SG: MARKET PULSE: KSH, CWT, BreadTalk, Global Palm, Nam Cheong (13 Aug 2013)

Stock Name: KSH Hldg
Company Name: KSH HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.73

Stock Name: CWT
Company Name: CWT LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.68

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 0.77

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.17

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.35

MARKET PULSE: KSH, CWT, BreadTalk, Global Palm, Nam Cheong

13 Aug 2013

KEY IDEA KSH Holdings: 1QFY14 PATMI up 165% to S$11.4m KSH's 1QFY14 PATMI increased 165% YoY to S$11.4m due to stronger contributions from both the property development and construction business segments. 1QFY14 PATMI now constitutes 24% of our full year forecast and, this being so, we judge this set of results to be in line with expectations. The group's order book stands at S$402.0m as at end Jun 2013 which we view to be a relatively healthy level. We continue to look forward to KSH's 45% Beijing condo project beginning sales this year which could be significant for KSH's earnings profile into FY15. In Singapore, new launches at NeWest and KAP Residences have shown firm performances to date; 85 out of a total of 136 units at NeWest have been sold at a median price of S$1,399 psf and at KAP Residences, 140 out of 142 units sold for a median price of S$1,789 psf. Maintain BUY with an unchanged fair value estimate of S$0.73. (Eli Lee) MORE REPORTS CWT Ltd: 2Q13 in line with expectations CWT reported a decent set of 2Q13 results that were in-line with our expectations. Revenue jumped 66% YoY to S$1.7b, driven by higher contribution from its newly established Commodity business. However, the group incurred higher administrative expenses and higher financing costs. Consequently, net profit eased 6% YoY to S$18.1m for 2Q13. The group also announced a new leadership team - headed by Adam Slater and Alan Kuek - at its Commodity business, replacing former employees who have left the team. We still like CWT, but lowered our valuation peg for its Commodity business to a conservative 9x (previously 12x) after its recent management reshuffle. This in turn lowered our SOTP valuation to S$1.68 (previously S$2.08). Maintain BUY. (Chia Jiunyang) BreadTalk Group: Improvement in 2H13 unlikely BreadTalk's 2Q13 results disappointed despite double-digit revenue growth to S$126.5m as operating profit fell by more than expected (15.1% YoY to S$3.8m) and operating profit and PATMI margins remained low at 3.0% and 2.4% respectively. In the coming months, we expect this trend to persist in light of its ongoing store expansion and the two non-performing restaurant brands (Ramen Play and Carl's Jr), which will remain a drag on overall performance. With a FY13F dividend yield of 1.1%, the investment proposition is unattractive in our view and the counter remains expensive at current valuations, especially given the low-single digit margins. We maintain SELL on BreadTalk with an unchanged fair value estimate of S$0.77. (Lim Siyi) Global Palm: Terrible season continues Global Palm Resources (GPR) posted 2Q13 revenue of IDR84.1b, down 21% YoY (but +26% QoQ), hit by softer CPO (crude palm oil) prices as well as lower volume sold. Reported net profit tumbled 70% YoY and 27% QoQ to IDR6.1b; excluding forex, core net profit still fell 69% YoY and 19% QoQ to IDR9.4b. For 1H13, revenue fell 26% to IDR150.9b, meeting 45% of our full-year forecast, while net profit slipped 57% to IDR14.4b, or just 27% of our FY13 estimate. We will be speaking with management shortly; but in the meantime, we place our Hold rating and S$0.17 fair value under review. (Carey Wong) Nam Cheong Ltd: 2Q net profit jumped 81% YoY Nam Cheong Limited's 2Q13 revenue and net profit jumped by 84% and 81% YoY to RM275m and RM41m respectively, driven by increase in shipbuilding activity. 1H net profit was RM76m and formed 50% and 46% of ours and the street's FY13F estimates. We will provide further updates after its briefing later. In the meantime, we keep our BUY rating and S$0.35 FV estimate unchanged. (Chia Jiunyang)

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NEWS HEADLINES - US stocks closed a low-volume, light-news session with slight losses on Mon, though the technology-dominated Nasdaq Composite managed a gain. - A KPMG study in Singapore last week says 82% of assets on companies' balance sheets these days are based on estimates. - Kingsmen Creative has won the dismissal of a lawsuit brought against it and its subsidiary, Kingsmen Exhibits Pte Ltd (KE), in the US. - Super Group reported a net profit of S$36.5m for its 2Q13, up 108% YoY from S$17.5m. - QAF posts 64% plunge in 2Q13 net profit as higher costs and expenses took a toll despite a rise in revenue for the maker of Gardenia bread. - Del Monte Pacific Limited's earnings grew 2% YoY in 2Q13, despite a higher rise in revenue, as one-off dual listing expenses and unrealised foreign exchange loss affected the bottom line.

