MARKET PULSE: CMA, NOL, CCT, Ezra, FCOT, Suntec REIT, MMH (29 Oct 2012)

Stock Name: CapMallsAsia
Company Name: CAPITAMALLS ASIA LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 2.16

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

Stock Name: CapitaComm
Company Name: CAPITACOMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.62

Stock Name: Ezra
Company Name: EZRA HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.30

Stock Name: Frasers Comm
Company Name: FRASERS COMMERCIAL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.31

Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 1.70

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

MARKET PULSE: CMA, NOL, CCT, Ezra, FCOT, Suntec REIT, MMH

29 Oct 2012

KEY IDEA CapitaMalls Asia: 3Q12 results above view Summary: CMA reported 3Q12 PATMI of S$63.4m - up 70.8% YoY mostly due to Minhang and Hongkou contributions and increased management fees. We judge this set of results to be above consensus and our expectations, and 9M12 core PATMI, excluding extraordinary items, now make up 83% of our FY12 forecast, driven by faster than expected revenue growth at Minhang and Hongkou and a S$7.3m QoQ dip in admin expenses as mall-opening costs eased. We expect increased visibility of recurring earnings, as a larger component of CMA's portfolio becomes operational, and relatively firm retail outlooks in China and Singapore to be positive drivers of its share price ahead. Maintain BUY with an increased fair value estimate of S$2.16 from S$1.85 previously as we update for valuations of REIT holdings and reduce the RNAV discount to par (from 10% previously). (Eli Lee) MORE REPORTS Neptune Orient Lines: Outlook promising Summary: Neptune Orient Lines (NOL) finally reported a profitable 3Q12 after six consecutive quarterly losses. Its revenue grew 4.0% YoY to US$2.3b (vs. +6% forecast) on higher volumes while its core EBIT improved to US$74m - a much better showing versus-US$72m in 3Q11 and marginal gains of US$16m in the previous quarter. The better performance came largely on the back of significant cost savings from its Efficiency Leadership Programme (ELP) as freight rates remained lacklustre despite the peak season impact. With this improved result, we narrow our net loss projections for FY12 as we anticipate 4Q12 rates to hold up well, capacity management efforts by the industry to continue, and bunker fuel rates to remain capped at current levels. Maintain BUY with an unchanged fair value estimate of S$1.38. (Lim Siyi) CapitaCommercial Trust: Average portfolio rentals up Summary: CapitaCommercial Trust (CCT) reported 3Q12 distributable income of S$57.9m - up 11.9% YoY mostly due to contributions from Twenty Anson, higher revenues from portfolio assets and yield protection income from One George Street (OGS). This is mostly in line with expectations and we note 9M12 distributable income now makes up 75% of our FY12 forecast. As indicated in our last two reports, we have been expecting an uptick in office fundamentals and believe this was mostly validated by CCT's 3Q portfolio data-points: 1) occupancy edged up QoQ to 97.1% in 3Q12 from 96.2% in 2Q, and 2) average portfolio rent increased to S$7.53 psf - the first increase seen after seven consecutive quarters of decline from 4Q10. Maintain BUY with an increased fair value estimate of S$1.70, versus S$1.62 previously, as we update our model for firmer rental numbers and cap rates. (Eli Lee) Ezra Holdings: Monitoring operating costs Summary: Ezra Holdings reported a 49% YoY rise in revenue to US$326.3m but saw a 41% decrease in net profit to US$7.3m in 4QFY12, such that full year net profit of US$65m was ~15% below our full year estimate. Core net profit of US$15.7m accounted for 90% of our estimate. This was partly due to higher administrative expenses and a higher tax rate. We expect admin expenses to remain elevated going forward. On a more positive note, management expects an increase in margins in FY13 as offshore support and subsea vessel utilisation rises, along with higher margins for new contracts. The group has a total bid book of US$4.4b, in which a significant portion is expected to be awarded in FY13. After adjusting our estimates and accounting for the listing of Triyards, our fair value estimate for Ezra drops to S$1.30. Maintain BUY. (Low Pei Han) Frasers Commercial Trust: A brand new start Summary: Frasers Commercial Trust (FCOT) reported a strong set of 4QFY12 results that were within our expectations. FCOT also announced the completion of divestment of its Japan properties, after months of market anticipation. We view the transaction positively because the divestment would improve its portfolio occupancy and weighted average lease to expiry. More importantly, gearing ratio is expected to drop from 36.8% to 28.6%, with no debt maturing until FY15. This will significantly strengthen its financial position and flexibility, and aid FCOT in seeking the release of two properties from its securitized pool. Regarding the space vacated by MMC at China Square Central (CSC), FCOT also updated that 76% of the space has been re-leased, including 49,000 sqft by GroupM starting Apr 2013. Going forward, FCOT intends to embark on Phase 2 of refurbishment works at CSC by end-2012, which should further enhance its positioning. We are positive on FCOT's transformation, strong execution and growth potential in FY13. Maintain BUY on FCOT with an unchanged fair value of S$1.31. (Kevin Tan) Suntec REIT: Strong execution paid off Summary: Suntec REIT delivered a good set of 3Q12 results, in our view. Despite the partial closure of Suntec Singapore and Suntec City Mall for Phase 1 of the asset enhancement works (AEI) and divestment of Chijmes, DPU only showed a 7.2% YoY dip to 2.35 S cents. For 9M12, DPU totalled 7.164 S cents (-3.9%), forming 78%/77% of our/consensus full-year DPU forecasts. We note that office segment continued to be the star performer in 3Q, registering a 10.3% YoY growth in revenue to S$31.4m amid positive rental reversions. In particular, Suntec City Office achieved its second consecutive quarter of full occupancy. Leasing demand had also been strong, as evidenced by the average contracted rent of S$8.96 psf pm secured for the quarter (vs. S$8.71 in 2Q). On its Suntec City AEI, Suntec REIT reiterated that the Phase 1 works is on schedule for completion by 2Q13. We understand that pre-commitment for Phase 1 NLA improved to 71.2% from 58.5% in 2Q, and projected ROI of 10.1% remains on track. We are upgrading Suntec REIT to BUY with a revised fair value of S$1.70 (S$1.45 previously). (Kevin Tan) Micro-Mechanics: 1QFY13 results below expectations Summary: Micro-Mechanics Holdings (MMH) reported 1QFY13 results which fell short of our expectations. Revenue declined 4.6% YoY to S$9.9m, or 8.0% lower than our forecast. This was MMH's sixth consecutive quarter of YoY sales decline. Net profit slid 5.6% to S$1.2m and was 12.4% short of our projection due to weaker-than-estimated revenue and higher effective tax rate, although this was partially offset by better-than-expected gross margin. Sequentially, revenue and net profit fell 4.3% and 13.4%, respectively. Both of MMH's core segments registered YoY decline in revenue, with its Custom Machining & Assembly (CMA) division causing a bigger drag once again. Sales for this division dipped 18.4% YoY to S$1.3m, but what surprised us was the -2.4% gross margin recorded during the quarter (1QFY12: 4.8%). We would likely reduce our forecasts, and will provide more details after speaking with management. However, we believe that MMH would still report growth in both its topline and bottomline for FY13 given the low base in 2Q and 3Q FY12. For now we have a HOLDrating and S$0.325 fair value estimate on the stock. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks ended Friday with weekly losses after weak earnings reports and bleak forecasts added to worries about the world economy. The Dow inched up 0.03% on Friday to close at 13,107.21, while the S&P 500 Index slid 0.07% to 1,411.94 and the Nasdaq finished 0.06% higher at 2,987.95. - Mermaid Maritime won a US$530m subsea services contract through a joint venture, with its revenue share estimated at 60%-70% of the contract value. Separately, Mermaid associate Asia Offshore Drilling won a US$236.5m drilling contract. - Koh Brothers Group agreed to buy a 41% stake in Metax Engineering for S$8.2m as it sees growth potential in Metax's business and possible synergies with its own. Metax said the investment would strengthen its financial position and help it bid for more capital-intensive projects.

