGPrice Call: BUYTarget Price: 0.35




Market Compass


11 November 2013~ Good Morning Singapore!


Singapore Idea Snippets:
11 Nov 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 :Love is moral even without legal marriage, but marriage is immoral without love.
- ELLEN KEY
Singapore: The Day Ahead

SINGAPORE DAYBOOK :'Tis the season not to see declines

A STRONG jobs report on Friday lifted the major stock indices within a hair's breadth of record highs last week, and now US Federal Reserve chairman Ben Bernanke is the only potential spoiler to the stock market's best year since 1997.
While pundits warn of more budget scares early next year, the latest bull run has too much momentum and seasonal advantages to bet against in the short term. It will soon be time for fund managers to begin "window dressing" end-of-year statements by loading up on this year's winners, and for workers to allocate retirement investments for 2014.
"The closer we get to December, the louder history sings 'Tis the season not to see declines'," said Sam Stovall, strategist for Standard & Poor's Capital IQ, in a note to clients. "So, while history says a correction is due, it doesn't say whether it will be on time. As a result, investors will likely get to enjoy their holiday festivities before fretting over the post-New Year fireworks."
On Friday, the Labour Department reported that US employers added 204,000 workers to payrolls in October - far more than the 120,000 economists had forecast.
(Source: The Business Times)

MARKET SCOOP

BBR cautious despite Q3 profit jump
Venture Corp Q3 profit up 7.7%
Higher margins push UOL's Q3 net profit up 6%
Hackers exploited vulnerability in PM Office's website: IDA
Pacific Radiance, affiliate seek listings in bet on offshore energy boom
Cosco wins Prosafe deal of over US$400m
MAS urged to make firms disclose diversity policy
(Source: The Business Times)

DBS VICKERS Securities says ...

CHINA MERCHANT HOLDINGS (PACIFIC) | BUY | TP: S$1.07
3Q13 net earnings rose 46% y-o-y to HK$145.8m as revenue rose 37% to HK$486m, due to contribution of newly acquired Ningbo-Beilun Port E'way. Contribution from JV roads also rose 12% y-o-y to HK$68.7m in the quarter
For 9M13, net earnings rose 40% y-o-y to HK$450m on 34% top line growth to HK$1.4bn, as JVs also contributed 23% more at HK$207.8m
This is a strong set of results against our FY earnings forecast of 489m and we will be looking to revise our earnings estimates in a full note to be issued at a later date
Top line is roughly in line with our FY estimate of HK$1.83bn
The outperformance is due to stronger than expected traffic growth on all roads while costs (finance and operating) were also lower than projected
Year-to-date, the company has generated free cash flows of nearly HK$1.1bn, and over HK$1.3bn if we include dividends from associates
Whilst the Group's current portfolio of roads should provide steady earnings growth, we believe CMHP continues to look for more acquisitions to further boost its prospects
This will be aided by the impending completion of the sale of its non-core New Zealand property businesses, which will further strengthen its balance sheet
Maintain BUY and TP of S$1.07 for now

OCBC Securities says ...

ST ENGINEERING | HOLD | TP: S$4.32

STE reported 3Q13 results that missed ours and the street's expectations
9M13 EPS of 13.34 S cents formed only 66% and 68% of the street's and our prior FY13 forecast
While 3Q13 revenue grew 0.5% YoY to S$1.55b, PATMI fell 9.9% to S$131.4m
PBT margin for the group declined from 12% to 11%
Highlights include: 1) lower gross profit from Aerospace and Land Systems; 2) an impairment of S$23.7m for ROPAX due to the prolonged softness in the shipping
market in Europe, partially offset by a write-back of warranty provisions of S$14.4m that were no longer required; 3) an increase in net finance costs of S$5.1m (driven by a S$3m lower FX gain and a S$2.8m lower gain on disposal of investments)
STE's order book fell slightly from S$12.7b as of end Jun to S$12.5b, of which S$1.5b is
expected to be delivered in 4Q13
Management indicated that the US government shutdown may indirectly push some milestone completions and contract wins from 4Q13 into 2014 due to slower approval of permits, etc
Three of the four sectors registered higher revenue YoY in 3Q13: Aerospace (+1%), Electronics (+2%), Land Systems (-11%; all three business groups recorded lower revenue) and Marine (+25%). PBT for two of the sectors rose YoY: Aerospace (-6%; absence of a S$10.1m write-back of allowance for inventory obsolescence recognised in
3Q12), Electronics (+7%), Land Systems (-9%) and Marine (+12%)
STE has lowered its FY guidance and now anticipates achieving comparable revenue and PBT for FY13 versus FY12 (as opposed to expecting higher revenue and PBT as it did previously)
We adjust our assumptions and cut our FY13F EPS to 18.0 S cents from 19.6 S cents
Using the same peg of 21x against FY14F EPS of 20.6 S cents (as opposed to FY13 EPS previously), our fair value rises to S$4.32 from S$4.11
Maintain HOLD on STE. FY14F dividend yield is 4.1%

OSK DMG Securities says...

BBR HOLDINGS | BUY | TP: S$0.35

BBR's 3Q13 PATAMI soared 252% y-o-y to SGD8.4m as revenue shot up 161% y-o-y, propelled by a higher number of projects entering the active stage of construction
Its associate recorded significant profits following the sale of two units at its upmarket development
However, margins were hit by provisions for losses in a project, and are expected to remain under pressure as labour cost rises
Gross profits higher, but margins thinner
During the quarter, construction on Bliss @Kovan reached the active construction stage and BBR started to recognise profits on the units sold from this development
However, this positive effect was somewhat offset by lower profits from general construction, as manpower and subcontractor costs rose
As a result, 3Q13 gross margin contracted to 9.9% vs 3Q12's 19.5%
Overall earnings boosted by property development segment
Apart from the profits recognised from sales of Bliss @Kovan units, BBR's 48%-
owned JV also recorded SGD3.3m in profit from the sale of three units at 8 Nassim Hill
It subsequently sold two more units and recognized the profits from these units in 4Q13 This helped to boost BBR's profits to SGD8.4m in 3Q13
BBR's SGD1.0bn strong orderbook as at end-3Q13 is expected to last it till FY16
Although the company's pipeline of infrastructure projects is healthy, the construction
industry is currently facing increasing challenges from intensifying competition and rising labour cost
We had initially assumed that construction at Bliss @Kovan would progress at a faster pace and that all the penthouses would be sold by year-end
Following a discussion with management, we are tweaking our revenue and margin assumptions
We maintain our earnings forecast of SGD21.4m and SGD0.35 TP, which is based on a 5x FY13F P/E