SG: MARKET PULSE: Telecom Sector, Global Palm, Keppel Corp, ComfortDelGro (21 May 2013)

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.17

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: HOLD

Target Price: 1.95

MARKET PULSE: Telecom Sector, Global Palm, Keppel Corp, ComfortDelGro

21 May 2013

KEY IDEA Telecom Sector: Downgrade to NEUTRAL All three telcos reported 1QCY13 results that came in within our expectations, with all of them meeting between 25% and 27% of our full-year forecasts. Going forward, other than M1 expecting moderate earnings growth, the other two are guiding for a pretty muted showing this year, with SingTel expecting stable group revenue while StarHub has eased its guidance to low single-digit revenue growth from single-digit previously. Besides the run-up in the telcos' share prices YTD, which makes the yields less attractive, a more "risk on" approach could see investors switch out of defensive stocks. As such, we downgrade our rating from Overweight to NEUTRAL on the sector. (Carey Wong) MORE REPORTS Global Palm: HOLD; No catalysts yet Global Palm Resources (GPR) posted 1Q13 revenue of IDR66.8b, down 33% YoY and 4% QoQ, while reported net profit tumbled 36% YoY to IDR8.3b, meeting 29% and 25% of our full-year revenue and net profit estimates, respectively. While GPR has maintained its new planting target of 300-400ha for this year, it has made a very slow start, planting just 5ha in 1Q13 (versus 166ha in 1Q12) - the lowest new planting since 1Q11. Meanwhile, the outlook also remains muted, given the still-sluggish CPO prices and an impending increase in labour cost (with the upward revision in Indonesia's minimum wages this year). Until we see fresh progress in its land negotiation and/or acquisition of either new or existing plantations, we opt to keep our HOLD rating and S$0.17 fair value (based on 10x FY13F EPS). (Carey Wong) Keppel Corporation: Sells 6.7% of Keppel REIT at S$1.555/unit Summary: Keppel Corporation (KEP) announced that its wholly owned subsidiary, Keppel Real Estate Investment Pte Ltd, has entered into a sale and purchase agreement with Goldman Sachs (the placement agent) for the sale of 180m units of Keppel REIT (6.7% of total issued units of KREIT) for S$1.555/unit. The aggregate cash consideration of S$279.9m took into account KREIT's last transacted price of S$1.605/unit as at 20 May 2013 and the 30-day VWAP of S$1.5129. This is at a premium to the book value and NTA/share of S$1.31 and S$1.28, respectively, as at 31 Mar 2013. Upon completion of the sale (expected 27 May), KEP's interest in KREIT remains substantial (from 58.2% to 51.5%). Recall that KEP earlier rewarded shareholders with dividend in specie of KREIT units; announced on 24 Jan 2013 when KREIT's share price was S$1.37. Maintain BUYon KEP with S$12.68 fair value estimate. (Low Pei Han) ComfortDelGro - Addition to Australian operations ComfortDelGro announced yesterday that it will acquire a privately-held bus company, Driver Group Pty Ltd, for A$22m. This acquisition will add five long-term, metropolitan bus routes in the Eastern suburbs of Melbourne to ComfortDelgro's Australian operations in Victoria, and increase its fleet to 420 buses from 378. Assuming regulatory approval, this deal will be completed in Jul 2013. While the deal is relatively smaller compared to its previous acquisitions in Australia and will not have a material impact on its earnings in FY13, it demonstrates management's intent to actively grow its overseas operations and we view this positively. However, valuations for ComfortDelgro remain expensive in our view and we maintain HOLD on the counter with an unchanged fair value of S$1.95. (Lim Siyi)

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NEWS HEADLINES - Singapore's domestic wholesale trade fell 7.3% YoY in 1Q. This was mainly attributed to a domestic decline in domestic sales of petroleum & petroleum products. - Singapore has maintained its stronghold as Asia's Top Convention City for the 11th consecutive year, according to the latest global rankings released by the International Congress and Convention Association (ICCA) - Plastoform Holdings has exited the SGX watch-list with effect from 21 May 2013. - Goldman Sachs launched on Monday a sale of about US$1.1b worth of Hong Kong-traded shares in ICBC, offering to sell its entire remaining stake in the world's biggest bank. - Morgan Stanley said on Monday it has signed an agreement to sell its Indian wealth management unit to Standard Chartered. - Brazil will grow less than 3% this year according to the latest forecast released on Monday.

SG: MARKET PULSE: UE E&C, Global Palm (26 Mar 2013)

Stock Name: UE E&C
Company Name: UE E&C LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.82

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.17

MARKET PULSE: UE E&C, Global Palm

26 Mar 2013

KEY IDEA UE E&C: Healthy pipeline of projects We met the management of UE E&C last week for an update. Despite the labour crunch in the construction industry and the cooling measures introduced by the government, management remains upbeat. The group has implemented productivity enhancement measures and adopted new technologies to facilitate work processes to help mitigate the tighter manpower constraints and rising costs. Meanwhile, the group has an estimated order-book of S$600-800m, anchored by four key residential developments: Austville EC, Watercolours EC, Prince Charles Crescent and the new Punggol EC. We now roll forward our estimate to FY13F and incorporate projections for the new Punggol EC project. This increases our SOTP fair value to S$0.82 (previously S$0.68). Upgrade to BUY. (Chia Jiunyang) MORE REPORTS Global Palm: HOLD with lower S$0.17 FV Global Palm Resources (GPR) continues to see a rise in its inventory of CPO (crude palm oil), this time more than doubling to 7.7k tonnes from 3.4k tonnes at end 3Q12 (also up 19% YoY). And with the continued high production of CPO (which is likely to continue into Mar as company expects FFB production to increase some 11% this year), GPR may see its stock pile inching even higher going into 2Q13. Meanwhile, new planting has been slow - GPR only added 331k ha last year - and plans to plan 300-400ha this year, citing tough negotiations with the local population. Recent FY12 results were slightly disappointing - GPR reported a net loss of IDR39.8b; but if we strip out the bio-asset fair value losses, core earnings would have come in at IDR51.5b, or 10% below our forecast. In view of the still muted outlook for CPO, we cut our FY14 forecast for revenue by 13% and core earnings by 12%; this also brings our fair value down from S$0.19 to S$0.17, still based on 10x FY13F EPS. Maintain HOLD. (Carey Wong)

