SG: MARKET PULSE: SembCorp, Fortune REIT, Goodpack, Nam Cheong (12 Nov 2013)

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.67

Stock Name: Fortune Reit HK$
Company Name: FORTUNE REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 6.95

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.87

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.35

MARKET PULSE: SembCorp, Fortune REIT, Goodpack, Nam Cheong

12 Nov 2013

KEY IDEA Sembcorp Industries: Overall steady Summary: Sembcorp Industries (SCI) reported a 30.8% YoY rise in revenue to S$2.97b and a 40.4% increase in net profit to S$254.4m in 3Q13, such that 9M13 revenue and net profit accounted for about 74% and 78% of our full year estimates, respectively. Stripping out one-off items, we estimate core net profit in 9M13 to be S$528.3m, accounting for about 71% of our full year estimate. The utilities business remained generally stable, but the UK side saw an impairment, mainly for power and steam assets. Meanwhile, with the deconsolidation of Sembcorp Salalah, SCI has turned from a net debt to a net cash position. We roll forward our valuation to FY14F earnings for the utilities business, and tweak our SOTP-based valuation to account for Salalah's listing on the Muscat stock exchange, resulting in an increase in our fair value estimate to S$6.67 (prev. S$6.48). Maintain BUY. (Low Pei Han) MORE REPORTS Fortune REIT: 3Q13 is line; counter is oversold Summary: FRT reported 3Q13 results that were generally in line with ours and the street's expectations. Revenue rose 10.7% YoY to HK$315.7m. Income available for distribution climbed 10.6% YoY to HK$153.3m, however, DPU increased by only 1.5% to 8.28 HK cents because of the placement units (representing an increase of 8.4% over the number of prior units) issued on 6 Aug. Income from Fortune Kingswood started contribution from 9 Oct. FRT's unit price has fallen 11% since 29 Jul (closing price of HK$7.14), the day before it announced the MOU for Kingswood. We believe the counter has been oversold. We tweak our FV slightly to HK$7.01 from HK$6.95. On valuation grounds, we upgrade FRT to a BUY from Hold. We believe that the reflection of the maiden contribution by Fortune Kingswood in the 4Q13 results will be a significant positive catalyst; we forecast 4Q13 DPU of 10.0 HK cents. (Sarah Ong) Goodpack Limited: 1QFY14 results in-line Summary: Goodpack's 1QFY14 results came in within expectations with revenue increasing 7.7% YoY to US$52.1m following greater demand by customers in the rubber industry. The company also managed to keep operating margins relatively stable despite incurring higher depreciation and financing costs from having a larger IBC fleet. As a result, operating profit and PATMI grew by 11.8% YoY to US$19.3m and 7.2% to US$13.9m, respectively. For the remaining quarters, we expect top-line growth to sustain as its key clients' synthetic rubber (SR) operations in Singapore ramp up operations. In terms of margins, we had previously factored in some margin deterioration but the decent 1QFY14 performance gives us some cause for optimism for the rest of year. Nonetheless, we leave our conservative FY14F projections intact but incorporate a slower pace of debt repayments. This causes our DCF-derived fair value to rise to S$1.87 (S$1.69 previously). However, Goodpack's share price has risen by more than 23% since late-Aug, we believe that much of the upside has been priced in at this point. Downgrade to HOLD. (Lim Siyi)

Nam Cheong: 3Q13 bottomline above expectations Summary: Nam Cheong Limited reported a solid set of 3Q13 results this morning, with revenue surging 140.4% YoY to MYR341.2m and PATMI jumping 86.0% to MYR58.7m. Revenue was in-line with our expectations but PATMI exceeded, with 9M13 revenue of MYR851.3m (+71.1%) and PATMI of MYR135.2m (+54.9%) forming 72.4% and 83.4% of our FY13 forecasts, respectively. This strong set of results was driven by both its Shipbuilding and Vessel Chartering divisions. The former saw a 141.9% YoY increase in revenue to MYR319.7m for 3Q13, while the latter's revenue jumped almost threefold to MYR21.5m. But due to a change in analyst coverage and pending an analyst briefing later, we place our Buy rating and S$0.35 fair value estimate on Nam Cheong under review. (Wong Teck Ching Andy) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks crept higher on Mon, giving the Dow Jones Industrial Average its 35th record close this year. - Real estate and business trust offerings may be a harder sell in the coming months, as the market shifts towards expectations of higher interest rates. - Despite a jump in revenue, Yongnam Holdings reported a 3Q13 net loss of S$3.4m, compared with a net profit of S$10.3m a year ago. - Vicom's 3Q13 net profit rose 6.1% YoY to S$6.78m, with revenue rising 6.9% to S$26.09m as business volume grew. - Super Group posted a 17% fall in 3Q13 net profit to S$18.7m, from S$22.6m a year ago. - QAF Limited saw 3Q13 net profit slide 11% YoY to S$3.8m, hit by weaker margins for an Australian pork producing.

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: IHH
Company Name: IHH HEALTHCARE BERHAD

Research House: DBS Vickers

Price Call: HOLD

Target Price: 1.50

Stock Name: Wing Tai
Company Name: WING TAI HLDGS LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 2.67

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: DBS Vickers

Price Call: BUY

Target Price: 2.00

Market Compass

29 August 2013~ Good Morning Singapore!

Singapore Idea Snippets:

