OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.30

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: Nomura

Price Call: BUY

Target Price: 9.20

Stock Name: OCBC Bk
Company Name: OVERSEA-CHINESE BANKING CORP

Research House: UOB KayHian

Price Call: BUY

Target Price: 12.02

Market Compass

03 May 2013~ Good Morning Singapore!

Singapore Idea Snippets:

03 May 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 :The brain is a wonderful organ; it starts working the moment you get up in the morning and does not stop until you get into the office. - ROBERT FROST Singapore: The Day Ahead SINGAPORE DAYBOOK:China PMI dips to 50.4 on weak export orders. Pull-back in HSBC index likely to add to concerns over short-term risks [BEIJING] China's factory-sector growth eased in April as new export orders fell for the first time this year, a private survey showed yesterday, suggesting the eurozone recession and sluggish US demand may be risks to China's economic recovery. The final HSBC Purchasing Managers' Index (PMI) dropped to 50.4 in April from March's 51.6 and was largely in line with a flash reading last week of 50.5. China's official PMI on Wednesday painted a similar picture, falling to 50.6 in April from an 11-month high of 50.9 in March as new export orders fell. The pull-back in both the official and HSBC PMIs are likely to add to concerns over risks to China's economy in the short term, although most analysts expect a steady and gentle recovery this year, aided by government support. MARKET SCOOP Taiwan cable firm's S'pore IPO aims to raise S$1.38b UOB Q1 profit up 4.9% Genting S'pore's Q1 net falls 44% Sing Investments Q1 profit falls 22% Elec & Eltek Q1 profit falls 28% S'pore April PMI dips to 50.3, indicates slower growth ST Engg's aerospace arm buys Turbo Mach for US$250k DBS VICKERS Securities says... BROADWAY INDUSTRIAL GROUP | HOLD | TP: S$0.30 1Q13 formed 4% of FY13F, if excluding forex and one-off items, Broadway would have just achieved break-even with S$0.2m profits, which is significantly lower than our S$2m estimate despite higher-than-expected sales Weaker sales (-23% y-o-y) and operating losses (S$3.3m) at HDD (57% of group sales) dragged down group performance Foam Plastics was stellar as EBIT quadrupled to S$6.7m on a 37% y-o-y sales growth, thanks to last quarter's order push-back Unfortunately, it is insufficient to offset HDD's decline Near term, HDD would be flat-line and Foam Plastics could scale back as quarterly orders normalise Broadway has started production of stamped parts for smartphone OEMs in South Korea and Taiwan New CEO JC Lee plans to focus on1) developing new business to diversify from HDD; 2) driving optimisation and automation to improve margins In view of volatile earnings during this period of recovery, we have re-pegged the valuation base to 0.6xPB, deriving TP of S$0.30 NOMURA Securities says... VENTURE CORP | BUY | TP: S$9.20 Venture reported 1Q13 net profit of SGD28.0mn (-26.0% q-q, -21.0% yy), 21% below our expectation of SGD35.5mn While we believe Venture could see a 2Q13F sales growth incrementally better than peers on higher contribution from Oclaro, overall demand environment remains weak We believe, margins are unlikely to see full recovery till a meaningful portion of Oclaro business gets ramped, probably by end-2013F Ventures revenues dropped q-q across nearly all major segments Venture noted that it continues to focus on increasing its market share from existing customers and winning new programmes and customers The company generated a mere SGD9.7mn in operating cash flows and SGD5.7mn in free cash flows in 1Q13 which puts focus on sustainability of dividends At 2013F dividend yield of 6.6% with 2012 dividend payout to go ex-date on 5th May 2013, that reason still stands firm The stock has declined 1.8% over the last 3 months (MSCI Singapore: +3.7%) and is currently trading at an FY13F PE of 13.6x and PBV of 1.2x UOB KAY HIAN says... OVERSEA-CHINESE BANKING CORP | BUY | TP: S$12.02 OCBC reported a net profit of S$696m for 1Q13 (-16% yoy, +5% qoq), slightly below our forecast of S$720m OCBC achieved healthy loan growth of 3.1% qoq, driven by expansion of 3.8% qoq in Singapore NIM contracted by a severe 6bp sequentially to 1.64% due to refinancing for housing loans Fee income increased 15% yoy to S$316m The main growth driver was wealth management, which expanded 17% yoy to S$105m and accounted for one-third of total fee income Net trading income was significantly lower at S$56m after five consecutive quarters with sizeable profits OCBC's 1Q13 performance was "off colour" with net interest income and non-interest income coming in slightly below expectations We have cut our net profit forecast for 2013 and 2014 by 8.1% and 8.8% respectively due to lower NIM and higher staff costs We have lowered our target price for OCBC to S$12.02, based on P/B of 1.67x, derived from Gordon Growth Model (ROE: 11.0%, required return: 7.8% and growth: 3.0%)

Broadway Industrial Group rated 'trading buy' by CIMB

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: CIMB

Price Call: BUY

Target Price: 0.55

CIMB in an Apr 30 research report says: "Although 1Q12 net profit forms just 11% of consensus and our FY12 forecasts, results are in line as we expect earnings to accelerate in 2H12. As expected, Broadway returned to profitability with a core net profit of $3.1 million for 1Q12. This was within consensus and our expectations.

"Including forex and fair-value gains from financial derivatives, net profit surged 68% y-o-y to $15.2 million. Sales grew 14% y-o-y and 39% q-o-q with all segments contributing. Gross margins, however, contracted to 10.1% from 13.0% a year ago due to its product mix and higher operating costs as a result of transferring some work from Thailand to China after flooding.