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NEWS HEADLINES - US stocks declined on Monday, erasing gains that briefly had the S&P 500 index less than one point from its record close, as Wall Street worried about Europe's troubles. - Share placements are gaining favour again among Singapore-listed companies as improving sentiment makes it easier to tap equity capital markets, observers say. - Singapore's CPI rose a faster than expected 4.9% in Feb from a year ago. Economists polled by Reuters were expecting an inflation rate of 4.1%, up from 3.6% in Jan. - About S$30m has been set aside by the Singapore government to run SME Centres over three years, from Apr 2013 to Mar 2016. - Lian Beng Group announced that it has won a S$220m contract to construct Bartley Ridge, a development comprising nine residential blocks along Mount Vernon Road. - Marine service provider Swissco Holdings Limited has diversified its business model to move higher up the value chain and into the oil rig sector.

MARKET PULSE: Karin Tech, Global Palm, Keppel Land (23 Nov 2012)

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.25

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.49

MARKET PULSE: Karin Tech, Global Palm, Keppel Land

23 Nov 2012

KEY IDEA Karin Technology: An Apple for a Christmas cheer We expect Karin Technology (Karin) to be a key beneficiary of recent new product launches by Apple, given the latter's leadership position in the smartphones and tablets space. Karin has the license to sell the full range of Apple products through its In-Smart retail stores in Hong Kong, which includes the iPhone 5, iPad Mini and fourth-generation iPad. However, the limiting growth factors would be supply constraints and low margins on these products, in our opinion. Management would also strive to increase focus on higher margin network security products and enterprise software solutions to mitigate this. We maintain our HOLDrating and S$0.25 fair value estimate on Karin, still based on 6x FY13F core EPS. Prospective FY13F dividend yield remains attractive at 8.2%. (Wong Teck Ching Andy) MORE REPORTS Global Palm: Still no catalyst yet Global Palm Resources (GPR) has slashed its planting target by >60% to 300-400 ha for 2012 as it now faces increasing difficulties in its negotiation with the local population. Instead, management continues to be on the lookout for acquisitions to boost its plantation size; and believes that the process to be easier now with the drop in CPO (crude palm oil prices). Nevertheless, we note that rising inventory levels could remain an issue which could see stockpiles rising further in 4Q12 and even 1Q13 due to continued strong CPO production and muted demand. Unless there is a sharp recovery in CPO prices or a sizable brown-field acquisition, we do not see any catalyst in sight. Maintain HOLDwith an unchanged fair value of S$0.19 even as we roll forward our 10x peg from blended FY12/FY13 to FY13F EPS. (Carey Wong) Keppel Land: Establishes US$3bn multicurrency MTN program Keppel Land (KPLD) announced that it has established a US3bn Multicurrency Medium Term Note Program. As of end Sep 12, KPLD's net gearing is a healthy 21% and we see this program adding significant incremental financial flexibility to its balance sheet, particularly as the group continues to look into allocating capital into accretive land acquisitions. That said, we continue to see limited catalysts for the share price ahead given limited visibility for major launches and MBFC T3 divestment over the near term. Maintain HOLD with an unchanged fair value estimate of S$3.49 (35% discount to RNAV). (Eli Lee)

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NEWS HEADLINES - US consumer sentiment rose slightly in Nov to the highest since Sep 2007, boosted by rising wages and an improving jobs market, but tempered by uncertainty about the fiscal cliff. US markets were shut yesterday for Thanksgiving. - Cambridge Industrial Trust has secured from its existing lenders a S$100m bridging loan to finance the purchase of properties and a S$50m revolving credit facility to fund various asset enhancement initiatives within its portfolio. - Technics Oil and Gas's 4Q12 PATMI declined 6% YoY to S$2.4m, despite a 10% rise in revenue to S$25m. Its gross profit margin fell due to more contract engineering contracts that command relatively lower margins being recognised. - Magnus Energy Group has received an A$2.7m payment for the sale of its entire investment in Acer Energy.

MARKET PULSE: Oil & Gas Sector, Sembcorp Marine, Global Palm (22 Aug 2012)