29 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 :The only time a woman really succeeds in changing a man is when he is a baby. - NATALIE WOOD Singapore: The Day Ahead SINGAPORE DAYBOOK : F&N: Weighing square feet and fluid ounces. Demerger appears to be a 'price discovery exercise', says analyst [SINGAPORE] Fraser and Neave's (F&N) split-up will test whether the company's diverse businesses had actually been weighed down by a conglomerate discount. "F&N's planned demerger and listing of two separate entities appear to be a price discovery exercise for now," CIMB analyst Donald Chua wrote in a report. F&N on Tuesday said it plans to distribute two shares of its property business, Frasers Centrepoint Ltd (FCL), for every one F&N share held. FCL will then be listed by way of introduction, with no plans to raise additional capital during the listing. (Source: The Business Times) MARKET SCOOP PM makes changes to cabinet and other appointments IDA launches public consultation on proposed acquisition of OpenNet Metech reverses loss position Dukang's Q4 earnings jump on higher sales Olam gets US$120m IFC loan for Nigerian, Indian projects Sembcorp to build 2 water treatment plants in Liaoning (Source: The Business Times) DBS Securities says... IHH HEALTHCARE | HOLD | TP: S$1.50 2Q13 headline revenue and net profit dropped by 38% and 61% y-o-y to RM1.68bn and RM157m respectively The drop was due to the recognition of medical suite sales from Novena hospital in 2Q12, which contributed RM1.2bn and RM193.6m in revenue and net profit, respectively In addition, 2Q12 profits were boosted by exceptional items, including fair value gains on investment properties In fact, 2Q13 core net profit (excl. exceptional items and medical suite sales in 2Q12) at RM189m was 60% higher than a year earlier EBITDA margins (excl PREIT) strengthened marginally by 1.7ppts to 22.5% (2Q12: 20.8%) despite cost pressures This came on the back of improving revenue intensity and positive EBITDA contribution from Novena Hospital and Acibadem Ankara Hospital In addition, Acibadem Bodrum Hospital also saw a smaller EBITDA loss in 2Q13 Novena Hospital posted a turnaround in EBITDA contribution, with positive RM2m EBITDA This is in line with earlier expectations for Novena Hospital to turn EBITDA positive in 2H13 Operational beds are unchanged from 1Q13 at 116, with occupancy estimated at c.50-60% This is on track to meet our expectation of EBITDA contribution of RM16.8m for FY13FMaintain HOLD while our TP is adjusted slightly to account for the weakening in RM against S$ While we believe the long term prospects for healthcare remain positive and IHH commands a premium due to its scarcity and geographical spread, the stock is already trading at 43x/36x on FY13F/14F earnings UOB KAY HIAN says ... WING TAI HOLDINGS | BUY | TP: S$2.67 Wing Tai reported 4QFY13 net profit of S$275.8m (81% yoy) bringing FY13 net profit to S$531.1m (102% yoy) Core net profit of S$458.1 excluding fair value gains (S$52.1m) and the effect of a change in accounting policy (S$20.9m) was above expectations The strong contribution from the development properties was underpinned by earnings recognised from Foresque Residences, L'VIV, Helios Residences and Belle Vue Residences in Singapore as well as Verticas Residences in Malaysia FY12) comprising of an ordinary dividend of 3 S cents and a special dividend of 9 S cents (payout - 32% of core earnings) NTA per share rose 27% yoy to S$3.62/share Wing Tai's recent launch of the Tembusu project was very well received with over 220 options granted to date (S$1,400-1,500 psf) We expect Wing Tai to record strong margin of more than 40% for the project due to the low land cost as this site was formerly an industrial building (Wing Tai's headquarters) During FY13 Wing Tai sold a total of 318 units (FY12: 225 units) in Singapore and 169 units in Malaysia with a sales value of S$725m and S$130m respectively Management guided a cautious outlook for the Singapore residential market and believes that the new measure introduced on the Total Debt Servicing Ratio (TDSR) framework for property loans is likely to slow the demand for new residential units in Singapore Going forward, Wing Tai is expected to launch the Prince Charles Crescent site and its high-end development at Ardmore Park Wing Tai's net-gearing dropped further to 0.15x (from 0.17x in end-FY12) Assuming a comfortable gearing of 0.5x, this would provide headroom of over S$700m The group is on the lookout for suitable investment opportunities in its core markets of Singapore, Malaysia, China and Hong Kong Maintain BUY with an unchanged target price of S$2.67/share pegged at 20% discount to its RNAV of S$3.33 Wing Tai's low gearing levels and sufficient cash buffer present good acquisition opportunities DBS Securities says... GOODPACK | BUY | TP: S$2.00 While FY13 revenue of US$190.7m (+8% y-o-y) matched our estimate, headline net profit came in slightly above at US$51.3m (+13% y-o-y), 6% ahead of ours and consensus' expectations of US$48m The key variants were the US$1.4m disposal gain of PPE and US$0.9m forex gain as well as lower-than-expected operating expenses in 4Q13 Goodpack is on track to achieve volume growth of 250k boxes in FY14, underpinned by the firm ramp up of new SR markets in Singapore and Russia Demand from US/Europe markets seems to be stabilizing and bottoming out. It has also made good progress in autoparts market with the secure of 10 new customers in FY13 and is at an advance stage of an approval process with one of the major OEMs in Europe Valuation is undemanding for Goodpack, trading at 1 SD below mean of 12x FY14PE and 1.8x P/Bv Our DCF-based TP is raised to S$2.00 as we roll over to FY14, which translates to 15x FY14PE and 2.3x P/Bv or 2-11% discount to historical mean In addition, Goodpack also offers 3-4% dividend yield based on an informal dividend payout ratio of about 45% Company declared final dividend and special dividend totaling 5 Scents for FY13 Reiterate BUY for Goodpack's rosy growth prospects and a lucrative 30% upside potential to our TP The finalisation of autoparts contracts will serve as an imminent catalyst.

SG: MARKET PULSE: Goodpack (28 Aug 2013)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.69

MARKET PULSE: Goodpack

28 Aug 2013

KEY IDEA Goodpack Limited: Decent FY13 results Goodpack's FY13 results were in-line with expectations. Revenue grew by a smaller 7.7% YoY to US$190.9m while PATMI improved 13.4% YoY to US$51.3m as its cost saving initiatives helped to offset higher depreciation and financing costs from a larger fleet and increased borrowings respectively. Similar to last year (FY12), management declared a final dividend of 2 S cents and a special dividend of 3 S cents. Although we lower our revenue forecasts for FY14, we still expect growth improvement following the commencement of key clients' synthetic rubber (SR) operations in Singapore and a new SR contract in Russia. In terms of margins, we only expect a small drop-off as continued cost saving initiatives should keep a lid on logistic and handling expenses. In light of its unchanged fundamentals and recent share price correction, we maintain BUY on Goodpack with a slightly lower fair value of S$1.69 (S$1.80 previously). (Lim Siyi)

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

NEWS HEADLINES - US stocks fell hard, with the Dow ending at a two-month low, as unease over possible US action against Syria shook global markets. - Monday's short-selling attack on China Minzhong Food (CMF) by Glaucus Research prompted some local broking houses to either cease coverage of CMF or even the entire S-chip sector. - Eu Yan Sang International registered a 49% YoY fall in net profit to S$4.7m for 4QFY13 despite an 11% YoY rise in revenue to S$77.3m. - Wing Tai's 4QFY13 earnings rise 72% YoY to S$275.8m and is proposing to reward shareholders with 12 S-cents in total dividends for FY13 (versus 7 S-cents in FY12). - IHH Healthcare Bhd registered an improved operational performance in 2Q13, boosted by the ramp-up of new hospitals, as well as a large one-off tax credit write-back. - Sim Lian Group's net profit for FY13 fell 27% YoY to S$166.9m on the back of higher contract costs and a fall in revenue. - Ausgroup yesterday reported a 93.6% YoY plunge in net profit to A$525k in 4QFY13 (versus A$8.25m in 4QFY13).