MARKET PULSE: Olam, Micro-Mechanics, Sembcorp Marine, Karin (29 Aug 2012)

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.80

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.09

Stock Name: Karin
Company Name: KARIN TECHNOLOGY HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.265

MARKET PULSE: Olam, Micro-Mechanics, Sembcorp Marine, Karin

29 Aug 2012

KEY IDEA Olam Int'l: Cautious FY13 outlook Olam International Limited (Olam) saw FY12 revenue rising 8.2% to S$17.1b, but reported net profit fell 13.7% to S$370.9m, which missed our forecast. It also declared a lower dividend of S$0.02 (versus S$0.03 in FY11). Going forward, Olam expects to see some uncertainty and volatility in the near term, but remains positive on the Agri-industry prospects. In light of the still muted outlook, we pare our estimates for FY13 revenue by 9.8% and core earnings by 6.2%. Hence even as we roll forward our unchanged 12.5x peg to FY13F EPS (from blended FY12/FY13 previously), our fair value drops to S$1.80. Maintain HOLD and would only consider accumulating around S$1.60 or better. (Carey Wong) MORE REPORTS Micro-Mechanics: Decent showing amid tough environment Micro-Mechanics Holdings (MMH) reported 4QFY12 results which beat our expectations. Revenue declined 6.8% YoY to S$10.3m, while net profit fell slightly by 0.4% YoY to S$1.4m, such that FY12 revenue and net profit of S$38.8m (-14.4%) and S$4.2m (-38.2%) exceeded our estimates by 2.8% and 7.3%, 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, sentiment within the semiconductor industry remains cautious, while cost pressures are also apparent. MMH is seeking to mitigate this via the implementation of more automated processes to improve its efficiency and lead time. We keep our FY13 projections and introduce our FY14 estimates. Maintain HOLD and S$0.325 fair value estimate, still based on 9x FY13F EPS. (Wong Teck Ching Andy) Sembcorp Marine: FPSO contract materialises, as expected Sembcorp Marine (SMM) announced that it has secured a contract worth US$674m for the construction of eight modules and module integration works for two FPSO vessels from Tupi B.V. (a consortium owned by Petrobras Netherlands, BG Overseas and Galp Energia E&P). Scheduled for completion in 60 months, the two FPSOs will be deployed in Brazil. Tupi also has a similar contract option to construct four modules and module integration work for an FPSO which can be exercised within 18 months. As mentioned in our earlier reports (8 Aug, 22 Aug 2012), SMM is expected to secure FPSO work from Petrobras and hence this latest announcement is within our expectations. With this contract win, SMM has secured contracts worth about S$9.1b YTD, accounting for 95.9% of our full year estimate. Maintain BUY with S$6.09 fair value estimate. (Low Pei Han) Karin Technology: 2HFY12 core earnings below expectations Karin Technology's (Karin) 2HFY12 revenue was within our expectations but core PATMI missed. Revenue jumped 35.3% YoY and 12.7% HoH to HK$1,712.9m, while reported PATMI surged 22.0% YoY and 61.3% HoH to HK$36.9m. But after adjusting for forex effects and other exceptional items, we estimate that core PATMI would instead have decreased 12.1% YoY and 16.2% HoH to HK$21.4m. For FY12, revenue accelerated by 49.1% to HK$3,232.3m, or 1.8% above our forecast. This growth was driven largely by its Consumer Electronics Products segment (now separated from the IT Infrastructure segment for reporting purposes), which entails the selling of a full range of Apple products through Karin's retail stores. Reported PATMI for FY12 grew 15.7% to HK$59.7m. We estimate that core PATMI fell 7.2% to HK$46.9m, which was 14.1% below our projections. On a positive note, a final dividend of 7.1 HK cents/share was declared, bringing total FY12 dividends to 14.1 HK cents/share, or a yield of ~8.8%. This is in line with our forecast and compares favourably to FY11's DPS of 12 HK cents. We will provide more details after the analyst briefing. For now, we place our Hold rating and S$0.265 fair value estimate under review. (Wong Teck Ching Andy)