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.09

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

MARKET PULSE: Oil & Gas Sector, Sembcorp Marine, Global Palm

22 Aug 2012

KEY IDEA Oil & Gas: Outperformance to continue With the end of the 2Q12 earnings season, we note that companies reported earnings that were mostly in line with our expectations, with the exception of Keppel Corporation and Marco Polo Marine (above), and Rotary Engineering (below). Key events included the materialisation of major contracts for the rigbuilders with more order flows in the pipeline, as well as continued recovery in the OSV segment. Ezion Holdings also clinched a series of contracts which supported its share price performance. Despite fears of a slowdown in the global economy, the rig market has picked up and the OSV market is on a gradual road of recovery, though the downstream segment is still in a difficult environment. Looking ahead, we expect continued good performance by SMM [BUY, FV: S$6.09], KEP [BUY, FV: S$13.34], EZI [BUY, FV: S$1.20] and SOH [BUY, FV: S$2.00], but among the rigbuilders we currently favour SMM. Maintain Overweight. (Low Pei Han, Chia Jiun-yang) MORE REPORTS Sembcorp Marine: Upside potential still there Sembcorp Marine (SMM) has been one of the top performers in the O&M space so far this year due to several reasons: 1) demand for the group's products remain high, supported by oil prices and buoyant activities in the industry, 2) its good track record and efforts to stay ahead of the curve have positioned it well to secure new orders, 3) its strong orderbook provides defensiveness when uncertainty in the global economy has resulted in a general lack of clarity in corporate earnings outlook, and 4) contracts have been forthcoming so far this year. Looking ahead, the above-mentioned factors are likely to remain for the medium term, and we still see upside potential for the stock based on forward valuations. We are also increasing our new order win estimate to S$9.5b (from S$8.7b) as we expect more contract wins. As such, our fair value estimate increases from S$5.69 to S$6.09. Maintain BUY. (Low Pei Han) Global Palm: HOLD - eyes on rising cost Global Palm Resources (GPR) has kept its 1k ha new planting target for 2012, although new plantings to date has been slow - only planted 259 ha in 1H12 versus 444 ha in 1H11. GPR eyes inorganic growth to help meet its target and has IDR240.6b (as of end Jun 2012) for M&A opportunities. On another note, cash cost has risen further in 2Q12 to IDR3697/kg, up further from IDR3277/kg in 1Q11; this mainly due to higher indirect material used (fertilizers), higher cost of upkeep and harvesting and increased cost of fuel. We will continue to monitor the situation and while we are bumping up our FY12 revenue forecast by 3.8%, our earnings estimate only rises by 3.6%. Our fair value also remains at S$0.19, mainly due to the depreciating IDR against SGD, even though we push out our 10x valuation to blended FY12/FY13F EPS. Maintain HOLD. (Carey Wong)

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NEWS HEADLINES - US stocks declined, with the S&P 500 Index retreating 0.3% to 1,413.26 points, as a fall in technology shares eclipsed optimism that progress would be made over resolving the eurozone's issues. - Wing Tai Holdings reported a 16% YoY decline in its 4QFY12 PATMI to S$140.5m despite an 88% surge in revenue to S$202.2m. - Civmec's 4QFY12 PATMI jumped 133% YoY to S$8.4m on the back of a 347% spike in revenue to S$113.6m - Longcheer Holdings issued a profit guidance, highlighting that it expects to report a loss for 4QFY12 and FY12 due to an impairment charge recorded on its receivables.

MARKET PULSE: Genting, Fortune REIT, UE E&C, City Dev, Wilmar, SIA, Noble, CSE Global, Global Palm, OKP, PAH (11 May 2012)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 4.30

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: OCBC

Price Call: HOLD

Target Price: 10.80

Stock Name: OKP
Company Name: OKP HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.53

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

Stock Name: Pac Andes
Company Name: PACIFIC ANDES RESOURCES DEVLTD

Research House: OCBC

Price Call: BUY

Target Price: 0.317

MARKET PULSE: Genting, Fortune REIT, UE E&C, City Dev, Wilmar, SIA, Noble, CSE Global, Global Palm, OKP, PAH