Friday, November 8, 2013

SG: MARKET PULSE: STE, Hyflux, Starhub, Yoma, Roxy-Pacific, Wilmar, SIAE, FEHT (8 Nov 2013)

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.32

Stock Name: Hyflux
Company Name: HYFLUX LTD
Research House: OCBCPrice Call: HOLDTarget Price: 1.23

Stock Name: StarHub
Company Name: STARHUB LTD
Research House: OCBCPrice Call: SELLTarget Price: 3.82

Stock Name: Yoma
Company Name: YOMA STRATEGIC HOLDINGS LTD
Research House: OCBCPrice Call: HOLDTarget Price: 0.84

Stock Name: Roxy-Pacific
Company Name: ROXY-PACIFIC HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.65

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 3.33

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD
Research House: OCBCPrice Call: HOLDTarget Price: 5.00




MARKET PULSE: STE, Hyflux, Starhub, Yoma, Roxy-Pacific, Wilmar, SIAE, FEHT
8 Nov 2013
KEY IDEA

ST Engineering: Earnings miss in 3Q13
Singapore Technologies Engineering (STE) reported 3Q13 results that missed ours and the street's expectations. While revenue grew 0.5% YoY to S$1.55b, PATMI fell 9.9% to S$131.4m. Highlights include: 1) lower gross profit from Aerospace and Land Systems; 2) an impairment of S$23.7m for ROPAX due to the prolonged softness in the shipping market in Europe, partially offset by a write-back of warranty provisions of S$14.4m that were no longer required; 3) an increase in net finance costs of S$5.1m (driven by a S$3m lower FX gain and a S$2.8m lower gain on disposal of investments). 9M13 EPS of 13.34 S cents formed only 66% and 68% of the street's and our prior FY13 forecast. We adjust our assumptions and cut our FY13F EPS to 18.0 S cents from 19.6 S cents. Using the same peg of 21x against FY14F EPS of 20.6 S cents (as opposed to FY13 EPS previously), our fair value rises to S$4.32 from S$4.11. Maintain HOLD on STE. FY14F dividend yield is 4.1%. (Sarah Ong)

MORE REPORTS

Hyflux: Slow 4Q after strong 3Q
In 3Q13, Hyflux saw revenue jumped 26% YoY to S$187.7m and net profit rose 74% to S$25.3m, such that 9M13 revenue of S$450.7m met 68% and earnings of S$51.0m met 75% of our FY13 forecasts, respectively. But with the completion of Tuaspring in 3Q, Hyflux believes that 4Q is likely to be slow. Nevertheless, management remains largely upbeat about its prospects, as it is working on tenders for various projects in MENA potentially worth S$2b. As we roll forward our 20x multiple from blended FY13/FY14 to FY14F EPS, our fair value inches up from S$1.215 to S$1.23. But we opt to keep our HOLD rating on the stock until we see better clarity on its project wins. (Carey Wong)

StarHub Ltd: 3Q13 slightly before forecast
StarHub Ltd reported 3Q13 revenue easing 1.2% YoY (down 1.4% QoQ) to S$578.8m, versus our S$592m forecast; net profit slipped 0.9% YoY (down 5.2% QoQ) to S$95.3m, as compared to our S$100m estimate. Quarterly dividend of S$0.05/share was declared as expected. As 9M13 revenue of S$1745.7m (down 1.2%) met just 69% of our full-year forecast, we need to pare our FY13 estimate by 6% (FY14 by 5%). Note that StarHub now expects to see a lower operating revenue (but flat service revenue) in 2013, as opposed to an earlier guidance for low single-digit revenue growth. Our DCF-based fair value remains at S$3.82. Maintain SELL.(Carey Wong)

Yoma Strategic Holdings: No surprises from 2QFY14 earnings
Yoma reported 2QFY14 PATMI of S$3.3m versus a loss of S$4.2m in 2QFY13. The return to profitability was mainly due to the sale of two buildings in Zone B of Star City, for which Yoma recognized S$15.1m of revenue and an incentive fee of S$2.3m, and lower staff costs. YTD PATMI now cumulates to S$3.76m and is judged to be mostly within expectations, making up 48.0% of our full year forecast for FY14. We note, however, that the gross margin has slipped 2.4 ppt YoY to 44.9% over the quarter due to a lower contribution from Pun Hliang Golf Estate (a higher margin project). In terms of the topline, 2QFY14 revenues increased 132.4% YoY to S$27.0m, again mostly due to recognition of residential sales and LDR sales at Star City. Maintain HOLD with an unchanged fair value estimate of S$0.84.(Eli Lee)

Roxy-Pacific Holdings: Earnings momentum continues
Roxy reported 3Q13 PATMI of S$16.1m, up 97% YoY due to stronger progress recognition at property projects. On a QoQ basis, however, 3Q13 PATMI was 18% lower mainly due to the absence of S$5.5m in fair value gains booked in 2Q13. After adjusting for fair value gains, we estimate 9M13 core PATMI to be S$42.9m, which forms 55% of our full year forecast. This is judged to be in line given that we foresee a back-loaded FY13 with Wis@Changi's contribution coming in wholly only upon obtaining TOP (anticipated to be 4Q13). 3Q13 topline increased 76% to S$76.7m again due to higher contributions from the property segment. We note that the hotel segment, which forms 16% of 3Q13 revenues, are putting in milder numbers with RevPar down 8% from S$189.2 (3Q12) to S$174.2 (3Q13), due to both lower occupancy and room rates. This is generally in line with OIR's outlook for the domestic hospitality sector. Maintain BUYwith an unchanged fair value estimate of S$0.65 (adjusted for 1-for-4 bonus issue in Sep-13). (Eli Lee)

Wilmar: 9M13 earnings in line
Wilmar International Limited's (WIL) reported its 3Q13 results last night, with revenue easing 4% to US$11,837m, mainly due to lower CPO prices. Nevertheless, reported net profit climbed 3% to US$416m, aided by better margins from its Palm & Laurics and also Oilseeds & Grains divisions. Core earnings was up 1% at US$391m. For 9M13, revenue slipped 4% to US$32,463m, meeting 66% of our FY13 forecast, while reported net profit climbed 22% to US$950m; core earnings rose 24% to US$950m, meeting 76% of our full-year forecast. We will be attending an analyst briefing at noon and will have more updates after that. In the meantime, we maintain our HOLD rating but place our S$3.33 fair value under review.(Carey Wong)