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

NEWS HEADLINES - US stocks ended mostly lower on Tuesday as investors weighed mixed economic reports and were cautious ahead of possible central-bank moves. The Dow fell 0.17% to 13,102.99. The S&P 500 Index slipped 0.08% to 1,409.30. - Sim Lian Group's FY12 net profit was S$229.1m, up 14%. Revenue climbed 3% to S$764m. - Eu Yan Sang's FY12 net profit was down 35% to S$16.4m. Revenue had risen 9% to S$289.9m. - Loyz Energy has clinched its first major onshore exploration and production agreement in the US and says that the contract could potentially contribute quickly to earnings and cash flow. - Magnus Energy posted a FY12 net loss of S$684k, versus PATMI of S$1.51m for FY11. Revenue had fallen 12.7% to S$48.3m.

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: CMA, Micro-Mechanics, Midas, NOL (3 Jul 2012)

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

Stock Name: MIDAS
Company Name: MIDAS HLDGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.33

Stock Name: NOL
Company Name: NEPTUNE ORIENT LINES LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.38

MARKET PULSE: CMA, Micro-Mechanics, Midas, NOL

3 Jul 2012

KEY IDEA CapitaMalls Asia: Divestments validate asset valuations CMA announced it has established a USD1.0b CapitaMalls China Development Fund III (CMCDF III), in which it would hold a 50% stake. Three CMA shopping malls, Tianfu and Meilicheng (Chengdu) and Luwan (Shanghai), would be divested as seed assets to CMCDF III. We understand that these would be injected for S$749m, versus their current book value of S$640m. This would result in a net gain of ~S$72m, on a 100% basis for these properties, and a net cash inflow of ~S$335m to CMA for the sale of its stakes. We expect the market to react positively to this development, and believe divestment valuations would serve as key data-points validating CMA's asset values in the market. Maintain BUY with a higher fair value estimate of S$1.79 (10% RNAV discount) versus S$1.76 previously, mostly due to stronger valuations for Chinese assets and listed entities. (Eli Lee) MORE REPORTS Micro-Mechanics: 4QFY12 results preview We continue to forecast a double-digit YoY fall in Micro-Mechanics Holdings' (MMH) revenue and net profit for its upcoming 4QFY12 results. This is premised on the still lacklustre conditions in the semiconductor industry. However, we are cognizant of a possible upside surprise to our revenue projection, given the relative strength of the USD against the SGD seen in 2QCY12. Meanwhile, MMH recently secured its maiden order for its new 24/7 Machining Line. This could aid its CMA division's turnaround, in our opinion, given the system's ability to improve its product cycle time, quality and operational efficiency. We also expect gradual sequential improvement in MMH's financial performance moving forward, in line with the recovery in the semiconductor industry. Maintain HOLD and S$0.325 fair value estimate. (Wong Teck Ching Andy) Midas Holdings: JV company wins RMB860m metro contract Midas Holdings (Midas) announced last evening that its 32.5% owned JV company, Nanjing SR Puzhen Rail Transport (NPRT) has clinched a RMB860m metro contract. This entails the supply of 20 train sets (or 120 train cars) to the Dongguan Rapid Railway R2 Line Project, with delivery scheduled from 2013 to 2015. This is the second announced contract win by NPRT in 2012 (the first being a RMB526.9m metro contract announced on 1 Mar). We estimate that this would boost NPRT's order book to ~RMB7.4b. Despite NPRT's strong order book, its contribution to Midas' earnings has been volatile and lumpy. As a recap, Midas reported a share of loss from NPRT amounting to RMB4.6m in 1Q12 (1Q11: net profit of RMB4.1m). Nevertheless, we expect conditions from NPRT to improve for the remainder of FY12. For now, we have a HOLD rating and S$0.33 fair value estimate on Midas. (Wong Teck Ching Andy) Neptune Orient Lines: Looking to sell Singapore HQ Neptune Orient Lines (NOL) yesterday said it intends to sell its Singapore headquarters building along Alexandra Road so as to release capital for strategic investment. NOL said it has not decided on a reserved price, but the media has thrown in an indicative pricing of ~S$400m for the 29 year old office building. In addition, Jones Lang LaSalle - the exclusive marketing agent for NOL Building, revealed in a release that NOL is expected to lease back the premises after the sale. The proposed sale and leaseback, if successful, will allow NOL to better allocate its capital in its core business of container shipping and logistics. We maintain our fair value estimate of S$1.38/share and BUY rating on NOL. (Eric Teo)