11 May 2012

KEY IDEA Genting Singapore: 1Q12 slightly below; lower S$1.97 FV Genting Singapore (GS) posted 1Q12 revenue of S$787m (-14.7% YoY), meeting 21.3% of our full-year forecast - slightly softer than expected. Net profit came in around S$211.5m (-30.9% YoY), or 20.8% of our FY estimate, as overall revenue was affected by lower win percentage and lower business volume in the premium player business. Going forward, management plans to focus on boosting its visitor numbers to its theme park and remains positive on the prospects of IMA over the longer term. Since 1Q12 results were slightly below our forecast, we opt to trim our FY12 estimates by 5-5.3% and FY13 by 2.3-2.4%, noting the impact of IMAs will likely be felt in 2013. This also eases our DCF-based fair value from S$2.02 to S$1.97. And with a sizable cash pile, we believe that an acquisition is likely on the card, although an IR in Japan has slipped down GS' priority list. Maintain BUY. (Carey Wong) MORE REPORTS Fortune Real Estate Investment Trust: Exceeding expectations 1Q12 results were above our and the street's forecasts. Net property income of HK$185m was up 15.1% YoY; 9.9ppt came from organic growth, while 5.2ppt was due to the one-and-a-half months contribution from Belvedere Square and Provident Square, which were acquired in mid Feb. DPU climbed 14% QoQ to 7.78 HK cents. With the next three quarters seeing full contribution from the two properties, we raise our FY12 DPU forecast from 29.4 HK cents to 31.7 HK cents, up 20.5% YoY from FY11 DPU. We maintain our BUY rating and raise our fair value from HK$4.88 to HK$5.22. (Sarah Ong) UE E&C: 19% fall in net profit UE E&C (UEEC) reported its 1Q12 results last evening. 1Q12 revenue and net profit fell by 35% and 19% YoY to S$56.6m and S$4.0m respectively, mainly due to lower contribution from existing projects. That said, we note that revenue recognition of construction contracts are usually lumpy in nature, and may not be an accurate reflection on the progress made on DBSS/EC projects. Looking ahead, we fear that labour costs could rise given the stricter foreign manpower quota. Therefore, we eased our gross margin assumption to 17-18% (previously: 20%). This in turn lowered our SOTP-derived fair value to S$0.71 (previously S$0.82). Maintain BUY. (Chia Jiunyang) City Developments Limited: No surprises for 1Q12 results CDL announced 1Q12 PATMI of S$156.8m, down 44.5% YoY mostly due to the lack of gains from the disposal of The Corporate Office recognized in 1Q11. We judge 1Q12 PATMI, which constitutes 20% of our FY12 forecast, to be broadly in line with consensus and our expectations. Over 1Q12, CDL launched two developments - The Rainforest and Bartley Residences, which has sold 94% and 41% respectively, and we expect at least two more launches in the year ahead. We continue to see good numbers from the hotel segment, with 1Q12 RevPar at M&C, the hotel subsidiary of the group, up 6% YoY in constant currency terms. While management continues to execute strongly, we believe that the share prices are fully priced given uncertainty in the domestic residential market - its core business segment - and the possibility of more property curbs ahead. Maintain SELLwith an unchanged fair value of S$8.92. (Eli Lee) Wilmar: HOLD with new S$4.30 FV In react to its poor 1Q12 results, Wilmar International Limited's (WIL) share price took a massive 9.1% tumble yesterday. As we had articulated in our 4Q11 results report (22 Feb), the market appears to be anticipating a much stronger recovery, but not supported by the 4Q11 results and its outlook. True enough, our view was reinforced by the 1Q12 results. In any case, we are paring our FY12 earnings forecast by 18% (FY13 by 12%). While we are keeping our valuation peg at 15x (one SD below its 3-year mean), our fair value drops to S$4.30. Maintain HOLD. We would be buyers closer to $4.00. (Carey Wong) Singapore Airlines: FY13 to remain challenging SIA's FY12 net earnings came in at S$336m, which was 25% and 17% respectively lower than the street's and our forecasts. Management said tension in the Middle East during 4QFY12 pushed fuel cost up by 15%, which caused profit margins to contract. Furthermore, SIA in 4QFY12 recorded S$79m of one-off losses, of which S$51m was a disposal loss. For the year ahead, management guided that capacities of the parent airline, SIA Cargo and SilkAir will increase by 3%, 3% and 22% respectively. Capex in FY13 is budgeted to be ~S$1.6b. Passenger yields will likely come under further pressure though fuel prices are expected to remain high. Demand for air freight is unlikely recover before 2HFY12. We maintain our fair value estimate of S$10.85/share and HOLD rating on SIA. (Eric Teo) Noble Group Ltd: 1Q12 earnings below consensus Noble Group (Noble) reported 1Q12 revenue rising 14.1% YoY and 13.5% QoQ to US$22.8b - meeting 26.1% of our FY12 forecast. Net profit fell 45.8% YoY (down 1.3% QoQ) to US$110.1m, or 16.8% of our full-year estimate, versus the street's S$166m consensus; but if we strip out profit (loss) on supply chain assets, its recurring income was just down 9.8% YoY and up 35.2% QoQ at US$135.8m (20.7% of forecast). We are paring our FY12 revenue estimate by 1.1% and earnings by 12.1% to reflect potential economic headwinds around the globe. We are also easing back our valuation peg from 11.1x to 10.5x, which in turn reduces our fair value from S$1.46 to S$1.21. Maintain HOLD. (Carey Wong) OKP Holdings: Wins S$4.9m contract OKP Holdings (OKP) last night announced it has won a new S$4.9m contract from the PUB for the proposed lining works and removal of NEWater mains for Stamford Canal at Orchard Road. The contract starts on 15 May 2012 and is expected to be completed by 14 Jan 2013. This contract is expected to contribute positively to, but has no material impact on, OKP's financial performance for the current financial year ending 31 Dec 2012. We maintain our fair value estimate of S$0.53/share and HOLDrating on OKP. (Eric Teo) CSE Global: Results in line CSE Global (CSE)'s 1Q results came in roughly within our and the street's expectations. 1Q12 revenue increased by 31% YoY to S$134.7m (1Q11: 102.6m), while net profit was flat at S$12.6m (1Q11: 12.5m). Gross margin declined to 31.4% (1Q11: 40.9%), mainly due to (i) additional cost incurred on its telecommunication projects, (ii) higher proportion of lower-margin greenfield project and (iii) reduction in recognition of license contribution from the UK healthcare sector. Order-book decreased to S$398m as of end-1Q12 (4Q11: S$455m). On a positive note, its gearing decreased to 30.2% from 34.2% a quarter ago. Pending an analyst briefing later, we put our Hold rating and S$0.80 fair value estimate under review. (Chia Jiunyang) Global Palm: 1Q12 results mostly in line Global Palm Resources (GPR) reported its 1Q12 results last evening. Revenue grew 12.0% YoY and 24.8% QoQ to IDR98.9b, meeting 27.3% of our full-year forecast. Net profit though fell 13.1% YoY and 756.8% QoQ (which also includes biological asset gains) to IDR12.9b, or around 23.4% of our FY12 forecast. However, we note that gross margin eased from 30.5% in 1Q11 and 31.3% in 4Q11 to 25.7%; this probably due to lower ASPs. We will be speaking with management to get an update on its expansion plans. For now, we put our Hold call and S$0.19 fair value under review. (Carey Wong) Pacific Andes: Better-than-expected 2Q results Pacific Andes Resources Developments Ltd (Pacific Andes) reported a strong set of 2Q results (for the 3-month period ended 28 March 2012). Revenue grew 35% to HK$3,320.5m. Net earnings improved 23% YoY to HK$333.0m and also higher than our estimates. This gives 1H net earnings of HK$472.6m, or 65% of our full year estimates. The group attributed the better performance to both its core businesses of frozen fish SCM (53% of revenue) as well as better high revenue from its fishery and fish supply business (47%). The key markets are China (accounting for 69% of sales), Africa (13%), East Asia (9%) and Europe (8%). There is an analyst briefing later and we will update once we have more information. Meantime, we are putting both our Buy and fair value estimate of S$0.317 under review pending the outcome of the briefing. (Carmen Lee)