SIA Engineering: 2Q14 results in-line
SIA Engineering Company's (SIAEC) 2Q14 results were in-line with ours and the street's expectations. 1H14 basic EPS of 12.60 S cents formed 50% of ours and 49% of consensus FY14 estimates. 2Q14 revenue rose 3.3% YoY to S$293.9m, chiefly due to an increase in airframe and maintenance overhaul work. Operating profit contracted 9.8% YoY to S$28.5m due to higher staff and subcontract service costs. Share of profits from associated and JV companies expanded 25.0% YoY to S$48.5m, representing a contribution of 60.0% of the group's pre-tax profits. 2Q14 PATMI thus rose 5.8% YoY to S$71.0m. However, we note that 1H14 PATMI and basic EPS are only up 2.0% and 1.0% at S$140.0m and 12.60 S cents respectively. We maintain our HOLD rating on SIAEC but place our fair value of S$5.00 (EPS forecast of 25.0 S cents for FY14 and 20.0X peg) under review. We will be meeting management later today for more updates. (Sarah Ong)

Far East Hospitality Trust: 3Q13 results in line
Far East Hospitality Trust (FEHT) has announced 3Q13 results which are in line with ours and the street's expectations. 9M13 distribution per stapled security of 4.22 S cents forms 74% of ours and 73% of the street's FY13 forecasts. Gross revenue for was S$31.5m or 9.4% lower than the IPO prospectus forecast. 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. The serviced residences also performed poorer YoY, with RevPAU falling 0.6% to S$227.1. 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 1.43 S cents or 4.7% lower than forecast. However, we emphasize that the results were within expectations for the market. We maintain our HOLD rating on FEHT but place our FV of S$0.92 under review. We will be speaking with management later today. (Sarah Ong)


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


NEWS HEADLINES


- US stocks dropped on Thu, with strategists pinning the slide on investors taking profits after a strong run that has left key benchmarks just below record highs.

- DBS Group Holdings is offering to buy back S$800m of an outstanding S$1.7b preference share issue, offering in exchange new notes with a higher payout and a shorter tenor.

- Parkway Life REIT saw its 3Q13 DPU rise to 2.66 S cents from 2.58 S cents a year ago.

- Nera Telecommunications' net profit for 3Q13 fell 42.1% YoY to S$3.3m, as operating expenses soared.

- FJ Benjamin Holdings' 1QFY14 net profit tumbled 83%, hit by a fair value loss on investment securities and foreign exchange losses.


Tuesday, October 29, 2013

SG: MARKET PULSE: Raffles Med, ST Eng, TEE (29 Oct 2013)

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD
Research House: OCBCPrice Call: BUYTarget Price: 3.61

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.11

Stock Name: Tee Intl
Company Name: TEE INTERNATIONAL LIMITED
Research House: OCBCPrice Call: HOLDTarget Price: 0.35




MARKET PULSE: Raffles Med, ST Eng, TEE
29 Oct 2013
KEY IDEA

Raffles Medical Group: Still delivering growth
Raffles Medical Group (RMG) reported 3Q13 revenue and PATMI growth of 8.0% and 10.3% YoY to S$85.1m and S$13.9m, such that 9M13 figures formed 72.8% and 68.7% of our full-year estimates, respectively. This was within our expectations. Looking ahead, RMG is seeking to finalise the negotiations for its proposed China hospital expansion plans with its partners; while the completion of sale of its Thong Sia building in 4Q13 would boost its FY13F net cash balance to S$241m (based on our estimates). We incorporate the gain in sale of the property in our forecasts and our FY13 PATMI estimate is bumped up by 35.2% to S$82.1m. Nevertheless, we view this gain as exceptional in nature and our valuation on RMG is also unaffected as it is premised on 29x FY14F EPS. Maintain BUY and fair value estimate of S$3.61 on RMG. (Wong Teck Ching Andy)

MORE REPORTS

ST Engineering: ST Aerospace wins Jetstar Asia line maintenance contract
ST Aerospace, the aerospace arm of ST Engineering (STE), and Jetstar Asia have announced the signing of a three-year line maintenance contract. The agreement covers a full suite of line maintenance support for Jetstar Asia's existing and future fleet of Airbus A320 aircraft. ST Aerospace has been supporting Jetstar Asia since 2004 for a wide range of maintenance services on their fleet of A320 aircraft. The contract is not expected to have any material impact on the consolidated net tangible assets per share and EPS of STE for the current financial year. Hence, we maintain our fair value estimate of S$4.11 and HOLD rating on STE. (Sarah Ong)

TEE International: Conditional LOI for Marina South Project
Tee International announced that it has signed a conditional letter of intent with Hyundai Mechanical and Construction Co., Ltd to deliver a S$142m Mechanical and Electrical (M&E) Package for the Marina South Mixed Development Project. The package is expected to have a duration of 28 months. We see this as a positive development which would significantly replenish the group's order book. Together with the Marina One Package, the group's current outstanding order book would stand at approximately S$317m. Maintain HOLD on Tee International with a fair value estimate of S$0.35. (Eli Lee)

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


NEWS HEADLINES

- US stock indexes posted a narrowly mixed finish in choppy trading Mon, with the S&P 500 setting a record high for a second straight session after an industrial-production reading beat expectations but a pending-home-sales gauge missed forecasts.

- Singapore Exchange could consider rebates for high-frequency market makers to boost liquidity in the marketplace, said a senior executive of the bourse operator.

- Straits Trading Company is buying into ARA Asset Management and is also setting up a co-investment company that will eventually boast a total capital commitment of up to S$950m.

- Rex International is forming a joint venture with Swiss company Ogsonic to provide a proprietary well stimulation technology to oil production and oil service companies.





Friday, October 11, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP
Research House: UOB KayHianPrice Call: BUYTarget Price: 11.86

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: DMGPrice Call: BUYTarget Price: 4.70

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD
Research House: OCBCPrice Call: HOLDTarget Price: 1.30




Market Compass


11 October 2013~ Good Morning Singapore!


Singapore Idea Snippets:
11 Oct 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 : And the things that we fear are a weapon to be held against us.
- IAN RUSH
Singapore: The Day Ahead

SINGAPORE DAYBOOK : Contingency plans in focus after SingTel fire. IDA to conduct 'thorough study' of incident, even as telco sorts through the mess