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

NEWS HEADLINES - The Dow industrials dipped slightly (-0.07%) after data showed that US manufacturing activity contracted in June for the first time in three years, but the S&P 500 index finished higher (+0.25%). - Sin Heng Heavy Machinery, a rental and trading of cranes and aerial lifts company in Singapore, has entered into a distributorship agreement for Indonesia with Kato Works Co., Ltd, one of the world's leading hydraulic crane manufacturers. - Perennial China Retail Trust has exercised its option to increase its stake in Chengdu Longemont Shopping Mall Development from 50.0% to 80.0%, at a total purchase consideration of RMB2.24b. - KSH Holdings' and Heeton Holdings' wholly-owned subsidiaries, along with Zap Piling Pte. Ltd. shall own 40%, 30% and 30% of the share capital of Unique Resi Estate Pte. Ltd., which has been awarded the tender for the purchase the freehold land parcel located at 121C Whitley Road at a purchase price of S$31m.

MARKET PULSE: CMT, Olam, Micro-Mechanics (22 Jun 2012)

Stock Name: CapitaMall
Company Name: CAPITAMALL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 2.02

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 1.86

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.325

MARKET PULSE: CMT, Olam, Micro-Mechanics

22 Jun 2012

KEY IDEA CapitaMall Trust: Execution remains spot on CapitaMall Trust (CMT) recently announced that it would issue HKD1.15b 3.76% Fixed Rate Notes due 2022 under its USD2.0b Euro-Medium Term Note Program. The proceeds would be swapped into SGD190.1m at a fixed 3.45% rate and used to partially refinance the S$783m secured term loan maturing in Oct 2012. We note that CMT's refinancing is going smoothly with interest costs mostly in line with its current average of 3.3% (end 1Q12), which would consolidate its balance sheet position and lengthen the average term to maturity of its debt structure. In addition, with the strategic divestment of Hougang Plaza and enhancement works at Bugis+ on track to complete in Jul 2012, we believe that management is executing well on strengthening CMT's balance sheet and optimizing its asset portfolio. Maintain BUY with a fair value estimate of S$2.02.(Eli Lee) MORE REPORTS Olam Int'l: No material impact from CFO's resignation Olam International Limited (Olam) has announced that its CFO Krishnan Ravi Kumar has resigned to pursue a new career outside the Agri-commodity sector. Shekhar Anantharaman will be moving into a new and enhanced role as Executive Director - Finance and Business, where he will lead the group's overall strategy and new business development activities and also oversee the corporate finance & accounts, and investor relations. We do not see the resignation as having a material impact on its daily operations as Shekhar is also a veteran in Olam, having spent 20 years there. Meanwhile, we continue to believe that the fundamental picture remains unchanged - the share price could continue to remain volatile in view of the ongoing issues in Europe and also sluggish economic growth in China. Maintain HOLD with S$1.86 fair value. (Carey Wong) Micro-Mechanics: Secures maiden orders for its 24/7 Machining Line Micro-Mechanics Holdings (MMH) announced last evening that it has secured an order of almost S$1m for parts used in lasers manufactured by NASDAQ-listed Newport Corporation (Newport). This represents MMH's first commercial production order for its new 24/7 Machining Line, which has been undergoing commissioning for some time now. During our last report (dated 3 May 2012), we highlighted that its new 24/7 manufacturing system could help to spur a revival in its Custom Machining & Assembly (CMA) segment's fortunes. We believe this order win is an encouraging start and more orders could follow from Newport and other customers in the future. This partly underlies our forecast for a 15% revenue growth for its CMA division in FY13. Maintain HOLD and S$0.325 fair value estimate, based on 9x FY13F EPS. (Wong Teck Ching Andy)

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

NEWS HEADLINES - Christine Lagarde, the head of the IMF, warned of acute stress in Europe and called for more relaxed monetary policy by the ECB and for Europe to issue bonds backed by all countries. - Moody's Investors Service has cut the credit rating of 15 of the world's largest banks, which includes Bank of America, JPMorgan Chase, Citigroup and Goldman Sachs. - In a circular to shareholders, Orchard Parade Hotel revealed that it plans to sell leasehold interests of at least S$702m as part of a move towards the planned listing of Far East Hospitality Trust. - The undersea cable unit of India's Reliance Communications Ltd may offer a dividend yield of over 10% for its US$1b Singapore IPO, which is expected to be launched over the next two weeks, sources said yesterday. - Temasek Holdings expects smaller returns for the asset management industry on anticipation that the outlook would be difficult for years, said Gregory Curl, president and head of Latin America.

MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH (30 Apr 2012)

Stock Name: SingPost
Company Name: SINGAPORE POST LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 1.14

Stock Name: LippoMalls
Company Name: LIPPO MALLS INDO RETAIL TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.45

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.29

MARKET PULSE: NOL, SingPost, LMIRT, Raffles Med, MMH

30 Apr 2012

KEY IDEA Neptune Orient Lines: Shanghai-Europe rates up again; upgrade to BUY Summary: The Shanghai (Export) Containerised Freight Index (SCFI) climbed 4% WoW in the week ended 27 Apr 2012. Shanghai to Europe freight rates gained 11% WoW, while Shanghai to Mediterranean rose 13% WoW, ahead of major shipping liners' announced general rate increase in Asia-Europe freight rates on 1 May 2012. Neptune Orient Lines' (NOL) share price has fallen 17% from its recent high of S$1.45/share on 3 Apr 2012 but the correction does not seem warranted. The SCFI is currently 43% higher than this time last year and shipping liners, including NOL, are profitable at current freight rates. Although there are concerns over increasing container shipping capacity, shipping liners seem to have learnt their lesson and are now using slow steaming to manage shipping capacity and refraining from price wars. We upgrade our rating on NOL to BUYand maintain our fair value estimate of S$1.38/share. (Eric Teo) MORE REPORTS Singapore Post: Dividends likely to remain intact despite transformation Summary: Singapore Post (SingPost) reported a 2.2% rise in revenue to S$578.5m but a 11.8% fall in net profit to S$142.0m in FY12, which were within our expectations. The logistics and retail divisions posted improved revenues in 4QFY12, while mail turnover remained steady. The group is pursuing a transformation programme for its future but we do not see this impacting the group's dividend payouts. Similar to last year, SingPost has declared a final dividend of 2.5 S cents per share, bringing the total dividend for the year to 6.25 S cents. The stock price has risen by about 9.0% since we upgraded it from Hold on 5 Jan, but we still see an upside potential of 17.3% (includes forecasted dividend yield of 6.1%) based on our DDM-derived fair value estimate of S$1.14. Maintain BUY. (Low Pei Han) Lippo Malls Indo Retail Trust: NPI boosted by acquisitions Summary: Lippo Malls Indonesia Retail Trust (LMIRT) reported 1Q12 NPI of S$30.9m and distributable income of S$15.0m, up 38.0% and 18.5% YoY. The strong performance was due primarily to a full-quarter contribution from the acquisition of two retail malls in 4Q11. DPU for the quarter was at 0.69 S cents (18.6% of our full-year forecast), lower than the DPU of 1.17 S cents registered a year ago due to a 1-for-1 rights issue in 4Q11. However, on a QoQ basis, it represents a significant improvement of 30.2%. As at 31 Mar, LMIRT's portfolio occupancy stood at 94.5% (94.1% in prior quarter), well above Indonesia's retail industry average occupancy rate of ~87.6%. In addition, its aggregate leverage was also healthy at 9.2%, with no refinancing requirements until Jun 2014. We are putting our BUY rating and fair value of S$0.45 under reviewas we adjust our estimates to incorporate the results. (Kevin Tan) Raffles Medical Group: 1Q12 earnings slightly below expectations Summary: Raffles Medical Group (RMG) reported its 1Q12 results this morning. Revenue was within our expectations but PATMI was slightly below. Revenue increased 13.2% YoY and 0.9% QoQ to S$72.9m, forming 23.2% of our full-year estimates. EBIT improved 11.0% YoY but fell 20.6% QoQ to S$14.2m, while PATMI was up 10.9% YoY but declined 29.6% QoQ to S$11.6m, meeting 19.6% of our FY12 forecasts. 1Q is typically RMG's weakest quarter, which explains the significant sequential drop in its earnings. We note also that approximately 15,000 sf of 'newly created' medical space at its Raffles Hospital would begin contributing from 2Q12, and hence we are expecting a stronger 2H (versus 1H). Both its Hospital Services and Healthcare Services divisions contributed positively, with revenue growth of 15.3% and 7.4%, respectively. This was driven largely by a higher patient load and acuity. We will provide more details on the outlook of RMG after the analyst briefing today. Until then, we place our BUY rating and S$2.66 fair value estimate (24x FY12F EPS) under review. (Wong Teck Ching Andy) Micro-Mechanics: 3QFY12 results within expectations Summary: Micro-Mechanics Holdings (MMH) reported its 3QFY12 results which were in line with our expectations. Revenue declined 15.8% YoY to S$9.4m, or 2.9% higher than our forecast. Net profit slumped 47.8% YoY to S$0.9m and was just 0.4% above our projections due largely to higher-than-estimated effective tax rate. Sequentially, revenue and net profit rose 7.2% and 16.7%, respectively, despite 3Q being a seasonally weaker quarter. We believe this provides a positive signal that MMH could experience gradual improvement moving forward, in line with the recovery in the semiconductor industry. For 9MFY12, topline fell 16.8% to S$28.4m, while bottomline dipped 47.6% to S$2.9m. On a segmental basis, sales for MMH's Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) divisions decreased 13.8% YoY (+5.1% QoQ) and 24.1% YoY (+18.4% QoQ), respectively. Nevertheless, MMH managed to maintain its gross margin for its SET segment at 53.1%. Although gross margin for its CMA segment slid from 12.8% in 3QFY11 to 12.0% in 3QFY12, there was an encouraging improvement of 11.9ppt on a sequential basis. We will provide more details after the analyst briefing. Meanwhile, our HOLD rating and S$0.29 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 - US stocks climbed on Friday and posted their best weekly gains in a month after better-than-expected earnings from Amazon.com and Expedia Inc boosted confidence in corporate performance. - Ho Bee's 1Q12 revenue fell 51% YoY to S$38.7m, while PATMI declined 71% to S$15.8m. - Sino Grandness posted 1Q12 revenue of RMB285.5m, up 61% YoY. PATMI increased by 81% to RMB56.7m. - Treasury China Trust reported 1Q12 revenue of S$26.0m, up 33.5% YoY. Earnings per unit increased 11% YoY to 3.0 S-cents. - Serial System's sales for 1Q12 declined 4% YoY to S$182m. PATMI declined by 43% YoY to S$1.8m.