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

NEWS HEADLINES - US stocks indexes were mainly flat. The DJIA broke a six-session losing streak as hopes for a breakthrough to Greece's political deadlock emerged. - Asia Pacific Breweries registered a 7.3% YoY drop in net profit to S$62.9m for 2Q12 mainly due to a S$29.8m provision for impairment of a China subsidiary. - Petra Foods' 1Q12 net profit rose 20.5% YoY to US$16.3m. Revenue had dropped 7% to US$403m. - WBL Corporation registered an 11% YoY drop in net profit for 2Q12 to S$20.1m. Revenue had risen 10% to S$598.5m. - Super Group announced a 21% YoY rise in its 1Q12 net profit to S$17.7m. Revenue had climbed 23% to S$122m. - Healthway Medical's 1Q12 net profit climbed 24% YoY to S$1.85m despite revenue dipping 2.3% to S$20m.

MARKET PULSE: NOL & Global Palm (22 Mar 2012)

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.38

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.19

MARKET PULSE: NOL & Global Palm

22 Mar 2012

KEY IDEA Neptune Orient Lines: Transpacific provides boost The Shanghai (Export) Containerised Freight Index (SCFI) climbed 5% higher WoW in the week ended 16 Mar 2012. The increase in SCFI was driven by shipping liners' success in getting most of the previously announced US$300/FEU hike in transpacific shipping rates. However, bunker fuel prices have averaged 8% higher QoQ thus far in 2012. Furthermore, since new deliveries of vessels are expected to increase shipping capacity this year, shipping liners' collective discipline in managing the oversupply is key to the profitability of the entire container shipping industry. We pared Neptune Orient Lines' (NOL) FY12 net loss estimate to US$136m, from the previous US$281m, after the latest hike in transpacific shipping rates. But we maintain our fair value estimate of S$1.38/share and HOLDrating on NOL. (Eric Teo) MORE REPORTS Global Palm: Eyes higher cost in FY12 We spoke recently with management of Global Palm Resources (GPR) to get an update after ending FY11 on a pretty weak note. Going forward, GPR expects to increase new plantings to 1.0k ha, after planting 951 ha in FY11. It adds that it is on the lookout for M&A opportunities, where it has an ample net cash balance of IDR215.8b as of end FY11. But higher cost of production could crimp margins, even though CPO prices have generally remained fairly resilient thus far this year. As such, we have adjusted our margin assumptions accordingly, lowering our FY12 revenue estimate by 3.8% and earnings by 9.9%. In line with the revision, our fair value eases from S$0.195 to S$0.19, still based on 10x FY12F EPS. But as the stock is currently trading at just 0.7x its FY11 NTA, we believe that further downside is likely limited. As such, we maintain our HOLD rating. (Carey Wong)

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

NEWS HEADLINES - Malaysia's central bank has projected its economy to grow at a slower-than-expected rate of 4-5% this year, due to a more challenging external environment. - Cordlife Group said that it will raise about S$26.3m in net proceeds from its Singapore IPO to facilitate its Singapore and Hong Kong expansion and acquisitions overseas. - F1 chief Bernie Ecclestone has recommended Singapore as the best location for the IPO of the motor racing business. - Singapore Airlines' new budget carrier Scoot has officially started to accept bookings on its website. - MAS said that two Lehman Brother entities have been placed under voluntary liquidation, although minibond investors here cannot launch claims against them as creditors.

MARKET PULSE: Sembcorp Marine, UOB, ST Engineering, Sheng Siong & Global Palm (24 Feb 2012)