[SINGAPORE] SingTel's engineers spent the day piecing together fibre optic strands by hand amid charred post-fire debris at the telco's Bukit Panjang facility yesterday.
Finding the cause of Wednesday's fire and the subsequent service disruptions, however, will preoccupy the firm during the coming weeks.
The fire, which had disrupted services for consumers and businesses over the past two days, had burnt 149 fibre optic cables in a chamber at the telco's Bukit Panjang exchange, 81 of which were OpenNet's. The other two chambers in the building were not affected.
Fibre cable repairs for corporate customers were completed last night, while the remaining services were on track for restoration by 7am today.
There is no preliminary estimate for the financial fallout of the fire or the service disruption, SingTel's CEO Consumer Singapore, Yuen Kuan Moon, told the media in a briefing at ComCentre yesterday.
In response to questions about what could have caused the fire and what role, if any, the facility's fire suppression system had played, Mr Yuen said, "We are currently investigating. Our priority is to first ensure that service is being restored."
In the coming weeks, the questions will begin in earnest. Within the telco, an inquiry will be convened to determine the cause of the fire and how its distribution network can be reinforced, Mr Yuen said.
SingTel also defended its business continuity plans yesterday, saying that it has physical location diversity - the Bukit Panjang building is one of nine such locations in Singapore - and electronic diversity, in which some switches are replicated.
"Unfortunately, in the case of the Bukit Panjang office, the damage caused by the fire is physical," the telco said.
The restoration task was made harder because the colour codes used to differentiate one kind of cable from another had been razed off by the fire. Engineers had to either divert cables to an undamaged chamber or cut out burnt portions and splice together the undamaged fibres - each thinner than a human hair - by hand.
Each cable can carry 96, 192 or 288 fibre strands, each strand supporting up to 16 corporate customers or 24 residential ones.
SingTel will not be the only entity asking hard questions of itself. The industry regulator, the Infocomm Development Authority of Singapore (IDA), will carry out a "thorough study" of the incident, said Minister for Communications and Information Yaacob Ibrahim yesterday. "We have to wait for the police report . . . and then we will start our investigation," he said, speaking at SingTel's Bukit Panjang building yesterday.
An IDA investigation has the potential to result in mammoth fines. Just last week, M1 was fined a history-making $1.5 million for the outage of its 2G and 3G mobile phone services in January.
Dr Yaacob called what happened on Wednesday a "major incident that we are concerned about". Telephone exchanges are considered critical pieces of infrastructure, he noted.
Other quarters, too, will look askance at SingTel. DBS, which saw some of its branches and ATMs affected on Wednesday, told The Business Times that it has a "diverse network contingency plan that ensures minimal disruption to our businesses in the event of an incident such as the fire at SingTel's Bukit Panjang exchange".
DBS is "working with SingTel to understand why the network contingency plan was not effective for the small proportion of DBS/POSB branches that were impacted," the bank's spokeswoman added.
Two of UOB's branches and 11 of OCBC's ATMs were also affected by SingTel's fire on Wednesday. All three banks saw services resume either that night itself or early yesterday morning before the start of business.
"Our branches were not impacted as our network was designed to be able to be supported by a secondary exchange if the primary one fails," an OCBC spokesman said.
BT understands that a bank's ATM might be able to shrug off a service disruption if it has a backup network line, as long as both the main and backup line are not connected to the same exchange.
Yesterday, Dr Yaacob said the IDA had always been concerned about the need for backup systems, even before the SingTel fire happened. "We've been looking at it closely. Every incident will be a learning point for us . . . clearly, there are things (that) we will begin to learn because the systems are becoming very complex," he said.
By yesterday, the collateral damage from the fire appeared to have been contained. By 6pm, OpenNet had restored service to 25 per cent of M1's 1,000 affected fibre broadband customers.
StarHub, which leases optical fibre capacity from SingTel, said that cable TV, cable broadband and digital voice services for affected customers were fully restored yesterday afternoon, while 36 per cent of its fibre broadband services had been restored by yesterday evening.
(Source: The Business Times)

MARKET SCOOP

Lian Beng Q1 net profit down 31%
S'pore bourse probes short-selling in Blumont, Asiasons
Merger talks between LionGold and smaller miner IRL halted
Grave digger to gold digger: S'pore business shifts feed governance worries
Trafigura renews Asian term loan facility at US$1.76b
Resale prices of non-landed private homes down; HDB COV lowest in 4 yrs
(Source: The Business Times)

OCBC Securities says ...

SMRT CORPORATION | HOLD | TP: S$1.30

The free MRT ride scheme introduced on 24 Jun has seen rail ridership figures for Jul and Aug exceed 60m rides for the first time in SMRT's history
The incentive to promote travel to 16 designated MRT stations in the city area before 8am has also aided in the alleviation of a congested rail system during the morning peak periods
In terms of financials, SMRT will bear the cost of free travel up to S$5m and the
relevant authorities will compensate the company for the remainder
We expect SMRT's upcoming 2Q14 results to be similar with 1Q14: slight revenue growth with higher operating expenses - namely staff, depreciation and repair/maintenance - causing operating profit to decline by double-digits YoY
On a segmental basis, bus operations will likely extend its streak of 11 consecutive quarters of losses (but we assume no asset impairments); rail profitability will be lower as well
The taxi, rental and advertising segments should stay positive and provide some consolation to SMRT
SMRT is unlikely to see an uptick in its share price due to the lack of a fare increase (delay by the Fare Review Mechanism Committee) and pressures on operating expenses
However, since the end of Aug, SMRT's share price has stabilised between a tight band of 1.29-1.30, which has helped to arrest its slide of 10% following its 1Q14 results
The lower frequency of bad publicity has definitely aided the company, and we believe that the street has already factored in the majority of the negative expectations for FY14 as well as concerns over capex requirements
As SMRT is currently trading close to our unchanged fair value estimate of S$1.30, we upgrade the counter to HOLD on valuation grounds ahead of its 2Q14 results release at the end of the month

DMG OSK Securities says ...

ST ENGINEERING | BUY | TP: S$4.70

ST Engineering has announced that its electronics arm, ST Electronics has secured SGD416m of contracts for rail electronics, satellite communications and communications projects in 3Q2013
Out of this, about SGD238m was for communications and electronics systems, advance IT systems and rail electronics solutions, while SGD178m was for satcoms products and broadband communications solutions
STE's orderbook stood at SGD12.7bn as of end Jun 2013, out of which about SGD2.8bn is expected to be delivered in 2H2013
We estimate the new contracts lifted net order book to SGD13.1bn, equivalent to 2x annual revenue
We have a BUY on ST Engineering with a DCF derived TP of SGD4.70
We like STE for its solid fundamentals: 31% ROE, 10- EPS CAGR of 5%, and 4.2% yield. STE currently trades at 20.7x FY13 P/E, below its historical peak of 24.5x

UOB KAY HIAN says...