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: OUE Ltd
Company Name: OVERSEAS UNION ENTERPRISE LTD

Research House: UOB KayHian

Price Call: BUY

Target Price: 3.63

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 1.67

Market Compass

12 July 2013~ Good Morning Singapore!

Singapore Idea Snippets:

12 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 :If you want to make peace with your enemy, you have to work with your enemy. Then he becomes your partner. - NELSON MANDELA Singapore: The Day Ahead SINGAPORE DAYBOOK : Global stocks rise as Bernanke sticks to QE [LONDON] Global stocks rose yesterday after Federal Reserve chairman Ben Bernanke promised to keep supporting the US economy. Mr Bernanke said that the US needs "highly accommodative monetary policy" - or low interest rates - "for the foreseeable future". That reassured investors who were dismayed by Mr Bernanke's comments last month that the Fed would likely slow its bond purchases later this year and end them around mid-2014 if the economy strengthens. Critics said that the Fed bungled its communications strategy. The Fed has been buying US$85 billion of financial assets a month to keep interest rates low and encourage borrowing and spending. That stimulus has driven global stocks higher, so the prospect of reducing it caused market volatility in recent weeks. "In one short and sweet statement, Federal Reserve chairman Bernanke has flicked a switch on the markets," said strategist Evan Lucas of Australia's IG Markets in a report. (Source: The Business Times) MARKET SCOOP Triyards Q3 profit down 55% to US$7.55m Vard pushed into losses by Brazil ops in Q2 Opening of SNB's Singapore branch signals importance of Asian market: MAS Genting Singapore breaks ground on new hotel in Jurong Smart's taxi service operator licence will not be renewed: LTA HLF to sponsor more SMEs for Catalist listing SCEinks S$8.8m deal with Mauritius Mencastsecures two offshore services contracts from Keppel U of Chicago Booth School moves to HK (Source: The Business Times) UOB KAY HIAN says... OVERSEAS UNION ENTERPRISE | BUY | TP: S$3.63 Overseas Union Enterprise (OUE) has lodged its preliminary prospectus for OUE Hospitality Trust (OUEHT) OUEHT will be offering 434.6m new units to public and institutional investors at S$0.88-S$0.90 per unit to raise S$382m-452m, while a further 247.2m units will be offered to cornerstone investors to raise S$218m-223m The total amount of funds raised will range from S$600m-675m Cornerstone investors include Credit Suisse (Private Banking and Wealth Management), Goldhill Group, Gordon Tang, Lucille Holdings and Splendid Asia Macro Fund Lead managers for the offering include Credit Suisse, Goldman Sachs and Standard Chartered, with co-leads Bank of America Merrill Lynch, Deutsche Bank and OCBC Figures from the preliminary OUEHT prospectus indicate that OUE will be retaining a larger stake of between 42.7-47.9% (depending on offering price and whether the overallotment option of 68.2m units is exercised) in OUEHT as opposed to its earlier intentions to retain a 30% stake Special dividend still substantial with a 5.0-8.3% yield based on the current share price and a payout ratio of 30-50% of the remaining net cash proceeds following the offering This is lower than our initial estimates of a 6-10% payout, although the higher stake retained will generate long-term dividend income for OUE Gearing to improve to 22% post-listing of OUE H-REIT from 62.1% currently The lower gearing will provide opportunities for OUE to leverage on its balance sheet to pursue development projects across geographies and property segments OUEHT to offer a forward yield of 7.3-7.5%, based on an initial offering price of S$0.88-S$0.90 per unit This is marginally higher than the average 7.2% forward yield for Singapore-listed hospitality trusts sector, while OUEHT offers a quality initial Singapore portfolio anchored by Mandarin Gallery (S$536m/31%) and Mandarin Orchard (S$1,220m/69%) The choice of Mr Chong Kee Hiong as CEO of OUE H-Trust should be viewed favourably by the market Mr Chong Kee Hiong brings immense experience in the hospitality industry, having served as the CEO of The Ascott Limited in his last appointment and the CEO of Ascott Residence Trust from Mar 06 to Feb 12 OUE has granted a Right of First Refusal (ROFR) to OUE H-Trust to acquire relevant hospitality assets in the pipeline OUE has identified S$413m worth of hospitality assets, including Crowne Plaza Changi Airport, Meritus Mandarin Haikou and Meritus Shantou China, for potential divestment into OUE H-Trust Further developments such as the addition of 200 rooms at Crowne Plaza Changi Airport and the partial conversion 163,000sf of NLA at 6 Shenton Way into serviced apartments will boost pipeline assets We retain our forecasts pending the listing of OUEHT and further details from management Maintain BUY with an unchanged target price to S$3.63/share which is pegged at a 20% discount to our RNAV of S$4.54/share CREDIT SUISSE Securities says ... MAPLETREE INDUSTRIAL TRUST | OUTPERFORM | TP: S$1.67 Among the industrial REITs, MINT has been the third worst performer, down 16% since end-April We believe valuations are looking attractive We upgrade MINT from Neutral to OUTPERFORM after stress-testing our DDM and rent assumptions Vacancy concerns at Signature is not as bad as the market perceives, with the major tenant, CS (4.5% of gross rental income), vacating in 2H13 About 10% of the space has already been back-filled While Iskandar is seen as a potential threat to industrial landlords, we note that it may take perhaps another five years before the infrastructure and the ease of doing business get up to a level where they become a meaningful threat For now, there is no meaningful competition in the flatted factory space (62% of MINT's NPI) Even after trimming our FY14-16E DPU by 0.3-1.9% to account for vacancy, our new DDM of S$1.67 (from S$1.70) still offers 27% potential upside We estimate that current share price implies a further 20% decline (on top of our existing assumptions) in FY14 rents Meanwhile, stress-testing our DDM for risk-free rates reveals that current share price is factoring a +200 bp in cost of equity CIMB Securities says... GOODPACK LIMITED | OUTPERFORM | TP: S$1.80 We raise FY13 EPS by 2% to adjust for better-than-expected 4QFY13 results, but cut FY14-15 EPS to reflect higher-than-expected finance costs and operating expenses We maintain our Outperform rating, with a target price of S$1.80, based on 14.9x CY14 P/E (5% discount to historical mean) The catalysts for the stock are the recovery of synthetic rubber demand and expansion of the auto parts business Goodpack has seen successive dips in quarterly revenues since 1QFY13, mainly due to 1) weak tyre demand as end-users extend the useful life of their tyres, and 2) weak synthetic rubber demand as customers whittle down inventory Synthetic rubber shipments are finally picking up though We noticed that there was a recovery in synthetic rubber shipments by Lanxess (one of Goodpack's major customers) from Europe to Asia in May and June To cater to the specific requests of synthetic rubber clients, Goodpack has manufactured c.145,000 IBCs, or c.5% of total IBCs, in a larger-than-usual size (MB7) Although the clients initially requested the new dimensions, they later recognised the MB7's inefficiency as a 20' container can fit only half as many MB7s as MB5s As such, Goodpack is in the process of modifying the MB7 IBCs into MB5s, which will temporarily reduce their available fleet by 5% The recent management updates revealed that the GMSA contract is not as big as we expected Goodpack is currently in talks with a large European car manufacturer to ship 32 auto parts to-and-from its production facilities in Asia and Europe Trade flows will improve if Goodpack successfully secures this potentially huge contract Given that the auto parts market is estimated to have five to ten times the volume of natural and synthetic rubber, the expansion of the auto parts segment could be an exciting new chapter for Goodpack However, the impact will not be recognised in the near term as Goodpack still has to scale-up its IBC fleet and expand its logistics capabilities, which will require time and raise expenses in the near term

OSPL - Good Morning S'pore - Central Dealing Desk

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: Credit Suisse

Price Call: BUY

Target Price: 13.70

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: UOB KayHian

Price Call: BUY

Target Price: 8.05

Market Compass

06 June 2013~ Good Morning Singapore!

Singapore Idea Snippets:

06 June 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 Singapore: The Day Ahead SINGAPORE DAYBOOK:SGX widens iron ore product offering to catch winds of change [SINGAPORE] The Singapore Exchange (SGX) may be holding pole position with its iron ore swaps, but it is not resting on its laurels. The exchange has expanded its suite of products for iron ore and is creating a "broad runway", in order not to be caught out by impending regulatory changes unfolding in the United States and Europe. "Regulatory change has not come from just one direction; it seems to have come from here and there, with reversals and flip-flops," said SGX head of derivatives Michael Syn. "We don't know how the market will develop or evolve, but we want to provide as broad a runway as possible, especially when there's so much crosswind or regulatory flip-flopping." (Source: The Business Times) CREDIT SUISSE Securities says... KEPPEL CORPORATION | OUTPERFORM | TP: S$13.70 Keppel has been awarded a contract worth US$800 mn from Caspian Drilling Company for the construction of a semisubmersible rig The rig is based on Keppel's proprietary DSS 38M design, and is scheduled for delivery in 4Q16 Excluding owner-furnished equipment, we estimate the yard price to be about US$600 mn Work will be carried out at Caspian Shipyard Company (45% stake), Baku Shipyard (10% stake) and Keppel FELS (100% stake Hence, we expect the effective value of the contract to Keppel to be about US$255 mn Keppel has secured about S$3.2 bn of contracts year-to-date, representing 53% of our 2013 forecast of S$6 bn (versus consensus expectation of S$5.0-5.5 bn) We expect further orders for semisubmersible rigs, driven by tightening supply and improving dayrates We believe this contract reflects how its near-market, near-customer strategy differentiates it from growing competition from emerging yards At the same time, we expect scope for earnings to surprise positively in the coming quarters, driven by (1) recovery in O&M margins, (2) contribution from Reflections and Corals at Keppel Bay, and (3) a potential turnaround in the Infrastructure division We maintain our OUTPERFORM rating on Keppel, which is our top pick within the Singapore offshore and marine sector OCBC Securities says ... GOODPACK LIMITED | BUY | TP: S$1.80 Lanxess, the world's biggest manufacturer of synthetic rubber (SR) - and a significant client of Goodpack's - officially opened its new butyl rubber plant on Jurong Island yesterday The facility is designed for a capacity of 100K metric tonnes/year, and is the company's largest investment in five years Goodpack had already secured contracts with Lanxess back in 2QFY13 but there were originally concerns over a potential delay in production However, with this official opening, and through enquires with Lanxess, we can expect production to commence in 1QFY14 With the additional intermediate bulk containers (IBCs) that it had procured earlier, Goodpack will be able hit the ground running together with the plant Furthermore, the plant will only reach full capacity utilization by 2015, so that means Goodpack will be able to enjoy incremental earnings until the plant reaches a steady state of production Lanxess aside, Goodpack has another deal in the coming quarters with a SR plant by Asahi Kasei Production at this plant (and use of its IBCs) should come in by 2QFY14, although we await official word on this development Goodpack's share price fell as much as 4.4% since our last update in the aftermath of its 3Q13 results release That said, this price correction presents an opportunity for investors to gain exposure to an important player in the IBC market, and indirect beneficiary of the growing middle class in China and India Upgrade Goodpack to BUY with an unchanged fair value estimate of S$1.80 UOB KAY HIAN says... VENTURE CORPORATION | BUY | TP: S$8.05 Venture experienced a mild pick-up in 2Q13 Revenue mix was relatively unchanged, which led to stable margins Customers' forecast for 2H13 has improved slightly although management remains cautious as macro headwinds could reappear Run-rate for production of Oclaro's fibre optics components has improved in 2Q13 The second phase of product transfer from Oclaro's Shenzhen plant to Venture's Penang plant started in May and will be completed in November Venture has designed a new point-of-sale system for MICROS to be used by restaurants, hotels and retailers operating in a mobile environment mStation is a mobile stand connected to a wide range of peripherals and network infrastructure This ODM project provides better margins Venture will embark on a new project involving Radio Frequency (RF) receivers in 2H13 Venture has expanded the scope of work for liquid chromatography from modules to complete box build Production for new products is scheduled for 3Q13 and 4Q13 Revenue growth and margins are expected to be better in 2H13 due to contribution from new products and improvement in product mix We have reduced our net profit forecast for 2013 by 3.5% due to lacklustre demand in 1H13 We have lowered our target price for Venture to S$8.05, based on 2013F PE of 16x (Benchmark Electronics: 17.8x, Plexus Corporation: 13.8x), justified by its average forward PE of 16.5x over the past 10 years Venture provides an attractive dividend yield of 6.8% The stock corrected 14.9% after reporting 1Q13 results that were slightly below our expectations and valuation has become more attractive

SG: MARKET PULSE: Goodpack, Petra Foods, Keppel Corp (5 Jun 2013)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.80

Stock Name: Petra
Company Name: PETRA FOODS LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 3.88

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.68

MARKET PULSE: Goodpack, Petra Foods, Keppel Corp

5 Jun 2013

KEY IDEA Goodpack Limited: A buying opportunity With the official opening of Lanxess's synthetic rubber plant in Singapore, we expect production to commence in 1QFY14, and Goodpack will be able benefit corresponding given the additional IBCs that it had procured earlier. In addition, the plant will only reach full capacity utilization by 2015, so that means Goodpack will be able to enjoy incremental earnings until the plant reaches a steady state of production. With another deal in the pipeline (Asahi Kasei), its prospects look positive in the coming quarters. That said, as its share price fell by as much as 4.4% since our last update, we deem that a buying opportunity has emerged for the stock. Therefore, we are upgrading Goodpack to BUYwith an unchanged fair value estimate of S$1.80. (Lim Siyi) MORE REPORTS Petra Foods: Time to cool off for summer A potential inflection point may be emerging for Petra Foods as a result of a possible slowdown in consumer demand growth in Indonesia and a larger-than-expected loss from its cocoa ingredients segment in 2Q13. For the former, the suggested removal of fuel subsidies could adversely affect consumer spending due to the higher level of dependency by the lower-income groups, which make a larger proportion of the population. In addition, Petra could experience greater cost pressures related to distribution, etc. For the latter, a larger-than-expected loss could materialize as other cocoa processors in the industry have issued profit warnings recently, and this could lead to a bigger drag for Petra in terms of its FY13 performance. Therefore, we downgrade Petra to SELL with an unchanged fair value estimate of S$3.88. (Lim Siyi) Keppel Corporation: Secures US$800m semi-sub rig for the Caspian Sea Keppel Corporation (KEP), through its subsidiaries, has secured a US$800m contract from Caspian Drilling Company, a unit of the State Oil Company of Azerbaijan Republic (SOCAR), to build a semi-submersible drilling rig which includes owner furnished equipment. Scheduled for delivery in 4Q 2016, the rig will be built to Keppel FELS' proprietary DSSTM 38M design, which has been customised for the harsh environment in the Caspian Sea. Having operated in Azerbaijan since 1997, KEP has built a strong relationship with SOCAR, and understand the requirements of rigs for the Caspian region. With this win, KEP has secured orders worth about S$3.1b YTD, accounting for 63% of our full year estimate. Maintain BUY with S$12.68 fair value estimate. (Low Pei Han)

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

NEWS HEADLINES - PEC Ltd has won new contracts in Singapore and Malaysia, adding S$64m to its order book. - Cacola Furniture International has inked two separate non-legally binding MOUs, each for a possible acquisition of a goldmine in China. - Healthway Medical Corporation has completed a S$10 million placement exercise to fund its expansion plans in China and its obligations in an associate company that is looking to list. - Mobile phone distributor MDR said that its partner, Golden Myanmar Sea Company Ltd, has been appointed by Nokia Sales International as a distributor of Nokia's products in Myanmar. - Almost 1,600 applications were put in for the 147 units at Afiniti Residences in Medini, within the Iskandar region in Johor, notwithstanding a tax-rate hike on foreign property owners that the state plans to unveil by the end of the year. - The IMF halved its growth forecast for Germany to 0.3% as the eurozone recession takes its toll on the bloc's largest economy.

