Daiwa raises GLP target to $2.59 vs $2.27

Stock Name: GLP
Company Name: GLOBAL LOGISTIC PROP LIMITED

Research House: Daiwa

Price Call: BUY

Target Price: 2.59

Global Logistic Properties’ tie-up with Haier underscores China’s pent-up demand, Daiwa says.

While no details on the initial three projects’ size or timing for completion were given, the deal highlights GLP’s ability to source domestic corporate demand for its facilities and reaffirms the view domestic Chinese entities are seeking more modern warehouse facilities, the house says.

It notes CBRE data show average China rentals for logistics facilities are up 2.9% year-to-date, while Tokyo logistic-facility vacancies decreased to 3.6% in 2Q12 from 1Q12’s 4.5%, with signs of increasing rents.

It raises its target to $2.59 from $2.27, based on parity with NAV; it no longer applies a 20% discount for the China assets. It keeps an Outperform call. The stock is up 7.7% at $2.65 after a series of large trades.

Tat Hong offers potential yield, growth: Maybank-KE

Maybank-Kim Eng turns more optimistic on Tat Hong after a management meeting. “The strong performance of the past few quarters suggests that Tat Hong’s recovery is taking place even faster than we expected,” it says.

“Tat Hong is experiencing the best time in its operating history with booming demand from all countries it operates in. Current order book already provides good earnings visibility for at least the next two years.”

It notes Tat Hong is able to charge a premium over competitors due to its cranes’ higher quality, wider product range, larger fleet size and less competition in the high-tonnage crane segment; it expects the pricing advantage to continue as no regional peers can achieve a comparable fleet size near-term.

It raises its FY13-15 net profit forecasts by 19.2%, 13.3% and 2.7% respectively after increasing rental-rate assumptions by 14.6%-15.7%, but it says its estimates may still be conservative. It increases its target to $1.74 from $1.41, keeping a Buy call. “Coupled with its strong and rising dividend yield, Tat Hong offers both growth and yield which is a rare and potent combination.”

The stock is up 4.4% at $1.30.

MARKET PULSE: Dyna-Mac, M1 (12 Sep 2012)

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.62

Stock Name: M1
Company Name: M1 LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.80

MARKET PULSE: Dyna-Mac, M1

12 Sep 2012

KEY IDEA Dyna-Mac Holdings: Well-positioned to capture new orders Dyna-Mac Holdings' (DMH) share price has jumped by about 29% since we upgraded our call to BUY ("Upgrade to BUY", 6/7/2012), outperforming STI's flattish performance over the same period. Looking ahead, we believe there is further upside as the group is well-positioned to benefit from possible new order wins. Recent orders for floating production systems are emerging at near record pace and the current backlog globally was at a peak of 67 units as of Apr 2012. To meet the growing demands, DMH recently acquired a 70% stake in a fabrication yard in Guangzhou, and rented another yard in Johor. In view of the improving outlook, we raised our fair value estimate to S$0.62 (previously S$0.52). Maintain BUY. (Chia Jiunyang) MORE REPORTS M1: LTE is still 2013 story at best M1 Ltd will launch its nationwide 4G LTE network in Singapore on 15 Sep, where it will offer 95% coverage for indoor and outdoor areas. M1 is also pricing its 4G services at a premium to its 3G bundles. While the 4G premiums could be a minor stumbling block (but unlikely to deter early adopters), the bigger stumbling block is likely to come from limited 4G handsets that are available. Hence, we believe that 4G LTE is still more of a 2013 story, as the mass market may still take some time to convert their 3G handsets to 4G. As such, we have not factored in any significant contribution from LTE until 2014 in our model. We continue to like M1 for its defensive earnings and relatively attractive dividend yield of 5.3%. Maintain BUY with an unchanged DCF-based fair value of S$2.80. (Carey Wong)

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

NEWS HEADLINES - US stocks finished higher on Tuesday, with the Dow having its highest close since late 2007, as investors wait for this week's key decisions from Germany's top court and the US Fed. - SP AusNet has expressed disappointment with the Australian Energy Regulator's Draft Determination on the Gas Access Arrangement Review. SP AusNet says that the Draft Decision, if implemented as it stands, would reduce its nominal revenues by 21%. - Perennial China Retail Trust intends to issue S$130m worth of 6.375% fixed rate notes due 2015. - Hanwell Holdings' wholly-owned subsidiary has entered into a mutual release and settlement agreement with adidas International Trading B.V. and The Rockport Company, LLC. - Manufacturing Integration Technology has executed sale-and-purchase agreements to buy two units in North Spring Bizhub. - Food Junction Holdings Limited has announced the opening of its latest restaurant, The Boxing Crab, located next to Sentosa's Underwater World Singapore.

Golden Agri at good entry point: Phillip

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

Research House: Phillip Securities

Price Call: BUY

Target Price: 0.77

Golden Agri is at a good entry point, with the selldown after the company’s announcement of plans for a US$400 million ($493 million) convertible bond issue overdone, Phillip Securities says.

While investors are likely to focus on the dilution effects near-term, the conversion price now represents an around 34% premium to the share price, it says.

The house notes management indicated the proceeds are intended for general corporate purposes as well as potential M&A, which GAR aims to close within three to six months, and greenfield investments; while management indicated most of the funds will be allocated for upstream Indonesian acquisitions, it is also looking for downstream M&A and joint-venture opportunities outside Indonesia, including in India and Europe, Phillip says.

It keeps its forecasts unchanged pending details on the bond proceeds’ use. It raises its fair value to $0.77 from $0.75, based on 12.5x P/E from 12.0x; it keeps an Accumulate call. The stock is down 0.7% at $0.67.