OVERSEA-CHINESE BANKING CORP | BUY | TP: S$11.86

Bank of Singapore (BOS), OCBC's private banking arm, experienced a lower volume of client activities in July and August
Investors have become more risk averse since concerns over the tapering of QE3 surfaced
Clients have switched from exotic structured products to savings products, such as
fixed deposits
Nevertheless, OCBC continues to benefit from inflows due to wealth creation within Asia and investors seeking to capture global opportunities, which has a positive impact on transaction volume
Assets under management (AUM) have expanded from US$23b during BOS' inception to US$46b over the last three years
Management targets to double AUM to US$80b over the next three years
OCBC's wealth management business also benefits from growth in bancassurance, where it dominates with a market share of about 34% in Singapore
According to The Business Times, OCBC's bancassurance business grew in excess of 50% yoy based on weighted premium in 2012
Endowment products were the largest contributor while mortgage insurance also gained popularity
OCBC NISP is conservatively managed with a low NPL ratio of 0.4%, based on MAS
Guidelines
Management does not see signs of stress and expects NPL ratio to remain low
SMEs, corporations and consumers account for 50%, 20% and 30% of total loans
OCBC NISP provides rupiah funding for domestic industries, such as tobacco, textiles, white goods and trading, which are less affected by the plunge in the value of rupiah
Indonesia contributed to 8.4% of total income in 2Q13
Management guided high single-digit loan growth for 2013 despite already having achieved a 10.3% growth in 1H13
A third of the growth in 1H13 came from short-dated trade finance facilities, where contribution could soften in 2H13
The ringgit and the rupiah have depreciated 4% and 15.1% against the Singapore
dollar in 3Q13 respectively
Malaysia and Indonesia accounted for 15.6% and 7.6% of total loans as of Jun 13
The depreciation of regional currencies will dampen loan growth in 2H13
CASA (current and savings account) ratio has expanded from 46% as at Jun 12 to 50.1% as at Jun 13
The improvement was driven by a 26.6% expansion in current accounts
OCBC has captured more operating accounts from multinational companies through providing cash management services
Wealth management business remains resilient
While transaction volume for existing clients is affected by higher risk aversion, contributions from new clients have increased due to inflows and expansion of AUM
In Indonesia, asset quality was resilient as OCBC NISP is conservatively managed and
provides rupiah funding for domestic industries
We maintain our earnings forecasts
Our target price of S$11.86 is based on 1.71x P/B, derived from Gordon Growth Model (ROE: 11.2, required return: 7.8% and growth: 3.0%)



Thursday, August 15, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Religare
Company Name: RELIGARE HEALTH TRUST
Research House: NomuraPrice Call: BUYTarget Price: 1.05

Stock Name: RafflesMG
Company Name: RAFFLES MEDICAL GROUP LTD
Research House: UOB KayHianPrice Call: BUYTarget Price: 3.78

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.11




Market Compass


15 August 2013~ Good Morning Singapore!


Singapore Idea Snippets:
15 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 : I like gardening - it's a place where I find myself when I need to lose myself.
- ALICE SEBOLD
Singapore: The Day Ahead

SINGAPORE DAYBOOK :Battered AUD sits heavy on SingTel's plate. Telco's Q1 profit up 7% but falling Aussie dollar may hit its earnings and revenue in FY2014

[SINGAPORE] A strong showing from SingTel's associates boosted the telco's first-quarter profit, but the outlook for the rest of its financial year was brought Down Under by the emaciated Australian dollar.
Yesterday, SingTel was compelled to cut forecasts for revenue and earnings, with both metrics headed for a decline.
Group revenue is expected to shrink by the mid-single digits for the financial year of 2014 which ends on March 31, 2014. Meanwhile, Ebitda (earnings before interest, taxes, depreciation and amortization) could shrink by low single digits for the period.
Just a quarter ago, the group had expected revenue to be stable and for Ebitda to grow at a low single-digit level for the same period. Since then, the Australian dollar has tumbled 10 per cent relative to the Singapore dollar - a movement magnified by the fact that two-thirds of SingTel's revenue comes from Optus, its Australian subsidiary.
"We have merely updated the guidance for the exchange rate movements. The underlying fundamentals remain unchanged," said Jeann Low, SingTel's group CFO, yesterday.
For the first quarter ended June 30, 2013, net profit rose 7 per cent to $1.01 billion, buoyed by growth in its associates' contributions and cost-control measures.
These gains more than made up for the 5.3 per cent decline in operating revenue to $4.29 billion, weighed down by revenue shrinkage in Australia. Down Under, consumer operating revenue fell 5.7 per cent to A$1.74 billion (S$2 billion) on a decline in mobile termination rates which kicked in from Jan 1 and lower equipment sales.
"The Australian economy has been a two-tier one for quite a few years. Anything that was resource- based was booming . . . but . . . the manufacturing and services sectors - they've been starting to slow down over the last couple of years," SingTel's group CEO Chua Sock Koong told The Business Times yesterday.
In the meantime, an aggressive restructuring of the distribution chain and workforce has lifted Optus's Ebitda 4.9 per cent to A$572 million, even in the face of falling revenue.
While Optus had previously relied on franchise stores, it has discontinued the arrangement, moving towards branded stores instead, allowing it to control the customer experience and keep costs down. At the same time, headcount at Optus has been reduced by 10 per cent since last year.
"The benefits of these are coming through this financial year," Ms Chua said.
On the regional front, SingTel's share of associates' pre-tax profits grew 14.1 per cent to $578 million, on higher contributions from strong data growth at Telkomsel and AIS.
Closer to home, SingTel's mobile subscriber base grew 5.7 per cent to 3.85 million. Its 4G mobile subscribers here number 537,000, up from 378,000 in the previous quarter.
Its pay-TV division, mio TV, continued to see growth, with revenue gaining 53.4 per cent to $38 million and its residential subscriber base growing 6.8 per cent year-on-year to 406,000. Quarter-on-quarter, this represents a gain of 2,000 customers.
The new English Premier League (EPL) pricing - almost double that of the old one - will boost mio TV's average revenue per user (ARPU), according to SingTel's CEO Group Digital L!fe and country chief officer for SingTel, Allen Lew, yesterday. For the quarter, mio TV's ARPU was 26 per cent higher at $26.
Earnings per share for the quarter stood at 6.35 cents, up from 5.93 cents the year before. The group's counter closed one cent lower at $3.81 yesterday.
(Source: The Business Times)

MARKET SCOOP

STX Pan Ocean Q2 loss narrows to US$24.7m
Tat Hong shares plunge on Q1 results, downgrades
Swiber's Q2 net profit tumbles 72.5% on higher expenses
Sakae'sH1 net profit up 37.7% despite tough F&B conditions
Otto Marine returns to profit in Q2 on one-off gain after winding up unit
Sias Research sets off for new Voyage
(Source: The Business Times)

NOMURA Securities says...