SG: MARKET PULSE: GAR, CityDev, Goodpack, Nam Cheong, Viz Branz (14 May 2013)

Stock Name: CITYDEV
Company Name: CITY DEVELOPMENTS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 12.04

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.80

Stock Name: Nam Cheong
Company Name: NAM CHEONG LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.30

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.74

MARKET PULSE: GAR, CityDev, Goodpack, Nam Cheong, Viz Branz

14 May 2013

KEY IDEA Golden Agri-Resources: Upgrade to BUY on valuation ground Golden Agri-Resources (GAR) posted 1Q13 revenue of US$1430.1m, weighed down by lower CPO prices; but still managed to meet 22% of our full-year forecast. We estimate that core earnings came in at around US$113m, down 30% YoY but up 176% QoQ, and also met 23% of our FY13 forecast. Management noted that the better showing came from lower operating expenses, improved performance at its China operations and the sell-down of inventory, which came as a big relief. While CPO prices may still remain weak in the near term, headwinds appear to be dissipating; management is also remaining fairly upbeat about its prospects as it continues to expand its integrated operation capabilities to benefit from the firm industry outlook. Coupled with the recent fall in share price, GAR now looks relatively attractive with a 19% upside to our unchanged S$0.63 fair value (based on 12.5x FY13F EPS). Hence from a valuation standpoint, we upgrade our call from Hold to BUY. (Carey Wong) MORE REPORTS City Developments Limited: Still executing well 1Q13 PATMI came in at S$137.7m, down 12% YoY mostly due to the absence of a disposal gain from the Tagore Avenue warehouse sale in 1Q12, partially offset by gains from strata units sales in non-core industrial assets. First quarter PATMI now makes up 26% of our full year forecast, which we judge to be in line with expectations. In 1Q13, the group launched two projects, the 912-unit D'Nest and 868-unit Bartley Ridge, of which 87% and 62% of total units have been sold - a reasonably firm set of performances. The group's hotel subsidiary, M&C, reported a soft set of first quarter numbers, with 1Q13 PATMI down 29% YoY due to a room refurbishment program that removed over 100k room nights and more difficult sector conditions. Maintain HOLD on CDL with an unchanged fair value estimate of S$12.04 (15% RNAV disc.). (Eli Lee) Goodpack Limited: Catalyst delayed Goodpack's 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD. (Lim Siyi) Nam Cheong: 1Q net profit up 8% to RM35.8m Nam Cheong Limited's revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged. (Chia Jiun-Yang) Viz Branz Limited: Best operating margins since FY10 Viz Branz's 3Q13 results was in-line with expectations with a decline in revenue offset by continued margin improvements due to the favourable raw material cost environment. While we lowered our FY13 projections to account for the seasonally weaker 4Q13, we expect margin improvements to persist and VB should remain on track to record a better FY13 performance in terms of PATMI growth. In addition, its growth prospects in its key China market remain decent. We leave our fair value estimate unchanged at S$0.74 and keep our BUY rating on the counter. In terms of the likelihood of a GO, we remain steadfast in our assertion that it will materialize, albeit at a later date and with a potentially different acquirer. (Lim Siyi)

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

NEWS HEADLINES - Wing Tai's net profit more than doubled to S$94.6m for 3Q13, from S$42.3m a year earlier. - Super Group posted 1Q13 net profit of S$22.1m, up 25% YoY, helped by improved sales of food ingredients, cost management and a fx gain. - China Minzhong's 3QFY13 net profit rose 5.9% YoY to RMB255m (S$51m) on improved sales in its processed and cultivation business segments. - SBS Transit's 1Q13 net profit tumbled 41.6% to S$2.8m, weighed by losses in its bus division. - Yanlord Land Group's 1Q net profit halved from a year ago to CNY67.3m (S$13.4m), mainly due to FX translation losses.

MARKET PULSE: ASL, Goodpack, CMA, Viz Branz, Karin, PEC, Midas (7 Feb 2013)

Stock Name: ASL Marine
Company Name: ASL MARINE HOLDINGS LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.86

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.95

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.55

Stock Name: VizBranz
Company Name: VIZ BRANZ LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.74