CIMB skeptical on Cosco offshore project's profitability

CIMB remains skeptical of Cosco Corp.’s ability to execute offshore projects profitably. It keeps its forecasts unchanged after the latest US$200 million ($247 million) semi-sub accommodation rig contract win as it is within its 2012 order-win assumption of US$2 billion.

“Cosco’s order momentum has not abated with US$1.4 billion of orders secured year-to-date, but profitability from these contracts remains questionable.” It notes the two semi-sub accommodation rig orders Cosco has won this year are priced 30%-35% lower than similar units being built by SembMarine and Keppel for more established players.

“Customers’ specifications and equipment could be the main variances but so are lower margins.” It adds, apart from execution risk, Cosco also faces cancellation risks as customers may not be able to secure financing, with most of its offshore customers venture capitalists, private equity funds or owners without established operating records. “Not time to switch camp. Stick with established Singapore rig builders.” It keeps an Underperform call with $0.85 target. The stock is up 1.1% at $0.960.




 

Phillip cuts Hu An Cable target price

Stock Name: Hu An
Company Name: HU AN CABLE HOLDINGS LTD.

Research House: Phillip Securities

Price Call: BUY

Target Price: 0.19

Phillip Securities cut its target price for Hu An Cable Holdings to $0.190 from $0.275 and kept its ’buy’ rating, citing smaller expected revenue and lower copper prices.

Shares of Hu An were unchanged at $0.134. They have gained 18.6% since the start of the year, compared with the FT ST Industrials Index’s 16.6% rise.

Hu An had said its net profit for the first half of the year fell 37.8% from a year ago to 38.7 million yuan.

The company underperformed most of its peers in terms of revenue growth and net profit margin, Phillip said in a report.

The brokerage cut its forecast revenue for the second half of the year and first quarter of 2013 by 25%, due to lower-than-expected volumes for its cable and wire business in the second quarter.

MARKET PULSE: Ezra, A-REIT, Triyards (11 Sep 2012)

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.35

Stock Name: Ascendasreit
Company Name: ASCENDAS REAL ESTATE INV TRUST

Research House: OCBC

Price Call: HOLD

Target Price: 2.28

MARKET PULSE: Ezra, A-REIT, Triyards

11 Sep 2012

KEY IDEA Ezra Holdings: Earnings impact from Triyard listing not significant Ezra Holdings (Ezra) recently announced that Triyards, its engineering and fabrication division, has received conditional eligibility to list on the Main Board of the SGX. The listing will be by way of an introduction whereby Ezra is proposing to distribute Triyards shares by way of dividend in specie to Ezra shareholders. We are positive on this development as this would allow the Triyards Group to tap the debt and equity capital markets independently from Ezra to pursue future growth opportunities. The move may also allow Ezra and Triyards to leverage on each other for business opportunities. Ezra is currently trading at about 12x FY12F earnings; should the market assign a lower P/E multiple to Triyards, this would lower our sum-of-the-parts based valuation of Ezra, and vice versa. As the proposed move is subject to the approval of Ezra shareholders, we maintain our BUY rating with S$1.35 fair value estimate on Ezra for now. (Low Pei Han) MORE REPORTS Ascendas REIT: Strong but not compelling Ascendas REIT (A-REIT) has been actively involved in capital recycling activities YTD in a bid to optimize its portfolio yield. Following the proposed sale of 6 Pioneer Walk in Jun, we note that A-REIT had on 24 Aug announced the divestment of another property, Block 5006 Techplace II, for S$38m. Based on our estimates, the proceeds may likely relieve its interest burden going forward and may potentially add 0.01 S cents to its FY14F DPU. For the rest of FY13, we believe A-REIT will deliver a stable set of performance, supported by full-year contributions from its past investments. However, we are maintaining our cautious view on its significant exposure (34% by valuation) to the business/science park segment, which has been seeing downward pressure on occupancy and rents. On a positive note, we understand that the current market rents are 16-35% higher than the average passing rents for the areas due for renewal. As such, we believe A-REIT will still put in a stable set of results. We maintain our HOLD rating on A-REIT with a revised fair value of S$2.28 (S$2.27 previously). (Kevin Tan) Triyards Holdings Ltd: Up-and-coming specialist yard With two yards in Vietnam and a fabrication facility in the US, Triyards Holdings Ltd (Triyards) is an engineering and fabrication solutions provider focused on the offshore oil and gas industry. Unlike many shipyards, the group has a strategic focus on the construction of self-elevating units (liftboats), having established a significant track record. Originating from Ezra Holdings which will hold a 67% stake post listing, Triyards may be able to be involved in some of the projects that Ezra undertakes and tap into Ezra's clientele base. The group delivered an average of US$15.9m in net profit each year from FY09-FY11, but 1HFY12 saw a strong performance of US$14.5m. A quick calculation based on 8x FY12 annualised EPS would result in a share price of about S$0.98. We do not have a rating on Triyards. (Low Pei Han)

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

NEWS HEADLINES - US stocks fell on Monday as investors were cautious ahead of the Fed's policy decision later this week. The Dow and the S&P 500 Index closed down 0.4% and 0.6% respectively. Intel fell 3.8% after guiding for lower 3Q12 revenue. - A subsidiary of MDR has been appointed Nokia's sole authorised distributor in Singapore. - COSCO Corp (Singapore) has obtained a US$200m preliminary order for a new semi-submersible accommodation rig from Axis Offshore, and added that it will make a further announcement when the contract turned effective. - Popular Holdings' 1Q13 net profit fell 36% YoY to S$6.6m as revenue fell 16% to S$119m. Last year, sale of units in 18 Shelford had helped the company record higher revenue and profit. - Global Logistic Properties will begin to develop specialized industrial parks for the home appliance sector in China with Haier Group, a Chinese home appliance maker.