RELIGARE HEALTHCARE TRUST | BUY | TP: S$1.05

1QFY14 results in line with expectations
Distributable income for grew 5.6% y-y, on the back of a 1% y-y increase in revenue
1QFY14 DPU stands at 2.0S$cent, which is in line with expectations
This makes up 24.5% of our FY14F full year DPU estimate
The group remains positive on achieving its projected DPU of 8.17S$cent for FY14F, or a projected yield of 9.5%, based on the last closing price
The results show that the group is on track to meet their guidance
We expect the stock reaction to be neutral to slightly positive
The stock trades at FY14F DPU yield of 9.5% and FY14F P/B of 1.0x
Revenue came in slightly higher than expected due to SGD/INR being weaker than what was assumed (i.e. the INR appreciated against SGD vis-à-vis our and management's assumption)
However, the weaker SGD/INR was a double-edged sword as it led to a fx loss on its forward currency contract
Barring the higher-than-expected depreciation, which is non-cash and does not affect distributable income, other cost items appear to be under control despite the weaker-than expected SGD/INR
Higher-than-expected net interest income also had a helping hand in bringing distributable income in line with expectations
Base fee ahead; variable fee behind expectations
Service fees (base+variable), as a net figure of S$25.7mn, saw no material variance from the company's initial projections
The base fee at S$20.1mn was S$0.6mn higher than the initial projection due to a weaker SGD/INR visà-vis the assumed rate in the prospectus
However, variable fees at S$5.6mn saw a negative variance of S$0.4mn as hospital revenues recorded were lower than expected
The direction and magnitude of the variance was similar for our own forecasts
Total service fees (excluding hospital expenses) were higher 3% higher than the projected amounted in INR term due to higher depreciation charges, offset by decreases in other cost such as medical consumables
In addition, a weaker SGD/INR (vis-à-vis what was assumed in the prospectus) expanded the variance such that the cost was 6% higher than projected
The net effect of the above was for NOI to be 1.7% below management guidance
This variance expanded further at the PBT level (before FV chg) due to 1.1mn of fx losses, offset by higher than-projected net finance income and lower-than-projected trust expenses
PBT before depreciation and FV changes stand at S$17.0mn, in line with management guidance of S$17.2mn and in line with our forecasts
Adjust for non-cash item; distributable income in line
Even though the changes in FV of financial derivatives has a significant impact on the PAT, we note that the impact on the distributable income is nil because it is non-cash and is adjusted back to arrive at the distributable income
The same can be said for the higher than expected depreciation which is a non-cash item
Excluding those two items, the net variance in the distribution adjustments was minimal and as such brought distributable income in line with our and management expectations

UOB KAY HIAN says ...

RAFFLES MEDICAL GROUP | BUY | TP: S$3.78

Raffles Medical Group (RMG) has entered into an agreement with Mr Kishore Kumar to dispose to him the group's units at 30 Bideford Road (Thong Sia) for a consideration of S$120m
Based on an independent valuation by Jones Lang LaSalle (as at December 2012), the fair value of the property is S$98m
This development is NOT a surprise as the group indicated that it had appointed JLL to advise and manage the sale of Thong Sia
This comes after the group's unsuccessful attempts to secure the approval to set up a medical centre at Bideford Road and the asset is now non-core
In terms of financial impact, RMG stands to make a disposal gain for Thong Sia as its cost for the building was S$98m, which was acquired in 2011
The estimated non-recurrent gains are up to S$21m
As for the impact on NTA, there is an enhancement of up to 5.5% to 75.19cents following the disposal
We understand that management continue to be on the lookout for a suitable site in the vicinity of the Orchard/Novena/Newton area to set up a specialist medical centre
Despite the strategic setback for Thong Sia, the group still stands to make a reasonable financial gain
However, RMG has not indicated that it is considering a special dividend
Nevertheless, we remain upbeat on RMG as prospects remain promising and we think RMG is well poised for new investments and M&As to drive growth due to its strong financials
We maintain our 2013-15 earnings forecast (notwithstanding an exceptional gain from the disposal of Thong Sia) and have a DCF-based target price of S$3.78/share
At our DCF-based target price of S$3.78/share, the implied 2014F PER is 27.3x
This is close to its +1 SD to mean PER of 28.6x but we think this is deserved, given its strong cashflow generation and healthy financial position which could fund potential M&As or other investments

OCBC Securities says...

ST ENGINEERING | HOLD | TP: S$4.11

STE reported 2Q13 results that were generally in line with our expectations and the street's
Revenue grew 1.7% YoY to S$1.60b, and PATMI climbed 3.3% to S$147.9m
PBT margin for the group stayed flat YoY at 12%. Highlights include: 1) absence of gain on disposal of properties in Aerospace and Land Systems, which totalled S$12.8m in 2Q12; 2) write-back of allowance for doubtful debts (S$2.7m) in 2Q13 versus allowance for doubtful debts (S$10.6m) in 2Q12; 3) unfavourable fair value change of S$3.9m in 2Q13 versus a favourable fair value change of S$6.7m in 2Q12 with regard to cross currency interest rate swaps (CCIRS) from USD to SGD
STE's order book fell slightly from its high of S$13.0b as of end-Mar 2013 to S$12.7b, of which S$2.8b is expected to be delivered in 2H13
Growth from core sectors All four sectors registered higher revenue YoY in 2Q13; Aerospace (+3%),Electronics (+2%), Land Systems (+1%) and Marine (+12%)
However, it should be noted that there was lower revenue in 2Q13 than what management had anticipated due to the rescheduling of Electronics project milestone completions to later periods
PBT for all four sectors rose YoY; Aerospace (+1%), Electronics (+13%; there was a gain on disposal of a 4.9% holding in HK-listed company), Land Systems (+7%) and Marine (+13%)
The "Others" component clocked a loss before tax of S$10.1m versus a 2Q12 PBT of S$0.8m chiefly due to the CCIRS
Better outlook for 2H13 STE continues to anticipate achieving higher revenue and PBT in FY13 versus FY12
The company also expects to achieve higher revenue and PBT in 2H13 versus 1H13. In particular, all sectors' 2H13 revenue and PBT are expected to be higher HoH
We tweak our assumptions and our FY13F EPS falls slightly to 19.6 Scents from 19.8 S-cents
Using a higher 21x peg (versus 20x previously) against our FY13F EPS, our fair value climbs to S$4.11 from S$3.97
We maintain a HOLD rating on STE
FY13F dividend yield is 4.1%



Wednesday, August 14, 2013

SG: MARKET PULSE: Venture Corp, STE, CSE, Dyna-Mac, ECS, SingTel, Swiber, Tat Hong (14 Aug 2013)

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 7.94

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 4.11

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD
Research House: OCBCPrice Call: BUYTarget Price: 0.96