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.295

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.60

MARKET PULSE: ASL, Goodpack, CMA, Viz Branz, Karin, PEC, Midas

7 Feb 2013

KEY IDEA ASL Marine: Can afford to be selective of new orders ASL Marine (ASL) reported a 7.3% YoY rise in revenue to S$83.0m and a 39.8% increase in net profit to S$10.6m in 2QFY13, such that results were in line with our expectations. Gross profit margin increased from 17.3% in 2QFY12 to 23.4% in 2QFY13 due to better margins in all three core business segments. Given ASL's busy yards and healthy order book (S$528m as at 31 Dec 2012), we understand that the group will aim to start securing orders only after Jun this year. Since our last report on 3 Dec 2012, the stock has done well, with its share price appreciating by 13.8% vs the STI's 6.7% gain over the same period. Despite this, we still see upside potential. We roll forward our valuation to blended FY13/14F earnings, still based on an unchanged PER of 10x. As such, our fair value estimate rises from S$0.82 to S$0.86. Maintain BUY. (Low Pei Han) MORE REPORTS Goodpack Limited: Promising prospects Goodpack's 2Q13 revenue increased by 6.4% YoY to US$46.4m following continued growth from its Synthetic Rubber (SR) segment. Operating profit rose by a corresponding 15.4% to US$16.2m - despite operating expenses rising by 7.1% YoY to US$31.8m - and PATMI gained 4.0% YoY to US$11.1m. We raise our FY13 and FY14 outlook on sustained improvements within the SR space as tyre demand holds up and new SR plants open in Singapore. Aided by two recent key contract wins, Goodpack stands in good stead to benefit once production from these SR plants ramp up in the middle of CY2013. As a result, we upgrade Goodpack to BUY and our fair value estimate increases to S$1.95 from S$1.85 previously. (Lim Siyi) CapitaMalls Asia: Good round-off to FY12 CapitaMalls Asia (CMA) reported 4Q12 PATMI of S$184.8m - decreasing 10% YoY mostly due to lower fair value gains from its properties in China and Singapore. This brings FY12 PATMI to S$546.0m, up 19.7%. Excluding revaluation gains and portfolio gains, FY12 PATMI adjusts to a core figure of S$175.7m, which we judge to be mostly in-line and only 3.2% below our FY12 forecast of S$181.5m. We continue to view CMA favorably and see its share price likely benefitting from dual tailwinds ahead: 1) increasing operational traction, as a larger component of CMA's portfolio becomes operational, and 2) relatively firm retail outlooks in China and Singapore. Maintain BUY with an unchanged fair value estimate of S$2.55. (Eli Lee) Viz Branz Limited: Continued margin improvement Ongoing competitive pressures in Myanmar caused Viz Branz (VB) to report a 5.6% YoY decline in 1H13 revenue to S$86.1m. However, favourable raw material costs and a reduction in administrative expenses saw operating profit and PATMI rise by 6.7% YoY to S$13.6m and 4.0% YoY to S$10.1m respectively. VB's management also declared an interim dividend of 1 S cents, which was similar to last year's interim payout. With the performance coming in within our expectations, our 2H13 forecasts remains unchanged, and we retain our fair value estimate of S$0.74. While the lack of progress on a GO will disappoint investors, we reiterate our view that a deal is likely to materialize. Maintain BUY. (Lim Siyi) Karin Technology: Leveraging on smartphones for growth Karin Technology's (Karin) 1HFY13 revenue surged 39.7% YoY to HK$2,123.3m, exceeding our expectations (54.4% of our FY13 forecast). However, estimated core PATMI of HK$26.8m (+5.1% YoY) was in line due to lower-than-expected gross margin, forming 50.1% of our full-year projection. Karin's strong revenue growth was driven largely by its Consumer Electronics Products and Components Distribution segments, which have significant exposure to the growing smartphone market. An interim dividend of 7.2 HK cents/share was declared. Our forecasted FY13F dividend yield stands at an attractive 7.7%. We retain our core PATMI projections, but raise our PE multiple peg from 6x to 7x in light of the improved market sentiment and Karin's stronger financial position. We also roll forward our valuations to blended FY13/14F EPS and our fair value estimate increases from S$0.25 to S$0.295, partially offset by a lower HKD-SGD assumption. Maintain HOLD.(Wong Teck Ching Andy) PEC Ltd: Ceasing coverage PEC Ltd reported another quarter of lackluster result with 2Q13 PATMI falling 15% YoY to S$2.6m despite revenue increasing by 11% to S$144m. Gross margin declined to 14% (2Q12: 20%) due to competitive pricing and cost pressures in both the project work and maintenance sectors. Other operating expenses also jumped 55% YoY to S$12.4m from cost increases associated with higher headcount (i.e. accommodation, transport expenses, etc). Besides the tight labour market, PEC's earnings growth is also limited by slower pace of petrochemical investments due to a change in EDB's energy policy. Meanwhile, we note that its share price has risen by almost 11% since our last report. We now see limited upside ahead and think that its earnings are likely to remain sluggish. Therefore, we CEASE COVERAGEon the stock due to the lack of medium-term price drivers and muted earnings outlook. (Chia Jiunyang) Midas Holdings: JV clinches CNY710m metro contract Midas Holdings (Midas) announced last evening that its 32.5%-owned JV company Nanjing SR Puzhen Rail Transport (NPRT) has clinched a metro contract worth CNY710m. This encompasses the supply of 24 train sets, or 104 train cars for the Ningtian Intercity Line Phase 1 project. Delivery is scheduled to take place only from 2014 to 2015, but this could lead to potential contract wins for Midas as it is a supplier of NPRT. We note that this is NPRT's second announced contract order of the year. Total contract wins amount to ~CNY1.05b for NPRT YTD. While NPRT has been a drag on Midas' earnings in FY12, we believe that its fortune would likely reverse from FY13 given its order book schedule on hand. Midas' share price is likely to react positively as a result of this announcement. Maintain BUY and S$0.60 fair value estimate, pegged to 1.2x FY13F P/B. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks eked out modest gains on Wed after earnings from Time Warner Inc and others reinforced a theme of steady improvement for consumer companies. The Dow ended a choppy trading day up 7.22 points, or 0.1%, at 13,986.52. - Further foreign labour curbs could jeopardise Singapore's position as a business hub for the Asia-Pacific region, according to the Singapore International Chamber of Commerce. - Nielsen's latest survey showed that Singapore could see a potential slowdown in consumer spending in 2013. - Global Logistic Properties' PATMI grew 30.7% YoY to US$112.8m in 3QFY13, boosted by fair value gains in investment properties and higher rents in China. - Pacific Andes Resources Development Limited posted a 42.5% YoY increase in 1QFY13 PATMI to HK$199.0m despite a 3.0% slip in revenue.

MARKET PULSE: Sakari Resources, Goodpack, Viz Branz, Micro-Mechanics (28 Aug 2012)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.85

Stock Name: Micro-Mech
Company Name: MICRO-MECHANICS (HOLDINGS) LTD

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

MARKET PULSE: Sakari Resources, Goodpack, Viz Branz, Micro-Mechanics

28 Aug 2012

KEY IDEA Sakari Resources: Cash offer at S$1.90/share Sakari Resources Limited (SRL) announced yesterday that PTT Mining Limited (PTTM) - a wholly owned subsidiary of PTT International - has made a mandatory conditional cash offer at S$1.90/share for all the shares in SRL that it does not already own. As the offer is also some 31% above our previous DCF-based fair value of S$1.45, we think that shareholders should ACCEPT THE OFFER, especially in light of the still uncertain longer-term outlook for global coal prices. In addition, we do not expect a competing bid as PTT group already owns such a large stake. (Carey Wong) MORE REPORTS Goodpack Limited: FY12 results in line Goodpack's FY12 results saw an overall 11.7% YoY growth in revenue to US$177.2m on the back of higher demand from the Synthetic Rubber segment while PATMI climbed higher by 4.6% YoY to US$45.2m. Its results were in line with our projections, coming in within 2.5% and 2.4% of our top and bottom-line forecasts respectively. To round off a stellar year, management declared a final dividend of 2 S cents and a special cash dividend of 3 S cents (FY11: final and special cash dividend of 2 S cents and 1 S cent respectively). Entering FY13, we forecast a 10% increase in revenue on the back of sustained growth in the Synthetic Rubber segment as well as increasing penetration in the automotive space. While margin pressures from higher logistic costs and IBC leasing charges will remain, we still anticipate overall bottom-line growth for the company. Rolling our projections forward to FY13/14, our fair value estimate rises from S$1.70 to S$1.85. Maintain HOLD. (Lim Siyi) Viz Branz Limited: Upgrade to BUY Viz Branz (VB) reported a strong set of FY12 results, with revenue gaining 4.3% YoY to S$172.7m following increases in demand across all business segments while declines in raw material costs and operating expenses over the course of the year aided significant margin improvements, which saw PATMI climbing higher by 47.6% YoY to S$17m. Management has yet to declare a final dividend but dividends declared thus far totaled 3.3 S cents, which is already greater than last year's 2.5 S cents. With demand from China and raw material prices likely to remain stable in the coming year, we leave our gross profit margin projections unchanged but raise our operating margin forecasts slightly to account for the continued easing of VB's cost structure. Upgrade to BUY at a revised fair value estimate of S$0.74. (Lim Siyi) Micro-Mechanics: 4QFY12 results exceeds expectations Micro-Mechanics Holdings (MMH) reported 4QFY12 results which beat our expectations. Revenue declined 6.8% YoY to S$10.3m, but was 8.1% higher than our forecast. Net profit fell marginally by 0.4% to S$1.4m, but compared favourably to our S$1.1m projection due largely to better-than-estimated revenue and gross margin. Sequentially, revenue and net profit showed encouraging signs with increases of 10.6% and 55.5%, respectively. For FY12, topline fell 14.4% to S$38.8m, while bottomline slumped 38.2% to S$4.2m. This was 2.8% and 7.3% above our full-year estimates, respectively. A final dividend of 2 S cents/share was declared, bringing total FY12 dividends to 3 S cents/share. This was similar to FY11 and our forecast, and translates into a yield of 7.7%. Looking ahead, MMH highlighted the lack of visibility in the near-term, while cost pressures are also apparent given the increase in minimum wages in several of its operating locations in Asia. We will provide more details after the analyst briefing. Meanwhile, our Hold rating and S$0.325 fair value estimate is under review. (Wong Teck Ching Andy)