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: HOLD

Target Price: 5.70

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD

Research House: OCBC

Price Call: BUY

Target Price: 19.74

Stock Name: ST Engg
Company Name: SINGAPORE TECH ENGINEERING LTD

Research House: OCBC

Price Call: BUY

Target Price: 3.32

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.44

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

MARKET PULSE: SEMBCORP MARINE, UOB, ST ENGINEERING, SHENG SIONG & GLOBAL PALM

24 Feb 2012

KEY IDEA Sembcorp Marine: Looking beyond FY11 Sembcorp Marine (SMM) reported a 1.5% YoY rise in revenue to S$997.6m and a 4.3% fall in net profit to S$229m in 4Q11 such that FY11 net profit was 8% higher than our expectations. This was mainly due to foreign exchange gains and substantially lower general and administrative expenses in 4Q11. Besides lower margins going forward, we also note that there are hardly any major catalysts left in the medium term after Petrobras awards its drillships orders. We have tweaked our estimates to take into account our higher new order wins assumption and updated the market value of SMM's stake in Cosco Corp. As such, our fair value estimate rises from S$5.63 to S$5.70. SMM's stock price has rallied about 37% YTD vs the STI's 12% rise and the FTSE Oil and Gas index's 24% gain. As we now see limited upside potential in the stock price, we downgrade SMM to HOLD. (Low Pei Han) MORE REPORTS UOB: Below expectations 4Q UOB Group turned in FY11 net earnings of S$2327m, down 14%, and below market expectations of S$2407m (4Q net earnings of S$558m). While Net Interest Income rose 4% to S$3678m, Non-interest Income slipped 11% to S$2020m. Impairment charge went up 10% to $523m, or S$225m in 4Q alone. Net Interest Margin reversed from 1.89% in 3Q11 to 1.95% in 4Q11. We expect corporate banking to continue to do well in FY12 as it grows its regional franchise. We are leaving our FY12 estimates intact, but raising our fair value estimate to S$19.74. Maintain BUY. (Carmen Lee) ST Engineering: Near miss with positive outlook ST Engineering (STE) 4Q11 revenue fell 5% YoY to S$1.5b but PATMI edged 2% higher to S$152m. The 4Q11 PATMI gain was primarily driven by two factors - 1) a total of S$10m of one-off losses in 4Q10 and 2) a lower tax rate of 16% in 4Q11. For the full year, STE's FY11 revenue remained flat at a tad shy of S$6b while PATMI grew 7% to S$528m, missing consensus revenue and PATMI estimates by 8% and 4% respectively. STE disclosed a record order book of S$12.3b at end-FY11 and announced a total dividend payout of 12.5 cents/share, made up by a final dividend of 4 cents/share and a special dividend of 8.5 cents/share. We increased our fair value estimate of STE to S$3.32/share, from S$3.01/share previously, and maintain our BUY rating. (Eric Teo) Sheng Siong Group: FY11 results within expectations Sheng Siong Group's (SSG) FY11 results were broadly in-line with our expectations. Revenue fell 8% YoY to S$578m following the closure of the two key outlets while net profit fell 36.1% to S$27.3m in the absence of trading gains. SSG's top-line figure exceeded our revenue projections slightly by 2.3% but an unexpected tax charge caused SSG's net profit to come in under our projected S$31m. The increase in tax was related to sale of investments in 2009 and SSG is currently requesting IRAS to review the tax assessment. A final dividend of 1.77 SG cents per share was declared (90% of net profit as previously committed) for a dividend yield of 3.6%. We will be speaking to management at SSG's results briefing later this morning and put our HOLD rating and fair value estimate of S$0.44 UNDER REVIEW. In the meantime, as mentioned in our previous report, we could see some initial selling pressure at market open due to the lower net profit. (Lim Siyi) Global Palm: Poor 4Q11 finish Global Palm Resources (GPR) ended FY11 on a pretty weak note. 4Q11 revenue grew 8.9% YoY but declined 13.3% QoQ to IDR79.23b, which the group attributed to weaker ASPs of CPO. While net profit jumped 410.6% YoY and 302.8% QoQ to IDR55.8b, it was mainly due to non-cash biological asset revaluation gains. Stripping that out, we estimate that core earnings would have been around IDR12.1b, or 3.9% below our forecast, while revenue was 10.6% below. For FY11, revenue of IDR345.6b was 2.6% below our estimate, while core net profit of IDR57.8b was 5.5% below. GPR has declared a final dividend of S$0.002/share. The group also added just 951ha in FY11, way short of its 1.6-1.7k ha target for this year. We will be speaking with management later; until, then, we place our Hold rating and S$0.195 fair value UNDER REVIEW. (Carey Wong)

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

NEWS HEADLINES - The euro rose to a 10-week high against the US$ after better-than-expected data on German business sentiment (the highest in seven months) reduced concerns about the outlook for the eurozone. - Singapore's CPI eased to 4.8% in Jan from 5.5% in Dec 2011, but core inflation, which strips out accommodation and private transportation costs, reached a 3-year high of 3.5%. The government said that core inflation is likely to hover around 3% in the next few months. - Cosco Corp. (Singapore) saw profit attributable to equity holder decline 44% to S$139.7m for FY11, due to higher operational costs in its shipyard business and higher taxes. Sales had increased by 8% to S$4.16b. - Gallant Venture reported a 44% YoY increase in revenue to S$62.9m for 4Q11. Total comprehensive income attributable to equity holders jumped to S$11.6m from S$1.05m a year ago.

SG:Global Palm- Not expecting much expansion in 2012

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.195

29 November 2011 : Global Palm Resources

Summary: Global Palm Resources (GPR) continues to disappoint with the pace of its new planting in 3Q11, where it added just 176 ha, bringing its YTD increase to 621 ha. Even though GPR has slashed its new planting target from 1.6-1.7k ha this year to 1k ha, it could still be a tall order as GPR would need to achieve 379 ha of new plantings in 4Q11. Management explained that the slowdown in new planting is an industry-wide trend, arising from Indonesia's two-year moratorium on new permits to clear primary forests and greater public and NGO scrutiny over new land opening. GPR has also lowered its new planting target for 2012 to just 770 ha. In view of the slow expansion so far and also the muted new planting target next year, we have reduced our FY12 revenue forecast by 9.3% and earnings by 8.4%. Applying an unchanged valuation of 10x against its FY12F EPS, versus blended FY11/FY12F EPS previously, our fair value drops to S$0.195 from S$0.21. Maintain HOLD.