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.
Research House: OCBCPrice Call: HOLDTarget Price: 0.44

Stock Name: ECS
Company Name: ECS HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.57

Stock Name: Swiber
Company Name: SWIBER HOLDINGS LIMITED
Research House: OCBCPrice Call: BUYTarget Price: 0.86




MARKET PULSE: Venture Corp, STE, CSE, Dyna-Mac, ECS, SingTel, Swiber, Tat Hong
14 Aug 2013
KEY IDEA

Venture Corp: Position for the recovery
Venture Corp's (VMS) 2Q13 revenue fell 3.9% YoY to S$587.7m, while PATMI dipped 10.6% to S$30.1m and was within our expectations. We expect a stronger showing from VMS in 2H13, driven by more meaningful contribution from the mass production of programmes from customers acquired in 2012 as well as new product launches. Management also sounded more upbeat during the analyst briefing, highlighting better sentiment amongst most of its customers. We retain our projections and roll forward our valuations to 15x blended FY13/14F EPS, which correspondingly raises our fair value estimate from S$7.37 to S$7.94. Given VMS's attractive FY13F dividend yield of 7.0% and an improved outlook, we upgrade the stock from Hold to BUY. (Wong Teck Ching Andy)

MORE REPORTS

ST Engineering: 2Q13 in line; Maintain HOLD
Singapore Technologies Engineering (STE) reported 2Q13 results that were generally in line with our expectations and the street's. Revenue grew 1.7% YoY to S$1.60b, and PATMI climbed 3.3% to S$147.9m. Highlights include: 1) absence of gain on disposal of properties in Aerospace and Land Systems, which totalled S$12.8m in 2Q12; 2) write-back of allowance for doubtful debts (S$2.7m) in 2Q13 versus allowance for doubtful debts (S$10.6m) in 2Q12; 3) unfavourable fair value change of S$3.9m in 2Q13 versus a favourable fair value change of S$6.7m in 2Q12 with regard to cross currency interest rate swaps. We tweak our assumptions and our FY13F EPS falls slightly to 19.6 S-cents from 19.8 S-cents. Using a higher 21x peg (versus 20x previously) against our FY13F EPS, our fair value climbs to S$4.11 from S$3.97. We maintain a HOLD rating on STE. FY13F dividend yield is 4.1%. (Sarah Ong)

CSE Global: Spin-off of UK business
CSE Global reported in-line results with revenue of S$116m (-20% YoY) and core net profit of S$12m (+12%). Gross margin improved to 34% from 25% in the year-ago period, mainly due to lower level of zero-margin work in Middle East and more profitable offshore work in the Americas. Separately, the CSE disclosed that its UK subsidiary, CSE (UK), is currently pursuing a separate listing on the London Stock Exchange. The listing will provide financial independence to both CSE and CSE (UK) to facilitate future access into capital markets to pursue growth opportunities. We will follow up with more updates after its briefing later. In the meantime, we keep our BUY rating but put our S$0.96 FV under review. (Chia Jiunyang)

Dyna-Mac Holdings: Improving order visibility
Dyna-Mac Holdings reported revenue of S$76.6m (+32.6% YoY) and net profit of S$7.5m (+23.2%) for 2Q13. The results were in-line with our expectations such that 1H13 net profit formed 50% of our FY13F estimates. The order-book improved to S$246m, up from S$113m just three months ago, providing visibility over the next one year. We currently have a HOLD rating with S$0.44 FV, and will provide updates after speaking to management later. (Chia Jiunyang)

ECS Holdings: 2Q13 core PATMI below expectations
ECS Holdings (ECS) reported a 11.0% YoY increase in its 2Q13 PATMI to S$9.0m on the back of a 23.5% hike in revenue to S$1,017.5m. However, if we exclude forex and other exceptional items, we estimate that core earnings would have decreased 7.3% to S$6.9m, which was below our expectations due largely to a lower-than-estimated gross margin. For 1H13, revenue increased 22.0% to S$2,107.8m, forming 50.1% of our FY13 forecast. Core PATMI rose 9.6% (reported PATMI jumped 21.0%) to S$15.4m, or 44.5% of our full-year estimate. On a positive note, ECS generated healthy net operating cashflows of S$50.6m in 2Q13, which helped to lower its net gearing ratio from 50.1% (as at end 1Q13) to 38.5% (as at end 2Q13). We will provide more details after meeting up with management. Meanwhile, we maintain our BUY rating but our S$0.57 fair value estimate is under review. (Wong Teck Ching Andy)

SingTel: Decent FY14 start; but outlook muted
SingTel posted 1QFY14 revenue of S$4293.3m, down 5.3% YoY and 4.2% QoQ, meeting about 24% of our full-year forecast; this largely weighed by lower revenue in Australia and the weaker AUD. Reported net profit though climbed 7.0% YoY and 16.4% QoQ to S$1011.0m, boosted by stronger EBITDA margins and higher associate contributions. Core net profit (excluding exceptional items) rose 5.5% YoY (but fell 10.4%) to S$897m, also meeting 24% of FY14 forecast. Meanwhile, free cashflow also climbed 23% YoY to S$893m, mainly due to timing and higher dividend receipts from associates. But going forward, the group's outlook remains somewhat muted, as SingTel expects lower overall revenue (mainly from Group Consumer), with likely EBITDA compression as well. We will have more after the analyst teleconference later. For now, we place our Hold rating and S$3.83 fair value under review. (Carey Wong)

Swiber Holdings: Soft 2Q13 results after a strong 1Q13
Swiber Holdings (Swiber) reported a 5.4% YoY rise in revenue to US$242.1m and a 13.7% increase in gross profit to US$37.1m in 2Q13. However, higher administrative, finance and other operating expenses contributed to a 72.5% fall in net profit to US$4.2m in the quarter. Earnings are generally lumpy by quarter due to project executions. 1H13 net profit rose 2.0% and accounted for close to 40% of our full year estimate, slightly below our expectations. Still, execution remains steady and the group has a US$1.2b order book with more work expected to be carried out in 2H13. Pending an analysts' briefing later in the afternoon, we maintain our BUY rating but put our fair value estimate of S$0.86 under review. (Low Pei Han)

Tat Hong Holdings: Has earnings peaked?
Our recommendation to take profit on Tat Hong shares ("Time to take profit", 26/6/2013) more than a month ago turned out to be timely. After eight quarters of strong performance, the group's earnings appeared to have peaked. In 1QFY14, it posted sharp declines in revenue (S$175m,-18% YoY) and net profit (S$8.2m; -51%) with weakness seen across every business segment. As we have feared, uncertainties in the macro environment have led to slower infrastructure and construction activities in Australia, Indonesia and Singapore. We are currently re-assessing the counter; and in the meantime, put our hold rating and S$1.31 FV under review. (Chia Jiunyang)

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


NEWS HEADLINES

- US stock indexes rose on Tue, with technology pacing the gains, after investor Carl Icahn touted his large position in Apple Inc.