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

NEWS HEADLINES - U.S. blue-chips closed lower on Monday in a quiet session. The Dow fell 0.3% to 13,124.67. The S&P 500 Index closed down 0.1% to 1,410.44. - Far East H-Trust closed two cents up at 95 S cents in its trading debut yesterday. - Koon Holdings' PATMI for 1H12 dropped to S$546k versus S$6.32m a year ago despite a 178% increase in revenue to S$99.3m. - Loyz Energy posted a FY12 net loss of S$5.1m versus a PATMI of S$905k for FY11. Revenue declined 30% to S$16.5m. - Noel Gifts International registered FY12 net profit of S$3.20m, down 12.7%. Revenue had declined 1.3% to S$25.7m. - Raffles Education is proposing to undertake a renounceable non-underwritten rights issue at S$0.14 each, on the basis of one rights share for every five existing shares held.

MARKET PULSE: Goodpack, United Envirotech (31 May 2012)

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.70

Stock Name: UtdEnvirotech
Company Name: UNITED ENVIROTECH LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.40

MARKET PULSE: Goodpack, United Envirotech

31 May 2012

KEY IDEA United Envirotech: BUY with S$0.40 FV United Envirotech Limited (UEL) reported FY12 revenue rose 9.4% to S$85.3m, or 4.1% below our forecast, while net profit slipped 34.6% to S$10.5m; but stripping off exceptional items, core net profit would have fallen 15.0% to S$12.5m, or just 1.6% shy of our forecast. UEL also declared a final dividend of 0.3 S cents per share, unchanged from last year. Going forward, management continues to remain upbeat about its prospects in the waste-water treatment industry in China, driven by the stricter discharge limit imposed by the Chinese government and the shortage of water supply in various parts of the country. And in view of the growing contribution from its Treatment business, we are bumping up our FY13F earnings estimate by 5.4%; we are also looking for a potential growth of 12.5% top-line and 12.9% bottom-line in FY14. Meanwhile, we are switching from a DCF-based valuation to the PER one. Ascribing a market-neutral PE of 12.8x to FY13F EPS, we derive a new fair value of S$0.40. Maintain BUY. (Carey Wong) MORE REPORTS Goodpack Limited: Slowly inching higher Since our last report on 14 May, Goodpack has edged higher by 0.9% as compared to a decline of 3.5% for the FTSE STI Index. Given Goodpack's decent set of 3Q12 results and its reliance on the automotive industry, we are not surprised by this outperformance. Automotive sales - including tyre manufacturers like Goodyear - have reported encouraging results for the first quarter of the year, and automotive sales in Asia for April saw YoY increases in the large markets of China, Korea, India, Taiwan and Indonesia. We reiterate our expectations for Goodpack to close out FY12 well given the revenue support from the automotive industry, and improving operating margins from management's effective cost control initiatives. Leaving our projections and corresponding fair value estimate of S$1.70 unchanged, we maintain our HOLD rating. (Lim Siyi)

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

NEWS HEADLINES - US stocks retreated as bond yields in Italy and Spain surged; and Greek polls added to uncertainty about whether it would remain in the euro-zone. The S&P 500 Index and the DJIA fell 1.4% and 1.3% respectively. - Crude oil futures closed below US$88 for the first time since Oct on the back of concerns over Spain and the scaled-back expectations for a stimulus plan for China. - Yeo Hiap Seng plans to take its Bursa-listed subsidiary, Yeo Hiap Seng (Malaysia) Bhd private. Entitled YHS (Malaysia) shareholders will receive a total capital repayment of MYR3.60 per share, a premium of 14% over the close on May 28. - Cache Logistics Trust is seeking to redeem S$35m 3.50% fixed rate notes due 2016, which were issued under its S$500m multicurrency medium term note programme. - Old Chang Kee posted a net profit of S$4.5m for the 15 months ended in Mar. Revenue was S$76.5m. - Engineering management service provider Asiatic Group registered a FY12 net loss of S$73k, better than the S$558k loss a year ago. Revenue had climbed 5% to S$51m.

MARKET PULSE: Golden Agri, UOL, Pac Andes, CSE Global, Goodpack, Breadtalk, SATS, Swiber (14 May 2012)

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

Research House: OCBC

Price Call: BUY

Target Price: 0.178

Stock Name: CSE Global
Company Name: CSE GLOBAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 0.80

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.70

Stock Name: BreadTalk
Company Name: BREADTALK GROUP LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.57

MARKET PULSE: Golden Agri, UOL, Pac Andes, CSE Global, Goodpack, Breadtalk, SATS, Swiber

14 May 2012

KEY IDEA Golden Agri-Resources Ltd: Upgrade to BUY Summary: Golden Agri-Resources (GAR) reported its 1Q12 results last Friday, with revenue rising 3.8% YoY and 14.4% QoQ to US$1519.1m, while net profit fell 30% YoY to US$162.0m (but made a 113% QoQ recovery). But it was a strong 113% QoQ recovery. All in, with revenue meeting 26.8% and earnings 28.1% of our full-year forecasts, Going forward, GAR believes that the industry outlook remains resilient with robust demand growth for palm oil coming from both emerging and develops countries; prices are also likely to be supported by limited supply growth of other vegetable oils, especially soybean. With numbers coming in mostly in line with our expectations, we are keeping our FY12 and FY13 forecasts unchanged. Still based on 12.5x FY12F EPS, our fair value also remains unchanged at S$0.77. But we upgrade our rating from Hold to BUYas the stock price has corrected quite a bit since our previous downgrade which we believe should have captured quite a bit of the negatives. (Carey Wong) MORE REPORTS UOL Group: 1Q12 earnings in line - Upgrade to BUY Summary. UOL reported 1Q12 PATMI of S$84.0m, down 63% YoY mostly due to reduced profits from the property development segment and from associates (after Nassim Park Residences' TOP in 1Q11). This was broadly aligned with consensus and our estimates. 1Q12 top-line came in at S$297.7m, down 59% again mainly due to lower sales of development properties. Given limited land-bank, we believe UOL to be relatively sheltered from uncertainties in the domestic residential space ahead. The group's balance sheet also remains healthy; cash is at S$334.2m and gearing at 33%. Upgrade to BUY with a marginally higher fair estimate of S$4.80 (30% RNAV discount), versus S$4.77 previously, mostly due to higher ASPs for Katong Regency. (Eli Lee)