Micro-Mechanics Holdings rated 'hold' by OCBC

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.29

OCBC Investment Research in a Jan 30 research report says: "Micro-Mechanics (MMH) reported a lacklustre set of 2QFY12 results. Net profit dipped 58.5% y-o-y and 39.9% q-o-q to $0.7 million on the back of a 23.6% y-o-y and 15.9% q-o-q decline in its revenue to $8.7 million.

"For 1HFY12, revenue of $19.1 million (-17.3%) formed 46.9% of our full-year forecast while net profit of $2.0 million (-47.5%) constituted 42.2% of our FY2012 estimates. A cash dividend of 1 cent was declared, in line with our expectations. We cut our FY2012 revenue forecast by 7.3% and net profit forecast by 16.6% in view of the worse-than-expected set of results.

"While we expect conditions to pick up in FY2013, we still see the need to lower our revenue and net profit projections by 5.6% and 15.0% respectively. Fair value estimate declines from 30.5 cents to 29 cents as we also roll forward our valuation to 9x blended FY12/13F EPS. MAINTAIN HOLD."

MARKET PULSE: First REIT, Ezion, Tiger Airways and Micro-Mechanics (30 Jan 2012)

Stock Name: First REIT
Company Name: FIRST REAL ESTATE INV TRUST

Research House: OCBC

Price Call: BUY

Target Price: 0.89

Stock Name: EzionHldg
Company Name: EZION HOLDINGS LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 0.97

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.305

Stock Name: TigerAir
Company Name: TIGER AIRWAYS HOLDINGS LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 0.65

MARKET PULSE: First REIT, Ezion, Tiger Airways and Micro-Mechanics

30 Jan 2012

KEY IDEA First REIT: Undaunted by volatile macroeconomic environment Summary: First REIT (FREIT) reported its 4Q11 results which were within our expectations. For FY11, gross revenue increased 78.4% to S$54.0m and was just 0.2% higher than our full-year projection. Distributable income to unitholders rose 105.8% to S$43.9m, in line with our forecast of S$41.9m if we exclude a special S$2.2m distribution in 4Q11. DPU for FY11 was 7.01 S cents, versus 6.63 S cents in FY10, and translates into an attractive yield of 9.1%. We believe that FREIT could acquire new hospitals in FY12. This would likely be debt funded given its ample debt headroom. Maintain BUY with a revised RNAV-derived fair value estimate of S$0.89 (previously S$0.84) as we roll forward our valuations and update our terminal capitalisation rates and Indonesian asset discount rates assumptions. (Wong Teck Ching Andy) MORE REPORTS Ezion Holdings: Growing the service rig business Summary: Ezion Holdings (Ezion) recently announced that it has clinched a charter contract worth about US$93.5m to provide a service rig for a period of 4.5 years. This is the third service rig contract that Ezion has clinched, and its ability to leverage on its network to clinch contracts from major oil companies has been impressive, along with the decent forecasted returns on equity. We are positive on this development due to the decent forecasted ROE, management's previous working relationship with the customer, as well as the project's ability to generate a steady stream of earnings within a short period of time, barring any hiccups. Maintain BUY with S$0.97 fair value estimate. (Low Pei Han) Micro-Mechanics: Lacklustre 2QFY12 results Summary: Micro-Mechanics (MMH) reported a lacklustre set of 2QFY12 results. Although we had already factored in the tepid industry conditions and impact from the suspension of its Thailand operations in our assumptions, MMH's performance still came in below our expectations. Net profit dipped 58.5% YoY and 39.9% QoQ to S$0.7m on the back of a 23.6% YoY and 15.9% QoQ decline in revenue to S$8.7m. For 1HFY12, revenue of S$19.1m (-17.3%) formed 46.9% of our full-year forecast while net profit of S$2.0m (-47.5%) constituted 42.2% of our FY12 estimates. Both MMH's Semiconductor Tooling (SET) and Custom Machining & Assembly (CMA) segments fared badly, with YoY declines in sales and gross margins. The increase in operating expenses as a percentage of revenue also culminated in a 7.2 ppt YoY fall in its net margin to 8.6% for 2QFY12. A cash dividend of 1 S cent was declared, in line with our expectations and payable on 23 Feb 2012. We will provide more details after the analyst briefing. For now, our Hold rating and S$0.305 fair value estimate is under review. (Wong Teck Ching Andy) Page 1 of 1 TIGER AIRWAYS: 33% STAKE IN MANDALA AIRLINES Summary: Tiger Airways Holdings Limited (TGR) announced today it has completed the share subscription agreement with PT Mandala Airlines ("Mandala") for 22,618,594 new Class C shares in the issued share capital of Mandala, representing approximately 33% of the enlarged issued capital. The terms of this agreement was previously announced on 23 Sep 2011 - TGR is subscribing for shares amounting to 33% of Mandala Airlines (Mandala) at a cost of US$1 cash and the provision of technical know-how. As we have previously mentioned, this is a positive development to TGR since such joint-ventures should help to absorb TGR's expected new aircraft deliveries for the rest of FY12. We have a HOLDrating on TGR, with a fair value estimate of S$0.65/share. (Eric Teo)