"We make no changes to our FY2012-2014 forecasts. Target price of 55 cents (based on 1x P/BV, within its 5-year average). TRADING BUY."

Broadway Industrial Group rated 'hold' by DBS

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.30

DBS Vickers Securities in a Jan 25 research report says: "Broadway warned that it will report a net loss for 4Q2011 and that FY11 will also be loss making. This is worse than our estimates, as we were projecting 4Q11 to breakeven.

"We had highlighted in our report that the impact of the floods in Thailand on Broadway will be material but not immediately quantifiable especially as Broadway had powered up its Wuxi plant to compensate for the loss of production in Thailand. We are currently reviewing our earnings forecast.

"As our current target price is based on -1SD P/BV valuation of 0.6x, we do not think that our target price will be significantly affected by any potential revisions in our earnings estimates. Target price of 30 cents. MAINTAIN HOLD"

Broadway Industrial Group rated 'hold' by DBS

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 0.32

DBS Vickers Securities in a Nov 3 research report says: "BWAY recorded 3Q11 net loss of $9.9 million as a result of forex losses of $13.2 million, of which $16.5 million are unrealized MTM losses from hedging of USD/CNY and USD/SGD.

"Excluding forex losses, operating profit would be $3.3 million, which is below our $4 million estimate due to higher operating costs in China, weaker than expected non-HDD business (operating loss of S$1.1m) and start up expenses.

"But BWAY looks like it could gain market share from Thailand floods... For a start, it has extra capacity in Wuxi to capture all customers' requirements before its Thailand plant resumes in March 2012. The current situation is still volatile and it remains to be seen if the spillover would flow to BWAY. Target price lowered slightly to 32 cents based on 0.6x PB. MAINTAIN HOLD."

Broadway Industrial Group rated 'neutral' by CIMB

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: CIMB

Price Call: HOLD

Target Price: 0.37

CIMB in a Sept 12 research report asy: "Our latest channel checks suggest that HDD OEMs and semiconductor equipment makers have been lowering their expectations and orders for suppliers have been pushed back.

"Such negative data points prompt us to cut our FY2011-2013 profit forecasts for Broadway by 6-11%. We also apply the average of its low-end 5-year P/BV to derive a new target price of 37 cents (from 47 cents, 0.8x P/BV, 5-year average), given a deteriorating macro outlook.

"In view of its slowing business and the macro uncertainties, the group is likely to reduce its full-year capex budget of $70 million. Although we see limited near-term catalysts, we believe its share price could be supported by its low P/BV and decent dividend yields of 5.8%. MAINTAIN NEUTRAL."

Broadway Industrial Group rated 'neutral' by CIMB

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: CIMB

Price Call: HOLD

Target Price: 0.47

CIMB in a July 22 research report says: "Excluding $1.4 million forex and impairment losses, Broadway's 2Q core earnings were 3% below our estimate and 19% below consensus because higher-than-expected sales were offset by higher opex and effective tax rate.

"1H net profit accounted for 42% of our full-year forecast and 35% of consensus. EBITDA margin shrank 5.1% pts yoy to 8.9% in 2Q11. It declared an interim dividend of 1 cent (same as 1H10 after adjusting for the 1-for-1 bonus issue), translating into a decent annualised yield of 4.8%.

"We adjust FY2011-2013 EPS by -4% to +1% for this set of results, higher sales and lower gross profit margin. But we retain our target of 47 cents, still based on its 5-year historical P/BV average of 0.8x. MAINTAIN NEUTRAL."

Broadway Industrial Group rated 'neutral' by CIMB

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD

Research House: CIMB

Price Call: HOLD

Target Price: 0.47

CIMB in a June 22 research report says: "Our discussions with Broadway suggest that its Hitachi Global Storage Technologies (HGST) business was weak in the June quarter. Management also concurred that its HGST's business may be affected by HGST's ongoing merger exercise with Western Digital (WD).

"On the other hand, business from its other HDD customer, Seagate, and non-HDD components has been fairly stable. The foam packaging business continues to improve qoq, thanks largely to capacity expansion and the closure of loss-making Xinjiang operations. We are lowering our FY2011-2013 profit forecasts by 13-14%.

"We have also applied its 5-year historical P/BV average of 0.8x to derive our new target price of 47 cents, down from 61 cents previously (1x CY11 P/BV, slight premium to its historical average). MAINTAIN NEUTRAL."

Broadway Industrial Group rated 'neutral' by CIMB

Stock Name: Broadway
Company Name: BROADWAY INDUSTRIAL GROUP LTD
Research House: CIMB

CIMB in an Apr 25 research report says: "Excluding forex gains of $3.5 million, core net earnings of $5.6 million were about 40% below consensus and our forecasts on lower-than-expected sales and gross profit margins. Reported 1Q11 profit forms 23% of consensus and our forecasts.

"Sales slipped 9% y-o-y and 12% q-o-q to $138 million. EBITDA margins contracted 3.7% pts y-o-y to 10.4%. Net gearing remained steady at 0.09x, similar to a quarter ago. Broadway's new plant in Chongqing is on schedule for a gradual relocation of its back-end assembly processes in the HDD component business from Shenzhen in 2H11.

"We cut our FY2011-2013 estimates by 5-12% after lowering margin assumptions. Accordingly, our target price drops from $1.23 to $1.21, still based on 1x CY11 P/BV - a level we deem fair given the uncertain near-term outlook. MAINTAIN NEUTRAL."