Pacific Andes: Outlook is fairly positive Summary: Pacific Andes Resources Developments Ltd (Pacific Andes) reported a stronger-than-expected 23% YoY jump in 2Q net earnings to HK$333.0m. Going forward, there are several positives including better quota, catch volume, higher selling prices for fishmeal as well as better efficiency and contribution from Tassal. In terms of its key markets, China is stable and it is seeing demand coming back from Japan and Korea. Africa is expected to be the fastest growing market for the group. We have raised our FY12 earnings from HK$731m to HK$791m due to the stronger 2Q. Using the same 6.5x earnings peg and adjusting for the rights issue, our fair value estimate for the stock is 17.8 cents. At current price, we maintain our BUY rating. (Carmen Lee) CSE Global: Buy into the recovery Summary: CSE Global (CSE)'s 1Q results came in broadly in line within our and the street's expectations. 1Q12 revenue increased by 31% to S$134.7m (1Q11: S$102.6m), while net profit was flat at S$12.6m (1Q11: S$12.5m). Gross margin declined to 31.4% (1Q11: 40.9%), on (i) additional work incurred on its telecom projects, (ii) higher proportion of greenfield projects and (iii) lower license contribution from the UK healthcare sector. After three consecutive quarters of operating cash deficits, CSE reverted back to a positive operating cashflow (S$8m) in 1Q12 and lowered its net gearing to 30.4% (end Dec-11: 34.6%). With improvements seen in its cash-flow and gearing level, we upgrade our rating to BUY with unchanged fair value estimate of S$0.80. (Chia Jiunyang) Goodpack Limited: Cost controls working out Summary: Goodpack's 3QFY12 revenue grew 4.2% YoY (-0.1% QoQ) to US$43.5m following increased contribution from its newly-won automotive business and higher prices charged on existing customers while a 1.5% YoY (+2.2% QoQ) reduction in logistic and handling costs pushed PATMI higher by 8.6% YoY (+8.0% YoY) to US$11.5m. For 9M12, Goodpack's revenue and PATMI constituted 75.6% and 75.9% of our FY12 projections, falling within our overall expectations. Going forward, we expect Goodpack to close out FY12 well with demand of its IBCs holding up well in the face of automotive industry support, and further reductions in operating expenses with its cost control initiatives. Following our 15 March take-profit call on Goodpack, the counter has since retreated by more than 13% and we deem the sell-downs to be over. As its results were largely in-line with our expectations, we leave our FY12 and FY13 projections and corresponding fair value estimate of S$1.70 unchanged. Upgrade our rating to HOLDon valuation grounds. (Lim Siyi) BreadTalk Group: Promising outlook ahead Summary: BreadTalk Group's (BTG) reported slight improvements in its 1Q12 results that were well within our expectations. Revenue grew 27.4% YoY (+5.6% QoQ) to S$106.1m on the back of stronger sales in China's bakery division, and gross profit margin improved by 0.5 percentage points YoY (-0.5 ppt QoQ) to 54.3%. Net profit climbed 15.1% YoY to S$1.4m - although it fell 64.3% QoQ on seasonality factors (4Q is typically the strongest quarter) - following higher contributions from the Bakery and Restaurant segments. Going forward, we expect BTG's revenue growth to persist as the growth in Asia maintains its upward push. While operating margin may remain depressed, as is typical of a company undergoing an expansion phase, we retain our confidence in management's ability in controlling costs and highlight the general stability in gross profit margins over the years. With BTG's results in-line with our expectations, we keep our FY12 projections unchanged and reaffirm our HOLD rating with an unchanged fair value estimate of S$0.57. (Lim Siyi) SATS Ltd: Results in line with expectations Summary: SATS Ltd (SATS) this morning released its 4QFY12 and FY12 financial results that were mostly in line with market expectations. SATS' FY12 PATMI came in at S$171m, or 2% higher than consensus estimate, even though revenue was 2% below the street's estimate at S$1.7b. SATS' FY12 revenue from continuing operations jumped 24% but PATMI tumbled 11%. For 4QFY12, revenue from continuing operations gained 8% to S$433m though PATMI fell 1% to S$50m. The fall in PATMI in 4QFY12 can be partially attributed to the discontinued operations, which contributed S$6m of PATMI in 4QFY11. We put our fair value estimate of S$2.43/share and Hold rating on SATS UNDER REVIEW, pending a briefing with management later today. (Eric Teo) Swiber Holdings: 1Q12 results within expectations Summary: Swiber Holdings (Swiber) reported a 29.1% YoY rise in revenue to US$194.4m but saw a 10.6% fall in net profit to US$8.6m in 1Q12, accounting for 27.0 % and 27.4% of our full year estimates, respectively. Gross profit margin increased from 16.2% in 1Q11 to 19.8% in 1Q12, but was lower on a sequential basis (4Q11: 21.0%). Current borrowings stood at US$372.8m with a cash balance of US$139.3m as at 31 Mar 2012. Meanwhile, the outstanding order book of about US$1.2b is expected to contribute to results over the next two years. Pending an analyst briefing in the afternoon, we put our Hold rating and fair value estimate of S$0.75 UNDER REVIEW. (Low Pei Han) For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - The US stock indexes edged lower as news of US$2b in trading losses at J.P. Morgan Chase led financials lower. The S&P 500 Index and DJIA both dropped 0.3% on Friday. - Over the weekend, Greece failed to form a coalition party, increasing concerns about an exit from the euro-area zone. Another vote might take place as early as next month. - Chuan Hup Holdings 3Q12 net profit rose by 24% YoY to US$12.8m. Revenue had jumped from US$1.8m to US$56m mainly due to the consolidation of PCI Ltd's results. - Chemoil Energy's saw 1Q12 net profit decline 62% YoY to US$8.8m. Revenue had grown 36% to US$3.5b. - Shipbuilder Jaya Holdings registered a 89% YoY drop in net profit for 3Q12 to US$3.8m. Revenue had climbed by 17% to US$16.2m. - Kencana Agri posted a 54% YoY decline in 1Q12 net profit to US$2.2m, despite revenue increasing 62% to US$48m.

OCBC cuts Goodpack to sell

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: OCBC

Price Call: SELL

Target Price: 1.70

OCBC Investment Research downgraded its rating on logistics company, Goodpack , to sell from buy, citing a sharp rise following a deal with General Motors.

While the deal was a catalyst for the group, OCBC said an almost one third increase in Goodpack’s market value following the announcement this month seemed overdone.

“Any revenue contribution from this deal will not be material in fiscal year 2012,” the brokerage said and retained its price target at $1.70.   

On Wednesday, Goodpack’s shares surged to the highest level since June and were down 2.7% on Thursday.

Goodpack - Scoring with General Motors

Stock Name: Goodpack
Company Name: GOODPACK LIMITED

Research House: CIMB

Price Call: BUY

Target Price: 2.06

Target S$2.06

Goodpack finally made a breakthrough in autoparts transportation. Its new General Motors contract could open the door to other such contracts. Trading at near-trough valuations, Goodpack deserves a rerating for its earnings potential. Upgrade to Outperform.

Source: CIMB Day Break 02 March 2012, Full PDF Report