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

NEWS HEADLINES - US economy grew at 2.8% annualized rate in the three months through Dec, lower than the forecast of a 3% increase. This dims the earnings outlook for Asian exporters and sent Japanese stock futures and Australian equities down. - A disorderly Greek default appears less likely as Greece and private investors in their bonds have reached a tentative deal to reduce the country's debt and enable it to receive a €130b bailout. - Fragrance Group and Aspial Corporation started the preview of Parc Rosewood in Woodlands on Saturday. The price range for Parc Rosewood has been adjusted downwards 8-10% to S$925-998 psf, to offset any impact on sales from the additional buyers' stamp duty. - Catalist-listed SBI Offshore has secured US$30m of new orders less than a month into 2012 from major rig builders in Asia and leading international drilling contractors to bring its total order book to US$36.1m, ~6x its US$6.1m order book a year ago. - Bemax Resources has agreed to purchase a number of heavy mineral tenements from Simto Resources for AUD$25m. The acquisition should significantly add to the company's resources base and mining operations in Western Australian's South West.

Micro-Mechanics Holdings rated 'hold' by OCBC

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.45

OCBC Investment Research in an Oct 10 research report says: "In light of the weakening macroeconomic environment which is expected to take its toll on the cyclical tech sector, we are lowering our estimates for MMH and now expect revenue and net profit to decline by 1.3% and 7.8% instead of a 4.8% and 2.1% rise in FY2012 respectively (FY2013 earnings estimates also cut by 8.1%).

"Notwithstanding our lower forecasts, we are keeping our dividend estimates for FY12 at 3 S cents, unchanged from FY2011. At this level, it implies a prospective yield of 6.7%, which should provide some downside support to MMH's share price. new fair value estimate of 45 cents (previously 50 cents), still based on 10x FY12F EPS. MAINTAIN HOLD."

Market Pulse: Olam, SMRT, Micro-Mechanics & OSIM (31 Aug 2011)

Stock Name: SMRT
Company Name: SMRT CORPORATION LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.04

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

Research House: OCBC

Price Call: HOLD

Target Price: 0.50

Stock Name: OSIM
Company Name: OSIM INTERNATIONAL LTD

Research House: OCBC

Price Call: BUY

Target Price: 2.04

Market Pulse: Olam, SMRT, Micro-Mechanics & OSIM (31 Aug 2011)

FOCUS

Olam Int'l: BUY with lower S$2.63 fair value

Summary: Olam International Limited reported strong revenue growth in FY11, which jumped 50.5% to S$15.73b, surpassing our forecast of S$13.77b, driven by both higher sales volume and ASPs. Reported net profit (including exceptional items) came in at around S$429.8m, up 19.6%; while NPAT (excluding exceptional items) climbed 37.1% to S$372.8m, just above our S$369.4m forecast. Citing the strong performance in FY11 and the continued execution of its long-term strategic growth plans, Olam says it continues to be positive about its prospects for FY12. While we largely share Olam's optimism about its relatively resilient food-related commodities business, we cannot ignore the looming global economic uncertainties. So even as we revise up our FY12 revenue estimate, we pare our core earnings estimate due to lower margin assumptions. As we are also lowering our valuation peg to 18x FY12F EPS from 19x previously, our fair value drops to S$2.63. Maintain BUY. (Carey Wong)

SMRT Corporation: Downtown Line setback

Summary: It was announced on Monday evening that SMRT had lost the tender to operate the Downtown Line. While revenue yield projections for the DTL are too early to be assessed, at first glance the loss has cost SMRT as much as 14,000 square metres of gross commercial space and daily riderships of about 500,000. Looking ahead, there are still other opportunities for SMRT (Thomson and Eastern Regional Lines), and the setback should force SMRT to enhance its operational capabilities and improve its public image. While there is no impact on SMRT's earnings from the loss of the tender, we anticipate some temporary selling pressures on its stock from the announcement. We maintain our fair value estimate of S$2.04 but upgrade our rating to BUY on recent price weakness as the stock still represents decent dividend yield (4.4% FY12F). (Lim Siyi)