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Market Pulse: Singapore Office Sector & Global Palm (21 Sep 2011)

Stock Name: KepLand
Company Name: KEPPEL LAND LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 3.97

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.21

Market Pulse: Singapore Office Sector & Global Palm (21 Sep 2011)

FOCUS

Singapore Office Sector: Muted interest for Robinson Rd site

Summary: Yesterday evening, Far East Organization affiliates (Boo Han Holdings and Pearlvine) bid highest for the Robinson Rd/Cecil St land parcel at S$312m, or S$882 psf per plot ratio. We estimate a development cost at S$140m - S$180m and therefore an all-in price around S$1,600 - S$1,700 per sq ft NLA. Putting this against S$1,916 psf achieved at the Anson House transaction (85 years remaining) in May 11, and considering there were only three bidders, this indicates capital values expectations have at least stagnated over 3Q11 and that office developers are increasingly cognizant of heightened risks ahead. Maintain NEUTRALon the office sector. We believe current prices of major office landlord Keppel Land (KPLD) continue to show fundamental value, despite a lowered RNAV and a heavier discount. Maintain BUY on KPLD with a fair value estimate of S$3.97 (20% discount to RNAV). (Eli Lee)

Global Palm: Expansion is slower than projected

Summary: Global Palm Resources (GPR) has recently announced that its group financial controller (FC) Zhang Xiaoyu has left the company to "pursue other career opportunities"; this after being appointed to the position on 5 Jul 2011, or just slightly over two months on the job. GPC did not immediately announce a replacement, suggesting that Zhang's departure was quite sudden. However, GPR does not expect to experience much of a disruption, saying that its CFO (currently based in Indonesia) can handle the work. Nevertheless, we note that the latest staff movement does not inspire confidence, especially in the current volatile market. Having said that, we only expect the FC's resignation to have a modest negative short-term impact on GPR; hence we maintain our HOLDrating and S$0.21 fair value. But the longer-term issue remains its ability to aggressively expand its plantation as set out in its IPO prospectus. (Carey Wong)

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

NEWS HEADLINES

- IMF stated in its World Economic Outlook report, that the global economy has entered a "dangerous" phase - with advanced economies facing weak growth and prospects for emerging economies propping up global growth turning uncertain.

- S&P downgrades Italy's credit rating, due to poor growth prospects, adding pressure on a debt-stressed Eurozone.

- The USD has risen to a six-month high against the SGD, with the greenback fetching S$1.2717 yesterday.

- GIC, the largest shareholder of UBS, met the Swiss bank's top management yesterday and urged the bank to take firm action to restore confidence in the bank.

- DBS announced that it will spend S$250m over the next five years to grow its private banking business.

- Advanced Holdings announced that it has secured S$16.8m worth of oil & gas and petrochemical projects to be carried out in China, Thailand, Saudi Arabia and Singapore.

- Vodafone, after choosing to terminate its partnership with M1, will adopt StarHub as its exclusive partner. This will set StarHub to become the cellular port of call for subscribers of British telecoms giant.

Global Palm Resources Holdings rated 'hold' by OCBC

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.21

OCBC Investment Research in an Aug 19 research report says: "Revenue jumped 61% y-o-y to IDR86.6 billion, underpinned by improved harvest (both from its own plantation and higher volumes purchased from third party) and buoyant selling prices of CPO and palm kernel; GPR achieved an ASP of IDR7586/kg, versus IDR6455 in 2Q10, but lower than IDR7706 in 1Q11.

"As a result, net profit also surged 111.5x y-o-y to IDR19.8 billion; it was also up 33% q-o-q. Given that the slow pace of expansion is likely to continue for the foreseeable future, implying very limited earnings growth potential, we cut our valuation peg from 16x FY11F EPS to 10x blended FY11/FY12F EPS, which in turn drops our fair value to 21 cents (32.5 cents previously). MAINTAIN HOLD."

Global Palm Resources rated 'hold' by OCBC

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD
Research House: OCBC

OCBC Investment Research in a Mar 4 research report says: "Global Palm Resources (GPR) reported its 4Q10 results recently, with revenue rising 19.6% y-o-y and 30.0% q-o-q to IDR94.5 billion, buoyed by higher crude palm oil (CPO) average selling prices and improved production yields.

Read more...

Global Palm - OCBC initiates Global Palm Resources at Hold

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD
Research House: OCBC

OCBC Investment Research starts Global Palm Resources Holdings (K6J.SG) at Hold recommendation with a $0.40 fair value estimate.



It says the stock looks fairly valued at the moment and has a slightly higher P/E of 16X compared with the sector average of 15.3X, looking at relative valuations. 

“Despite our relatively upbeat projections, we note that Global Palm has also run up with the rest of its plantation peers,” OCBC says. 

It sees an opportunity to revisit the rating if the group executes successfully on its expansion plans.

Global Palm - Global Palm Resources Holdings rated 'buy' by AmFraser

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD
Research House: AmFraser

AmFraser in a Jan 5 research report says: "Global Palm Resources Holdings Ltd (GPR) is one of the smallest SGX-listed palm oil producers with market capitalization of $155 million as of Nov 10. We believe GPR may be trying to gain a foothold into East Kalimantan for oil palm cultivation.

Read more...

Global Palm - AmFraser starts Global Palm Resources at Buy

Stock Name: Global Palm
Company Name: GLOBAL PALM RESOURCES HLGS LTD
Research House: AmFraser

AmFraser starts Global Palm Resources (K6J.SG) at Buy with $0.51 fair value, based on 12X FY11F P/E of 4.2 cents.



“We believe GPR may be trying to gain a foothold into East Kalimantan for oil palm cultivation. If the venture inroad proves successful, it will further beef up GPR’s production capacity and more importantly provide an alternative source of plantation landbank for oil palm cultivation.” 

It adds, due to its small size and domestic consumption driven nature, GPR is also less likely to be hampered by environmental organisations in growing its cultivated plantations. 

The house forecasts $83.1 million, $116.4 million in net profit for FY10, FY11 respectively. It says GPR is priced relatively lower vs regional peers at over 8X FY11F P/E. Shares are +6.8% at $0.395 in heavy volume of 7 million shares.