- Banyan Tree Holdings' 2Q13 net profit rose to S$1.7m from S$644k a year ago as its revenue climbed 3% YoY to S$81.7m on the back of stronger contribution from its hotel investment segment.

- Boustead Singapore saw its net profit for 1QFY14 rise 45% YoY to S$17.7m.

- Asian Pay Television Trust declared a maiden distribution of 4.8 S-cents per unit for the period from 29 May 2013 (listing date) to 30 Jun 2013.

- SBS Transit's ride continues to be bumpy, with its net profit dropping 30.6% YoY to S$3.2m for 2Q13.





Monday, July 15, 2013

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Triyards
Company Name: TRIYARDS HOLDINGS LIMITED
Research House: UOB KayHianPrice Call: BUYTarget Price: 1.11

Stock Name: Vard Holdings
Company Name: VARD HOLDINGS LIMITED
Research House: Credit SuissePrice Call: SELLTarget Price: 0.80

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD
Research House: OCBCPrice Call: HOLDTarget Price: 3.97




Market Compass


15 July 2013~ Good Morning Singapore!


Singapore Idea Snippets:
15 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 :Love of beauty is taste. The creation of beauty is art.
- RALPH WALDO EMERSON
Singapore: The Day Ahead

SINGAPORE DAYBOOK : No to bank-developer tie-ups. New MAS rule prohibits preferential rates for property loans to clients buying designated properties

[SINGAPORE] The government is clamping down on a common practice where property developers and agents tie up with banks to sell property: it has introduced a wide-ranging rule that will, among several things, stop banks from offering preferential interest rates for loans to clients who buy designated properties.
BT understands that the Monetary Authority of Singapore (MAS) informed financial institutions (FIs) of this new rule in a letter sent out on the same day the new property loan rules were announced in late June. All forms of tie-ups with property developers and agents are not allowed under this new rule, which took effect from June 29.
Asked about the regulation, an MAS spokesman told BT: "MAS is of the view that, except for the granting of property loans, FIs should not be offering any property-related services to customers in general. FIs should therefore not engage in property advertisements or tie-ups with property developers/agents.
"This is regardless of the location of the property (in Singapore or overseas) or the type of the property (residential, commercial or industrial). MAS will take into account an FI's compliance on this issue, in its supervisory assessment of the FI."
(Source: The Business Times)

MARKET SCOOP

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(Source: The Business Times)

UOB KAY HIAN says...

TRIYARDS HOLDINGS | BUY | TP: S$1.11

Triyards reported a net profit of US$7.5m for 3QFY13, in line with our forecast of US$7.3m
9MFY13 net profit of US$21.1m formed 70.3% of our full-year profit forecast
3QFY13 revenue and profit declined by 61% yoy and 55% yoy respectively, mainly due to lower revenue recognised for the construction of the subsea construction vessel Lewek Constellation (Constellation)
The Constellation is currently berthed in Vietnam and is expected to leave the yard in September for final outfitting work
3QFY13 gross profit margin of 19% was 6ppt higher than 3QFY12, as: a) certain SEU projects achieved cost savings from fabrication as well as procurement of material and equipment, b) two ship repair projects were completed, and c) one offshore fabrication project was completed in 3QFY13
Triyards' reported end-3QFY13 net gearing was 29%, compared with 60% at end-FY12
Triyards net orderbook stands at US$264m, which will be fully recognised by FY14
Triyards recently commissioned afloating dock for ship repair and has completed its first ship repair work for the Mermaid Challenger
According to management, the floating dock will be able to service up to 20-30 offshore support vessels (OSV) per year and we estimate incremental full-year earnings contribution of US$2m-3m
Management indicated that after a round of roadshows in the US, Triyards is seeing strong interest for their proprietary third-generation self-elevating units (SEU).
These third-generation units (TDU-400) will incorporate drilling and construction capabilities, unlike the previous generation units which can only perform servicing work
The third-generation units will have the capabilities of a full-fledged jack-up rig, but at a 20% discount
These units will cost up to US$160m-180m, compared with US$60m and US$90m for third-party designed first- and second-generation liftboats respectively
No change in earnings forecast
Maintain BUY and unchanged target price of S$1.11, pegged at 7.9x FY14F PE, a 10% discount to peers' average of 8.8x FY14F PE, due to Triyards' shorter operating track record and lumpy profit recognition from Ezra's Constellation, which comprises 17% of FY14F net profit

CREDIT SUISSE Securities says ...

VARD HOLDINGS LTD | UNDERPERFORM | TP: S$0.80

Following a profit warning on 28 June, Vard reported a 2Q13 net loss of NKr20 mn driven mainly by execution challenges in its Brazil operations
While 2Q13 EBITDA margin of 4.1% was in line with our forecast, the company was further impacted by a NKr70 mn write-down of goodwill for its Niteroi yard in Brazil
In Niteroi, the remaining four vessels are expected for be delayed by a quarter on average
Vard was also impacted by higher start-up costs in its new Promar yard, as well as cost escalations for two LPG carrier hulls subcontracted to CGU-Rio Nave on a cost-plus contract
During the analyst briefing, management provided little clarity on the individual factors driving margins decline
There was also no margin guidance provided for 2H13, as profit could continue to be impacted until the last vessel in Niteroi is delivered in 4Q14
While consensus 2013 EPS has been reduced by 14% since the profit warning, we believe there could be further 30% downside
Given limited earnings visibility until the challenges are resolved, we maintain our UNDERPERFORM rating and TP of S$0.80

OCBC Securities says...

ST ENGINEERING | HOLD | TP: S$3.97

ST Engineering (STE) announced that its aerospace arm, ST Aerospace, has secured new contracts worth about S$430m in 2Q13
This includes the exclusive component Maintenance-By-the-Hour contract worth S$32.25m awarded by Spring Airlines Japan, and the five-year Multi-crew Pilot Licence training contract from Qatar Airways announced in June 2013
In the VIP cabin reconfiguration business, ST Aerospace secured three deals involving Boeing Business Jets (BBJ): a cabin design contract in Eastern Europe, a 12-year maintenance check and interior refurbishment project on a Boeing 737 belonging to a returning Middle Eastern customer, and a maintenance and interior modification contract awarded by a US customer
The magnitude of the contract wins is in line with our expectations
We maintain our fair value estimate of S$3.97 and HOLD rating on STE