Micro-Mechanics: FY11 earnings slightly below expectations

Summary: Micro-Mechanics' (MMH) reported FY11 revenue were in-line with our expectations although net profit fell slightly short due to an apparent slowdown in 4QFY11 conditions. Revenue rose 10.6% to S$45.3m, or 3.1% below our forecast. Net profit jumped 43.0% to S$6.8m but this was below our projections by 7.7%. MMH's performance was partly affected by the weakening USD against SGD, as 48% of its sales were invoiced in USD. A final dividend of 2.0 S cents was declared, and total declared dividends for FY11 translates into a healthy yield of 6.7%. Moving forward, management would focus on improving the cycle-time of its manufacturing process to improve its operational efficiencies. Nevertheless we understand that some of its customers have provided a more cautious outlook. We lower our valuation peg on the group to 10x FY12F EPS (previously 12x blended FY11/FY12 EPS) due to subdued macroeconomic and industry conditions. Hence we derive a lower fair value estimate of S$0.50 (from S$0.67). Given MMH's more muted earnings growth expectations, we are downgrading the stock to HOLD. (Wong Teck Ching Andy)

OSIM International: Withdrawing its proposed TDR issue

Summary: OSIM International Ltd (OSIM) announced that it has decided to submit an application to the Taiwan Stock Exchange (TSE) and Securities and Futures Bureau of Taiwan (SFB) for the withdrawal of its proposed TDR issue. This decision was made after taking into consideration the ongoing global markets disruption. As a recap, OSIM had planned to raise net proceeds of ~S$76m (based on an indicative offer price of NT$20.80 or S$1.80 equivalent). We are not surprised by management's decision to withdraw its application as the recent sell-down in OSIM's share price means that the proposed indicative offer price now represents a 65.9% premium over its last closing price (21.6% premium over the average closing price of S$1.48 since it received approval from TSE on 29 Apr 2011). We had also previously stated in our 27 Jul 2011 report that we do not expect OSIM's expansion plans to be affected even if the TDR listing does not take place, given its excellent cash position. The group generated net operating cashflows of S$53.2m for 1H11 and also recently raised ~S$120m from the issue of convertible bonds. We have also not incorporated any proceeds from the proposed TDR in our financial model. Maintain BUYand fair value estimate of S$2.04. (Wong Teck Ching Andy)

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

NEWS HEADLINES

- The IMF has cut its 2011 growth forecast for the US and the eurozone to 1.6% and 1.9% respectively, down from 2.5% and 2% previously. It also said that the Federal Reserve and the European Central Bank (ECB) must be ready to ease policy to sustain the global economy.

- SIA retained its leading position in the ranking of airlines worldwide, according to online travel magazine SmartTravelAsia.com. However, Changi Airport slipped to second place, after Hong Kong International Airport, in the ranking of airports.

- Wing Tai Holdings recorded a 148% YoY jump in 4Q net earnings to S$171m, helped by fair value gains on its investment properties and higher contributions from its associates and joint ventures.

- China Minzhong reported FY11 net profit of RMB567m, up 54.2% YoY due to increased sales in both its vegetable cultivation and processed vegetable segments.

- OKP Holdings has secured a S$46.8m contract from PUB to work on Alexandra Canal, bringing its total order book to S$433.3m

- Chip Eng Seng Contractors won a S$113m HDB contract to build five blocks of residential buildings with 792 units and a multi-storey carpark at Hougang Neighbourhood 4.

Micro-Mechanics Holdings rated 'buy' by OCBC

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

OCBC Investment Research in a may 5 research report says: "Micro-Mechanics (MMH) reported its 3Q11 results which were within our expectations. Revenue rose 9.8% y-o-y to $11.1 million and net profit jumped 31.6% y-o-y to $1.7 million.

"Regarding the recent Japan earthquake and tsunami, MMH indicated that it had experienced minimal direct impact from its customers and supply chain so far. Looking ahead, MMH does not foresee any significant impact of this crisis on its FY2011 results, barring any unforeseen circumstances.

"We continue to like MMH for its healthy balance sheet (net cash) and attractive prospective dividend yield of 6.1%. We are keeping our estimates intact as its 3QFY11 results have met our expectations. Fair value estimate of 67 cents, still based on 12x blended FY2011/2012F EPS. MAINTAIN BUY."

Micro-Mechanics Holdings rated 'hold' by OCBC

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

OCBC Investment Research in an Apr 11 research report says: "The market for semiconductor tools stands at around $190 million per year according to estimates from Micro-Mechanics Holdings (MMH).

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Micro-Mechanics (Holdings) rated 'buy' by AmFraser

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

AmFraser Research in a Mar 7 research report says: "We like Micro Mechanics (MMH) for its strong competitive position in the semiconductor tooling segment and its global presence especially in the fast growing markets in Asia. Its proprietary designs and manufacturing know-how also creates significant barriers for new entrants to their segment of the industry.

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